ESPN Thematic Report on minimum income schemes

Transcription

1 . ESPN Thematic Report on minimum income schemes 2015 Ljiljana Stokic Pejin and Jurij Bajec October 2015

2 EUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Directorate C - Social Affairs Unit C.2 Modernisation of social protection systems Contact: Emanuela Tassa Emanuela.TASSA@ec.europa.eu European Commission B-1049 Brussels

3 EUROPEAN COMMISSION European Social Policy Network (ESPN) ESPN Thematic Report on minimum income schemes 2015 Ljiljana Stokic Pejin, Economics Institute, Belgrade Jurij Bajec, Faculty of Economics, Belgrade University 2016 Directorate-General for Employment, Social Affairs and Inclusion

4 The European Social Policy Network (ESPN) was established in July 2014 on the initiative of the European Commission to provide high-quality and timely independent information, advice, analysis and expertise on social policy issues in the European Union and neighbouring countries. The ESPN brings together into a single network the work that used to be carried out by the European Network of Independent Experts on Social Inclusion, the Network for the Analytical Support on the Socio-Economic Impact of Social Protection Reforms (ASISP) and the MISSOC (Mutual Information Systems on Social Protection) secretariat. The ESPN is managed by LISER and APPLICA, with the support of OSE - European Social Observatory. For more information on the ESPN, see: Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission, however it reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet ( European Union, 2016 Reproduction is authorised provided the source is acknowledged

5 Contents ABBREVIATIONS... 4 SUMMARY... 5 PART I - DESCRIPTION OF MAIN FEATURES OF MINIMUM INCOME SCHEME GOVERNANCE ARRANGEMENTS Levels of governance Delivery arrangements Rights-based versus discretionary benefits DESIGN OF MINIMUM INCOME SCHEME Level of benefit Eligibility conditions Conditionality rules Duration Transitions LINKS WITH OTHER SOCIAL BENEFITS AND SERVICES Components covered by MI schemes Other means-tested benefits Passport to other services and benefits PART II - ANALYSIS OF MINIMUM INCOME SCHEMES ASSESSMENT OF ADEQUACY, COVERAGE, TAKE-UP AND IMPACT Adequacy Coverage Take-up Impact LINKS TO OTHER TWO PILLARS OF ACTIVE INCLUSION Inclusive labour markets Access to quality services SUMMARY TABLE REFERENCES ANNEX

6 Abbreviations ALMP CSW EC FSA GDP HBS LC LFS MI MoF MoLEVSP MoT NES NSP RSD RSO SILC SIPRU WB Active Labour Market Programs Centre for Social Work European Commission Financial Social Assistance Gross Domestic Product Household Budget Survey Local Communities Labour Force Survey Minimum Income Ministry of Finance Ministry of Labour, Employment, Veterans and Social Policy Ministry of Trade National Employment Service Novcana Socijalna Pomoc (Financial Social Assistance) R. Dinar Republic Statistics Office Survey on living and income conditions Social inclusion and poverty reduction unit World Bank 4

7 Summary Minimum Income (MI) schemes are regulated and governed by the state, while the responsible ministry is the Ministry of Labour, Employment, Veterans and Social Policy. Administration of the benefits is delegated to the Centres of Social Work (CSWs), whose staff is in charge of the approval process, control of eligibility compliance, evaluation of benefit renewal and communication with other social care institutions. The funds for MI benefits and for the expenditures of CSWs are mainly provided by the central budget. Local communities cover expenditure for premises and partially fund the salaries of CSWs staff. The main legislative act which provides financial assistance for the population is the Law on Social Protection, which was amended in 2011 with improvements in coverage and targeting. The main MI benefit of last resort is Financial Social Assistance (FSA), whose objective is to provide a minimum income and social inclusion for the most vulnerable individuals/households. This benefit is rights-based, although CSWs workers have rather broad discretionary rights in evaluating the applicant s eligibility. FSA is a means tested benefit, with a nominally set threshold of EUR 59.3 (2011) for a single member household; the threshold is indexed with the consumer price index, twice annually. Benefit is increased by 20% for a single parent household and for households where all family members are incapable of work. The main eligibility criteria relate to available incomes and assets. For individuals/households with unemployed able-working members, eligibility conditions include registration at the national employment service, availability to work and compliance with offers for training or education. In July % of the n population was covered by FSA benefits, a small decrease of 0.2 percentage points compared to Coverage increased substantially, by about 60% in the last five years, due to the 2011 amendments of the Law and also to the negative impact of the crisis. There is significant regional discrepancy in the coverage with negative examples in the most deprived areas. Coverage is considered inadequate given the percentage of the population at-risk-ofpoverty and in view of the absolute poverty rate, especially for the families with children. The low eligibility threshold secured a good targeting of the poor and low leakage. The main issue is duration, as the majority of beneficiaries remain within the scheme for 10 years or more. The current legislation encourages activities which could increase the employability of beneficiaries and improve their wellbeing. The main institutions responsible for implementing these activities are CSWs, who are also responsible for coordination with other social care institutions. Even though several regulations have been adopted in these areas, the evidence shows that implementation is not feasible due to constraints in human resources in CSWs and in other relevant institutions. The employment profiles of FSA beneficiaries differ greatly from the general population, consequently a tailored approach has to be taken in responding to their potential. The absence of a one-stop-shop concept results in a lack of communication between relevant institutions and the discouragement of beneficiaries. Some positive examples are noted at local levels, where local administrations are employing more tailored approaches to reflect the profiles of their vulnerable residents. This positive practice points to the need for decentralisation of decision making regarding MI schemes, conditionality and exchange of good evidence between local communities. 5

