Can Europe Make It?

Welfare benefits are calculated by political objectives not empirical calculations

"Humans as persons of necessity exist in social relationships." Adequacy of Minimum Income Schemes is a debate that is gaining traction across the EU.

Charlotte Rachael Proudman
29 January 2014

Benefit levels in Britain reflect political decisions on the amount governments in Britain have been prepared to spend, not the total of claimants’ needs. Britain has never emphasised the issue of adequacy when determining the level of welfare benefits. Only two EU member state countries, Germany and Sweden, have embodied the right to an adequate level of living in statute. There is now a growing movement across Europe calling for the introduction of Adequate Minimum Income in EU member states.

The rates of welfare benefits in Britain are not sufficient to lead a life that is compatible with human dignity. The rate of Job Seeker’s Allowance is £56.80 for those aged between 16 and 24, an increase of £3.35 from 2012, while those aged 25 and over are entitled to £71.70, a rise of £4.20 from the previous year. People in receipt of Job Seeker’s Allowance in Britain are barely surviving, and living a life well below the poverty line. They are dependent on food banks, payday loans, and charities to provide basic necessities. Without access to adequate resources people are prevented from a fundamental right to a private and family life (Article 8, European Convention of Human Rights).

Has anyone wondered how the level of welfare benefits is calculated in Britain? The short answer is, there is no objective calculation method to determine benefit levels. Benefit levels reflect political decisions on the amount governments in Britain have been prepared to spend, not the total of claimants’ needs. Welfare benefit scales for people of working age have been justified by nothing more than the principle that benefits must be held below the level of low wage rates.

The EU on Adequacy of Minimum Income 

Britain has never emphasised the issue of adequacy when determining the amount of welfare benefits. The European Anti-Poverty Network is campaigning for the introduction of Adequate Minimum Income Schemes in EU member states. The EU Commission has widely debated the introduction of adequate minimum income schemes throughout Europe. The EU Commission has defined ‘adequacy of minimum income’ as “sufficient to lead a life that is compatible with human dignity… living standards and price levels by type and size of household in the Member State concerned should be taken into account using the appropriate national indicators”. The objective of the adequate minimum income scheme is to allow people to live in dignity.

The EU have left the implementation of the recommendations to individual member states. Consequently no common criteria concerning sufficient resources and social protection have been identified across member states. Minimum income schemes vary enormously from one member state to another. Some European governments use independent and politically credible standards for the incomes to ensure access to the minimum acceptable standards of living in their countries. Only two countries, Germany and Sweden, had embodied the right to an adequate level of living in statute.

Sweden

Sweden uses the reference budget to determine the social welfare allowance. Reference budgets are expenditure patterns for different types of households. To ensure transparency and legitimacy, the reference budget is an objective tool used to calculate welfare allowances every three years. The reference budget is more than a minimum budget and includes more than basic needs such as leisure activities.

The reference budget calculates the daily expenses of a family, which include, food, clothing and footwear, hygiene, recreation/leisure, consumables, newspaper, radio, TV and telephone. The welfare allowance is then used to top up the disposable income of families to the amount indicated by the reference budget.

Germany

A test case brought before the Federal Constitutional court in Germany in 2010 established a constitutional right to a subsistence minimum for an existence in human dignity. The Hartz IV decision stresses that there is a unified and all‐encompassing fundamental guarantee that covers “both the physical existence of the individual, that is food, clothing, household goods, housing, heating, hygiene and health . . . and ensuring the possibility to maintain inter‐human relationships and a minimum of participation in social, cultural and political life, given that humans as persons of necessity exist in social relationships.”

The legislature fixes the actual level of benefits using a transparent and appropriate procedure on the basis of plausible methods of calculation according to people’s actual need. The statistical model used to calculate the standard rate for minimum social assistance by the legislature is a  ‘Sample Survey on Income and Expenditure’ of 60,000 households in Germany conducted every five years. The lowest 15% of single-person households with the lowest net income, excluding recipients of social assistance, is the standard benefit for a single person. There is no rationale for using 15%; it is therefore not conclusive, nor justifiable by the legislature. The procedure used to determine the rate for multi households varies and becomes more complex. 

Minimum Income Schemes vary from one EU member state to another; there is no consistency in approach or common criteria. Although the Schemes vary across member states, the levels of benefits applied in member states are consistently too low to allow for a decent standard of living. Adequacy of Minimum Income Schemes is a debate that is gaining traction across the EU.

Introducing Adequate Minimum Income in EU member states would ensure a basic right to a dignified life. A social protection system that works in practice across all countries may even reduce the fear of increasing numbers of EU welfare tourists. People may perceive that there would be less incentive for benefit claimants to migrate from one member state to another in pursuit of welfare benefits, when the level of benefits in each country is adequate, and relative to each member state, thereby ensuring everyone has the right to a decent standard of living.

Expose the ‘dark money’ bankrolling our politics

US Christian ‘fundamentalists’, some linked to Donald Trump and Steve Bannon, have poured at least $50m of ‘dark money’ into Europe over the past decade – boosting the far right.

That's just the tip of the iceberg: we've got many more leads to chase down. Find out more and support our work here.

Get weekly updates on Europe A thoughtful weekly email of economic, political, social and cultural developments from the storm-tossed continent. Join the conversation: get our weekly email

Comments

We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram