ESPN Thematic Report on minimum income schemes

ESPN Thematic Report on minimum income schemes 2015 Pedro Perista & Isabel Baptista October 2015

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 E-mail: Emanuela.TASSA@ec.europa.eu European Commission B-1049 Brussels

EUROPEAN COMMISSION European Social Policy Network (ESPN) ESPN Thematic Report on minimum income schemes 2015 Isabel Baptista Pedro Perista 2016 Directorate-General for Employment, Social Affairs and Inclusion

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: http:ec.europa.eusocialmain.jsp?catid=1135&langid=en Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) 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 (http:www.europa.eu). European Union, 2016 Reproduction is authorised provided the source is acknowledged

Contents SUMMARY... 7 PART I - DESCRIPTION OF MAIN FEATURES OF MINIMUM INCOME SCHEME... 8 1 GOVERNANCE ARRANGEMENTS... 8 1.1 Levels of governance... 8 1.2 Delivery arrangements... 8 1.3 Rights-based versus discretionary benefits... 8 2 DESIGN OF MINIMUM INCOME SCHEME... 9 2.1 Level of benefit... 9 2.2 Eligibility conditions... 10 2.3 Conditionality rules... 12 2.4 Duration... 13 2.5 Transitions... 13 3 LINKS WITH OTHER SOCIAL BENEFITS AND SERVICES... 13 3.1 Components covered by MI schemes... 13 3.2 Other means-tested benefits... 13 3.3 Passport to other services and benefits... 14 PART II - ANALYSIS OF MINIMUM INCOME SCHEMES... 16 1 ASSESSMENT OF ADEQUACY, COVERAGE, TAKE-UP AND IMPACT... 16 1.1 Adequacy... 16 1.2 Coverage... 17 1.3 Take-up... 17 1.4 Impact... 18 2 LINKS TO OTHER TWO PILLARS OF ACTIVE INCLUSION... 20 2.1 Inclusive labour markets... 20 2.2 Access to quality services... 24 3 SUMMARY TABLE... 26 REFERENCES... 27 5

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Summary The Social Insertion Income (Rendimento Social de Inserção RSI) is a rights-based benefit first introduced in 1996 under the designation of Guaranteed Minimum Income (Rendimento Mínimo Garantido RMG). It combines income support with opportunities for social insertion so as to ensure resources for individuals and their households that can contribute to satisfying their minimal needs and favour a progressive social and professional insertion. The measure therefore has a monetary component (the cash benefit) which is a universal right, temporary and not discretionary but based on established criteria. The second component is an insertion programme based on a contract between the beneficiaries and the Programme whereby both parts agree to develop a set of actions and tasks, leading to the gradual social, labour and community integration of the household. The RSI is under the responsibility of the Institute of Social Security (ISS). The ISS operates at municipal level, within a network of local partners, although following national guidelines. It only covers the frailest fringes of the vulnerable population and it provides low benefit levels. In 2015, the maximum amount of benefit per person was EUR 178.15, which is also the entitlement threshold for one individual person. The benefit s amounts can hardly be considered adequate as it is considerably lower than the poverty threshold, the minimum wage and the mean value of unemployment benefit. Throughout its almost 20 years of existence, the minimum income measure has undergone several changes. These changes, particularly the ones implemented in 2010 and 2012, as an answer to the economic and financial crisis and mainly aiming at restraining public expenditure, have resulted in stricter eligibility and conditionality. Although not much data on take-up is available, there are signs of constraints, mainly in terms of the complexity of procedures that may hamper the access of some potential beneficiaries to the scheme. The changes also resulted in reduced levels of coverage and benefits. Additionally, the RSI no longer covers costs e.g. with housing or transportation, which may now only be granted within the scope of other benefits, of social assistance or of measures such as those inscribed in the active labour market policies, for some of which RSI beneficiaries represent priority target groups. Thus, even if the RSI never aimed at decreasing the poverty rate, it is hardly surprising that its impact on the severity and intensity of poverty, significant till 2010, also decreased significantly in the recent past. Data constraints hinder the assessment of the link between the Portuguese minimum income scheme and the other two pillars of active inclusion. Nevertheless, there is evidence of the need to strengthen organisational and operational mechanisms crucial to the effectiveness of labour activation support tailored to the needs and profiles of the beneficiaries. Access to services is an important component of the insertion contract between the State and RSI beneficiaries. Different models of intervention and unbalanced resources have been identified in the provision (or facilitation) of support for accessing services in crucial areas such as health, housing, education and training. 7

