Poverty and social exclusion in the EU: third-order priorities,hybrid governance and the future potential of the field

Abstract

EU leaders have agreed to reduce the number of people who are at risk of poverty or social exclusion by 15 million (including at least five million children) by 2030. This article explores this ambitious target and analyses the positioning of the field throughout the EU’s broader governance hierarchy, as well as the governance arrangements within the field. It finds that throughout such governance arrangements, the issue of being at risk of poverty or social exclusion is largely dealt with by intergovernmental agreements and is thereby a third-order priority for the EU, with economic integration first-order and employment policy second-order. Meanwhile, within the field EU governance arrangements are currently being transformed to further encourage the Member States to take action. While this is a significant development, the overall ability of the EU to reduce the number of those at risk of poverty or social exclusion requires the field to move beyond its current third-order status.

Introduction

Addressing poverty or social exclusion is a complex policy problem, in terms of both what causes it and how it can be tackled. Different groups within society are at risk of poverty or social exclusion (AROPE) for a variety of reasons, whether it be unemployment, single parenthood, old-age poverty, being a young person, educational attainment, disability, gender, ethnicity or a combination of these factors (Duffy, 2020; Vaalavuo, 2015). Adding a further layer of complexity is the role of social transfers in reducing rates of people at risk of poverty or social exclusion, as well as other factors, such as affordable housing, availability of affordable child care, where people live (urban or rural), and the functioning of taxation systems, which may either encourage or discourage certain forms of activity (for example, labour market participation) (Duffy, 2020; Vaalavuo, 2015). Meanwhile, Eurostat (2018) estimates that in 2017 social transfers (excluding pensions) reduced the number of people classified as poor across the EU by almost one-third. Nevertheless, the different welfare states and systems of poverty alleviation across the EU create differences between the Member States. In addition, an important aspect of reducing the number of those at risk of poverty or social exclusion is the role of the social partners. In its proposal for the Minimum Wage Directive – agreed between the Council and the Parliament in October 2022 – the European Commission notes that: ‘Member States with high collective bargaining coverage tend to have a low share of low-wage workers and high minimum wages’ (European Commission, 2020b: 2). Attempting to reduce the rate of those who are at risk of poverty or social exclusion at the EU level is a challenge. Only concerted and coordinated EU action can make a difference, in terms of both reducing the rate of those who are at risk of poverty or social exclusion, but also challenging some of the macroeconomic logic that drives the policy problem.

This article examines the EU’s attempts to tackle the number of those who are at risk of poverty or social exclusion both historically and during its most recent spike of activity, which aims to reduce the number by at least 15 million by 2030 as part of the Commission’s 2021 Action Plan for the Implementation of the European Pillar of Social Rights (EPSR). It thereby speaks to the literature on the governance of the European social dimension (Copeland, 2020; Crespy and Menz, 2015; Graziano and Hartlapp, 2019; Mailand, 2021; Vesan et al., 2021), as well as the literature specific to the field (Aranguiz, 2022; Armstrong, 2010; Copeland and Daly, 2012; Jessoula and Madama, 2018; Shahini et al., 2022). The approach takes inspiration from two analytical dimensions found within the literature to analyse historically the policy area and the extent to which the EU is likely to meet its ambitious target. The first views governance arrangements as inherently political, characterised by power relations, power asymmetries and interdependencies that produce and reproduce hierarchy, priority and privilege (Copeland, 2020; Copeland and Daly, 2014). This enables an analysis of the field throughout EU governance arrangements, which draws attention to the status of a policy area in relation to other policy areas within the EU’s governance hierarchy. The second dimension refers to the concept of hybridity within governance arrangements, focusing on the interaction of different governance instruments and their potential effectiveness (Copeland and ter Haar, 2015; Trubek and Trubek, 2007). For Trubek and Trubek (2007) hybrid governance is complementary if the various governance tools have not been merged, and transformative if they are not only complementary but integrated into a single system in which the functioning of each element is necessary for the successful operation of the other. Analysing these two dimensions of governance provides for a broader and more in-depth approach than a singular focus on only one aspect. The analysis is based on the primary and secondary documentation regarding the EU’s governance of policy concerning people at risk of poverty or social exclusion and highlights both historical and current developments.

