(1)

Pursuant to Article 3 of the Treaty on European Union, the aims of the Union are, inter alia, to promote the well-being of its peoples and to work for the sustainable development of Europe based on a highly competitive social market economy, aiming at full employment and social progress. The Union is to combat social exclusion and discrimination, promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child.

(2)

Pursuant to Article 9 of the Treaty on the Functioning of the European Union (TFEU), the Union, in defining and implementing its policies and activities, is to take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.

(3)

Point (c) of Article 153(1) TFEU enables the Union to support and complement the activities of the Member States in the field of social security and social protection of workers. Union action can also be pursued to address challenges regarding access to social protection for people in self-employment on the basis of Article 352 TFEU, which contains a provision allowing the Council to adopt appropriate measures to attain objectives laid down by the Treaties where the Treaties have not provided the necessary powers.

(4)

On 17 November 2017 the European Parliament, the Council and the Commission solemnly proclaimed the European Pillar of Social Rights. Principle 12 of the European Pillar of Social Rights states that, regardless of the type and duration of their employment relationship, workers, and, under comparable conditions, the self-employed have the right to adequate social protection.

(5)

The social partners have committed to continue contributing to a Europe that delivers for its workers and enterprises.

(6)

In its resolution of 19 January 2017 on a European Pillar of Social Rights, the European Parliament underlined the need for adequate social protection and social investment throughout people’s lives, enabling everyone to participate fully in society and the economy and sustaining decent living standards.

(7)

In its opinion on the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions launching a consultation on a European Pillar of Social Rights, the European Economic and Social Committee emphasised the need to ensure that all workers are covered by fundamental labour standards and adequate social protection.

(8)

Social protection systems in their different forms are the cornerstone of the European social model and of a well-functioning social-market economy. The key function of social protection is to protect people against the financial implications of social risks, such as illness, old age, accidents at work and job loss, to prevent and alleviate poverty and to uphold a decent standard of living. Well-designed social protection systems can also facilitate participation in the labour market by contributing to activation and supporting the return to work and labour-market transition for individuals who switch jobs, move in or out of work, start a company or close one down. They contribute to competitiveness and sustainable growth as they support investment in human capital and can help to reallocate human resources towards emerging and dynamic sectors of the economy. They also have a role to play as automatic stabilisers by smoothening consumption over the course of the business cycle.

(9)

Social protection can be provided through benefits in kind or in cash. It is generally provided through universal schemes that protect all individuals and financed through general taxation and/or through schemes that protect people in the labour market, which are often based on contributions related to their work income. Social protection includes several branches, covering a variety of social risks ranging from old age to illness or unemployment. This Recommendation applies to the branches of social protection which are often more closely related to participation in the labour market and mostly ensure protection from loss of work-related income upon the occurrence of a certain risk. This Recommendation does not apply to the provision of access to social assistance and minimum income schemes. It complements existing Union-level guidance on social services and assistance as well as on the active inclusion of people excluded from the labour market, such as the Commission Recommendation of 3 October 2008 on the active inclusion of people excluded from the labour market.

(10)

Globalisation, technological developments, changes in individual preferences, and demographic ageing have driven changes in the Union labour markets for the last two decades and will continue to do so in the future. Employment will increasingly be more diverse, and careers will be less and less linear.

(11)

A variety of employment relationships and forms of self-employment exist in Union labour markets alongside full-time open-ended employment contracts. Some of them have existed in the labour market for a long time (such as fixed, temporary, part-time, domestic work, or traineeships), whereas others, such as on-demand work, voucher-based work and platform work, have developed more recently and increased in importance since the 2000s.

(12)

The self-employed in particular form a heterogeneous group. Most individuals voluntarily choose to be self-employed, with or without employees, taking the risk to become entrepreneurs, while one out of five self-employed persons is self-employed because he or she cannot find a job as an employee.

(13)

As labour markets evolve, social protection systems in their different forms need to evolve too, so as to ensure that the European social model is future-proof and that it enables Union societies and economies to make the most of the future world of work. In most Member States, however, the rules governing contributions and entitlements for social protection schemes are still largely based on full-time open-ended contracts between a worker and a single employer, while other groups of workers and the self-employed are more marginally covered. Evidence shows that some non-standard workers and some self-employed persons have insufficient access to the branches of social protection which are more closely related to participation in the labour market. Only a few Member States have undertaken reforms to adapt social protection systems to the changing nature of work to protect affected workers and the self-employed better. Improvements have been uneven across Member States and across branches of social protection.

(14)

In the long run, the gaps in access to social protection could put at risk the welfare and health of individuals and contribute to increasing economic uncertainty, the risk of poverty and inequalities. They could also lead to suboptimal investment in human capital, reduce trust in institutions and limit inclusive economic growth. Such gaps could also reduce the revenues of social protection if a growing number of people do not contribute to the schemes.