Part I - Description of main features of Minimum Income Scheme 1 Governance arrangements 1.1 Levels of governance In, the Minimum Income Scheme is called the Social Insertion Income (Rendimento Social de Inserção RSI). The RSI is under the responsibility of the Institute of Social Security (ISS). The ISS operates at the municipal level, following national guidelines. Regional branches exist although they merely support the execution, at municipal level, of the decisions taken at the national level. Municipalities have no major role in the implementation of social policy. The Programme is delivered at local level by the local branches of social security (within a network of local partners). However, the criteria regulating the allocation, the conditions contracted and the criteria for termination are defined at the central level and then mainly executed at the local level. The monitoring of compliance of the conditions agreed under the insertion contract (job-search requirements are compulsory) is a local responsibility. For 2015, the budget for the RSI was a little over EUR 290 million. 1.2 Delivery arrangements There are no single points of contact or one-stop shops providing beneficiaries of the RSI with the necessary benefits, services and activation. However, there are national level protocols e.g. between the ISS and the public employment services (Institute for Employment and Professional Training IEFP), and cooperation between these entities is specifically mentioned in the legislation for specific measures. As such, the ISS is supposed to work in cooperation with the IEFP and data should be exchanged between the two entities at the municipal level. The local social services should be informed, for instance, whenever a beneficiary of the RSI fails to comply with an activation procedure. In some cases, the ISS outsources the delivery of the RSI to social solidarity private agencies that become responsible for managing a given set of cases in designated geographical areas, the so-called protocol teams. This mechanism became a reality in 2003 and was further reinforced and redesigned after 2005. The objective of the outsourcing process was to improve the efficacy of the contractual process between the beneficiary and the Programme by overcoming the lack or insufficiency of human resources for individual and close interaction and monitoring of the processes. 1.3 Rights-based versus discretionary benefits The RSI is a non-contributory means-tested benefit focusing on the most vulnerable individuals and households. Thus, it should be considered a rights-based benefit. However, there are indications that discretion arises for specific implementation aspects outside the payment of the benefit. Matos & Costa highlight differences in the services provided to the beneficiaries of the RSI depending on whether accompaniment is ensured directly by Social Security or by the external teams with which the ISS has protocols. According to the study, these teams stand out in terms of the services made available and of the obligations to be fulfilled by the beneficiaries in terms of employment, training and documentation, i.e., there is evidence that they provide a wider intervention aiming at covering different areas and involving the beneficiaries more actively (Matos & Costa, 2012: 144). Matos & Costa also stress that besides variations between different territories and different recipients, the implementation of the insertion contracts also varies depending on whether accompaniment is ensured directly by Social Security or by the 8

external teams with which the ISS has protocols, reflecting different models of intervention (Matos & Costa, 2012). Still according to the study, this is reflected in the opinions expressed by the beneficiaries. Opinions are more positive regarding the professionals of the external teams and beneficiaries recognise inputs in terms of family life, health, employment and schooling. Conversely, accompaniment by Social Security teams is deemed to fall below expectations and to concentrate mostly on the cash benefit component. Another aspect concerns specific components to which RSI beneficiaries may be entitled under certain conditions, such as public transportation vouchers or monthly care allowances to cover care of their under-age children and/or dependent adults by third parties. According to reports from local social services, they are granted more easily when the objective is to allow people to start working than when the objectives do not directly relate to a job. Another issue regards the uneven access to funds depending on the institutional framework of the professionals involved. Social Security professionals have facilitated access to social security funds, which is not the case for professionals from protocol teams who thus have to resort to municipal funds. 2 Design of minimum income scheme In 1996, the creation of the Rendimento Mínimo Garantido (Guaranteed Minimum Income, later on re-baptised as Social Insertion Income) was the Portuguese response to the recommendations 1 issued by the Commission in 1992. The GMI was introduced in through Law 19/96, which established a new right ensuring each citizen a minimum level of economic resources and promoting the development of social insertion programmes. The Social Insertion Income combines income support with opportunities for social insertion. This ensures that individuals and their households receive resources that contribute to satisfying their minimal needs and favour a progressive social and professional insertion. The measure therefore has a monetary component (the cash benefit) which is a universal right, temporary and not discretionary but based on established criteria. The second component is an insertion programme, based on a contract between the beneficiaries and the programme whereby both parts agree to develop a set of actions and tasks, leading to the gradual social, labour and community integration of the family. 2.1 Level of benefit The RSI is a differential benefit, i.e., the monthly benefit will correspond to the difference between the maximum rate of the RSI and the household's total income. There is no fixed frequency for indexing/uprating the benefit. The amount of the RSI is defined by an Order issued by the Ministry of Solidarity and Social Security and corresponds to a percentage of the Social Support Index (IAS). Since 2009 the amount of the IAS has been EUR 419.22. The latest change regards Decree-Law 13/2013, of 25 January, which established the amount as 42.495% of the IAS. Previously, Order 257/2012, of 27 August had established the amount as 45.208% of the IAS. The maximum rate of the monthly benefit is calculated in the following way: EUR 178.15 for the claimant (100% of the RSI), EUR 89.07 for each of the other adults in the household (50% of the RSI) and EUR 53.44 for each child (30% of the RSI). Children are considered as adults in the situations described in section 2.2.a, below. 1 Council Recommendation nº441 on Common criteria concerning sufficient resources and social assistance in social protection systems. 9