8 Part I - Description of main features of Minimum Income Scheme 1 Governance arrangements 1.1 Levels of governance In the state regulates, governs and provides funding for the Minimum Income (MI) schemes and the responsible ministry is the Ministry of Labour, Employment, Veterans and Social Policy (hereafter MoLEVSP). The ministry proposes all related national legislation and adopts lower order acts relating to social protection laws. It also administers funding for MI schemes, secures delivery and controls the administration of cash benefits. MI schemes are regulated by the Social Protection Law 1 (hereafter, the Law) which was amended in 2011, with meaningful changes related to MI schemes. Under chapter VII, The Material support (Articles ), the Law covers all aspects of the design and administration of MI schemes and other types of financial assistance for specific target groups or single emergency financial support. The Law defines four types of MI benefits related to the needs of different population categories (see Annex, Table A1.). The main financial benefit of last resort is the Financial Social Assistance (Novcana Socijalna Pomoc) which is a noncontributory financial benefit designed as a safety net to secure minimal living standards for the persons and households in need. MoLEVSP delegates the duties of delivering MI benefits to the local Centres for social work (hereafter CSWs) who are responsible for the complete administration of these types of financial assistance. CSWs are the main national institutions responsible for the delivery of social protection services at the local level. They are founded by the local administration, in accordance with the national legislation; presently, every community has one CSW. The professional staff (sociologists, legal experts, pedagogues, etc.) has the status of public employees, whose salaries are funded from the central budget, while the local communities provide premises and salaries for the administrative and technical staff. In 2014 there were 3,733 employed staff in all CSWs, and salaries for 83% of them were financed from the state budget (Republic Institute for Social Protection, 2015a). MI beneficiaries constitute the largest share of CSWs clients; in the same year 65% of all CSWs clients were beneficiaries of financial assistance (FSA benefit, one-off-emergency payments and care-takers allowances). 1.2 Delivery arrangements Administration of the FSA, the main MI benefit, is the responsibility of CSWs, whose staff is in charge of the approval process, control of eligibility compliance during the approved period, and evaluation of the benefit renewal. Once FSA benefit is approved, an account at the Post Office Saving Bank (the state bank) is opened for the entitled household head (the individual who is chosen to claim the MI right, if the household has multiple eligible members). The delivery of the cash benefit from the state budget to the bank s local branch is then arranged; monthly payments are usually delivered within two weeks for a scheduled month. The date and amounts of the payments are announced in the media and published on the MoLEVSPs web-site. The CSWs are also responsible for linking provisions by other social care services necessary to the social inclusion of FSA beneficiaries, through contacts with the relevant institutions. The current Law on Social Protection and the Regulation on The Measures of Social Inclusion for Beneficiaries of NSP 2 (2014) regulate the social inclusion of beneficiaries by the provision of the following services: 1 RS, Official Gazette 24/ RS, Official Gazette 112/2014 6

