Considerations on COM(2018)132 - Access to social protection for workers and the self-employed - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2018)132 - Access to social protection for workers and the self-employed. |
|---|---|
| document | COM(2018)132  |
| date | March 13, 2018 |
(2)Pursuant to Article 9 TFEU, the Union, in defining and implementing its policies and activities, takes into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion and a high level of education, training and protection of human health.
(3)Point (c) of Article 153(1) TFEU enables the Union to support and complement the activities of the Member States in the field of social security and social protection of workers. The Union action may also be pursued to address challenges of access to social protection for people in self-employment based on Article 352 TFEU, which contains a provision allowing the Union to adopt an act necessary to attain objectives laid down by the Treaties when the latter have not provided the powers of action necessary to attain them.
(4)The European Parliament, the Council and the Commission solemnly proclaimed the European Pillar of Social Rights in their Interinstitutional proclamation of 17 November 2017 26 . Principle 12 of the Pillar states that regardless of the type and duration of their employment relationship, workers, and, under comparable conditions, the self-employed, have the right to adequate social protection.
(5)The social partners have committed to continue contributing to a Europe that delivers for its workers and enterprises 27 .
(6)In its Resolution on a European Pillar of Social Rights 28 the European Parliament underlined the need for adequate social protection and social investment throughout people’s lives, enabling everyone to participate fully in society and the economy and sustaining decent living standards. In its opinion on a European Pillar of Social Rights, the European Economic and Social Committee emphasised the need to ensure that all workers are covered by fundamental labour standards and adequate social protection.
(7)Social protection systems are the cornerstone of the Union social model and of a well-functioning social market economy. The key function of social protection is to protect people against the financial implications of social risks, such as illness, old age, accidents at work, or job loss, to prevent and alleviate poverty and uphold a decent standard of living. Well-designed social protection systems may also facilitate participation in the labour market by supporting labour market transition for individuals who switch jobs, move in or out of work, start a company or close it down. They contribute to competitiveness and sustainable growth as they support investment in human capital and as they may help to reallocate human resources towards emerging and dynamic sectors of the economy. They also have a role to play as automatic stabilisers by smoothing consumption over the course of the business cycle.
(8)Social protection can be provided through in-kind or in-cash benefits. It is generally provided through social assistance schemes that protect all individuals (based on their citizenship or residency and financed through general taxation) and through social security schemes that protect people in the labour market, often based on contributions related to their work-income. Social protection includes several branches, covering a variety of social risks ranging from unemployment to illness or old age. This Recommendation applies to the branches of social protection which are more closely related to the labour market status or type of employment relationship and mostly ensure protection from loss of work-related income upon the occurrence of a certain risk. It complements existing guidance, at the Union level, on social services and assistance, and more broadly on the active inclusion of people excluded from the labour market 29 .
(9)Globalisation, technological developments, changes in individual preferences, and demographic ageing have driven changes in the European labour markets for the last two decades and will continue to do so in the future. Employment will increasingly be more diverse and careers will be less and less linear.
(10)A variety of employment relationships and forms of self-employment exist in Union labour markets alongside full-time open-ended employment contracts. Some of them have already been known in the labour market for a long time (such as fixed, temporary, part-time, domestic work, or traineeships); others developed more recently and increased in importance since the 2000s: on-demand work, voucher-based work, platform work, etc.
(11)The self-employed in particular also form a heterogeneous group. Most individuals voluntarily choose to be self-employed, with or without employees, taking the risk to become entrepreneurs, while one out of five self-employed is self-employed because he or she cannot find a job as an employee.
(12)As labour markets evolve, social protection systems need to evolve too, to ensure that the European social model is future-proof and that it enables Union societies and economies to make the most of the future world of work. However, in most Member States, the rules governing contributions and entitlements of social protection schemes are still largely based on full-time open-ended contracts between a worker and a single employer while other groups of workers and the self-employed have been more marginally covered. Evidence shows that some non-standard workers and some self-employed have insufficient access to the branches of social protection which are more closely related to the labour market status or type of employment relationship. Only a few Member States have undertaken reforms to adapt social protection systems to the changing nature of work to better protect affected workers and the self-employed. Improvements have been uneven across countries and across branches of social protection.