The current situation is different from the situation in 2009, following changes introduced in 2010 and 2012. Two major modifications in the calculation of the benefit regard the change of reference value, from the social pension to the IAS (see also section 2.2.d, below); and the usage of the OECD-modified equivalence scale instead of the OECD equivalence scale. Table 1, below, summarises the changes, as well as the current situation. Table 1: RSI major changes First adult Second adult Third adult onwards 1-2 children 3rd child onwards Reference value Before August 2010 100% 100% 70% 50% 60% Social pension August 2010- June 2012 100% 70% 70% 50% 50% Social pension July 2012 present day 100% 50% 50% 30% 30% Social Support Index (IAS) It should be noted that before the 2010 changes, the amount of the benefit was increased whenever the beneficiary was pregnant or /cohabiting with a pregnant woman. There could also be an additional special support: i) when the household included people with severe mental or physical disabilities, with chronic diseases or elderly in a situation of great dependency; ii) to compensate for housing expenses. If a household s housing expenses were higher than 25% of their RSI benefit, the benefit was increased by an amount equal to those expenses, up to a maximum of the highest amount of housing benefit allowed for a household of the same size. The level of the benefit may be reviewed at any time, namely whenever there is a change in the income or the composition of the household. Thus, the ISS should be informed of any changes within 10 days. Table 2, below, summarises the current levels of the benefit for different household types. Table 2: Levels of the RSIS benefit, according to different household types Person 1 Person 2 Person 3 Person 4 Total Single-adult households with no children 178.15 --- --- --- 178.15 Married s with no children 178.15 89.07 --- --- 267.22 Married s with 2 children aged 7 and 14 178.15 89.07 53.44 53.44 374.10 Single parents with one child aged 2 years 178.15 53.44 --- --- 231.59 2.2 Eligibility conditions Age Claimants must be over 18 years of age, except in the following circumstances: i) they are pregnant, ii) they are or have been living in a de facto relationship for more than two years, iii) they are responsible for minors or disabled persons who depend on the beneficiary's household exclusively for support. In any case, they should be economically autonomous. The situation described in ii) is an addition to the situation in 2009. Also the responsibility for disabled persons is a change as in 2009 only disabled children were considered. 10

Nationality/ residency requirements There are no nationality requirements, but there are residency requirements. Claimants can be Portuguese citizens, EU or EEA citizens, or citizens of other countries that have an agreement regarding the freedom of movement of persons within the EU. In all cases, they must have been legally resident in for at least one year. For citizens of the remaining countries, claimants must have been legally resident in for at least three years. In 2009, eligibility depended only on the legal residency in of the claimant. Employment status The RSI covers both those in employment and those out of work. If unemployed and capable of working, the claimants must be registered with the public employment services. Claimants must also sign and uphold an Insertion Contract (see section 2.3.). If the claimants are incapable of work, aged less than 16 or more than 64, or providing indispensable care to a member of his/her household (subject to medical certification), they do not have to comply with the requirement of being actively available for work. If a person resigned without just cause, s/he can only claim the RSI after a one-year period. Income/asset status If the claimant lives alone, his/her personal monthly income cannot be higher than an established percentage of the IAS; EUR 178.14, in 2015. Before 2012, it could not be higher than 100% of the amount of the Social Pension that, in 2015, was set at EUR 201.53 per month (see also section 2.1). If the claimant is living with other people, the total income of the household must be lower than the maximum amount of the RSI that would be calculated for that household. It should be mentioned that in 2010, categories of income considered in the evaluation of the resources of the beneficiaries were added to include some benefits in kind such as housing benefits and financial and property income. Thus, currently, apart from income from employment, pensions, capital or property, the monthly income to be considered also includes monthly subsidies such as those received for performing socially useful work (e.g. under the scope of the programmes CEI and CEI+), housing benefits and maintenance payments. For the calculation of the total income of a household, only 80% of the net wages or salaries are considered. The same applies to the monthly subsidies for performing socially useful work. If, while receiving the benefit, any of the unemployed household members enters into employment or into socially useful work, only 50% of the net wages or salaries will be considered during the first 12 months. If the claimant lives in social housing, the calculation of his/her personal/household income will be increased by EUR 15.45/month during the first year of the benefit; by EUR 30.91/month during the second year of the benefit; by EUR 46.36/month during the third year of the benefit. This represents a significant change compared to 2009. As aforementioned, before the 2010 changes, the benefit could even be increased to compensate for housing expenses. Since 2012, the household s financial assets cannot be higher than EUR 25,153.20 (60 times the value of the IAS in 2015) and the value of the household s movable assets or goods subject to registration (automobiles, motorcycles, vessels) also cannot be higher than EUR 25,153.20 Claimants must grant the Social Security Institute access to all relevant information needed to assess their socio-economic position. Other In order to be entitled to the RSI, claimants must neither be in provisional detention or serving a prison sentence in prison accommodation nor living in institutions financed by the State. 11

