European Economic and Social CommitteeSection for Employment, Social Affairs and Citizenship

Report to the Ad-hoc group "Europe 2020 Steering Committee"

Two study visits as a follow-up to the opinion on the

European platform against poverty and social exclusion (SOC/405)

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INDEX

1 – Introduction...................................................................................................................... 2

2 – Background...................................................................................................................... 2

3 – Platform against Poverty and Social Exclusion............................................................... 3

4 – EESC recommendations................................................................................................... 4

5 – Indicators agreed by the Council...................................................................................... 4

6 – Structure of the visits....................................................................................................... 5

7 – PORTUGAL..................................................................................................................... 6

7.1 – Stakeholder involvement................................................................................... 67.2 – Targets............................................................................................................... 77.3 – Education........................................................................................................... 77.4 – Labour market................................................................................................... 87.5 – Funding............................................................................................................. 87.6 – The Platform against Poverty............................................................................ 8

8 – DENMARK...................................................................................................................... 10

8.1 – Stakeholder involvement................................................................................... 108.2 – Targets............................................................................................................... 108.3 – Education........................................................................................................... 118.4 – Labour market................................................................................................... 118.5 – Funding............................................................................................................. 128.6 – The Platform against Poverty............................................................................ 12

9 – Conclusions...................................................................................................................... 14

Appendix I.............................................................................................................................. 15

Appendix II............................................................................................................................ 17

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1. Introduction

The Platform against Poverty and Social Exclusion is one of the seven flagship initiatives in the EU 2020 Strategy. It followed an EU year on Combating Poverty and Social Exclusion (2010) in which the EESC played a strong role in engaging with the various stakeholders and in the organisation of different events.

The EESC Steering Committee of the 2020 Strategy takes a holistic view of the flagship initiatives contained in the strategy, part of which involves assessing progress made over the ten year period. As an initial follow-up, it was agreed that two study visits should be made to different Member States to meet with stakeholders in order to ascertain the initial impact that this flagship initiative was making on poverty reduction.

It was agreed that visits take place to Denmark and to Portugal to find out more about their poverty targets and progress being made in the areas for action set out for the Platform. The rationale for the choice was that Portugal is facing particular economic issues and is subject to support within the Euro Zone, whereas Denmark is exhibiting more stability. The two countries offered contrasts in how the current financial crisis had affected public services and how it impacted on their populations.

The visits were undertaken in October 2011 by three representatives of the EESC – Brenda King (Group I), Daiva Kvedaraite (Group II) and Maureen O’Neill (Group III, who was also the rapporteur).

2. Background

"People are said to be living in poverty if their income and resources are so inadequate as to preclude them from having a standard of living considered acceptable in the society in which they live. Because of their poverty they may experience multiple disadvantages through unemployment, low income, poor housing, inadequate health care and barriers to lifelong learning, culture, sport and recreation. They are often excluded and marginalised from participating in activities (economic, social and cultural) that are the norm for other people and their access to fundamental rights may be restricted"1.

More than 80 million people across the EU live below the poverty line2 of which more than 50% are women and 20 million are children. Whilst statistical data on material poverty is important, the existence of immaterial poverty, such as, for instance, illiteracy, must also be recognised. The current economic crisis has hit the most vulnerable and disadvantaged members of our communities the hardest.

1 Joint Report by the European Commission and the European Council on Social Inclusion, March 2004.2 The risk of poverty is set at 60% of the national median equivalised disposable income after social transfers particular

to each Member State.

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The EU Commission has put the reduction of poverty at the heart of its economic, employment and social agenda – The Europe 2020 Strategy3. The Heads of State and Government reached political agreement on a common target to lift at least 20 million people out of poverty and social exclusion in the next decade. The flagship initiative of the Platform against Poverty forms an integral part of the Strategy, together with Guideline 10 of the Integrated Guidelines to implement the Strategy, which will underpin the contribution of Member States to tackle poverty and social exclusion within the National Reform Programmes.

The European Year for Combating Poverty and Social Exclusion highlighted the complexity and multi-dimensional aspects of tackling poverty and the urgent need for action to counter poverty in the face of the economic crisis and austerity measures.

