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Journal Article•DOI•

A New Kid in Town? Active Inclusion Elements in European Minimum Income Schemes

Sarah Marchal1, Natascha Van Mechelen1•
University of Antwerp1
01 Jan 2017-Social Policy & Administration (John Wiley & Sons, Ltd)-Vol. 51, Iss: 1, pp 171-194
TL;DR: In this paper, the authors assess the current variation in activation strategies directed towards able-bodied persons of working age relying on a minimum income guarantee in 19 EU member states and find that there are only few countries where the activation discourse has remained a dead letter.
Abstract: This article assesses the current variation in activation strategies directed towards able-bodied persons of working age relying on a minimum income guarantee in 19 EU member states. First, we argue that the active inclusion notion developed by the European Commission in its Recommendation on the active inclusion of persons excluded from the labour market provides a useful tool to categorize current activation strategies towards minimum income protection (MIP) recipients. Consequently, we assess the empirical viability of active inclusion strategies in a fuzzy set ideal type analysis of purpose-collected institutional data. We find that there are only few countries where the activation discourse has remained a dead letter. Most countries implement policy measures that aim to discourage benefit dependency among MIP recipients. Nevertheless, behind the realities of activation strategies towards MIP recipients seldom lies the notion of active inclusion as defined by the European Commission. Particularly, many countries focus predominantly on incentives to increase labour market participation rates of MIP recipients, rather than enabling measures.

Summary (3 min read)

Jump to: [Introduction] – [Active inclusion principles] – [Activation typologies] – [Data] – [Method] – [The active inclusion elements] – [Mapping active inclusion in the EU] and [Conclusion]

Introduction

  • This paper asks whether the principles outlined in this policy document provide a useful extension to common activation typologies for assessing variation in activation strategies directed at the specific target group of minimum income protection (MIP) beneficiaries.
  • To this end, the authors hold the active inclusion principles against dimensions that have been identified as capturing differences in activation types, before they embark on an empirical assessment of activation strategies in 19 EU Member States’ MIP schemes, for January 2012.
  • In the following section, the authors briefly discuss the principles outlined in the active inclusion recommendation.

Active inclusion principles

  • The 2008 Recommendation combines a long-standing EU level interest in adequate MIP schemes with a focus on common social policy objectives through economic growth and increasing labour market participation (Vandenbroucke and Vleminckx 2011).
  • However the 2008 Recommendation remains vague on the desired level of minimum income guarantees as well as on issues related to coverage and take-up of assistance payments.
  • The second pillar, inclusive labour markets, details that persons able to work should “receive effective help to enter or re-enter and stay in employment that corresponds to their work capacity” (European Commission 2008: 13).
  • It urges Member States to provide for a broad range of very different types of active labour market measures, including policies that raise the employability of the workforce and improve the accessibility and quality of jobs at the bottom of the labour market.
  • These services should be affordable, readily available, and easily accessible for those in need.

Activation typologies

  • The widespread shift in government priorities from passive income support to activation and investment (Weishaupt 2011), has led to an abundance of activation forms and instruments (Barbier and Ludwig-Mayerhofer 2004; Eichhorst and Konle-Seidl 2008).
  • Yet, especially more instrument-oriented classifications do share a focus on the distinction between ending benefit dependency through labour market participation versus human capital formation as two different approaches to activation (Torfing 1999; Barbier and Ludwig-Mayerhofer 2004; Dingeldey 2007; Bonoli 2011; Leibetseder 2014).
  • He sees both aims of activation to represent two distinct dimensions or axes of activation, thereby allowing for four types of activation: incentive reinforcement, upskilling, employment assistance and occupation.
  • The authors have argued that active inclusion is in essence a multi-dimensional notion that combines a broad interpretation of human capital formation with an incentives approach to activation.
  • Especially the inclusive labour markets pillar combines an enabling with a recommodifying intent, explicitly recommending enabling labour market policies as well as more demanding labour market participation incentives.

