Progress towards the EU 2020 goals. Reforms introduced in

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1 E U R O P E A N S E M E S T E R : C O U N T RY S P E C I F I C R E C O M M E N D AT I O N S T H E M AT I C A N A LY S I S O N S O C I A L P R O T E C T I O N On 22 May, the European Commission published its Country Specific Recommendations (CSRs) for 2017/2018. The recommendations provide policy guidance tailored to each EU country on how to boost jobs and growth in line with the EU 2020 Strategy. As such, they are a key element of the European Semester cycle for EU economic policy coordination. EUROCITIES has carried out a thematic analysis of the country specific recommendations related to social protection, poverty and inequality. Concerning social protection systems, most recommendations call for reforms to ensure the adequacy and coverage of safety nets. Improving parental leave and child care services were a recurrent proposal in CSRs alongside ensuring minimum wage (in FR, BG, RO). Income inequality and poverty feature strongly in the CSRs that call for combining preventive and mitigating policies, including equal access to education and healthcare, affordable quality services and well-designed tax and benefit systems. Several recommendations called for reducing the tax-wedge for low-income earners (in DK, HU, LV, NL). Minimum wage recommendations concern France, Bulgaria and Romania. Some countries did not receive a recommendation concerning social protection but relevant topics and themes related to poverty and inequality mitigating measures were mentioned in the Commission s analysis preceding the country-specific recommendations. Progress AT The tax reform has reduced the tax wedge from 49.5 % to 46.7 % Substantial progress in reforming its wage-setting system. For healthcare, public expenditure is expected to rise significantly in the medium and long term Increase The number of early childcare places for children under 3 years of age - in 2015, the number of places was at 25.5 %, still significantly below the Barcelona target of 33 % The recent initiatives aimed at strengthening the provision of CSR 1: Ensure the sustainability of the healthcare system

2 primary care need to be fully implemented BE N/A N/A N/A N/A N/A BG The National Health Map, has the potential to improve access to healthcare and equity if implemented fully Minimum wage level has increased significantly The relative poverty situation of children has improved (but remains very high). Decrease the share of people living at risk of poverty or social exclusion - Bulgaria is the poorest member state of the EU. the at-risk-of-poverty rate for the elderly deteriorated substantially especially for women Reduce income inequalities, which represents a significant growing problem - The ratio of the income of the richest 20 % of households to that of the poorest 20 % rose from 6.1 in 2012 to 7.1 in 2015 and is among the highest in the EU Increase levels of support of the social protection system CSR 3: In consultation with social partners, establish a transparent mechanism for setting the minimum wage. Improve the coverage and adequacy of the minimum income. Increase health insurance coverage, address shortages of healthcare professionals CY The National Reform Program overhauls the health sector Income support schemes continue to be constrained by limited quality assessment and follow-up measures Increase the access to adequate and effective healthcare - The Cypriot healthcare sector remains characterised by a lack of universal coverage and various levels of inefficiency CSR 5: Adopt legislation for a hospital reform and universal health care coverage. CZ Increase the cost-effectiveness of the healthcare system

3 DK The national Europe 2020 target for social inclusion, aiming at reducing the number of people living in very low work intensity households, is far from being achieved EE DE Administrative reform Act to offer quality services Estonia is implementing the Social Welfare Act Estonia has taken action to ensure the provision and accessibility of high-quality social services Substantial efforts have been undertaken to make the tax system more progressive as of 2018, in particular for low-income earners Germany increased the minimum personal income tax allowance and child allowances and adjusted the income tax brackets. Stabilise the at-risk-of-poverty rate that has increased from 15.8 % in 2010 to 21.6 % in 2015 Increase quality and affordable child care to increase female participation in the workforce Reduce tax wedge for low-wage earners (which is high in comparison with other Member States CSR 1: Ensure better adequacy of the social safety net. Reduce the gender pay gap by improving wage transparency and reviewing the parental leave system. CSR 2: Reduce the high tax wedge for low-wage earners. Create conditions to promote higher real wage growth. ES Uniformise the eligibility conditions of income guarantee schemes across regions Increase the effectiveness of income guarantee schemes Better target Family benefits Give better access to childcare for low-income parents CSR 2: Address regional disparities and fragmentation in income guarantee schemes and improve family support, including access to quality childcare.