9 Education formal Training informal education Employment Health care treatment Socially useful work in the local community. The complete responsibility for the implementation of these measures is delegated to the CSW, whose offices are responsible for the coordination with other related public institutions (National Employment Service - NES offices, schools, health care and the local administration). Article 4, of the Regulation defines the procedures for drawing a Protocol agreement between a CSW and a beneficiary, which includes proposed activities and obligations for both parties. The article outlines the possibility for the reduction or withdrawal of the MI benefit, if the beneficiary does not comply with the conditions defined in the protocol. 1.3 Rights-based versus discretionary benefits The Law determines the eligibility conditions, which are rather comprehensive when it comes to the evaluation of a household s income, especially those related to the household s income from outside the formal labour market. The responsible CSW worker has the discretionary right to approve or refuse claims for the FSA benefit, subject to his/her evaluation based on visits to the households and inquiries based on official and unofficial sources. Apart from the official documents, which can be verified, a CSW has to evaluate whether there are other unclaimed potential sources of income: informal employment, unregistered remittances, or possession of movable assets whose market value is six times or more the value of the MI benefit entitlement. The designated CSW worker prepares a written statement with findings about the eligibility of the claimant which is the main document for the approval/refusal of the claim. In 2014, out of the total number of submitted claims (81,178) 9.2% were rejected. CSWs are also entitled to suspend the ongoing delivery of benefits if their findings prove that an individual/household is no longer eligible. Claimants can issue appeals on the CSWs decisions; residents of Belgrade appeal to the City of Belgrade administration, residents of the Vojvodina Province to the Province s Secretariat for social care, while the residents of the South Region can appeal to the MoLEVSP. Other areas where CSWs discretion can be applied are: (1) more active engagement in the provision of timely and appropriate information about MI schemes to the potentially eligible beneficiaries and (2) submission of claims for FSA in the line-offduty in cases where applicants are not capable of managing the claims by themselves (endorsed by the Law). 2 Design of minimum income scheme 2.1 Level of benefit The Law on Social Protection, adopted in 2011, introduced changes relating to the threshold setting for FSA benefit. The eligibility threshold prior to 2011 was determined as a percentage of the average wage and adjusted by household size, with the same weights for children and adults on the equivalence scale. The 2011 Law set the eligibility threshold at a nominal value of EUR 59.3 for a single member household; in July 2015 the income threshold/per family member was EUR For the calculation of the household s transfers the OECD scale has been used; for a single household 1, for each additional adult 0.5 and 0.3 for a child less than 18 years old. Households with more than six members are entitled to the benefit calculated for six members (prior to 2011 only five members were eligible). Benefit is increased by 20% for single parent households and for households where all family members are incapable of work. In % of the beneficiaries received the basic benefits, while 33.8% received the increased benefit. In the latter group 48.6% of 7

10 households had all members incapable of work, while the remaining were single parent households. The FSA payment represents the difference between the entitled benefit and the household s calculated income derived from employment or from assets (the average of the last three months). The following payments are excluded from the calculation of the household s income: child, parental and caretaker allowances, scholarships, rewards, allowances for vocational training, one-off-emergency financial assistance, and the income of a family member who has been confirmed as the family abuser. Cash payments in July 2015 are given in Table 1; since the Law has defined the same weight for children from 0-18 years of age, under the categories three and four the child s age is irrelevant for the level of payments. Table 1: FSA Beneficiaries, by households type, July 2015 Household types MI Benefit in 1. Singles Couples Couples + two children, aged 7 and 14 years Single parent + one child, aged 2 years Source: MoLEVSP, Benefits are received once a month, while the FSA threshold is indexed by the consumer price index semi-annually (April and October). Individuals capable of work and households where the majority of family members are capable of work are entitled to the benefits for nine months out of a calendar year; payments are usually suspended during the three summer months. 2.2 Eligibility conditions Eligibility conditions are not explicitly restrictive of age, residency, nationality 3 or employment status, although the claimant has to provide a number of documents which require residency and citizenship status. In July 2015, 252,166 persons received FSA benefit, which is about 3.1% of the total population. The main eligibility criteria relate to the available incomes and assets of the claimant, either a single or multiple member household. For the determination of the number of household members (and their incomes) the Law includes: spouses, children and first and second degree relatives who live in the same household. Children up to age 26, if enrolled in regular education, are eligible family members considered incapable of work. A person who has a family member (a child or sibling) who is obliged and able to provide for his/her care under the current legislation 4, has to submit a court reference stating that a procedure for exercising this right has been initiated or resolved, if such person is not fulfilling his/hers obligations. The main conditions relating to asset ownership are: a) An appropriate dwelling unit (one room per the household member, or two rooms for a member who is entitled to special care). b) 0.5ha of arable land, or 1ha of arable land when all of the households members are incapable of work. c) Personal (movable) property, not essential for ensuring basic living conditions, whose market value is equal to six or more applicable FSA benefits. 3 The Law on Social protection states that citizens from other states, or persons without citizenship, are entitled to all social benefits and services according to the international agreements. 4 The Family Law 2011,

11 The Law draws a distinction between the criteria for household members capable and incapable of work. This criterion determines, to some extent, the level of payments and the annual duration of the payments (quoted in the previous sub-chapter). The Law sets the following criteria regarding work capacity: A. Incapable for work are: persons of retired age, children up to 15 years old, children enrolled in regular education up to 26 years of age, persons with invalidity and medically incapable persons, caretakers, pregnant women and parents on maternity/paternity leave. B. Particular eligibility conditions for household members capable for work are: 1) That he/she is enrolled in the regular education or vocational training, or is registered as unemployed at the National Employment Service (NES). 2) That he/she did not refuse any offers for employment, prequalification, or vocational training or elementary education. 3) That the previous employment has not been terminated because of his/her actions, or that one year has passed since this employment. 4) That he/she is alone and takes care of a sick child. 2.3 Conditionality rules The main eligibility conditions for unemployed persons capable of work relate to their registration at the national Employment Service (NES) and their availability to work or participate in related ALMPs. CSWs are responsible for the referral of information to the NES offices about the approved MI benefit for the unemployed beneficiary; while the NES offices have to forward all the relevant information concerning changes in the beneficiary s employment status. Cooperation between NES offices and Centres of Social Work is regulated by The Social Protection Law 5 (2011) which defines the modes of communication between them. Cooperation between these two institutions has not been very significant in the past. Available data from the Synthesised report on CSWs work for 2014 (Republic Institute for Social Protection, 2015) shows that only 316 contacts with the NES offices were made that year, when 259,802 unemployed persons capable of work were beneficiaries of some of the available forms of services or benefits. The lower order act, the Regulation on Measures for the Social Inclusion of Beneficiaries of FSA, adopted in September 2014, strengthens the provisions on The Rights and duties related to the employment of FSA beneficiaries capable of work of the current Law (Article 86). CWSs are now responsible for drawing up the joint Support protocols with the institutions engaged in the improvement of a beneficiary s social status (NES offices, education and health care institutions), while professional teams should be established to implement and monitor a beneficiary s progress in the related area. These protocols refer to the following areas of social care: Education formal Training informal education Employment Health care treatment Socially useful work in local community. The responsibilities of the Centres of Social Work and the obligations of the beneficiaries are outlined in a personal agreement document, which is based on the 5 Article 86 9