2.3 Conditionality rules Conditionality rules include the observance of the eligibility criteria. Additionally, and according to article 16 of Law 123/2012, the beneficiaries of the RSI are obliged to apply to any social benefits they are entitled to, as well as demanding credit claims or maintenance payments due to them. Article 21 establishes that the beneficiaries should inform the managing authority (ISS or protocol teams) of a change of address or of any changes susceptible of modifying or terminating the right to the benefit within 10 days. Failing to comply with these obligations will lead to the suspension of the benefit. This will also be the case when a renewal request is not presented within the legally mandated period of two months before the end of the 12 months for which the benefit is granted. After 90 days without any change in the reason(s) leading to suspension of the benefit, the benefit will be ceased. Besides the income component, the RSI includes an insertion contract containing a set of rights and duties that the claimant must sign in order to receive the benefit. The contract implies that all beneficiaries meeting the conditions for activation are registered at the PES and available for a set of integration measures. According to article 18 of Law 123/2012, they include: a) accepting work or vocational training; b) attending the education/apprenticeship system; c) participating in temporary occupation programmes that may favour their insertion into the labour market or satisfy social objectives or respond to social needs; d) participating in vocational orientation and training actions; e) participating in professional rehabilitation actions; f) participating in actions aimed at the prevention, treatment and rehabilitation in the field of drugs addiction; g) participating in activities developed by charities; h) using social support facilities; i) domestic support services; j) incentives for own job creation. These were also the measures in place in 2009. The only change regards the fact that, until 2009, the activities mentioned in paragraph c) could not normally be developed within the scope of organised labour, an exclusion that no longer applies. Whenever the insertion contract includes professional integration in collaboration with the PES, it is mandatory for recipients to engage in a personal employment plan, for which the IEFP is responsible. If the claimant does not sign the insertion contract, the claim for the RSI is dismissed and may not be presented again for the following 24 months (in 2009, this period was 12 months). If one of the claimant s household members does not sign the insertion contract, he/she may not benefit from the RSI for the following 12 months. For the same period of time, he/she ceases to be considered a household member for the purposes of receiving the income benefit but his/her income is still considered for the calculation of the benefit to be received by the household (six months in 2009). These same sanctions are applicable for a period of 24 months if any of the household members fails to attend a meeting without justification or refuses a convenient job, 2 a socially useful activity or job or vocational training. In 2009, this period was 12 months. If any of the household members fails to attend or to comply with a specific action or measure, the period during which the sanctions are applicable is 12 months. Failing to deliver any documents deemed necessary, including bank documents and an authorisation for the ISS to access the claimant s banking information leads to the dismissal of the claim or its suspension if payment is already in progress. The ISS should monitor the continued eligibility of the recipients, according to a defined set of risk indicators, and establish sanctions for the recipients failing to comply with rules. 2 The text does not provide a definition of what a convenient job is. 12

2.4 Duration Since the 2012 changes, the RSI is attributed for a maximum period of 12 months but it may be renewed for equal periods and as long as eligibility conditions are met. Renewal must be requested by the claimant two months before the end of the 12 months period. Before the change, renewals were automatic. 2.5 Transitions As mentioned above, in section 2.2.d, if any of the unemployed household members, while receiving the benefit, enters into employment or into socially useful work, only 50% of the net wages or salaries will be considered for the calculation of the household income during the first 12 months. With regard to the transition from unemployment-related benefits, claimants of the RSI must exhaust entitlement to any of these benefits before applying to the RSI if those are beyond the eligibility threshold; otherwise they will be denied entitlement to the RSI. Moreover, as the income considered for means-testing while applying to the RSI refers to the month prior to the request (if income is variable, the period considered will include the three months previous to the request), it may be the case that entitlement is denied even if the person/household has no income at the moment of the request. Additionally, the date from which the benefit is paid is the date the insertion contract, which must be established by the social security services within a period of 60 days after the claim 3, is signed. As no retroactive effects are due, people may go up to two months without receiving any guaranteed income. In 2009, the benefit was due from the date of application. 3 Links with other social benefits and services 3.1 Components covered by MI schemes Since 2012, the RSI does not include any components to cover costs, e.g. with housing, transportation, education, health or with specific circumstances such as disability. These may only be attributed within the scope of other means-tested benefits as described in section 3.2, below, or of social assistance. Meals, transportation and/or childcare allowances may be attributed to RSI beneficiaries but not as part of the scheme, but rather deriving from their integration into training or into measures such as Active Life-Qualified Employment or CEI+, for instance. What the teams supporting the beneficiaries of the RSI may provide is support in terms of counselling in specific areas health, housing and other spheres such as nourishment and personal hygiene. In these cases, the teams act as intermediaries/facilitators between the clients and the health and housing services. Helping with documentation and escorting the beneficiaries on specific occasions are examples of services that may be provided. Services may also refer beneficiaries to entities providing specific services in each of these spheres. 3.2 Other means-tested benefits As long as the eligibility criteria are met, the RSI may be cumulated with other benefits, namely: Social old-age pension; Social invalidity pension; Widow s pension; Orphan s pension; Dependence supplement; Solidarity Complement for the Elderly; Rent subsidy; Disability Bonus; Allowance for attendance to a third person; Allowance for attendance at a special school; Family Allowance; Prenatal Allowance; Parenthood and adoption benefit; Sickness benefit; Unemployment benefit. The following are the main means-tested benefits supporting working-age people at risk of poverty. 3 If the services fail to comply with this deadline, the benefit is due from this date onwards. 13