Young people, migrants and the low skilled face worsening unemployment, the "working poor" are unable to earn a sufficient wage to cover daily necessities, and older people and families on reduced incomes face increasing material deprivation which affects 8% of Europeans and up to 30% in some Member States4.

The European Council has agreed that the headline target for the reduction of poverty in the context of the 2020 Strategy should be based on three indicators: the at-risk-of poverty rate, severe material deprivation and the percentage of people living in jobless households. Poverty reduction targets should relate to local and regional priorities

3. Platform against Poverty and Social Exclusion

The aim of the Platform is to create a joint commitment among the Member States, European Institutions and key stakeholders to fight poverty and social exclusion, by setting out a dynamic framework for action for social and territorial cohesion to ensure that jobs, growth and social inclusion are shared more equally across Member States.

The Commission identified five key areas for action:

Delivering actions across the policy spectrum

Greater and more effective use of EU funds to support social inclusion

Promoting evidence-based social innovation

3 2010 Update of the Joint Assessment by the Social Protection Committee (SPC) and the European Commission of the social impact of the economic crisis and of policy responses (Nov 2010).COM(2010) 2020 – Europe 2020 – A European strategy for smart, sustainable and inclusive growth.

4 Material deprivation is defined as experiencing at least four out of nine deprivations. People are not able to afford to: pay the rent or utility bills; keep their home adequately warm; face unexpected bills; eat fish, meat or protein or equivalent every second day; a week of holiday away from home once a year; have a car; a washing machine; a colour TV or a telephone.

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Working in partnership and harnessing the potential of the social economy

Enhanced policy coordination among the Member States.

4. EESC recommendations

In its response to the Commission’s proposals the EESC stated:

As poverty represents a violation of human rights, governments, the social partners and civil society must take shared responsibility for its eradication;

There must be policy coherence between economic, financial, employment and social measures in the 2020 Strategy and all should contribute to social cohesion;

Austerity measures should not increase the risk of poverty and an effective social impact assessment must be made and debated;

The Active Inclusion Strategy should be implemented as an integrated approach to ensure adequate income support, an inclusive labour market and access to quality work and services;

There must be a stronger emphasis on reducing inequalities and enforcing fundamental human rights, including through fairer income distribution and implementing the horizontal social clauses set out in the Lisbon Treaty;

There should be increased emphasis on investing in human capital through lifelong learning in education and training, including improved skills training matched to needs in and outside the labour market;

The participation of civil society stakeholders in the Platform, including people experiencing poverty, NGOs and social partners, should be reinforced through structured dialogue at EU and national level and supported through appropriate EU funding. The EESC should play an active and collaborative role in this dialogue and in the Annual Convention;

EU funding, particularly the Structural Funds, targeted at reducing poverty, needs to be increased and the emphasis given to simplifying procedures, increasing transparency and monitoring effective delivery;

The Social Open Method of Coordination (OMC) must be strengthened, which includes the development of National Strategies for Social Protection and Social Inclusion and action plans at national and local level. Its link to the flagship initiative on poverty needs to be clarified.

5. Indicators agreed by the Council

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The relative risk of poverty Low intensity of labour in a household Material deprivation

6. Structure of the visits

The basis for the discussions was taken from the EESC response to the Commission’s Proposal for the Platform and a questionnaire was drawn up (appendix I) and sent to the stakeholders who had agreed to participate. We are very grateful to the Commission for the use of their offices in both Lisbon and Copenhagen and to the ESC in Portugal for enabling a meeting in its office. We appreciated the time given to us by a range of stakeholders and for their informed and enthusiastic support (appendix II).

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7. PORTUGAL

‘On 23rd March 2011 the Portuguese government submitted a Stability Programme for 2011-14 to the national government which rejected it. In April 2011 the Portuguese Government submitted a National Reform Programme which was overtaken by a Memorandum of Understanding signed in May 2011 which saw the Council adopting an implementing decision to make available to Portugal medium term financial assistance for three years 2011-14.’

The Commission stressed the urgency of implementing the planned measures to comply with the decision.