The analysis reveals that throughout the broader process of European integration, reducing the number of individuals who are at risk of poverty or social exclusion is a third-order priority, as distinct from macroeconomic concerns of the Single Market and fiscal and monetary policy, which are first-order, and employment policy, which is second-order. Not only does the attention paid to poverty and social exclusion tend to be ‘fitful’ (Daly, 2006), with peaks of intense activity followed by troughs in which very little happens, but EU policy tools remain largely intergovernmental and EU politics broadly favours the status quo. Nevertheless, since the 2017 launch of the EPSR, the EU has developed a variety of governance instruments within the field that have the potential to transform the arrangements into what might be termed ‘complementary hybridisation’ (Copeland and ter Haar, 2015; Trubek and Trubek, 2007), that is to say, governance instruments with different incentives that operate collectively to encourage Member States to take action. While the EU may make better progress towards its target as compared with previous initiatives in the field, substantial obstacles remain both throughout and within if efforts to reduce the number of people at risk of poverty or social exclusion are to move beyond their current third-order status, which can be described as simply muddling through. In the context of the current literature and debates, the findings provide further evidence of increased activity in the field in recent years (Shahini et al., 2022) and its potential (Aranguiz, 2022; Shahini et al., 2022). Importantly, it provides a unique perspective by highlighting obstacles to reducing the number of people at risk of poverty or social exclusion and how they might be overcome.

The article proceeds as follows. Section 1 analyses the EU’s competence in the field and situates it within the framework of the broader process of European integration. Section 2 analyses the governance tools within the field and their transformation over the past five years into a form of complementary hybrid governance. Section 3 reflects on the changes needed both throughout the EU and within the field if the EU is to raise the status of the issue of poverty and social exclusion beyond its current status as a third-order priority. The article concludes with some further reflections on the field within EU governance.

Addressing the numbers of those at risk of poverty or social exclusion within EU governance and its third-order status within the logic of European integration

At the signing of the Treaty of Rome it was decided that both employment and social policy were to remain intergovernmental areas in which close cooperation between the Member States, combined with ‘the functioning of the Common Market’ would favour the harmonisation of social systems. The six founding Member States of the European Economic Community (EEC) saw little need to integrate in this respect given the similarities between their welfare states and a belief that social progress would follow from the development of the Common Market. While it was assumed that this was unlikely to happen automatically, there was a belief that trade unions and governments would be willing to translate economic growth into better working conditions and stronger social protection. Thus 12 of the 248 articles (covering equal pay and common social security measures) in the founding Treaty were devoted to employment and social policy, but with the proviso that distortions of competition were to be avoided at all costs (Hantrais, 2007: 2–3). In other policy areas, such as training, employment, labour law and working conditions, and social security and collective bargaining, the Commission was given the responsibility of promoting close cooperation between the Member States.

In 1974 the Council of Ministers issued a Resolution to create a series of Social Action Programmes. The first stated that economic expansion within the EEC should also result in improvements in the quality of life. The programme set out to achieve three employment policy aims: the attainment of full and better employment; the improvement of living and working conditions; and the increased involvement of management and labour in economic and social decision-making (Hantrais, 2007: 4–5). This set the scene for the development of the European social dimension over the next decade, and the 1970s saw substantial activity in the areas of education and training, health and safety at work, workers’ and women’s rights, and, importantly, tackling poverty, leading to the establishment of several European networks and observatories to stimulate and monitor progress in the field (Hantrais, 2007: 4–5). Developments during the formative years of the EEC, combined with the legal underpinning of the Treaties, created a hierarchy of policy and legislative priorities in which integration was supposed to be market-led. That is, market-led integration is the EU’s first and main priority, with significant legal and political integration within the framework of supranational governance (Copeland, 2020; Dawson, 2018). With its limited legal remit in the areas of equal opportunities and social security coordination, employment policy is a second-order priority. As already mentioned, reducing the number of people at risk of poverty or social exclusion, which is intergovernmental and coordinated at the EU level, is a third-order priority.