Unemployment assistance To be entitled to unemployment assistance, the monthly equivalent personal income cannot be higher than 80% of the value of the Social Support Index (IAS) - EUR 335.38 in 2015 and the value of household assets and goods cannot be more than EUR 100,612.80 240 times the value of the IAS in 2015. It has a minimum duration of 150 days and a maximum duration of 540 days, depending on the age of the claimant and of his/her contribution (employment) record. The monthly amount received relates to the value of the IAS and to the type of household: 80% of the IAS for beneficiaries living alone and 100% for beneficiaries not living alone. Social Invalidity Pension The Social Invalidity Pension may be granted to people over 18 years of age who are permanently incapable of work (not due to an accident at work or to occupational disease), as long as they are not covered by the compulsory social insurance scheme or by the temporary scheme for rural workers and as long as their monthly income is EUR 167.69 or less (or EUR 251.53 in the case of s). The Social Invalidity Pension amounts to EUR 199.53 per month. Dependency Supplement Recipients of invalidity pensions who are in a state of dependency (dependant on a third party performing the day-to-day activities of life for them) are entitled to the Dependency Supplement. The supplement for the first degree of dependency is paid to persons who are unable to perform autonomously tasks relating to feeding or to mobility or to looking after personal hygiene and who are receiving pensions of EUR 600 or less per month. Its monthly amount is EUR 99.77 under the general social security scheme and EUR 89.79 under the other schemes. The supplement for the second degree of dependency is paid to persons who, in addition to meeting the above criteria for the first degree of dependency, are bedbound or have been diagnosed with severe dementia. In these cases, the monthly amount is EUR 179.58 under the general social security scheme and EUR 169.60 under the other schemes. Rent Subsidy Rent Subsidy is intended to protect economically disadvantaged tenants whose rents increased due to the coming into force of the New Regime of Urban Rental. In order to be entitled, the person must have a rental contract for permanent housing prior to 18 November 1990 and the rent update must have occurred before 12 November 2012. Those aged less than 65 are entitled if their household s Adjusted Annual Gross Income is lower than EUR 21,120 (3 x the minimum salary x 14). Beneficiaries must not possess, in the same municipality (or in neighbouring municipalities, in the case of the Lisbon and Porto metropolitan areas), a vacant dwelling acquired before the beginning of the contract (except in the case of inheritance). The amount of the subsidy is equal to the difference between the amounts of the new rent and the rent calculated as being within the household s financial capacity. Calculation is made on the basis of a debt-to-income ratio which must be between 15% and 30% of the household s Adjusted Annual Gross Income. The subsidy is granted for 12 months and renewable for equal periods of time. It may vary between 5% and 100% of the minimum wage (in 2015, EUR 25.25 and EUR 505, respectively) per month. No subsidy is attributed if the calculated amount is below 5% of the minimum wage. 3.3 Passport to other services and benefits Following their Insertion Contract, beneficiaries of the RSI may be integrated e.g. into education courses, into apprenticeships, into vocational or personal development training or into the measure Active Life-Qualified Employment. However, in none of these cases do they have preferential access. 14

Unemployed beneficiaries of the RSI are the target group of the Contracts Employment-Insertion+ (CEI+). This measure regards the development of socially necessary work which satisfies the temporary needs of projects promoted by public entities or by private not for profit entities, for a maximum period of 12 months. In this case, RSI beneficiaries are entitled to a monthly endowment of EUR 419.22 (100% of the IAS) which replaces the endowment of the RSI, as well as to a monthly transportation allowance, if transportation is not made available by the employing entity, to a daily meal or meal allowance and to an insurance against accidents at work. Since the acceptance of a convenient job offer or of adequate vocational training takes precedence over the development of socially needed work, the beneficiaries of the CEI+ are entitled to a maximum of four days per month to look for a job. Beneficiaries of the RSI are also among the target-groups of the gas and electricity social tariffs and of the Extraordinary Social Support to the Energy Consumer (ASECE). The social tariffs consist of reductions in the network access tariffs to be established on a yearly basis through a governmental order to be published by 20 September. For 2015, it should have corresponded to an amount allowing for a saving of approximately 30% on the network access tariffs. The ASECE consists of a reduction of 13.8% to the invoiced amount excluding VAT, other taxes or contributions and any existing energy reductions (e.g. social tariff). Regarding access to health, it should be mentioned that even if RSI beneficiaries are exempt from health user charges, such exemption is not automatic, i.e. RSI beneficiaries need to request it. 15

Part II - Analysis of Minimum Income Schemes 1 Assessment of adequacy, coverage, take-up and impact 1.1 Adequacy The mean figures of the RSI are very low. According to the latest statistics from the institute of Social Security, 4 in June 2015, the monthly mean values were EUR 93.60 per person and EUR 215.16 per household. Extrapolating for a yearly basis, the values would amount to EUR 1,123.20 per person and EUR 2,581.92 per household. These amounts have been fairly stable over the years and are considerably below the poverty threshold. According to the latest data issued by Statistics (INE) in October 2015, the poverty line (60% median threshold) in 2013 was EUR 4,937 per year or EUR 411.42 per month (12 months). Thus, even if the benefit has potential for mitigating the intensity and severity of poverty, as recognised by different authors and studies (e.g. Rodrigues, 2007; Castro et al., 2012), it will hardly have a decisive impact on the reduction of poverty. Comparative analysis of RSI figures for the mean amount of unemployment benefits and the amount of the minimum wage provide further insights regarding this matter. 5 In 2013, the mean value of the unemployment benefit (including all benefits) was EUR 6,160.92 per year, a little less than the yearly amount received by a worker earning the minimum wage EUR 6,790. Figure 1, below, using the year 2013 as reference, illustrates, for a selection of household types, the existing gaps between RSI amounts, the poverty threshold, the mean value of unemployment benefit and the minimum wage. Figure 1: RSI yearly amounts and poverty threshold according to household composition, compared to the mean value of the unemployment benefit and the minimum wage Such gaps exist regarding all selected household types. Unlike the minimum wage, which may ensure a revenue above the poverty threshold for single-adult households and for single parent households with a child aged 2, the RSI revenue for any household only represents 43.3% of the poverty threshold for that same household. 4 Available at: http://www4.seg-social.pt/estatisticas (Accessed 22/10/2015). 5 It should be mentioned that a project regarding the establishment of a national minimum subsistence benchmark has been in place since 2012. However, so far, no concrete outputs have been made available. The final report was expected to be made public by the end of 2015. 16