National reform targets

Reduction of public deficit to 4.6% in 2011, 3% in 2012 and 2% in 2013 Increase in exports by 40% by 2020 Increase in R&D Reduction in school dropout rate by 10% by 2020; increase in graduates by 40% by 2020 Increases in energy efficiency by 20% 75% employment rate 20y-64y by 2020 A decrease of 200,000 people in poverty by 2020.

The responses

7.1 Stakeholder involvement

There was strong feeling from all those participating, whether from business, unions or NGOs, that there was a lack of involvement in the development of the National Reform Programme, the Emergency Plan or other action plans.

Some public forums were held but it was not felt that there had been a real opportunity to influence outcomes. Each sector through its lobbying capacity exerted its views, but the importance of social and civil dialogue in times of crisis was continually emphasised so that alternative views could be considered. As a result, the following issues were raised:

There was an increasing imbalance between economic and social measures and the austerity measures were having an impact on the most vulnerable;

There was a lack of clarity about the financial provision to implement the proposed measures;

Inequalities, particularly in income distribution, were high and growing; More discussion on the targets and their impact was lacking; More involvement might have enabled a better focus in fostering cross cutting

measures between tax, justice and income systems;

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A belief that the NRP was outdated; A belief that the external force of the TROIKA in determining the NRP was

detrimental, as investment in Portugal might be discouraged as a result.

7.2 Targets

Implementing the targets was creating difficulties, in particular:

The austerity measures were hitting the poorest; 600,000 children had been removed from benefits and child poverty is increasing; The loss of social protection was affecting the increasing number of people who were

becoming unemployed; Very few new jobs were being created; Salaries were cut back, increasing the prospect of the ‘in-work poor’; Consequences of the austerity measures on older people who had fixed incomes; The impact of increases in indirect taxes, e.g. VAT, on the poorest, particularly in

relation to the cost of electricity, which has risen from 6% to 23%. Transport costs were also increasing;

The lack of investment in business and the lack of access to credit, which impacted on employment potential;

There was insufficient investment in infrastructure, housing and regeneration; There was no common strategy across Europe to tackle poverty, as each Member

State could chose its own target (see above), which made meaningful data collection problematic.

There were doubts about meeting the target of removing 200,000 people from poverty given the increase in unemployment, reduction in benefits, increased indebtedness, the use of savings to meet rising costs and the estimated decrease of around 20% in household income.

7.3 Education

The issue of education was given great importance and key challenges were being faced.

The school dropout rate in Portugal was higher than the EU average and there was agreement that this had to be reduced, but there was also concern that the investment in education and training was also threatened by the reduction in public expenditure;

The issues of illiteracy needed to be tackled and skills and qualifications improved in order to enable an entry into the labour market and an entrepreneurial approach;

The fact that young qualified people were leaving Portugal with the loss of their skills and expertise to the country;

The need to emphasise the importance of lifelong learning; The integration of immigrants through education; The reduction of funding to NGOs, which run a range of schools, kindergartens and

support groups, which leaves a deficit of provision.

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7.4 Labour market

With increasing levels of unemployment, there was considerable concern about the ability of Portugal to reach the proposed target of 75% of the adult population in employment by 2020 (20-64y).

Retaining the minimum wage had proved difficult and the aim to raise it slightly had not been fulfilled;

Salary cut backs were being experienced, creating the ‘in-work poor’; The minimum insertion benefit rate was inadequate; Portugal was not an industrialised country and was dependent upon trade, agriculture

and tourism as a source of wealth, so the migration of people from inland Portugal was of considerable concern for the development of agriculture, but also an increased pressure on urban areas;

The loss of skilled workers to other countries and the lack of investment in housing, infrastructure and business all had an impact on the ability to meet the proposed target and the benefit to the population;

The growth in the informal economy was a major concern because of low wages, lack of security for the employees who could benefit from social protection and lack of contribution from the State to fund public services;

There needed to be a stronger focus on active inclusion, which would embrace adequate income support, inclusive labour market, and access to quality work and services.