The various Treaty changes introduced since then have further entrenched this legal and political ordering of priorities. While in the early 1990s there was political momentum in the social dimension, with the adoption of various directives on employment matters, anti-poverty policy remained less of a concern for the EU and even faced opposition from some Member States. Both Germany and the United Kingdom, for example, opposed the Commission’s 1994 proposal for a Social Action Programme (Hantrais, 2007: 187–188). By the time of the Amsterdam Treaty changes (1997), the political momentum within the EU was shifting away from the harmonisation of employment policy towards legally non-binding modes of governance or ‘soft law’. The Amsterdam Treaty changes gave the EU, particularly the Commission, the role of coordinating and steering the Member States’ employment policies. Articles 146–150 outlined the governance of the newly formed European Employment Strategy (EES). It is iterative and involves the adoption of common guidelines and the annual reporting of progress by the Member States to the Commission and the Council. In areas of policy weakness, the Council can issue Country Specific Recommendations (CSRs), which a Member State is required to act upon over the proceeding annual governance cycle (Ashiagbor, 2005; Velluti, 2010).

Social exclusion did not enter the EU mainstream until the launching of the Lisbon Strategy in 2000, which aimed to make the EU ‘the most competitive and dynamic knowledge-based economy in the world’ by 2010 (Council of the European Union, 2000). The legally non-binding mode of governance introduced with the EES – referred to as the Open Method of Coordination (OMC) under the Lisbon Treaty – was introduced into a variety of policy areas, such as education and training, pensions and, importantly, social exclusion (James, 2012: 18). As regards the latter, up until 2005 the Social OMC focused on an approach that combined access to employment, resources, goods and services to help the most vulnerable. Under its third-order priority within the framework of European integration, its governance process was less regular and less prescriptive than the EES, with governance cycles every two to three years and no CSRs or quantitative targets. The relaunching of the Lisbon Strategy in 2005 emphasised ‘jobs and growth’ and the Social OMC was reformulated to include both pensions and health care, and renamed ‘Social Protection and Inclusion’. In the relaunched Lisbon Strategy social exclusion became more closely linked to labour market activation (Daly, 2006: 7). The governance cycles remained irregular and there were no targets, no recommendations, few benchmarks or deadlines other than for the purpose of reporting, and no sanctions of any consequence (Daly, 2012: 74–75).

The field initially gained greater political prominence during the launch of Europe 2020, the EU’s economic and social reform programme for the decade, which replaced the Lisbon Strategy. Europe 2020 included the EU’s first quantitative target to reduce the number of people at risk of poverty or social exclusion by 17 per cent (or 20 million) by 2020 (European Commission, 2010). To give some idea of the scale of this ambition, over the eight years of relative growth in Europe (2000–2008), the prevalence of relative income poverty in the EU remained more or less unchanged (Cantillon, 2011). In some respects, the target represented a step forward for the governance of the field. It was built on three different definitions of being at risk of poverty or social exclusion, understood as (i) income poverty and/or (ii) severe material deprivation and/or (iii) living in a jobless household. Member States could use a combination of different definitions or develop their own definition. The Broad Economic Policy Guidelines (BEPGs) and those of the EES were combined and formed the Integrated Guidelines (IG), whose Guideline 10 concerned the fight to reduce the number of those at risk of poverty or social exclusion. As part of the Europe 2020 programme, the Commission launched one of its seven flagship initiatives to achieve its goal, known as the European Platform against Poverty and Social Exclusion. It was designed to spearhead reform, focus minds on the various ways in which poverty could be reduced and enable mainstreaming (see Sabato and Vanhercke, 2014).

The poverty target was therefore brought into the EU’s governance mainstream and incorporated in the European Semester, the EU’s annual governance cycle which serves to monitor and enforce compliance with budgetary and structural reforms. Despite apparently positive changes, the EU’s hierarchy of priorities remained firmly established and in many respects was amplified. The European Semester was one of several governance reforms introduced in the wake of the eurozone crisis. In the absence of any form of fiscal federalism or redistributive policies to balance the finances of the eurozone, the European Semester became a key tool in steering and implementing the EU’s solution to the eurozone crisis, namely ‘austerity’ (Degryse, 2012). The first part of the decade witnessed some Member States implementing EU-driven reductions in spending and debt. Under the EU’s hierarchy of priorities, employment policy reforms were of secondary importance, while the target as regards people at risk of poverty or social exclusion retained its third-order status.