1.2 Coverage According to the latest statistics from the institute of Social Security, 6 in June 2015 there were approximately 209,000 beneficiaries (50.6% of which women), meaning that approximately 18,500 people lost entitlement to the benefit since January 2014. Compared to June 2012 the month prior to the coming into force of the second set of major changes to the scheme nearly 129,000 people had lost entitlement to the benefit, i.e. 37%. Compared to July 2010 the month prior to the coming into force of the first set of major changes to the scheme the number of people who lost entitlement to the benefit was 180,000, i.e. 46.3%. At its peak in terms of number of beneficiaries, reached in March 2010, the RSI covered 404,586 people, following steady increases after its creation. Thus, it is clear that the changes which have been introduced in the RSI programme led to the exclusion of a large number of beneficiaries, given the stricter access conditions. As put by Rodrigues, the reforms were an alteration that was needed, implemented at the worst possible moment due to the economic and financial crisis, and led mainly by the need to cut costs (Rodrigues, 2011: 2). Families with children were certainly among those most affected, as the increase in child poverty over the last years demonstrates. Child poverty increased from 22.4% in 2009 to 25.6% in 2013. The Commission s Staff Working Document Assessment of the 2014 national reform programme and stability programme for highlights the lowering of the income threshold for eligibility of the RSI and its impact on reducing coverage especially for large families (EC, 2014: 19). The latest report by the Social and Economic Council of the UN 7 evaluates the transposition of principles laid down in the International Covenant of Economic, Social and Cultural Rights. One of the main recommendations regards the need to progressively upgrade the reference index (IAS) of the RSI in order to ensure a wider eligibility, ensuring that it is adjusted to the evolving needs of beneficiaries, in order to reduce income inequalities and to cushion the effects of the austerity measures. Moreover, the European Commission itself is clear, in its summary assessment of s progress in addressing the 2014 CSRs, identifying no progress in ensuring adequate coverage of social assistance, including the minimum income scheme (EC, 2015: 52). 1.3 Take-up There are not many studies focusing on or analysing take-up of the RSI scheme. The studies conducted by Castro et al., 2012 8, Rodrigues et al., 2013 9 and by Santos et al., 2014 10 provide some insight regarding the complex issue of non-take up (Rodrigues et al., 2013: 43). Santos et al. stress that even if no direct discrimination against specific groups regarding access to the scheme was reported, some constraints could be identified, 6 Available at: http://www4.seg-social.pt/estatisticas (Accessed 22/10/2015). 7 Quoted in several Portuguese media, namely ONU: Salário mínimo em deve ser aumentado e RSI alargado, available at http://www.jornaldenegocios.pt/economia/financas_publicas/detalhe/onu_salario_minimo_em_portugal_de ve_ser_aumentado_e_rsi_alargado.html (Accessed 29/05/2015). 8 Castro, Alexandra (coord.) (2012), A cidade incerta - Barómetro do Observatório de Luta Contra a Pobreza na Cidade de Lisboa, Porto, EAPN, available at: http://observatoriolisboa.eapn.pt/ficheiro/a_cidade_incerta.pdf. 9 Rodrigues, Carlos Farinha et al. (2013), EUROMOD Country Report PORTUGAL 2009-2013, available at: https://www.iser.essex.ac.uk/files/euromod/country-reports/year5/cr_pt_y5_jan2014_final_12032014.pdf 10 Santos, Elisabete et al. (2014), Adequate Minimum Income building consensus: Analysis of Minimum Income Scheme in, EAPN, Directorate-General for Employment and Social Affairs and Inclusion, available at: https://eminnetwork.files.wordpress.com/2013/04/emin-portugal-2014-en.pdf. 17