(15)

Workers and self-employed persons can be identified as formally covered by a specific social protection branch if the existing legislation or collective agreement states that they are entitled to participate in a social protection scheme in that specific branch. Formal coverage can be provided via mandatory or voluntary schemes. The latter give the opportunity to individuals to join a scheme (opt-in clauses) or cover all individuals of the target group by default, giving them the opportunity to leave the scheme if they so wish (opt-out clauses). Evidence shows that voluntary schemes with opt-out clauses have higher membership rates and therefore provide better coverage than voluntary schemes with opt-in clauses.

(16)

Workers and self-employed persons can be identified as effectively covered in a specific social protection branch if they have the opportunity to accrue adequate benefits and the ability, in of the event that the corresponding risk materialises, to access a given level of benefits. A person may be granted formal access without de facto being able to build and take up entitlements to benefits.

(17)

Social protection is considered to be adequate when it allows individuals to uphold a decent standard of living, replace their income loss in a reasonable manner and live with dignity, and prevents them from falling into poverty while contributing, where appropriate, to activation and facilitating the return to work. When assessing the adequacy, the Member State’s social protection system as a whole needs to be taken into account, which means that all social protection benefits of a Member State need to be considered.

(18)

In some Member States, certain categories of worker, such as short part-time workers, seasonal workers, on-demand workers, platform workers and those on temporary agency contracts or traineeships are excluded from social protection schemes. Moreover, workers who do not have full-time, open-ended contracts can encounter difficulties in being effectively covered by social protection, because they may not fulfil entitlement criteria for receiving benefits from contribution-based social protection schemes. The self-employed are completely excluded from formal access to key social protection schemes in some Member States; in other Member States, they are able to join them on a voluntary basis. Voluntary coverage may be a suitable solution in the case of unemployment insurance, which is more closely associated with entrepreneurial risk; it is less justifiable for other risks, such as illness, which are largely unrelated to a person’s status in the labour market.

(19)

The rules governing entitlements could work to the disadvantage of non-standard workers and the self-employed. In particular, income and time thresholds (qualifying periods, waiting periods, minimum working periods, duration of benefits) may constitute an unduly high obstacle to accessing social protection for some groups of non-standard workers and for the self-employed. In general, two sets of issues have been identified: firstly, existing differences in rules between standard employees and people in non-standard employment or the self-employed could unnecessarily penalise one group; secondly, the same rules applied to all groups could lead to poorer outcomes for people outside standard employment and might not be adapted to the situation of the self-employed. In both cases, there is scope to tailor the rules more to the situation of the specific groups while maintaining a general principle of universality, so that no one in the labour market would be left uncovered upon the materialisation of a social risk. Specific measures may be needed to avoid people contributing to overlapping schemes, for example when carrying out ancillary activities while already fully covered in their main job.

(20)

Social protection rights are not always preserved, accumulated and/or transferred when individuals are transitioning between different labour market statuses, for instance going from employment to self-employment or unemployment, combining salaried employment and self-employment, and starting or closing down a business. However, the preservation, accumulation and/or transferability of rights across schemes are crucial in allowing people who combine or change jobs or pass from a worker status to a self-employed status or vice versa to access benefits in contribution-based social protection schemes effectively and to have adequate coverage, as well as to encourage their participation in the case of voluntary social protection schemes.

(21)

In some cases, benefits can be inadequate, i.e. insufficient or untimely. They might not allow individuals to maintain a decent standard of living or to live with dignity, and might not prevent them from falling into poverty. In such cases, there could be scope to improve adequacy, while also being attentive to the need to enable measures that facilitate the return to work. The rules governing contributions may skew the level playing field and work to the disadvantage of some categories of worker and the self-employed. For instance, social protection contributions for the self-employed may include contributions independent of income, or be set on the basis of past income or assumptions about future income. This can create cash-flow problems for the individual when their income drops below the estimates. If a Member State decides to determine an income threshold under which the worker or self-employed person concerned is not subject to the obligation to make insurance contribution payments, reductions and other measures of progressivity should apply, where appropriate, equally to workers and the self-employed, but should not induce to under-reporting of income. In general, reductions and other measures of progressivity may also be used to promote transitions to less precarious forms of employment and to tackle segmentation.

(22)

The current regulatory complexity and lack of transparency regarding social protection rules in many Member States may mean that people are insufficiently aware of their rights and obligations and of the ways in which they can exercise their rights and comply with their obligations. This could also contribute to a low take-up rate for or low participation in social protection schemes, especially in the case of a voluntary scheme. Transparency can be achieved in different ways, for example by sending updates on individual entitlements, setting up online simulation tools regarding benefit entitlements and creating online and offline one-stop information centres or personal accounts. Digitalisation can, in particular, contribute to improving transparency for individuals.