12 evaluation of the beneficiary s needs and potentials. This regulation introduces a new, more active role, for the social worker. 2.4 Duration Entitlement to FSA benefits is not subject to explicit time limits, but is paid for as long as the relevant conditions are met. The beneficiary has the obligation to report any changes relevant to the eligibility conditions: the changes have to be reported within 15 days of their occurrence; the modification is applicable from the next month. A CSWs worker is also responsible for observing the ongoing status by conducting regular visits. Entitlement is renewed semi-annually for those who receive a ninemonth benefit, or once a year in May for other beneficiaries. The claim for a benefit renewal has to be submitted one month prior to the expiry date. The MI right is put on-hold if the beneficiary serves a prison sentence which is longer than one month, or if he/she is sent for compulsory in-hospital health care treatment. The right can be reinstated after serving the prison sentence, or after the end of the health care treatment, if the beneficiary claims the right. 2.5 Transitions Under the Law FSA right is universal, irrespective of employment status. Consequently, eligibility depends on the realised income, which includes unemployment benefits and income from employment. If the unemployed claimant enters formal employment, the benefits will be either decreased or withdrawn, depending on the level of the reported wage. A claimant is under the obligation to report any relevant changes concerning income level. At the same time, the NES office, which keeps the records if the registered unemployed person is an FSA beneficiary, is responsible for forwarding any information regarding changes in the beneficiary s employment status to the CSW. 3 Links with other social benefits and services 3.1 Components covered by MI schemes In addition to the main financial assistance, FSA benefit, the Law defines three other financial benefits: 1) Caretaker benefits which are not means-tested; they are set at a nominal value, indexed semi-annually; in July 2015 the basic benefit was EUR 82, while the increased one (for persons with severe disability) was EUR ) Financial assistance for work activation for persons with disability is also a nonmeans tested benefit. It includes coverage of training costs (paid to the training enterprise), transportation costs and payment of boarding costs. 3) One-off-emergency assistance for individuals/households who are in urgent need of financial assistance. The funds are provided by local governments, while the payment cannot exceed the local average wage (from the previous month). Even though, there is no eligibility income threshold for this assistance, the approval procedure takes into the account the income status of the claimant. The assistance is administered by the CSWs; in ,602 persons received this benefit Other means-tested benefits Other relevant means-tested benefits are defined within the Law on The Financial support for families with children 7 ; their main objective is the protection of children s wellbeing and assistance to new parents. There are two types of benefits: 6 Republic Institute for Social Protection, 2015, Synthesised report on CSWs work for RS Official Gazette 107/