7.5 Funding

Access to EU Structural Funds was considered to be very important and the following issues were highlighted:

Concern about the complexity of obtaining funding; The importance of being able to access the funds to support training and other

services offered by NGOs; The procedures involved made it difficult for smaller organisations to take up the

potential ESF funding; The administrative burden attached to EU funding programmes; The problems encountered in building partnerships or consortia in relation to

governance issues; The predominance of government in such programmes and an inherent mistrust of

civil society organisations.

7.6 The Platform against Poverty

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The Platform had a role in bringing together the achievements against the poverty reduction targets in each Member State, but there was a lack of clarity about how this function would be implemented.

There was an absence of dialogue at a national level and no specific programmes to follow through on the proposals;

There was little emphasis on social inclusion; There were no apparent initiatives which encompassed other Member States; Given the adoption of different indicators, it was difficult to get a coherent picture of

progress; There were questions about how would the Commission monitor outcomes and

provide enforcement; There was a lack of clarity about the Open Method of Co-ordination and a wish to see

it having a much stronger role; The function of the Annual Convention of the Platform was not clear and concern

was expressed that the delegations were not chosen by the Member States.

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8. DENMARK

‘The Council recommended that Denmark implement fiscal consolidation measures in 2011, 2012 and 2013 to ensure an average annual fiscal effort of 0.5% of GDP over the period 2011-13 as planned and correct the excessive deficit by 2013. It recommended to accelerate the reduction of the general government deficit if economic conditions turn out better than currently expected and to strengthen expenditure control by adopting binding multi annual spending ceilings for local, regional and central government which are consistent with the overall medium term budget targets.’

The national reform targets

Structural balance on public finances by 2020. Public debt accumulation was stopped; Reforms to increase labour supply and ensure better management of public

expenditure; By 2020 to have increased private employment by 125,000 people; Increase growth potential by almost 2% per year; Primary public expenditures share of GDP had to be less than 50% by 2020; Reforms to create growth in public consumption by 0.8% per year in the period 2014-

2020; New spending policy was introduced based on binding spending ceilings for central

government, regions and municipalities. This was anchored in specific law on spending ceilings;

Continued tax freeze to 2020.

The responses

8.1 Stakeholder involvement

The importance of national engagement was clearly stated. A network of civil society organisations and social partners had been formed in 2010, but there were concerns that:

Very few people were involved in the development of the NRP; Organisations were consulted but often only given a very short time to respond,

which made it difficult to canvas the opinions of members; It was important for NGOs and Social Partners to have the opportunity of influencing

the NRP, but that it was difficult to do this; There was no real culture of stakeholder involvement, but perhaps this might improve

with the new government; The stakeholder group was widened, involving employers more.

8.2 Targets

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In spite of a poverty reduction target set at 20,000, there was no specific reference to the reduction of poverty in the areas where it can be achieved, so there was expressed concern that:

There was no consensus about what constituted poverty or how to measure it; There needed to be agreement on the problem in order to tackle it; There was a widening gap in inequalities, but little recognition of it; Taking the indicators to reduce poverty (material deprivation, poverty defined as 60%

of median income and low work intensity households), the NRP targets made very little reference to them;

Child poverty was increasing affecting families; The migrant population formed a significant part of the population experiencing

poverty; There needed to be a stronger balance between the fiscal and social measures, and

subsidies were important in the equation, not just a focus on employment.

8.3 Education

There was clear recognition of the importance of education and there was a government commitment to ensure that the Danish Education system is of world class quality, but there were some concerns that:

More needed to be done to prevent early dropouts from school; There needed to be more emphasis on primary education to ensure that

individuals can progress through the education system with confidence; There needed to be more support for migrants and marginalised groups within the

education system; There needed to be more investment in teachers to enable flexibility of approach

and more engagement with families; Schools were expensive; There needed to be a stronger agreement on the way forward for the education

system; There needed to be a stronger emphasis on skills and qualifications to improve

the labour market.