Social issues gained greater prominence within the European Semester during the second half of the decade. As the European economy began to grow and concerns over the integrity of the eurozone subsided, social actors were able to gain some traction in the Semester. For some, the latter underwent a certain socialisation, which was regarded as a positive step towards the building of a comprehensive social dimension (Zeitlin and Vanhercke, 2018). Others, however, point to the limitations of such political activity (Copeland, 2020; Crespy and Vanheuverzwijn, 2019; Dawson, 2018). CSRs in relation to people at risk of poverty or social exclusion may have increased in number in relative terms, but they were framed around the need for participation in the labour market and/or in education and training (Copeland, 2020: 151). In 2020 there were 8.5 million fewer people at risk of poverty or social exclusion than in 2008, across the EU (Eurostat, 2021). The extent to which EU governance is the causal factor behind the reduction can also be called into question. In their study, Jessoula and Madama (2018: 187) noted that in Belgium, Poland and, to some extent, Italy, there were increases in the salience of poverty, agenda shifts, revisions to national legislation, and some procedural changes to promote more integration across social policy sectors. Other Member States, such as (then) the United Kingdom, Germany and Sweden were more resistant to change. It remains important not to overstate the contribution of EU governance to reducing the number of those at risk of poverty or social exclusion. EU policy in this area under the aegis of Europe 2020 was at best complementary to agendas and policy developments within the Member States, given its situation with the governance hierarchy.

The governance of reducing those at risk of poverty or social exclusion within the field and the emergence of complementary hybridisation

The EU’s latest commitment to reduce the number of those at risk of poverty or social exclusion by at least 15 million by 2030, including at least five million children, is the latest iteration of such legally non-binding governance in the field (European Commission, 2021a). As with the EU’s 2020 commitment to reduce the number of those at risk of poverty or social exclusion, progress is to be monitored via the European Semester. The target has the potential to be yet another high-level commitment, plan or programme from the Commission and the Council which may disappear during a subsequent crisis or with the emergence of a new policy priority. An issue for the EU’s legal and political structures is that reducing those at risk of poverty or social exclusion is addressed predominantly by legally non-binding modes of governance and provides very few incentives for national governments to participate. A second issue is that in the context of limited Treaty provisions, EU attention to the issue of those at risk of poverty or social exclusion tends to wax and wane. Governance arrangements in the policy field can easily be relegated or even ignored when a crisis hits or politics changes.

There is a sense, however, that the EU’s current preoccupation with reducing the number of those at risk of poverty or social exclusion may be different from previous iterations. The policy problem has been gaining traction at the EU level for nearly a decade and may be able to overcome its third-order status. The overall result could be that the EU’s policy objective is less susceptible to shifts in issue salience and is therefore more likely to be achieved. The driver behind these changes is the intertwining of different elements of political agency within the EU institutions, which have come to view the EU’s social problems, including those at risk of poverty or social exclusion, as a matter of common concern and a priority. This, in turn, has produced shifts within EU governance and the emergence of a form of hybridity in relation to the instruments used. Hybridity refers to how different forms of governance, such as hard law and soft law, coexist and their potential effects on the integration potential of a policy area. For Trubek and Trubek (2007) hybrid governance is complementary if the various governance tools have not been merged, and transformative if they are not only complementary but integrated into a single system in which the functioning of each element is necessary for the successful operation of the others. Hybrid structures can either be designed intentionally or can emerge unintentionally as new governance patterns are introduced. As we shall see with regard to those at risk of poverty or social exclusion, within the field a form of complementary hybridisation is emerging, although it has emerged unintentionally as new governance instruments have been introduced in related fields.