Data

  • This paper uses institutional data on minimum income provisions for the able-bodied of working age in 19 EU countries referring to the situation in January 2012.
  • Data are extracted from the expert-sourced CSB-MIPI data set.
  • More in particular, the analysis builds on i) standard simulations of the net disposable income guaranteed to the able-bodied of working age and on ii) information on activation efforts and activity requirements.
  • The questionnaire also includes background information on the active labour market programmes available to MIP recipients.
  • Indicators are based on national or local laws and policy guidelines in order to gauge non-discretionary activation policies.

Method

  • The authors use fuzzy set ideal type analysis to assess the conformity of activation policies to the active inclusion principles of the 2008 Recommendation.
  • A value of 0.5 denotes the point of maximum ambiguity (see table 2).
  • Through logically combining these set membership scores, it is possible to systematically assess cases’ membership into the overarching underlying concept (i.e. the ideal typical construct).
  • Either implicitly or explicitly, it has been recognized that both approaches can be combined in a single strategy (Torfing 1999; Dingeldey 2007; Etherington and Ingold 2012).
  • Finally, one can think of a pre-activation model where providing passive income support rather than preventing social risks is the main policy priority.

The active inclusion elements

  • Table 2 summarizes the indicators used to assess countries’ adherence to the different aspects of active inclusion.
  • Child care costs exceeding 30 per cent of net income are no exception, yet Finland and Austria succeed in keeping costs under three per cent of net minimum wage income 1 .
  • Even though financial incentives are generally lower in countries with more generous minimum income support , only in Austria and Estonia do net benefits exceed 90% of minimum wage income 2 .
  • The authors distinguish between three - admittedly broad - types of active labour market programmes: training, employment experience in the public sector and in the private sector 5 .

Mapping active inclusion in the EU

  • Figure 3 presents countries’ principal activation strategy (i.e. the strategy to which they have the highest membership score).
  • Moreover, most countries do not show any membership whatsoever in the active inclusion type, as they have no adherence to at least one of its four dimensions (which is often adequate income support, see table 3).
  • There is a broad range of ALMP available to MIP recipients and participation rates are not suspiciously low (Marchal and Van Mechelen 2013).
  • Lithuania and Slovakia combine stark financial incentives and behavioural conditions with affordable and broad based services .
  • In both countries minimum wages are inadequate; nonetheless the very low MIP benefits still ensure a large financial incentive.

Conclusion

  • This paper assessed the potential of the principles outlined in the European Commission’s 2008 Recommendation on the active inclusion of people excluded from the labour market to structure a fine-grained classification of activation strategies in European minimum income schemes.
  • Even these countries do not perform well on each and every dimension of active inclusion.
  • The findings leave little doubt on three things.
  • This should advance decent MIP and quality services on national welfare states’ political agenda as well as promote convergence towards a broad conception of active inclusion across the different EU Member States.