particularly affecting those most affected by social exclusion. Homeless people, for instance, face increased difficulties due to lacking a fixed address. Another constraint regards the complex procedures [that may act] as inhibitor factors in the access to the measure (Santos et al., 2014: 39). This is seconded by Rodrigues et al., 2013, who express that new rules for new claims and renewals of the RSI may increase the bureaucratic process and create additional difficulties to families, leading to an increase in non-take-up (Rodrigues et al., 2013: 26). In some cases, there is the need for tailored support from professionals who can act as intermediaries, helping applicants understand the procedures. However, even when support is available, there may be the case that take-up results hampered as the language used by some of the technicians/professionals is not appropriate to the characteristics of the groups of beneficiaries, impeding the professionals from playing their role of mediators effectively (Santos et al., 2014: 40). Still another constraint regards the loss of privacy as the access to the measure implies that claimants expose themselves by authorising RSI professionals to come into their lives, even to their homes, and to access information on their bank accounts. Linked to this is the social stigma associated to the measure which even leads some respondents (most of all the unemployed) to refuse the possibility to benefit from the RSI as they wish to keep their distance from a measure that generates devaluation in terms of identity and public stigmatisation (Castro et al., 2012: 263). 1.4 Impact It should be mentioned that the RSI never intended to have an impact on the level of poverty but rather on its depth. As demonstrated in figure 1, above (section 1.1), the scheme s amounts are considerably below the poverty threshold. Thus, the RSI should have no impact on the poverty rate. Table 3, below, shows that this is not exactly the case especially in the pre-2010 changes period. This may be explained by the difference in the definition of household income for the purposes of the RSI Programme and the total household income. As put by Rodrigues, who has been analysing the subject over the last years (e.g. Rodrigues, 2009 11 ; 2011 12 ; 2013a 13 ; 2013b 14 ) that difference explains how some households that were slightly above the poverty line and had sources of income not controlled by the RSI might be able to leave the situation of poverty by receiving this benefit (Rodrigues, 2009: 11). 11 Rodrigues, Carlos Farinha (2009), Efficacy of Anti-poverty and Welfare Programs in : the Joint Impact of the CSI and RSI, School of Economics and Management / Technical University of Lisbon, WP 42/2009/DE, available at: http://pascal.iseg.ulisboa.pt/~depeco/wp/wp422009.pdf. 12 Rodrigues, Carlos Farinha (2011), Minimum Income in : changing the rules in times of crisis, Host country independent expert paper for the Peer Review on improving the efficiency of social protection, held in on 29-30 November 2011, available at: http://ec.europa.eu/social/blobservlet?docid=8043&langid=en. 13 Rodrigues, Carlos Farinha (2013a), Moving the goalposts not once but twice: Minimum Income Benefit in [presentation]. 34 slides. Presentation to the Seminar RSI: uma garantia de cidadania? Available at http://www.eapn.pt/download.php?file=2269. 14 Rodrigues, Carlos Farinha et al. (2013b), EUROMOD Country Report 2009-2013, available at: https://www.iser.essex.ac.uk/files/euromod/country-reports/year5/cr_pt_y5_jan2014_final_12032014.pdf 18

Table 3: Simulated impact of the RSI: poverty measures Before RSI After RSI 1 Var. (%) After RSI 2 Var. (%) After RSI 3 Var. (%) Incidence (F0) 17.8 17.5-1.7 17.7-0.6 17.7-0.6 Intensity (F1) 5.2 3.7-28.8 4.3-17.3 4.7-9.6 Severity (F2) 2.5 1.1-56.0 1.5-40.0 1.9-24.0 Vertical Efficiency -- 99.4 99.7 100.0 Poverty Reduction Efficiency Poverty Gap Efficiency -- 96.5 99.0 99.9 -- 27.3 15.4 9.0 Notes: RSI 1: Original RSI Programme RSI 2: RSI after the 2010 reform RSI 3: RSI after the 2012 reform Source: Rodrigues, 2013 (Microsimulation 15 based on 2009 Portuguese EU-SILC) Primarily driven by political and ideological options and by the need to cut public expenditure, the simulation showed that the change in the entitlement rules of the RSI led to an increase in poverty intensity of about 30%, an increase in inequality measured by the Gini of 2% and by the Atkinson index (e=2) of more than 9%. (Rodrigues, 2013a). It further showed that the major positive impacts of the RSI before the reform, which have mostly been in the reduction of the severity and intensity of poverty, have now been lost and that the increased efficiency of the scheme is clearly insufficient to counterbalance the significant decrease in its efficacy. As stressed by Rodrigues, an increase of 3.4 percentage points in the poverty reduction efficiency cannot justify a decrease of 18.3 percentage points in the poverty gap efficiency (Rodrigues, 2013a: 31). This has also been acknowledged by the OECD, in its Economic Survey Report, where it emphasises that the reforms undertaken in the RSI benefit programme since 2010 continue to erode its effectiveness in reducing inequality and poverty severity making the poor poorer, recommending the prioritisation of the support given to children and youths, including by giving a more generous weight to children in the calculation of RSI benefits, or by raising child benefits (OECD, 2014: 108). Thus, the developments of the RSI programme in the last few years seem to be distorting the recommendation made in the SIP according to which there is the need to modernise social policies to optimise their effectiveness and efficiency (EC, 2013: 2) and that reforms must focus on making efficiency gains, paying attention that reforms are well-designed in order to avoid negative repercussions on poverty levels, productivity and economic growth, health of the population and social cohesion (EC, 2013: 5), and the plea made in the 2014 CSR and, again, in the 2015 CSR to ensure adequate coverage of social assistance, in particular the minimum income scheme (European Council, 2015: C 272/97). 15 According to the author, the results were produced by a simulation run in lab-like perfect conditions. The model assumes the inexistence of non-take-up and fraud, but also that household incomes and living conditions remained unchanged over the recent years. It is deemed not to be an accurate representation of the real everyday effects of the implemented changes in the RSI, but to provide a reflection of their consequences. 19

