Bridging the Gaps: Insights from Eurofound's Social protection 2.0: Unemployment and minimum income benefits

Posted on Monday, 28 October 2024
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The report "Social Protection 2.0: Unemployment and Minimum Income Benefits" by Eurofound provides a comprehensive analysis of how social protection systems in the EU address unemployment and minimum income needs, particularly for vulnerable groups. It highlights several key issues in the effectiveness and reach of these systems.

A major finding is that while social benefits significantly reduce poverty risk—halving the proportion of people at risk—the system leaves out about two-thirds of unemployed individuals. These are often people with precarious employment histories, such as the self-employed, youth, and long-term unemployed. The report points to structural gaps in coverage, which means that a large portion of these individuals does not receive higher-tier benefits due to stringent contribution requirements and eligibility criteria.

The report also discusses the non-take-up of benefits, where those eligible for assistance fail to apply. This is a persistent issue in many Member States, where no country sees more than 80% of entitled people receiving minimum income benefits. The digitalisation of applications has simplified the process in some cases but has also created barriers for older individuals, people with disabilities, and those in rural areas with limited internet access.

Furthermore, benefit adequacy varies widely across the EU. Unemployment benefits range from 50% to 90% of previous earnings but are often capped or decrease over time. The report recommends automatic indexation as crucial to maintaining the adequacy of these benefits, especially during periods of inflation. The report emphasises that maintaining gender equality in access to social protection is important since women are over represented among the recipients of minimum income benefits.

To improve access, the report suggests simplifying entitlement criteria, investing in information provision, and creating flexible benefits that encourage returning to work without losing financial support. Finally, it underscores that social protection should extend beyond basic survival, aiming to foster social inclusion and long-term employment prospects through an integrated approach that links monetary benefits with access to essential services like training and education.

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Ireland

The report notes that Ireland is one of the countries where, "social transfers bring the at-risk-of poverty rate down from above-EU-average to below-average levels". Looking at expenditure on active labour market policies per person unemployed, only Ireland brought its expenditure to above-average in 2019. Whilst in theory, across most Member States, people need to be aged 16 or older to qualify for unemployment benefits, however in reality, age of eligibility is impacted by the need to demonstrate contribution records. For example, in Latvia, people are covered from the age of 15 (minimum working age) but need to have contributed for one year, so can receive unemployment benefits from age 16, in Finland it is at age 17 and in Ireland 18. Of note though is that in Ireland, unemployed people under 25 not living independently are entitled to a lower amount of lower-tier unemployment benefit (€141.70 per week to increase in January 2025).

A bank account facilitates benefit receipt for many but some Member States still allow for cash collection (for example Lithuania, in government and post offices). In Ireland, in 2022 (when 29.5 per cent of social welfare benefits were paid in cash through the post office), "lower-tier unemployment benefits became paid in cash by default for control reasons, reverting to the pre-pandemic situation".

Applying online is generally more common for accessing unemployment benefits than for minimum income benefits. Only in Austria and Spain is it the opposite case. In some countries, minimum income benefit applications are completed in person, but can also be submitted via post (Ireland, Luxembourg). In Ireland, an in-person registration process must be completed to obtain a card to verify claimant identity, "for example to set up a MyGov account, which is needed, for instance, to complete digital higher-tier unemployment benefit applications or to collect minimum income payments at post offices". Introduced in 2010, MyGovID has three million people registered by 2021. There can be problems with making applications online as "26% find that the digital platform is not user-friendly, and 21% report technical problems" in Ireland. 

Interestingly at a time of 'full employment' in Ireland, the report noted that 20 per cent of unemployment benefit recipients are "casual or part-time workers, self-employed workers and workers temporarily on reduced hours".

Social Welfare Supports

In terms of addressing poverty, the impact of social welfare supports cannot be underestimated. For the bottom decile, welfare supports make up 73 per cent of disposable income. Without welfare transfers, nearly 40 per cent of the population would have been below the poverty line; in 2020, 2021 and 2022, welfare transfers reduced that share to between 10 and 15 per cent of the population. 

Social Justice Ireland has long advocated that Government must commit to benchmarking core social welfare rates to 27.5 per cent of average earnings to protect vulnerable households. We were deeply disappointed that Budget 2025 yet again favoured temporary supports instead of delivering progress on longterm income adequacy through indexation of social welfare rates. Ultimately temporary supports are not an adequate response to a continuous crisis of income inadequacy.

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