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This item is the archived peer-reviewed author-version of:
A new kid in town? Active inclusion elements in European minimum income
schemes
Reference:
Marchal Sarah, Van Mechelen Natascha.- A new kid in town? Active inclusion elements in European minimum income
schemes
Social policy and administration - ISSN 0144-5596 - 51:1(2017), p. 171-194
Full text (Publisher's DOI): http://dx.doi.org/doi:10.1111/SPOL.12177
To cite this reference: http://hdl.handle.net/10067/1289440151162165141
Institutional repository IRUA
1
A new kid in town? Active inclusion elements in European minimum income schemes
Sarah Marchal
PhD fellow from the Research Foundation – Flanders (FWO), Herman Deleeck Centre for
Social Policy, University of Antwerp
Natascha Van Mechelen
Herman Deleeck Centre for Social Policy, University of Antwerp
Version forthcoming in Social Policy and Administration
Abstract: This paper assesses the current variation in activation strategies directed towards
able-bodied persons of working age relying on a minimum income guarantee in 19 EU
Member States. First, we argue that the Active Inclusion notion developed by the European
Commission in its 2008 “Recommendation on the active inclusion of persons excluded from
the labour market” provides a useful tool to categorize current activation strategies towards
minimum income protection (MIP) recipients. Consequently we assess the empirical viability
of active inclusion strategies in a fuzzy set ideal type analysis of purpose-collected
institutional data. We find that there are only few countries where the activation discourse has
remained a dead letter. Most countries implement policy measures that aim to discourage
benefit dependency among MIP recipients. Nevertheless, behind the realities of activation
strategies towards MIP recipients seldom lies the notion of active inclusion as defined by the
European Commission. Particularly, many countries focus predominantly on incentives to
increase labour market participation rates of MIP recipients, rather than enabling measures.
Keywords: activation strategy, fuzzy set ideal type analysis, active inclusion, minimum
income schemes, EU social policy
2
Introduction
In 2008, EU level interest in minimum income protection led to the publication of the
Recommendation on the active inclusion of persons excluded from the labour market
(henceforth the 2008 Recommendation) by the European Commission. Building on
accumulated expertise and consultations with relevant stakeholders (Frazer et al. 2010), the
2008 Recommendation lists the main policy instruments and domains deemed relevant for the
activation of this specific target group. These are structured around three pillars, i.e. adequate
income support, inclusive labour markets and access to affordable and quality services. This
paper asks whether the principles outlined in this policy document provide a useful extension
to common activation typologies for assessing variation in activation strategies directed at the
specific target group of minimum income protection (MIP) beneficiaries. To this end, we hold
the active inclusion principles against dimensions that have been identified as capturing
differences in activation types, before we embark on an empirical assessment of activation
strategies in 19 EU Member States’ MIP schemes, for January 2012.
This preoccupation is warranted in at least two perspectives. First, through its synthesis and
application of previously identified activation dimensions to the less well-studied target group
of MIP recipients, this paper contributes to the literature on the nature and diversity of
activation strategies in contemporary welfare states. Second, from a (European) policy
perspective, it is important to gauge to what extent Member States have embraced EU level
principles of activation (Graziano 2011, 2012) and, more in particular, the notion of active
inclusion in their policy design.
In the following section, we briefly discuss the principles outlined in the active inclusion
recommendation. Next, we assess whether and to what extent active inclusion represents a
different view on activation than previous assessments of activation types. We proceed by
3
presenting the data and methodology used to assess the empirical variation in activation types
in Europe’s MIP schemes. The next section describes the variation on separate active
inclusion indicators over EU Member States. Finally, we assess the empirical viability of the
active inclusion principles by means of a fuzzy set ideal type analysis and conclude.
Active inclusion principles
The 2008 Recommendation combines a long-standing EU level interest in adequate MIP
schemes with a focus on common social policy objectives through economic growth and
increasing labour market participation (Vandenbroucke and Vleminckx 2011). It hence
simultaneously embraces the “activation” and the “protection” functions of minimum income
provisions and labour market policies directed towards those on a long distance from the
labour market.
First, the adequate income support pillar encourages Member States to “recognise the
individual’s basic right to resources and social assistance sufficient to lead a life that is
compatible with human dignity” (European Commission 2008: 12). However the 2008
Recommendation remains vague on the desired level of minimum income guarantees as well
as on issues related to coverage and take-up of assistance payments. The preconditions for
adequate income support included by the Commission mainly relate to the requirement for
persons whose condition renders them fit for work to remain available for the labour market
or vocational training, and to the necessity to provide incentives to seek employment.
The second pillar, inclusive labour markets, details that persons able to work should “receive