8.4 Labour market

The Danish economy slowed down around 2007 and unemployment was rising. In 2010 it had reached 7.4% and it was predominantly young people who were affected. The target was for 80% employment in the group 20-64y. The following issues were highlighted:

There was a strong emphasis on providing incentives to work;

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People were not prepared to travel more than one hour to go to work or to move their location;

The flexicurity system provided a level of security, but there were concerns about the activation measures. These measures included advice on CVs and guidance on job seeking. However, the system was viewed as complicated and resulted in about 30% of young people not involving themselves in these measures;

It was believed that the investment in these activation measures had no effect on relieving unemployment and that the programme needed to be overhauled. A recent audit report showed that those who had participated in the activation measures had a lower success rate in obtaining employment than those who sought employment directly;

The deterrent was the loss of social assistance if one did not join the scheme; Although there were no ‘working poor’, there was a lack confidence in the

proposed measures; There was significant concern with the increasing number of people working in

the informal economy (without collective agreements), which undermined social protection systems. There was a belief that regulatory issues created barriers to people entering the formal economy – e.g. asking a taxi driver to demonstrate that he/she has a vocational qualification – and there was a collision between government and business on these issues, which increased the problem;

There was a concern that the restrictions on finance at a local level would have an impact on the development of employment and on provision of training services.

8.5 Funding

Whilst there was a requirement for Denmark not to increase the current tax rate, which was a very high one in relation to other EU States, there was a tension about how to maintain the level of services provided. This gave rise to concerns that:

There was a loss of specialised services in health and education because of cutbacks in local funding;

There needed to be more co-operation between different services in order to make best use of resources available;

To achieve the NRP targets it was important to access EU funds but this was based on a 25% contribution from Denmark and this required commitment from the government;

The access to EU funding was complex and bureaucratic.

8.6 The Platform against Poverty

There was little familiarity with the proposed functions of the Platform and it was felt that there should be more discussion. The following views were expressed:

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Although the OMC did not function well, there needs to be a mechanism that could provide a view of progress against the targets and obtain an EU wide perspective;

The fact that each Member State could determine its own indicators in measuring a reduction in poverty did not lead to a coherent approach or to the collection of meaningful data. There should be one common indicator for all Member States. Denmark did not want to agree to the indicator of 60% of median income;

There should be ways to test the impact of the measures adopted on the poverty level – e.g. the effect of cuts in benefits;

Governments needed to be part of the monitoring and sharing process in these measurements;

There was a lack of clarity about the aim of the Annual Convention of the Platform in bringing these issues together and about the effectiveness of national reform programmes in Member States;

There should to be a system of accountability, which had to be an imperative at EU and national level.

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9. Conclusions

Whilst the social protection system in Denmark appears to be more robust than that in Portugal, there is an underlying sense of insecurity in both countries. It is striking that there is the same lack of real stakeholder involvement for all the rhetoric on this issue. It is also evident that a consistent way of measuring the impact of strategies within the 2020 Strategy and the country national reform programmes is essential to achieve real progress and that this should be allied to a robust and coherent system of accountability if the poverty target agreed by the Council is to be achieved.

March 2012

For the European Economic and Social Committee

Maureen O’NeillMember of Group III, Rapporteur of the EESC opinion on the European Platform against Poverty and

Social Exclusion and former President of the EESC Standing Group on the EU Year on Combating Poverty and Social Exclusion 2010

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N.B.: Appendices overleaf.

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Appendix I – Questionnaire sent out to the hearings participants

PLATFORM AGAINST POVERTY

Thank you very much for assisting the EESC in obtaining a better understanding of the issues relating to poverty reduction in your member state.

Before answering the questions it would be helpful if you could say a little about your organization and its aims.

INVOLVEMENT

1. Was there a stakeholder forum in your Member State to consider how reducing poverty could best be achieved? If so what form did this take and which organizations were involved?

2. How did you try to influence the approach your Government should take?

THE TARGETS

3. Do you agree with poverty reduction targets set in the Portuguese National Reform Program (NRP) and do you consider that they will be achievable and effective in the timescales set in relation to:

Fighting inequalities and furthering social justice Promoting a new intergenerational contract Guaranteeing a coherent network of social minimums Fostering social inclusion

4. What obstacles do you foresee in relation to achieving the targets?

5. If you have alternative proposals what are they and why do you believe they would be more effective?

FUNDING

6. Are the funds available from the EU and national governments adequate to achieve the proposed targets and are they sufficiently focused to be effective?