13 1) Child benefit, for the first four children in the family (the mother has to be registered at the Health Insurance Fund). The eligibility threshold is somewhat higher than the FSA threshold; in July 2015 the threshold was EUR 67.8, and the benefit was EUR 22. For a single parent, 8 the threshold is increased by 20% and the benefit is increased by 30%. 2) Parental assistance is delivered after the birth, for the first four children. The benefit is means-tested regarding the level of the family s income tax payments. The cash benefit is rather generous: in July 2015 the benefit for the first born child was EUR 314, for the second 9 EUR 1,231 and for the fourth EUR 2, Passport to other services and benefits FSA Beneficiaries can acquire the status of protected customers for electric, gas and heating bills, if they own or lease the dwelling they lives 10. The Regulation on energyprotected customers 11, adopted by the Government in 2014, states that FSA beneficiaries and beneficiaries of child benefits are automatically considered eligible; consequently their application is administered through the local administration and at the local branches of the Electric Power Industry of - EPS (a public company). The decrease in payment for the energy bills is calculated according to the dwelling area, number of household members and quantity of energy delivered to the household 12. The eligibility income threshold for the protected status is higher than the threshold for FSA benefits. For a single member household it amounted to EUR in May In ,000 households acquired this status, while in the same year 101,656 households were FSA beneficiaries; apparently a significant number of these households did not exercise this right. Since January 2014 the funds for these subsidies have been provided from the central budget, while previously they were covered by the EPS. Under the Law on Health Care Protection 14 (2014), Article 11, FSA beneficiaries are exempted from participation payments for health care services and for prescription drugs. However, the application procedure for exclusion from the payments is rather complicated and unclear; unlike reimbursements for energy bills, there is no direct link with the MI scheme and the CSWs offices. The patients have to prove their eligibility by submitting a number of documents to the local branches of the Health Insurance Fund. There are no data on the number of patients who have utilised this right; however, the Survey on the health status of the population from 2013 (IPH, 2014) reveals that 24.8% of the population could not take care of all of their health needs, due to the lack of financial resources. It is questionable if eligible beneficiaries are well informed about the ways to exercise these rights. FSA beneficiaries with young children are entitled to the reimbursement of fees for publicly founded kindergartens (Law on The Financial support for families with children) 15. The level of the reimbursement is decided by the local administration, which is the founder of the kindergartens. 8 Regulation on the conditions for acquiring the rights on the financial assistance for the families with children; Official Gazette 16/2002; defines the following families as single parent: sole parent; one parent is disabled and does not receive a pension; one parent is serving a prison sentence longer than 6 months; one parent is enlisted in the army service. 9 The payments for the second and third and fourth child are delivered in 24 months instalments. 10 Landlords rarely make the official leasing contracts in order to evade the tax payments. 11 RS Official Gazette 90/2013, 44/ For a single household nominated energy is 120kWh per month. 13 RS Official gazette 40/ RS Official Gazette 93/ RS Official Gazette 107/

14 Part II - Analysis of Minimum Income Schemes 1 Assessment of adequacy, coverage, take-up and impact 1.1 Adequacy The adequacy of FSA benefits is low, which is mainly the effect of a rather low eligibility threshold. When we compare the ratio of FSA benefit to the 60% median threshold, for the first three types of observed households, the ratio is around 55%, the ratio improves only for a single parent household, since these households are entitled to a 20% increase of FSA benefit. The ratio to the national absolute poverty line 16 is a little higher for single member households, 66.9%, but is somewhat lower for the other two types, 58.9% and 41.44% respectively, for the second and third type of households (see Figure 1.). These differences are partially the result of a different equivalence scale used for the measurement of absolute poverty 17. Figure 1. Value of FSA benefits and the selected poverty indicators, by households types, in 2014 (in Euro) Source: MoLEVSP, RSO, SILC 2014; SIPRU 2015 When FSA benefit is compared to the value of the Minimum consumer basket (for a three member household) in July 2014, which amounted to EUR 295.4, it is again evident that FSA benefit does not provide adequate resources to cover minimum living expenses. Similar conclusions about adequacy were drawn from the beneficiaries survey conducted for the World Bank study18 where about 82% of the surveyed individuals estimated that the FSA benefit covers one-third or less of their needs. There is a difference in the value of the minimum basket among regions in ; the City of Belgrade has the highest costs of living, which are 20% higher than costs in the largest municipalities in the South Region19. Consequently the regional discrepancies influence the real value of FSA benefits since beneficiaries from the smaller communities can cover more expenses with their FSA benefits. 16 This line was computed in 2006 on the basis of the Household Budget Survey, using nutritional standards and the appropriate proportion of non-food items; it is indexed by the retail price index. 17 Scale: 0.7 for adults and children 14 years or older; 0.5 for children less than 14 years old. 18 World Bank, 2011, Report No ECA, Social Safety nets in the Western Balkans, Design, Implementation, and Performance 19 The City of Belgrade belongs to the North Region (NUTS1). 12

