The European Commission has proposed to raise minimum incomes to at least the poverty line in all EU countries. Such an adequate EU-wide minimum income would ensure every European can live a decent life. It would guarantee everyone in the EU a living income to pay our rent, buy healthy food, continue our education, secure access to health care, and – most pressingly right now – that we can cover our energy bills. To ensure that Member States live up to this, the Greens/EFA advocate a binding law, namely a directive on adequate minimum income, whereas the Commission wants to stick to non-binding recommendations.
Minimum income schemes are one of the strongest social tools to lift people out of poverty. So, what exactly is a minimum income? How could it benefit you? And what’s the plan for an EU minimum income?
What is the difference between a minimum income and a minimum wage?
Minimum income is often confused with minimum wage.
A wage is a remuneration that people get in return for carrying out a job in the labour market. The Greens/EFA strongly advocate that wages must be high enough to guarantee a decent standard of living. Recently, the EU institutions adopted a law to introduce a minimum wage that is linked to the cost of living. This is a big step forward towards a truly social Europe in which everybody can live a good life. Now, it is up to EU governments to apply this law as soon as possible. The cost-of-living crisis is happening now and people with low wages need this support urgently.
A minimum income is a social allowance provided by public authorities to people who are temporarily, or for a longer period, out of the labour market and lack access to unemployment benefits. There can be several reasons for this. People might get sick or go through a difficult private situation. Job demand can be low in a specific region; or there can be a mismatch between offer and demand. People might lack education, skills, or the experience to get a fairly paid job. Women often perform non-paid care tasks. Those are situations that could affect any one of us at a certain point in our lives. Some people are just not able to work. In all these cases, a minimum income enables a life of dignity.
An adequate minimum income – How much money do we need to live?
Safety nets and benefit systems, such as Minimum Income Schemes, exist in all Member States. However, the level of national minimum income is not adequate. Being adequate would mean that the allowance is high enough to cover the costs of all food, items, and services that we need to live a decent life. As of now, this is not the case in any of the EU countries.
For a minimum income to be adequate, it needs to be set at or above the so-called ‘poverty threshold’, which is 60% of the national median income. This threshold differs enormously from country to country across the EU. In Belgium, it currently amounts to 1085 euro a month for a single person and 2279 euro for a family with two kids. Even in a rich and developed welfare state such as Belgium, 14.9 % of the population is living in poverty or at risk of social exclusion. In Bulgaria, as of 2023, the poverty threshold is equivalent to an income of 257 euro or less per month. Around 1.5 million Bulgarian citizens or 22% of the population is currently living below this level. Only in Ireland, the benefit levels are close to the national poverty threshold.
It is not surprising then that poverty remains unacceptably high in Europe. In 2021, 95.4 million people in the EU were at risk of poverty and social exclusion, representing 21.7% of the EU population. Adequate minimum incomes would contribute greatly to the reduction of poverty.
Human dignity is a human right
We all have the right to live a life in dignity. We all have the right to have a roof over our heads. To eat healthy food, to benefit from affordable health care, to access quality education. Living in poverty often traps people because it excludes them from the rest of society. They can be denied a say and threatened by social and economic insecurity. Minimum incomes can help them escape this predicament. The financial security of a minimum income can enable people the opportunity to participate in society, undergo training, look for a job or do voluntary work to help better their situation.
Who would benefit most from a minimum income?
Groups who are more likely to face higher levels of financial instability and discrimination, such as single parents, women, people who are long-term unemployed, people with migrant backgrounds, Roma, and people with disabilities or long-term illnesses would be the ones to benefit most from minimum incomes set to the poverty threshold. But let’s see for ourselves with some examples, that we came up with based on national statistics.
How would access to an adequate minimum income benefit Ulrike, Lucija, Juan, and Jean?
- Ulrike, Germany, 50 yo, housewife
Ulrike has been a housewife for most of her life and does not get any income herself. She depends financially on her husband, who has become violent over time. If she had access to a minimum income high enough to live on, she could escape her situation and build a life of her own.
- Lucija, Croatia, 27 yo, single mom
Lucija had a child at the age of 18. She raised her daughter with the aid of her parents, but prefers to be financially independent from her parents. She dreams of studying to become a social worker. She is not entitled to unemployment benefits because she never contributed to a social security fund. Thanks to an adequate minimum income, she can now achieve her dream, as this monthly amount will serve as her safety net during this transitioning period.
- Juan, Spain, 19 yo, student
Juan does not get along with his father, who insists that he takes over his industrial scale farm. Juan, however, wants to study to become an engineer. For this, he will need to become a full-time student, but his parents refuse to pay. Unfortunately, in some EU countries, like Spain, you need to be at least 25 to be eligible for minimum income. If Juan had access to a minimum income, he could pay his rent and take up his engineering course.
- Jean, France, 56 yo, former civil servant
Jean was unlucky in life. 10 years ago, a car accident left him unable to work for a time. He lost his job, began drinking heavily and became depressed. He managed to get his life back on track. Unfortunately, he cannot find a job. Employers are suspicious and say he has been without a job for too long. Because he’s out of the job market, he lost his unemployment benefit. He is conducting satisfying voluntary work now. He can do this thanks to the minimum income he gets. The amount is hardly enough to live on, so he rents together with two other people. He would prefer to live alone, but that is only possible if the allowance was higher.
The EU’s proposal for a minimum income – is it social and green enough?
In its proposal from September 2022, the European Commission acknowledges that minimum income should be set minimally at the national poverty line. So far, so good. But unfortunately, the European Commission only issues ‘recommendations’ to the EU Member States. They are not binding, so EU governments have no legal requirement to follow them.
Moreover, this is not the first time that EU Member States have been asked to adjust their welfare benefits to decent levels. They have failed to do so for years. Why would they suddenly have a change of heart and change their policies to live up to standards that aren’t even mandatory?
This is why the Greens/EFA group have been calling for a new EU law, namely a European Directive on minimum income. Given that a law for wage increase was possible, why should it not be possible for minimum incomes too?