7. Do you have alternative suggestions for the use of EU funds and how they might be better administered?

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8. To what extent have the support measures from the EU Commission and the International Monetary Fund (IMF) been successful?5

IMPLEMENTATION AND MONITORING

9. What proposals would you like to see implemented in the monitoring and review of the poverty targets and the direction of the 2020 Strategy?

10. How would you wish stakeholders (social partners, civil society organizations, those experiencing poverty and local authorities) to be engaged in monitoring the outcomes of the 2020 strategy and how do you think this would contribute to achieving effective outcomes.

THE PLATFORM AGAINST POVERTY

11. What are your expectations of the Platform Against Poverty as a mechanism for promoting and supporting poverty reduction at a national and EU level.

GOOD PRACTICE

12. What examples do you have of effective approaches to reducing poverty?

5 This question was not part of the questionnaire send to Denmark.

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Appendix II – Lists of participants in the hearings

Hearing in Lisbon – 3 October 2011

Portuguese ESC Mr José A. Silva Peneda – President

Portuguese ESC Ms Catarina Braga – Secretary-General

Portuguese ESC Ms Dina Lopes – Secretariat

CGTP-IN – Confederation of Portuguese Workers

Ms Maria do Carmo Tavares

UGT – General Trade Union of Workers Ms Vanda Cruz Ms Paula Bernardo

CAP – Portuguese Confederation of Farmers Ms Cristina Morais

CCP – Confederation of Trade and Services of Portugal

Mr Pedro d'Almeida Freire

CIP – Business Confederation of Portugal Mr Nuno Biscaia

CTP – Confederation of Tourism Mr Nuno Bernardo

CPCI – Confederation of Construction and Real State

Mr Luis Saraiva

CNIS – Confederation of Charitable Institutions

Mr Eugénio Fonseca

Portuguese Unions of Mutuals Mr Alberto Ramalheira Mr Luís Silva

Confederation of Family Associations Mr José Alarcão Troni

Confederation of Organisations for People with Disabilities

Mr Paulo Paleta Fernandes

Hearing in Lisbon – 4 October 2011

European Commission Representation in Portugal Mr Artur Furtado

Social Security Ministry – Service of Strategy and Planning Ms Rita Guerra

National Agency for Educational/Professional Qualification (ANQ) Ms Dora Santos

High Commissariat for Immigration and Ms Susana Antunes

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Intercultural Dialogue (ACIDI)Institute of Employment and Vocational Training (IEFP) Ms Ana Maria Rodrigues

Commission for Citizenship and Gender Equality (CIG)

Mr João Paiva Maria do Rosário Fidalgo

Managing Institute of the European Social Fund Ms Maria do Carmo Abreu

Portuguese Union of "Misericórdias" Mr Manuel Lemos

EAPN Portugal Ms Sérgio AiresMs Sandra AraújoMs Maria Costa

Hearing in Copenhagen - 28.10.2011

European Commission Representation in Denmark – Head of Representation

Mr Jan Høst Schmidt

European Commission, DG EMPL Official Mr Christian Aagaard

LO • The Danish Confederation of Trade Unions - Consultant in Economic and Labour Market issues

Mr Christian Sølyst

EAPN DK - Director Mr Per K. Larsen

CASA - Experienced researcher of poverty Mr Finn Kenneth Hansen

Kofoeds School - Humanitarian organization that provides help to people with socio-economical problems – International Chief Consultant

Mr Ole Meldgaard

Socialpolitisk Forening - Chair of the international committee

Mr Bjørn Christensen

The Economic Council of the Labour Movement (ECLM) – Economic policy institute and think-tank working to promote social justice in Denmark - Senior researcher

Mr Jonas Schytt Juul

The Council for Socially Marginalised People - Governmental council of experts appointed by the ministry of social affairs - Head of Secretariat

Mr Ole Kjærgaard

Think Tank CEPOS Mr Martin Ågerup

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