15 In 2015 the average FSA benefit as a percentage of the official net minimum wage20 amounted to 49% (it was 3% higher in 2014). The percentage was 90% for multiple member households where most of the members are unable to work, due to the 20% increased benefit. Table 2. MI Beneficiaries, outlays by households types, July 2015 Household Total outlays types Number of persons - Structure (%) in Structure (%) FSA benefit per household in Singles ,491, members ,789, members ,306, members ,722, members , > members , All 100 9,024, (average) Source: MoLEVSP, The adequacy of the benefits for families with children is markedly low since the equivalence scale is only 0.3 for all children, irrespective of their age. Another issue is that the benefit is increased only up to six family members, which leaves the most vulnerable, multiple-member households without the necessary assistance. Under the current eligibility conditions almost half of the FSA resources (47.4%) are spent on single and two members households, which constitute about one third (32.7%) of all beneficiaries (Table 2.) 1.2 Coverage In the past five years the number of FSA beneficiaries has been increasing steadily until in 2014 the increase amounted to 66.7% compared to In July 2014, 3.7% of all the population was covered by the FSA scheme; however, their number decreased by 5.9% in July 2015 when 3.5% of the whole population was covered (252,166 individuals). The notable decrease in 2015 was among the households with three or more members, by around 7% on average. Even though the number of beneficiaries is increasing, the coverage of the poor has been rather low compared to the proportion of the population at-risk-of-poverty 21. In 2014, with an at-risk-of-poverty rate of 25.6%, (1,825,737 persons at risk) only 14.6% of this population was covered by FSA benefits, almost the same proportion (15%) as in In 2014 the at-risk-of-poverty rate for children (up to 18 years of age) was 29.6%, (392,665 children) while in the same year 97,103 children were FSA beneficiaries (7.3% of all children in ), which means that only 24.7% of the children who were at-risk-of poverty were included in the FSA scheme. In the same year, 12,645 older persons (65+) were FSA beneficiaries, which is only 1% of the total population of that age group. The other relevant population at risk, multiple member families, had an at-risk-of-poverty rate in 2014 that was the highest at 35.2%. However, their coverage by FSA benefits is the lowest, as coverage of multiple member households amounts to 9.8% only (see Annex, Table A2.). Populations from the rural areas are also at risk, as their absolute poverty rates have been higher than the national average in the last eight years. The only available data on their coverage 20 Social Council 21 SILC data have been available since 2013; previously poverty was calculated as the absolute poverty Rate. 13

16 are from , when 18.7% of all beneficiaries were from rural households 23, (4.6% were rural old age households) while 2011 Census data show that 41% of the population live in rural areas 24. The eligibility condition for an older person which allows possession of 1ha (or less) of arable land is very restrictive and does not take into account the actual situation. The majority of the members of old age rural households are not able to work anymore, and due to the high concentration of old age households in rural areas there are few offers for the lease of arable land. Ownership of the land is an obstacle for FSA benefit, while in reality it does not yield any income. Discrepancy regarding regional coverage is evident, especially when comparing developed and underdeveloped Local Communities (LCs). The most striking differences relate to coverage in the deprived communities in the East and South Region. This Region has constantly had the highest absolute poverty rates in recent years (SIPRU, 2014, Poverty in, ). Yet in some of the poorest communities coverage of the total population by FSA schemes was 2% or less (Figure 2.). There is no information or study which analyses these differences, one explanation could be that these localities are populated by old-age rural households, which are evidently the least represented in the FSA schemes. Figure 2. Share of FSA beneficiaries in the total population of the selected Local communities, by development status, July 2014 Data Source: MoLEVSP, Social profile of LCs, data base, The low coverage is the result of the very strict eligibility conditions on one hand and the very low eligibility threshold on the other, which excludes the majority of households. A World Bank study in states that the eligibility threshold is far below the income of the bottom decile; this condition restricts the entry into the scheme and leaves out a number of poor households. At the same time these rules result in accurate targeting, since 74% of all benefits reached the poorest quintile, with very low leakages to the richest ones. 22 MoLEVSP, Social profile of LCs 23 MoLEVSP, Social profile of LCs, data base, 24 RSO, Census 2011, Population by age and gender, by the settlement types 25 World Bank, 2012, Implementing Activation and Graduation Measures for Social Assistance Beneficiaries in Selected Western Balkan Countries: A Review of National Experiences (SERBIA). 14

17 1.3 Take-up The low coverage can be partly explained by the strict eligibility rules, but discrepancies at the local levels point to other factors that might influence low take-up in some LCs. Stigma, lack of information and rigid compliance with the conditionality rules are the most quoted in both WB studies. It is evident that the number of beneficiaries has increased due to the amendments of the 2011 Social Protection Law, which relaxed previous conditions and the increase was also influenced by the negative effect of the crisis on living standards. The highest increase in the number of beneficiaries occurred in 2012 and 2013 with a rise of 20% and 16% respectively, while in 2014 the increase was just 3.3% and a the situation reversed in 2015 (July) with a 5.9% decrease. Apparently entry into FSA schemes is rather complicated for new beneficiaries, while the ones which have passed the approval procedures are better informed about how to re-apply. Republic Institute for Social Protection (2015) reports that about two thirds of FSA beneficiaries in 2014 were the same as 2013, while a certain number has been re-activated from previous years. A WB study from 2011 quotes that CSWs reports show that about 90% of the current work-able FSA recipients reapply regularly. The same study commented on minor outreach to the poor by the CSWs staff who handle cases on demand, but make very little effort to make pro-active identification of those who are eligible but do not apply on their own initiative. 1.4 Impact SILC data show that social transfers decreased the at-risk-of-poverty rate by 7.3 percentage points in 2013 and by 6.4 percentage points in Poverty depth indicators were measured only for the studies on absolute poverty, these data show that poverty depth moved from 1.1% in 2011 to 1.7% in 2014, with the peak value of 1.9% in 2012 (SIPRU, 2014, 2015). These relatively low values of poverty depth indicate moderate poverty; still, these indicators are based on the Households Budget Survey which is not representative for the coverage of poverty. 2 Links to other two pillars of active inclusion 2.1 Inclusive labour markets The present normative regulations related to FSA eligibility of the work-able unemployed beneficiaries include requests for registration at the NES office, work availability and acceptance of offers to participate in ALMPs. Regulations outline the obligations of the beneficiary and the obligations of the CSWs and NES offices to take active roles in increasing the employability of beneficiaries. The regulations have been amended and further upgraded in 2014, increasing the duties of the CSWs and NES staff, while at the same time the human and technical capacities of these institutions have not been increased accordingly. The WB study (2013) points out that the weak institutional capacity of the systems for social assistance and public employment services are one of the main obstacles for the better management of the activation programmes. The study provides an illustration of the overload of the CSWs workers: the ratio of clients to staff in the financial assistance units ranges between 200 and 250 recipient households per staff member, consequently the share of the actual time spent with FSA recipients in the total annual working time is estimated at about 15%. Data from the Synthesised Report on CSWs work in show that communication between CSWs and other social intuitions were negligible, in 2014 there were only 316 communications with the NES offices, while there were over one hundred thousand registered beneficiaries capable of work. A similar observation is given in the WB study, based on the survey of FSA beneficiaries 27 : the incidence of referrals from NES 26 Rep. Institute for Social Work, A representative survey of 2,400 FSA beneficiaries, carried out in July 2011 by RSO 15