(23)

A lack of statistics on coverage by social protection, broken down by type of employment relationship, age, sex and citizenship, may limit the possibilities for improving the capacity of social protection systems to adapt and respond to the changing world of work.

(24)

The gaps in access to social protection may have detrimental effects, in terms of economic and fiscal impacts, which are felt across the Union. They are a matter of common interest for the Member States and potentially present obstacles to the achievement of key objectives of the Union.

(25)

Union legislation already ensures the principle of equal treatment between various types of employment relationship, prohibits any direct or indirect discrimination on the basis of sex in matters of employment, occupation, social protection and access to goods and services, ensures the portability and preservation of rights in the case of mobility between Member States and guarantees minimum requirements for the acquisition and preservation of supplementary pension rights across borders, as well as minimum requirements in terms of transparency for occupational schemes. This Recommendation is without prejudice to the provisions of existing Union law on social protection rights, in particular, Regulation (EC) No 883/2004 of the European Parliament and of the Council (1), Directives 2006/54/EC (2), 2008/94/EC (3), 2008/104/EC (4), 2010/41/EU (5), (EU) 2016/2341 (6), (EU) 2019/1152 (7) and (EU) 2019/1158 (8) of the European Parliament and of the Council, and Council Directives 79/7/EEC (9), 93/103/EC (10), 97/81/EC (11), 1999/70/EC (12), 2004/113/EC (13) and 2010/18/EU (14).

(26)

Council Recommendation 92/442/EEC (15) identified commonly held objectives in the area of social protection and invited Member States to examine the possibility of introducing and/or developing appropriate social protection for self-employed persons. Those commonly defined objectives have opened room for the Open Method of Coordination for Social Protection and Social Inclusion, an essential instrument to support the definition, implementation and evaluation of national social protection frameworks and to foster mutual cooperation among the Member States in this area.

(27)

In the framework of the European Semester, the Annual Growth Survey 2018 recalls that improving the adequacy and coverage of social protection is crucial to prevent social exclusion, while the guidelines for the employment policies set out in Council Decision (EU) 2018/1215 (16) call on the Member States to modernise social protection systems.

(28)

In its Social Protection Floors Recommendation of 2012 (No 202), the International Labour Organization recommends its members, in accordance with national circumstances, to establish as quickly as possible and maintain their social protection floors comprising basic social security guarantees.

(29)

The Commission has undertaken a two-stage consultation of the social partners under Article 154 TFEU on a possible action addressing the challenges of access to social protection for people in all forms of employment. The procedure set out in Article 154(2) TFEU as such is not applicable to Union action to address challenges related to the self-employed on the basis of Article 352 TFEU. The Commission invited the social partners to share their views as regards persons in self-employment on a voluntary basis.

(30)

The Commission also carried out a public consultation to seek the views of various stakeholders and citizens and gathered evidence to assess the socioeconomic impacts of this Recommendation.

(31)

The implementation of this Recommendation should not be carried out in a way that reduces rights set out in existing Union law in this field, nor should it constitute valid grounds for reducing the general level of protection afforded to workers in the field covered by this Recommendation.

(32)

This Recommendation should avoid imposing administrative, financial or legal constraints in a way which would hold back the creation or development of small and medium-sized enterprises (SMEs). Member States are therefore invited to assess the impact of their reforms on SMEs in order to make sure that SMEs are not disproportionately affected, with specific attention be paid to micro-enterprises and the administrative burden, and to publish the results of such assessments.

(33)

This Recommendation should not further aggravate the liquidity of undertakings – in particular SMEs – when their financial situation has been negatively affected by late payments from public authorities.

(34)

The Member States may involve stakeholders, including the social partners, in the design of reforms.

(35)

This Recommendation is without prejudice to the powers of the Member States to organise their social protection systems. The exclusive competence of the Member States with regard to the organisation of their social protection systems includes, inter alia, decisions on the setting-up, financing and management of such systems and related institutions as well as on the level, substance and delivery of benefits, the level of contributions and the conditions for access. Taking into account the differences between national systems, this Recommendation does not prevent Member States from maintaining or establishing more advanced provisions on social protection than those recommended herein.

(36)

This Recommendation respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union. In particular, this Recommendation seeks to promote the application of Article 34 of the Charter of Fundamental Rights of the European Union.

(37)

The financial sustainability of social protection schemes is essential for the resilience, efficiency and effectiveness of such schemes. The implementation of this Recommendation should not significantly affect the financial equilibrium of Member States’ social protection systems,

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