The emergence of complementary hybridisation has been driven by increased politicisation across the EU. The role of EU expertise, particularly that of the Social Protection Committee, has done much to promote the need for EU action. Over the past decade, the Social Protection Committee has developed its knowledge infrastructure through various data-gathering and scoreboard initiatives. Knowledge generation concerning reducing the number of those at risk of poverty or social exclusion has been a cornerstone of the field since the Lisbon Strategy, but the formation of the Social Protection Performance Monitor (SPPM) in 2012 represents a new phase in that it formalised data gathering, made data on the different dimensions of being at risk of poverty or social exclusion accessible and, importantly, enabled cross-country comparisons and the monitoring of overall trends (Social Protection Committee, 2012). The SPPM was used to feed into the European Semester and, although concrete policy outcomes related to poverty and social exclusion emanating from the Semester are difficult to identify, the SPPM did much to generate knowledge of the policy problem, as well as alerting us to new areas of concern. One such concern is in-work poverty, which was included within the SPPM and has gained increased traction as a particular policy problem. The issue here is that in 2020 across the EU 8.8 per cent of workers (between the ages of 18 and 64) lived in poverty (Eurostat, 2021). As regards political activity, the actions of the Social Protection Committee in conjunction with the policy-making of the European Parliament and the broader set of social actors have increased the ‘salience of poverty’ (Jessoula and Madama, 2018: 187).

More broadly, politicisation gathered pace during the Juncker Commission (2015–2019) and has continued with the Commission of von der Leyen. By the middle of the 2010s, the European electorate was exhibiting rising discontent with the EU. The gathering opposition has been driven by the 2008 financial crisis and EU austerity measures that were implemented at the national level under European economic governance (Vesan et al., 2021). Mindful of a more critical mass of sympathetic governments within the Council, one of the Juncker Commission’s responses to the growing discontent was to push for further integration within the EU’s social dimension (Copeland, 2022). The aim was to both kick-start and re-energise integration in the field and attempt to put the economic and social aspects of integration on a more equal footing. The centrepiece of the Juncker Commission’s plan was the European Pillar of Social Rights (EPSR), which it hoped would replicate the political momentum that emerged in the field during the early 1990s following the 1989 Community Charter on the Fundamental Social Rights of Workers. Launched in 2017 the EPSR contains 20 principles and rights, grouped into three themes: (i) equal opportunities and access to the labour market; (ii) fair working conditions; and (iii) social protection and inclusion (European Commission, 2017a). The EPSR represents an amalgamation of social rights already guaranteed in the Charter of Fundamental Rights of the European Union, albeit updated to reflect changes in the labour market; existing EU social and employment policy competences and activities, particularly those governed by legally non-binding modes of governance; and several policy initiatives that attempt to both define and steer the future of a Social Europe, but for which social rights currently do not exist, such as homelessness and long-term care (European Commission, 2017a). The EPSR is to be delivered through four means: EU law; social dialogue; policy guidance and recommendations through the European Semester; and financial support through a range of EU funds.

In the area of reducing the number of those at risk of poverty or social exclusion, there is no specific principle related to its reduction per se. Rather there are several areas in which developments could have a positive impact. For example, Chapter 1 includes the right to education, training and lifelong learning (principle 1), gender equality (principle 2), equal opportunities (principle 3), and active support for employment (principle 4); Chapter 2 includes the right to fair wages; and Chapter 3 includes affordable child care and equal opportunities for children (principle 11), the provision of adequate social protection (principle 12), the right to adequate minimum income (principle 14) and old-age income and pensions (principle 15), the inclusion of people with disabilities (principle 17), affordable long-term care (principle 18), access to housing (principle 19), and access to essential services (principle 20). It should also be noted that the important aforementioned principles are those for which the EU’s legal competence remains broadly in the field of legally non-binding initiatives. The scale and scope of ambition are substantial, however, not least because positive developments within these various subfields may make important contributions to the reduction of those at risk of poverty or social exclusion.