4 FI FR HR Social partners reached in March 2017 an agreement on a new unemployment benefit convention, to be endorsed by the French government, which aims at reducing the annual deficit by EUR 1.2 billion De-complexify the benefits system - It can result in significant inactivity and low wage traps Increase the provision of childcare Introduce paid paternity leave paid CSR 1: Ensure timely adoption and implementation of the administrative reform to improve cost-effectiveness of social services and of healthcare services CSR 3: Ensure that minimum wage developments are consistent with job creation CSR 2: Improve coordination and transparency of social benefits Address the high at risk of poverty or social exclusion rate - According to the latest data, in 2015, almost 30 % of the population is at risk Increase the effectiveness and fairness of the social protection system - There is a lack of coordination across authorities in charge, and low transparency. In 2016, only 0.6 % of GDP was spent on the minimum income scheme targeting the poorest household

5 HU The tax wedge for low-income earners has decreased due to the decrease of employers' social security contributions by 5 percentage points in 2017, but it remains high Three of the targeted cash benefits slightly increased in 2017 Increase the adequacy and coverage of social assistance and unemployment benefits Increase the duration of unemployment benefits - it is still the lowest in the EU at 3 months, below the average time required by job seekers to find employment CSR 2: Complete the reduction of the tax wedge for low-income earners CSR 3: Improve the adequacy and coverage of social assistance and the duration of unemployment benefits Guarantee a uniform and minimally adequate living standard for those in need Equalise access to healthcare IE Child poverty has fallen slightly but remains higher than the EU average. Increase the quality and the access of childcare - net childcare costs in Ireland are among the highest in the EU CSR 2: Enhance social infrastructure, including quality childcare. IT Some progress has been made regarding the national anti-poverty strategy. The recently adopted Inclusion Income scheme is a positive step towards establishing a single comprehensive scheme against poverty Increase access to affordable care services (for children and the elderly) Address the high rate of people at risk of poverty or social exclusion CSR 4: Rationalise social spending and improve its composition. The effectiveness of the Inclusion Income scheme depends on appropriate targeting and priority allocation to families with children LT The legislation on the new social model envisages increasing the Address the high proportion of people at risk of poverty or social CSR 2: Improve the adequacy of the social safety net

6 adequacy and coverage of unemployment benefits, and there are some discussions on improving the adequacy of social assistance exclusion, together with growing income inequality - The ratio of the incomes of the richest 20 % of households to that of the poorest 20 % rose from 5.3 in 2012 to 7.5 in 2015 and is the second highest in the EU Increase spending on social protection Address the poverty rate among people with disabilities and promote their integration into the labour market Increase expenditure on prevention and public health Improve the performance of the healthcare system by strengthening outpatient care, disease prevention and affordability LU LV MT N/A N/A N/A N/A N/A Medium-term plans on minimum income support are in preparation. Increase access to health care and public spending Strengthen basic social safety nets to avoid high poverty and inequalities N/A N/A N/A N/A N/A CSR 1: Reduce taxation for low-income earners. Improve the adequacy of the social safety net CSR 2: Increase cost-effectiveness and access to healthcare, including by reducing out of pocket payments and long waiting times. NL Adapt the social security system to the growing number of selfemployed and those with temporary contracts to ensure their protection and to ensure the sustainability of the system CSR 2: promoting access of the selfemployed to affordable social protection

7 PL The new child benefit is expected to reduce poverty and inequality, but it may also have a negative effect on the labour market participation of parents, mostly women Increase The size of the child allowance KRUS, the costly special social insurance system for farmers, does not promote social mobility and creates hidden unemployment PT Hospital reform In the health sector, the government has adopted measures aimed at promoting disease prevention and public health policies Better budgetary planning and implementation in hospitals CSR 1: Ensure adequate budgeting, in particular in the health sector with a focus on the reduction of arrears in hospitals Several steps have been taken to make the health care sector more efficient and sustainable, for example via centralised procurement or greater use of generics RO The government has increased the minimum wage for the third consecutive year in Minimum wage increases contribute to reducing high in-work poverty In 2016, a comprehensive antipoverty package was adopted The law on the minimum inclusion income was adopted, to enter into force in Better access to quality healthcare - It is impaired by shortages of health professionals, underfunding and over-reliance on hospitals. This affects people with low income and rural areas in particular CSR 2: Establish a transparent mechanism for minimum wagesetting, in consultation with social partners Some policy action has been taken to shift from inpatient to outpatient

8 SE care. Regional healthcare plans were developed to identify needs for infrastructure and services, and the implementation of the national health strategy is being monitored N/A N/A N/A N/A N/A SI The rate of people at risk of poverty and social exclusion decreased but remains above the EU average for the elderly Implement the right measures to advance in the long-term care reform CSR 1: Adopt and implement the proposed reform of the healthcare system and adopt the planned reform of long-term care SK Increase childcare facilities, especially for children under the age of three CSR 1: Improve the cost effectiveness of the healthcare system, including by implementing the value for money project. UK Address the issue of childcare supply for children under 3 years old