(13)In the long run, the gaps in access to social protection may put at risk the welfare and health of individuals, contribute to increasing economic uncertainty, poverty risk and inequalities, and may also lead to suboptimal investment in human capital, reduce trust in institutions and limit inclusive economic growth.
(14)Workers and self-employed people can be identified as formally covered by a specific social protection branch if the existing legislation or collective agreement set out that they are entitled to participate in a social protection scheme in that specific branch. Formal coverage can be provided via mandatory or voluntary schemes. The latter give the opportunity to individuals to adhere to a scheme (opt-in clauses) or cover all individuals of the target group by default giving them the opportunity to leave the scheme if they so wish (opt-out clauses). Evidence shows that voluntary schemes with opt-out clauses have higher rates of adherence and therefore provide better coverage.
(15)Workers and self-employed people can be identified as effectively covered in a specific social protection branch if they have the opportunity to accrue adequate benefits and the ability, in case of materialisation of the corresponding risk, to access a given level of benefits. A person may be granted formal access without de facto being able to build and take up entitlements to benefits.
(16)Social protection is considered as adequate when it allows individuals to uphold a decent standard of living, to replace their income loss in a reasonable manner and to live with dignity and prevents them from falling into poverty.
(17)In some Member States, certain categories of workers such as short part-time workers, seasonal workers, on-demand workers, platform workers and those on temporary agency contracts or traineeships are excluded from social protection schemes. Moreover, workers who do not have full-time, open-ended contracts can encounter difficulties in being effectively covered by social protection, because they may not fulfil entitlements criteria for receiving benefits from contributions-based social protection schemes. The self-employed are completely excluded from formal access to key social protection schemes in some Member States; in other Member States they are able to adhere to them on a voluntary basis. Voluntary coverage may be a suitable solution in the case of unemployment insurance, which is more closely associated to the entrepreneurial risk; it is less justifiable for other risks such as illness, which are largely independent from their status in the labour market.
(18)The rules governing entitlements may work to the disadvantage of non-standard workers and the self-employed. In particular, income and time thresholds (qualifying periods, waiting periods, minimum working periods, duration of benefits) may constitute an unduly high obstacle to access social protection for some groups of non-standard workers and for the self-employed. In general, two sets of issues have been identified: firstly, existing differences in rules between standard employees and people in non-standard employment or self-employed may unnecessarily penalise one group; secondly, the same rules applied to all groups may lead to poorer outcomes for people outside standard employment and may not be adapted to the situation of the self-employed. In both cases, there may be scope to better tailor the rules to the situation of the specific groups while maintaining a general principle of universality so that no-one in the labour market is left uncovered upon the materialisation of a social risk. Specific measures may be needed to avoid people contributing to overlapping schemes, for example when exercising ancillary activities while already fully covered in their main job.
(19)Social protection rights are not always preserved and transferred when individuals are transiting between different labour market statuses, for instance going from employment to self-employment or unemployment, combining salaried employment and self-employment, starting or closing down a business. The transferability of rights across schemes and their aggregation is also crucial to allow people who combine or change jobs or pass from a worker status to a self-employed status and vice versa to effectively access benefits in contributory schemes and to have adequate coverage, but also in order to encourage their participation in case of voluntary social protection schemes.
(20)Benefits may be inadequate, i.e. insufficient or untimely to uphold the standard of living, to live with dignity and prevent individuals from falling into poverty. In this case, there may be scope to improve adequacy, while also being attentive to enabling measures that facilitate the return to work. The rules governing contributions may skew the level playing field and work to the disadvantage of some categories of workers and the self-employed. For instance, social protection contributions for self-employed may include contributions independent of income, or be set based on past incomes or assumptions about future income. This can create cash flows problems for the individual when their income drops below the estimates. Moreover, progressivity and reductions in social contributions for low-income groups could apply more equally to workers and the self-employed, while also ensuring that such exemptions do not induce under-reporting of income.
(21)The current regulatory complexity and lack of transparency regarding social protection rules in many Member States hamper people's ability to be aware of their rights and obligations and their possibilities of exercising them. They may also contribute to a low take-up rate, or low participation in social protection schemes, especially in the case of a voluntary scheme.