effective help to enter or re-enter and stay in employment that corresponds to their work
capacity” (European Commission 2008: 13). It urges Member States to provide for a broad
range of very different types of active labour market measures, including policies that raise
4
the employability of the workforce and improve the accessibility and quality of jobs at the
bottom of the labour market. Member States are cautioned to “continually review the
incentives and disincentives resulting from tax and benefit systems, including the
management and conditionality of benefits and a significant reduction in high marginal
effective tax rates, in particular for those with low incomes”. The European Commission
hence encourages countries to equip benefit schemes with due availability criteria and job
search obligations.
Third, access to quality services is considered essential. A wide range of services is
considered necessary to help benefit recipients in getting their lives back on track, including
social assistance, housing support, childcare, health and care services. These services should
be affordable, readily available, and easily accessible for those in need.
Activation typologies
The widespread shift in government priorities from passive income support to activation and
investment (Weishaupt 2011), has led to an abundance of activation forms and instruments
(Barbier and Ludwig-Mayerhofer 2004; Eichhorst and Konle-Seidl 2008). Scholars have
sought to reduce this diversity into a number of well-defined activation dimensions, to gauge
the specific nature of activation across countries and over time (see, among others, Van
Berkel and Hornemann Moller 2002; Weishaupt 2011).
Given their different focus and research question, the resulting characterizations tend to differ
on various accounts, including the precise definition of activation. Yet, especially more
instrument-oriented classifications do share a focus on the distinction between ending benefit
dependency through labour market participation versus human capital formation as two
different approaches to activation (Torfing 1999; Barbier and Ludwig-Mayerhofer 2004;
Citations
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TL;DR: In this paper, a detailed disaggregated analysis reveals that most redistributive systems do contain subsystems that are strongly targeted to the poor by intent and by design, and they also show that a disaggregation over the function of social transfers is very relevant: old-age benefits are an important driver of the weak overall association.
Abstract: The optimal design of redistributive systems continues to be a matter of considerable academic and public debate, with the optimal extent and intensity of pro-poor targeting remaining a key issue of contention. This article shows, first, that the overall relationship between pro-poor targeting and income inequality reduction is very weak. Although occasionally the association is positive, it is not robust, very weak, and effectively zero with various reasonable methodological decisions. Second, and more importantly, a detailed disaggregated analysis reveals that the most redistributive systems do contain subsystems that are strongly targeted to the poor by intent and by design. Third, we also show that a disaggregation over the function of social transfers is very relevant: old-age benefits are an important driver of the weak overall association, while for family benefits we find a positive relationship. Absolutely key, however, is our finding that means-tested systems play a crucial role in bringing about redistributive effectiveness, even if their relative size is small. We thus shed new light on the politics of targeting. While it remains important that broad sections of the electorate benefit from social transfers, strong pro-poor targeting within such a context is possible and indeed essential for real redistributive impact. Benefits for the poor need not be poor benefits if and when these are embedded in benefit systems that meet wider redistributive needs and rationales.

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Abstract: EU social policy has generally been limited to the definition of non-binding social outcome targets, a governance model known as ‘second order output governance’. However, many EU Member States have failed to make progress in fighting poverty. This begs the question of whether a more performant EU-level involvement in the field of social policy is conceivable. In this paper, we argue that European minimum standards are the place to start, including principles for minimum social security and minimum wages, as i) the European social objectives cannot be attained without guaranteeing adequate incomes to those in and out of work, and ii) social co-ordination should thus go beyond broad outcome goals such as the reduction of the number of households at risk of poverty or social exclusion. We propose to include policy indicators regarding minimum income protection in the recently revised EU monitoring process of the European Semester.

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TL;DR: In this paper, the authors find several discrete, relatively small and unintended institutional developments that have aligned the design of Finnish unemployment security closer to a partial basic income scheme, which may suggest Finland has important stepping stones in place, important stumbling blocks remain and the jury is very much out on whether Finland would be the first European country to fully institute a basic income.
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176 citations

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171 citations

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Jean-Claude Barbier, Wolfgang Ludwig-Mayerhofer
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