Parliament calls for binding minimum income legislation

The European Parliament is concerned that the recent minimum income recommendation adopted by the Council won’t enable the EU to reduce poverty by half by 2030. A binding instrument – a directive – could be the right tool.

In October last year, the European Parliament and the Council adopted a directive on adequate minimum wages in the EU. Widely supported by trade unions, the initiative was criticized by employers' associations as well as by some member states, who argued that the EU was encroaching on the prerogatives of national social partners. After the directive was adopted, the Danish government initiated proceedings to have the directive annulled by the Court of Justice. The Swedish government announced in April 2023 that it would join this initiative.

At the same time, the Commission published in September 2022 a more modest proposal for a recommendation on minimum income schemes in the EU. Reflecting the minimum wage directive, this instrument targets "minimum incomes", that is the financial assistance for people without jobs or with insufficient income. The aim here is to ensure that Member States set these financial aids at an adequate level, in order to prevent beneficiaries from falling below the poverty threshold (for a more complete analysis, see our article here). This recommendation was adopted by the Council in January 2023.

As confirmed by Commissioner Schmit's head of cabinet at our Brussels conference, the Commission chose a non-binding legal act for two reasons. First, it is a legal issue: there is no clear legal basis for the EU to intervene in this area. Secondly, there is a political problem: the Commission is aware that a binding act in this area would have no chance of being adopted by the Parliament or the Council.

The European Parliament has therefore been working in parallel on a resolution, with which it seeks to promote the adoption of a binding act on this issue - as many civil society organizations have long been calling for.

This resolution was adopted on 15 March 2023. In addition to a call for the Commission to propose a directive on minimum income, it includes a number of recommendations to Member States, which are also included in the Council recommendation. These include the call to increase minimum income schemes to a level that is at least equivalent to the national at risk of poverty or social exclusion threshold (AROPE) and to raise awareness of these schemes and make them more accessible, especially for disadvantaged groups such as the homeless.