18 to CSWs, and vice versa is low, 3% and 0.5%, respectively. Survey data shows that only 8% of FSA beneficiaries (able to work) were included in some type of ALMPs; the highest participation was in training programs, followed by public works programmes and career guidance and counselling. The employment profile of beneficiaries differs from the one of the general population and has a great influence on their employability and potential to be included in the regular ALMPs. The low participation rate of FSA beneficiaries in ALMPs could be explained by their low educational attainment, as over half of them (52%) 28 have only elementary education or less. The other important characteristics that influence employability are portrayed in the WB survey which outlined the profile of beneficiaries: Elder experienced unemployed 35%; most individuals are long term unemployed and most of them declared themselves to be discouraged unemployed. Inactive uneducated women 21%; young and middle-aged women who are out of the labour force and who have very low levels of education: nearly half report not being interested in working. This is also the group with the highest likelihood of not reporting for work because of caretaking duties. Elder experienced inactive 16%; individuals who have worked in the past but are currently out of the labour force because of discouragement. This group has the highest average age (47 years old) and reports low openness to retraining for a new job. Inexperienced unemployed women - 12%; the majority are young and middleaged women who are inexperienced, unemployed (mostly so for a long time), and largely with very low educational attainment (69% with primary education or less). Chronic unemployed 0.8%; a group of long-term unemployed includes rather young individuals, most of them males, with limited work experience but characterized by high willingness to accept more training. Educated unemployed youth - 8%; young people who have recently joined the labour market and are short-term unemployed. The large majority is willing to accept more training, and the few who report to be inactive could be categorised largely as discouraged unemployed. Due to the high national unemployment rates in the past ten years ALMP design was favouring young educated unemployed, while a small share of available ALMPs matched the profile of FSA recipients. Beneficiary age plays an important role in response to ALMPs, as willingness to train declines with the age of the beneficiaries. Over 50% of the survey respondents aged 45 years or more reported that they do not want to take new training because of their age (Figure 3.). A high share of unemployed beneficiaries, 43%, was not actively looking for a job due to illness, while 19% claimed inactivity because of the caretaking duties. It is evident that the activation policies targeting FSA beneficiaries require a tailored approach that corresponds with the beneficiaries employability conditions and a much better communication between CSWs and NES. A WB 2011 study finds that data exchange between the CSWs and the NES offices are sporadic; while a real-time connectivity and reciprocal access to databases is not available. As a result beneficiaries are seldom offered activation programmes and rarely sanctioned for not taking offered jobs or training. 28 WB,

19 Figure 3. Willingness to train among the work-able FSA beneficiaries in 2011 Source: WB, 2013 The government addressed this problem in the latest National Employment Action Plan 29 for 2015, by introducing a special measure for FSA beneficiaries only. A new measure Integration of FSA beneficiaries in the labour market provides a 12- month subsidy (EUR 90 per month) to employers (from the private sector) if the employee is hired for 24 months. 30 The measure applies a positive discrimination for FSA beneficiaries, although it does not directly address strengthening of the beneficiaries employability, which would be useful in the long run. The complex profile of the beneficiaries and the conditions they live in requires a unique approach which could be provided in one-stop-shops, where all relevant problems could be managed by one team of professionals. The Regulation on Measures for the Social Inclusion of Beneficiaries of FSA, adopted in 2014, envisages expert teams for every beneficiary, that should assist the individual/family in leaving the FSA schemes and returning to the labour market. Implementation of the regulation is hardly feasible in practice, since it requires the adoption of a number of normative acts which will regulate the working engagements of professionals from different social care sectors. The evidence of inadequate communication between CSWs and NES offices, although both institutions are under the jurisdiction of the same ministry (MoLEVSP), shows that coordination is difficult without systematic changes. The positive examples from the local levels imply that decentralisation of decision making could be one approach in accomplishing a tailored approach for residents in need of social assistance. All examples of FSA beneficiaries working are in the area of communal infrastructure maintenance, mainly street cleaning and similar jobs 31. Evidence indicates that a large share of FSA beneficiaries have stayed within the MI scheme for long periods of time. In 2014 more than one third of the beneficiary households had been receiving FSA for more than eleven years (see Figure 4.) Among the group of adult beneficiaries who had been using MI benefits for up to fifteen years, around 45% were capable of work. The percentage of capable adults who had been beneficiaries for more than fifteen years is lower than 25.3%, however it is a 29 RS Official Gazette 101/14 30 It is also foreseen that the employee receives an additional 18 months stimulation (EUR 15), but only if the resources are available