2 Links to other two pillars of active inclusion 2.1 Inclusive labour markets Assessing the link between the Portuguese MI scheme and existing mechanisms fostering ALMP support mechanisms or access to quality services has been seriously hampered by two organisational changes which occurred in recent years: the extinction, in the second semester of 2011, of the National Commission for the Social Insertion Income, whose main task was to evaluate the implementation of the measure and, in 2012, the extinction of the unit for studies and planning of the Institute for Social Security. Both structures regularly produced monitoring and evaluation reports on the implementation of the Social Insertion Income both on the income component and on the insertion activities which are no longer available. Moreover, the statistical information publicly available is now restricted to the number of beneficiaries (individuals and households) and to the average amounts of the benefit. There is no information on the insertion component, i.e. activities in which the beneficiaries (and their families) are engaged and which cover areas such as education, employment, health, training, housing and social action. The RSI insertion contract has to be signed by the claimant in order for them to be entitled to receive the benefit as mentioned in section 2 of part 1; this means that all beneficiaries meeting the conditions for activation should be registered at the Public Employment Service (PES) and available for work, training, etc.. Local social services responsible for the monitoring of the RSI should inform the local PES whenever a beneficiary fails to comply with the necessary register at the PES or to comply with an agreed activation measure. Failure to meet any of these conditions may lead to the suspension of the RSI. According to a recent study (Santos et al., 2014) the present system enforces the necessary monitoring actions regarding compliance with the continued eligibility rules in a very specific client-provider power dynamics marked by the existence of a great gap between the power of technicians and the power of beneficiaries since failure on the part of the technicians or the system is not subject to any punishment (even when it has a negative impact on the beneficiaries of the measure) whereas failure on the part of the beneficiaries is always subject to punishment through suspension or cessation of the benefit (Santos et al., 2014: 40). One of the few evaluation studies on the measure 16 (Matos & Costa, 2012) highlights some difficulties in the activation of RSI beneficiaries. The authors stress that the sphere of labour seems to debate with harsh difficulties, patent in the low proportion of recipients integrating into the labour market as a consequence of the measure ( ) This is revealing of how the measure seems to be insufficient regarding the systemic constraints blocking the initiatives of those trying to return to the labour market. ( ) As already identified by some studies, the lack of opportunities and the lack of adequate and timely responses boost attitudes of resignation and passivity creating scenarios where life without the RSI is no longer envisaged (Matos & Costa, 2012: 145-146). Another study conducted in the city of Lisbon (Castro et al., 2012) also highlights the relative failure of the RSI in spite of several adjustments made to boost an effective integration of the beneficiaries into the labour market: The RSI has been a useful tool to combat extreme poverty but it has not avoided completely the stigmatising trap of social policies and a reduced effectiveness regarding integration into the sphere of labour (Castro et al., 2012: 262). 16 Reporting to the period 2006-2009. 20

Recent interviews conducted with social workers from RSI protocol teams 17 showed some examples of daily constraints with regard to activation arising from different features of RSI implementation procedures: New entitlement conditions the inclusion of all individuals residing under the same address in one single file (irrespective of household and family dynamics) may discourage labour activation: Sometimes, it happens that one person in one household with several units gets a job earning the minimum wage and, as a consequence, all the other members may get a reduction in their income benefit, or even lose entitlement to the RSI ; Cooperation flaws in addition to the inexistence of single points of contact or one-stop shops providing unemployed beneficiaries with the necessary benefits, services and activation supports, local employment and social services are often poorly connected, seeming like each entity is only taking care of its own backyard ; Communication systems the lack of a shared IT system between employment and social services together with different levels of access to clients information may result in poor management of employment activation opportunities and to the interruption of support: very often, people go there and are sent back because their qualifications are not adjusted to the proposals. ( ) There is a platform but protocol teams do not have access to all the information, namely to employment information. Only social security teams have access to employment information. And we have had cases where the system indicates that the person is not registered at the PES but the person comes up to us with a declaration of the IEFP saying that he/she is indeed registered ; Geographical lottery the coexistence of different intervention models (Matos & Costa, 2012), the lack of overall minimum standards regarding the delivery of social services to RSI beneficiaries (Perista & Baptista, 2015) and the wide diversity of cooperation practices between employment and social services at the local level introduce a strong bias into the chances of getting consistent and adequate activation support: For several years we had almost no job proposals coming from the PES. In the last few months, this has changed ( ) we think this may be a local problem because we know that things work differently in other places ( ) It is people who make institutions tick. These difficulties in the labour activation of RSI beneficiaries need to be understood within an overall national context where the expenditure on active labour market programmes (as a percentage of GDP) is relatively low. Similarly, expenditure on public employment service, as well as on placement and related services, tends to be low. (OECD, 2015:2) One specific activation measure directly addressing unemployed beneficiaries of the RSI Contracts Employment-Insertion+ (CEI +) aims at engaging beneficiaries in socially needed work which satisfies the temporary needs of projects promoted by public entities or by private not for profit entities, for a maximum period of 12 months. Once again, there are no evaluation studies regarding the implementation of CEI+. However, in late November 2014, the Ombudsman urged the Ministry of Solidarity, Employment and Social Security to undertake an urgent evaluation of the measures within the sphere of Public Administration 18. The initiative derived from a complaint presented by the major Portuguese trade union (CGTP-IN) claiming that the measures were being used by public entities to replace jobs. Thus, with regards to the implementation of this initiative to foster the employability of RSI beneficiaries, the main issue at stake is the quality of the labour outcome, rather than the quantitative 17 Interviews conducted for the 2015 Thematic Report on integrated support for the long-term unemployed. 18 http://www.provedor-jus.pt/site/public/archive/doc/mess.pdf (Accessed 21/10/2015). 21