Joint Report on Social Protection and Social Inclusion 2006
This Report identifies the various overarching issues facing social protection and social inclusion in the future, and describes changing social realities in Europe, particularly in the areas of fighting poverty and exclusion, and in pensions and health care. It also offers ways of achieving the objectives set by the revised Lisbon Strategy, against a background of change. The Open Method of Coordination (OMC) remains the preferred instrument for this purpose.
Communication from the Commission, of 13 February 2006, to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Joint Report on Social Protection and Social Inclusion 2006 [COM (2006) 62 final - Official Journal C 67 of 18.03.2006].
The European Union (EU) and its social policies face major challenges in the medium to long term.
In the long run, the challenges of global competition, the impact of new technologies and an ageing population need to be addressed.
More immediate action is needed to boost sluggish growth, curb high rates of unemployment and reduce continuing inequalities.
Social protection and social inclusion: developments and reforms
After several years of stagnation, the percentage of GDP (28% in 2003) spent on social protection has now risen slightly.
Systems of cash transfers (other than pensions) account for 5% of GDP. In this area, reforms have been undertaken with a view to strengthening incentives to take up work. Benefits to support incomes for those making the transition to (low-paid) employment are also becoming more widespread. Social assistance is increasingly linked closely with social and employment services, thus achieving synergies and increasing efficiency. Moreover, notable reform efforts were made in relation to long-term sickness/invalidity schemes.
Spending on pensions, which averaged 13% of GDP in the EU in 2003, has ensured that being old is no longer associated with being poor or being dependent. Furthermore, in the light of population ageing and the increase in life expectancy in Europe, most Member States have undertaken reforms to ensure the adequacy, sustainability and modernisation of pensions. The National Strategy Reports which Member States submitted in 2005 show that these three objectives must be viewed together in order for the reforms to succeed. Member States have therefore adopted a three-pronged strategy based on:
- reducing public debt;
- higher employment rates among older people;
- reforming pensions.
In 2003, spending on health care and long-term care averaged 8% of GDP. At present this area is directly affected by the consequences of ageing and the emergence of new technologies. In 2004 the Open Method of Coordination (MOC) was extended to include health care and long-term care, areas which continue to pose challenges in terms of supply, access and financial sustainability. In response to ever-growing demand, in order to guarantee access to health care for all and also to overcome the quantitative and qualitative gaps in supply, Member States have undertaken various reforms:
- ensuring greater effectiveness and efficiency through reorganisation, prioritisation and the development of incentive structures for users and providers;
- strengthening the role of health promotion and disease prevention policies;
- systematic use of charges and co-payments as well as reductions in fees, targeted at disadvantaged groups;
- promoting active lifestyles and healthy ageing;
- developing indicators and setting quality standards, practice guidelines and accreditation systems;
- involving patients;
- promoting choice;
- technological progress.
With regard to fighting poverty and exclusion, considerable progress has been made in several areas. However, like the economic situation, the picture remains mixed. Moreover, the review of the Lisbon Strategy revealed an implementation gap between what Member States committed to and the policy effort to implement them. There are eight problem areas in which action must be taken:
- labour market participation, which is generally low;
- modernisation of social protection systems;
- disadvantages in education and training;
- child poverty, which still persists;
- assistance to families;
- housing, an area where significant inequalities persist;
- access to quality services;
- integration of people with disabilities, ethnic minorities and immigrants.
Intervention was also necessary in light of the concentration of multiple disadvantages in certain urban and rural communities and among some groups (people with disabilities, migrants and ethnic minorities, homeless, ex-prisoners, addicts and older people).
Social protection and social inclusion: challenges
The Commission's January 2006 Communication on a new framework for the OMC identifies four overarching challenges for social protection and inclusion policies:
- to promote social cohesion and equal opportunities for all through adequate, accessible, financially sustainable, adaptable and efficient social protection systems and social inclusion policies;
- to interact closely with the Lisbon objectives on achieving greater economic growth and more and better jobs and with the EU's Sustainable Development Strategy;
- to strengthen governance, transparency and the involvement of stakeholders in the design, implementation and monitoring of policy;
- finally, there should be a two-way interaction between the OMC and the Lisbon Strategy. Social protection and inclusion policies should support growth and employment objectives, and, conversely, growth and employment policies should support social objectives.
For social protection schemes a holistic approach is required which focuses on:
- monitoring the effectiveness and efficiency of systems, policies and funding mechanisms;
- the distribution of spending across different branches;
- the balance between public provision and self-reliance.
With regard to pension schemes, it is necessary to:
- further highlight the interlinkages between the three broad objectives of adequacy, sustainability and modernisation of pension systems;
- continue to remove disincentives and strengthen incentives for working longer (including for potential beneficiaries of minimum pensions);
- improve the way in which both employers and labour markets treat older workers;
- monitor the trend towards a decline in replacement rates;
- take better account of new forms of working and of career breaks (particularly for care);
- ensure that women can build up their own pension rights;
- ensure that private pension schemes are affordable and secure, so that they can complement public schemes (which are the principal source of pensions in all but a few Member States) as effectively as possible.
With regard to health care and long-term care:
- in terms of efficiency and effectiveness, there is a need for greater coherence and better coordination between different types of care;
- in terms of access and quality, action must be taken to strengthen the role of family doctors;
- in terms of financial sustainability, it is recommended to boost incentives to use resources in a rational way, and to ensure greater use of regulated competition.
The chapter on the challenges for the future in relation to fighting poverty and exclusion highlights a threefold need:
- better mainstreaming;
- better governance;
- better links between the NAPs for inclusion and the Structural Funds (in particular the European Social Fund and the European Regional Development Fund).
Still in relation to fighting poverty and exclusion, a more strategic, systematic and transparent approach is needed for the formulation of NAPs for inclusion, to ensure that policies are set out more clearly. The OMC needs to develop a strong focus on poverty among children and their families. The multiple exclusion faced by young people from ethnic minorities in poor neighbourhoods also needs increased attention. In this context, the fundamental role of education and training in breaking the intergenerational transmission of poverty should be highlighted.
It is essential to ensure that the OMC and the revised Lisbon Strategy mutually reinforce one another. Monitoring and evaluation also need to be strengthened.
This second Joint Report on Social Protection and Social Inclusion responds directly to the challenges of the Lisbon Strategy and of the Hampton Court Summit, and builds on the 2003 Communication " Strengthening the social dimension of the Lisbon strategy: Streamlining open coordination in the field of social protection ". It draws on the plans and policy statements produced by the Member States during 2005 under the three policy strands of social inclusion, pensions, and health and long-term care. It is guided by the views expressed by Member States and stakeholders on the value of the OMC.