20 significant issue as these persons have been excluded from the labour market for a very long time. Figure 4. Structure of the adult population of MI beneficiaries in 2014, by the entire duration of the utilisation of MI benefits (in %) Source: Republic Institute for Social Protection, 2015, Adult beneficiaries of social protection services and schemes in 2014 The FSA is designed so that each additional earning is subtracted from the fixed rate benefit. This design has been labelled by the WB study as 100% marginal effective tax rate. Calculations for 2012 show that marginal effective tax rate is 100% for a oneearner family with 2 children, until around 30% percent of the average wage, when this family is no longer eligible for social assistance. For a one earner family with 2 children, social assistance is withdrawn at a level which is less than the full time minimum wage (see Annex, Figure A1.). One of the obstacles for a proper assessment of beneficiaries employability is the large informal labour market sector which has persisted in for more than two decades. High employment rates in the informal labour market speak to the low fiscal discipline and the fact that authorities have trouble controlling it. In 2014 the national employment rate in the informal market was 23% (RSO, LFS 2014), with higher rates in the less developed regions, 33.8% in Sumadija and West and 28.5% in South and East. The informal labour market provides opportunities for additional unregistered earning for households where most members are able to work, since their FSA benefits are not sufficient for the coverage of the minimum costs of living. The majority of young respondents (15-24) from the WB survey had been engaged in the informal sector, as 73% of them were informally employed. This proportion is smaller for older beneficiaries at 36.4%. The Labour Force Survey for 2014 shows that almost half of those employed in the informal sector (48.7%) have only elementary education or less, which is very close to the educational profile of FSA beneficiaries. Since CSWs have access only to administrative records, it is a rather demanding task for them to track the informal labour engagements of their clients. There are no government funded studies 32 on the assessment of the adequacy, coverage and take-up and no regular monitoring of the effectiveness of MI schemes. For that reason, it seems that MI schemes are planned on the basis of available budgets, not on the basis of actual needs. 2.2 Access to quality services Families with inadequate financial means are exempted from certain payments for health care services and prescription drugs according to the current Law on health care. Since the 2015/16 school year children from single parent households, 32 The available studies were produced by the international organizations (WB, UNICEF). 18

21 households with two unemployed parents and households of FSA beneficiaries will receive free school books for elementary and secondary schools. This is a new measure, since in previous years only children in the first four grades of elementary school were entitled to free school books. It is interesting that around 145,000 elementary school students have applied for this assistance (both parents are unemployed for one third of applicants, while every fourth household has no regular income 33 ), while the number of the children who are FSA beneficiaries is much smaller, as there were 99,000 children aged 18 years or less in These figures also point to the inadequate coverage of the child population. The state also provides funds for the operation of 84 soup kitchens which deliver free meals for 36,000 individuals 34, the majority of whom are FSA beneficiaries. Although there is positive legislation related to services in health care and education, there is little information on the utilisation of such benefits. There are still no systematic solutions which could satisfy all needs in one single place. In 2014 CSWs had a negligible number of contacts with other social care institutions. The majority of communications were with education (2,700) and health care institutions (2,900), which is very low compared to the total of all CSWs clients in that year (682,172). Positive practice has been observed at the LC level, when the local administration creates additional social programmes for vulnerable residents. In the Ombudsman s Report on The Implementation of the National Strategy for Improvement of Roma Status several examples were quoted related to the tailored needs of the unemployed residents. Three LCs (Nis, Knjazevac and Pozarevac) have introduced specific types of jobs, mostly in the public institutions for eligible recipients of on-off financial assistance. At the local level the City of Belgrade is one of the best examples of additional support for FSA beneficiaries. The City provides free travel passes for students, free holidays for children from the most deprived families and the City also tops-up entitled FSA benefit, by 10%, for the households were all members are unable to work Newspaper Vecernje Novosti April, 6 th, inrzs.gov.rs/cir/aktuelno/item/3735-ministar-vulin-posetio-petoroclanu-porodicu-grbic