Minimum income schemes (MIS) have been in place in many EU countries for years, however, they have been failing to guarantee people protection against poverty. A major step towards addressing this took place on 15 March 2023 when the European Parliament voted to adopt a resolution on adequate minimum income, calling for stronger legislation and showing an ambition by MEPs to take the fight against poverty to new levels. With 336 votes in favour of adopting the resolution, notably the majority of the Socialist-Democrat family, and other progressive policymakers, the European Parliament took a significant step in protecting some of Europe’s most vulnerable from falling below the poverty line.
For 96.5 million people across the EU, living at risk of poverty is the day-to-day reality. Now, as the cost of basic needs such as electricity, food and housing have skyrocketed even further, society’s most vulnerable continue to pay the price. With the vast majority of our social protection schemes not equipped to provide adequate support, unless something is done both at EU and national levels, this situation can only get worse.
In all EU member states, minimum income schemes are the final safety net designed to prevent people from falling below the poverty line. For those who find themselves in extremely difficult circumstances minimum income offers a lifeline, providing financial stability and access to support services that would otherwise be out of reach.
The shocking reality, however, is that the adequacy of most minimum income schemes across the EU have remained almost unchanged for decades. Most schemes are so inadequate that they are failing to bring people over the poverty line. In fact, over half of EU countries’ schemes fail to provide a minimum standard of living and less than 50% of households in extreme poverty are receiving support.
In Spain, the government of Pedro Sanchez has made a structural change in the country’s social policy through the implementation of a national MIS, “El Ingreso Mínimo Vital”. The Spanish MIS is a homogeneous instrument throughout the national territory, a non-contributory benefit from the Social Security system, supported by the development of social-labour activation itineraries to favour the transition of the most vulnerable groups to a fairer participation in the society in cooperation with the regions, the municipalities, and the NGOs.
The Spanish inclusion policy is innovative, designed and implemented with continuous evaluation and evidence-based support, assuring homogeneity since it is managed by the central government, and properly focused on the needs of the family, with special treatment to women and children. It has managed to harmonize the concept of vulnerability, to the point that the government has been able to focus during the inflation crisis on those households that mostly needed it. The inclusion policy has turned into the cornerstone of the last safety net in terms of income support and best practices to social-labour inclusion for the most vulnerable.
Several analysis and evaluations of the MIS have been performed so far and it seems that the Spanish scheme delivers more equality and dignity for people, and addresses the vicious poverty gaps, often amongst those who are finding themselves in the most vulnerable situations.
Between 2019 and 2021 inequality was reduced thanks to the large growth in income among the poorest 10% of households. Half of this increase in income is explained by the growth in the coverage rate of the minimum income system. The data should be taken as a sign of success of the MIS as a new public policy: in a moment of unprecedented emergency, it served to stop the erosion of income to those who it could have affected the most, to the point of going back even in real terms. Indeed, some studies warn on how the poverty data would have been if the MIS had not existed.
Almost 80% of the increase in spending produced as a result of the extraordinary inflation of 2022 was compensated in minimum income scheme households, thanks to the 15% increase in the payroll introduced by the Government in the decree of extraordinary measures against the price boom.
In general terms the official poverty rates have been reduced. According to the latest data from the National Statistics Institute, the population at risk of poverty or inequality in Spain falls in 2022 to the lowest level since 2013. The AROPE (At Risk of Poverty or Social Exclusion) rate went from 30.2 in 2014 to 26.0 in 2022, mainly thanked to the social shield, where the MIS is a key element.
Beyond the analysis based on income and wealth data, it seems that the MIS helped households feel less pessimistic about the evolution of their finances during the Covid-19 and cost-of-living crises. Between June 2020 and December 2022, the MIS increased the balance between those who said their financial situation had improved and those who said it had deteriorated.
Indeed, minimum income schemes have also become one of the top priorities of the Spanish Government for its current six-month presidency of the EU Council, the reign of which it took over on 1 July 2023. The Spanish Government will include it in the November 2023 EPSCO Council presidency conclusions. And there will be two main points according to the January 2023 Council Recommendation on MIS. The first one is the non-take up (NTU) of the minimum income benefits, where the Spanish government is especially concerned and has deployed several projects to understand and reduce the NTU for the national MIS. The second issue is the development of a Policy Lab that Spain has launched in Spain over the last three years. With the financing of the NextGen instrument, they have set up 34 pilot projects on innovative active inclusion programs, with a strong analytical and experimental component. All those efforts are in line with the Council recommendations on minimum income approved last year.
Coming back to the EU level, what is particularly significant about the European Parliament’s adopted Resolution on Adequate Minimum Income, is that for the first time, MEPs are calling for an EU Directive to help tackle the problem. Introducing this legislation would mean setting minimum living standards across the EU as well as holding member states accountable for guaranteeing those standards.
The importance of an EU directive on minimum income has long been the championed by civil society organisations, including Social Platform, of which I have had the honour to be President in 2019-2023, because of the potential impact on closing the gaps in the safety nets and ensuring no one is left to live in poverty. In 2021, EU leaders pledged to reduce the number of people at risk of poverty by at least 15 million by 2030. However, due to years of inaction and a lack of willingness from national governments to update their social protection schemes, the chance of meeting that target had been looking extremely unlikely, if not impossible.
With one in five people in the EU already at risk of poverty and social exclusion, the clock is ticking to find real, sustainable solutions. People who fall through the gaps can be from different backgrounds and face many different challenges, including single parents, the long-term unemployed, people with disabilities or long-term illnesses, as well as people from socially disadvantaged groups such as Roma.
The economic fallout from multiple crises – not least the ongoing the cost-of-living crisis – shows no sign of resolving itself any time soon. We have the next EU elections less than a year from now, but a key decision will also be made in Spain on 23 July 2023: to ensure that the motion of fighting for equality and dignity of all people, which the government of Pedro Sanchez has been delivering on, continues. That is why a vote for progressive, inclusive policies of the socialist party and its allies is so very important, as this will ensure that we continue building Spain – and consequently, Europe, in which progressive Spain has been playing such a crucial role, especially in protecting the European social model – that does not leave behind the most vulnerable people and regions to their fate. Spain, and Europe, which delivers prosperity for the many and not for the few.
Everyone deserves to live a life in dignity, and we need minimum income schemes that guarantee to leave no one behind. Let’s get everyone over the poverty line and, in Spain, let’s use the opportunity of the general election on 23 July 2023 vote to reaffirm the commitment to solidarity and social justice.
Secretary General of Volonteurope
Former President of Social Platform