(22)Lack of statistics on coverage by social protection broken down by type of employment relationship, age, sex and citizenship may limit the possibilities of improving the capacity of social protection systems to adapt and respond to the changing world of work.
(23)The gaps in access to social protection may have detrimental effects, in terms of economic and fiscal impacts, which are felt across the Union. They are a matter of common interest for the Member States and they potentially present obstacles to the achievement of key objectives of the Union.
(24)Union legislation already ensures the principle of equal treatment between various types of employment relationships, prohibits any direct or indirect discrimination based on sex in matters of employment, occupation, social protection and access to goods and services, ensures portability and preservation of rights in case of mobility between Member States and guarantees minimum requirements for the acquisition and preservation of supplementary pension rights across borders, as well as minimum requirements in terms of transparency of occupational schemes. This Recommendation should be without prejudice to the provisions of the directives and regulations already setting out some rights to social protection 30 .
(25)In its case law 31 the Court of Justice of the European Union has established criteria for determining the status of a worker. The definition of worker in point 7 is based on these criteria.
(26)Council Recommendation 92/442/EEC 32 identified commonly held objectives in the area of social protection and invited Member States to 'examine the possibility of introducing and/or developing appropriate social protection for self-employed persons’. Those commonly defined objectives have opened room for the Open Method of Coordination in the field of social protection and social inclusion, an essential instrument to support the definition, implementation and evaluation of national social protection frameworks and to foster Member States' mutual cooperation in this area.
(27)In the framework of the European Semester, the Annual Growth Survey 2018 recalls that improving the adequacy and coverage of social protection is crucial to prevent social exclusion while the 2018 Guidelines for the employment policies call on the Member States to modernise social protection systems.
(28)In its Social Protection Floors Recommendation of 2012, the International Labour Organisation recommends its members, in accordance with national circumstances, to establish as quickly as possible and maintain their social protection floors comprising basic social protection guarantees.
(29)The Commission has undertaken a two-stage consultation with the social partners 33 on access to social protection for people in all forms of employment, in accordance with Article 154(2) TFEU. The procedure of Article 154(2) TFEU is not as such applicable to Union action to address the challenges related to the self-employed on the basis of Article 352 TFEU. The Commission invited the social partners to share their views as regards persons in self-employment on a voluntary basis.
(30)The Commission also carried out a public consultation to seek the views of various stakeholders and citizens and gathered evidence to assess the socio-economic impacts to this Recommendation 34 .
(31)The implementation of this Recommendation should not be used to reduce existing rights set out in existing Union legislation in this field nor should it constitute valid grounds for reducing the general level of protection afforded to workers in the field covered by this Recommendation.
(32)This Recommendation should avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small- and medium-sized undertakings (SMEs). Member States are therefore invited to assess the impact of their reforms on SMEs in order to make sure that SMEs are not disproportionately affected, with specific attention for micro-enterprises and for administrative burden, and to publish the results of such assessments.
(33)This Recommendation should not aggravate further the liquidity of undertakings – and especially of SMEs – when their financial situation has been negatively affected by late payments from public authorities.
(34)The Member States may involve stakeholders, including social partners, in the design of reforms. This Recommendation should not limit the autonomy of the social partners where they are responsible for setting up and managing social protection schemes.
(35)This Recommendation should be without prejudice to the powers of the Member States to organise their social protection systems. The exclusive competence of the Member States with regard to the organisation of their social protection systems includes inter alia decisions on the setting up, financing and management of such systems and related institutions as well as on the substance and delivery of benefits, the level of contributions and the conditions for access. This Recommendation should not prevent Member States from maintaining or establishing more advanced provisions on social protection than the ones recommended here.
(36)This Recommendation should duly observe, reinforce and enhance fundamental rights, in particular as established by Articles 29 and 34 of the Charter of Fundamental Rights of the European Union.
(37)The financial sustainability of social protection schemes is essential for the resilience, efficiency and effectiveness of the schemes. The implementation of this Recommendation should not significantly affect the financial equilibrium of Member States' social protection systems,