As a result of the shift in politics, there have also been shifts within the governance arrangements. Within the European Semester the principles of the EPSR, combined with a redesigned Social Scoreboard, feed into the analysis and formulation of the Country Reports, as well as the Country Specific Recommendations (European Commission, 2017b). The EPSR was also used in 2018 to revise the Integrated Guidelines of the Semester to ensure they are fully representative of its 20 principles (Official Journal of the European Union, 2018). In a context in which the legal foundations of the Semester have not changed, the danger is that the European Semester may fail to deliver much in the way of reducing the rate of those at risk of poverty or social exclusion, thereby representing yet another lost decade for millions of people across the EU. Indeed, analysis of the 2022 CSRs reveals that this is a real possibility (see European Commission, 2022a). While the individual Country Reports produced by the European Commission highlight the most important social and employment policy priorities within each of the Member States – areas of concern and areas to monitor – the resultant Country Specific Recommendations are somewhat modest with little explicit mention of the need to reduce the rate of those at risk of poverty or social exclusion. Having said that, pre-pandemic there was a growing prevalence of social CSRs in the Semester. The requirement to include them in national Recovery and Resilience plans may explain the specific patterning of CSRs in 2022 (see below). In 2022, 14 Member States were issued with no CSRs concerning the social dimension (BG, CY, DE, EL, FR, HR, IR, IT, LT, MT, PO, PT, RO, SK) even though most faced obvious challenges with their rates of those at risk of poverty or social exclusion. More encouragingly, though, Country Specific Recommendations have been issued for some Member States in the broad areas related to being at risk of poverty or social exclusion and cover the inclusion of disadvantaged groups in the labour market (AU, NL, SE, HU), education and training for disadvantaged groups (BE, LU, NL, SE), improving the provision of social housing (CZ, DM, ES, HU, LT), improving the coverage of social protection (EE, HU, LV), improving long-term care (EE, SI), improving the quality of social services (LT, HU), and social security to incentivise work (FI). In many respects, the coverage of these areas within the European Semester indicates that being at risk of poverty or social exclusion is currently being viewed through a wider lens at the EU level.

Encouraging developments outside the European Semester highlight the increased variety of governance tools being used to tackle the problems of those at risk of poverty or social exclusion and a form of complementary hybridisation. In many respects, this is where the EPSR and its 20 principles have had a material impact on EU policy agendas as it has become a governance tool to mainstream other EU policies. The first of these is related to the EU’s legislative agenda, which the Juncker Commission specifically tied to the launching of the EPSR. At the heart of the Commission’s strategy was the updating of existing directives to ensure they better reflect current working practices, as well as bringing the principles of the EPSR onto the EU’s agenda (Copeland, 2022: 10). The Commission secured agreements on revising the Written Statement Directive in the form of the Directive on Transparent and Predictable Working Conditions and a Revision to the Maternity Leave and Parental Leave Directives in the form of the Directive on Work-Life Balance for Parents and Carers. While the fundamental aim of each directive concerns employment policy, they both contain important elements that are related to reducing the number of those at risk of poverty or social exclusion. For example, among other things, the Directive on Transparent and Predictable Working Conditions gives workers with variable schedules the right to greater predictability of working hours, the right to request a permanent contract after six months of being on a temporary contract, and the right not to be charged for mandatory training (European Commission, 2022b). These additional rights are a response to the growth of insecure employment over the past two decades, in terms of both a rise in temporary contracts and the introduction of on-demand or platform workers. Such work practices have had a disproportionate impact on the lowest paid, who often have insufficient resources to manage fluctuating wage income. Combined with other initiatives as regards being at risk of poverty or social exclusion, such legislative developments could help to reduce the number of people experiencing in-work poverty. Meanwhile, and as demonstrated by the Juncker Commission, legislative developments can provide the foundation for future revisions and updating, thereby ensuring their continuous modernisation and relevance.

Legislative developments that are relevant to reducing the number of those at risk of poverty or social exclusion have continued during the current Commission. In 2021 the Commission launched a proposal for a directive on improving working conditions in platform work (European Commission, 2021b). The proposed Directive seeks to ensure that people working through digital labour platforms are granted the legal employment status that corresponds to their actual work arrangements. The persons concerned would therefore enjoy the labour and social rights that come with the status of being a worker. This would mean the right to minimum wages (where they exist), collective bargaining, working time and health protection, the right to paid leave, and social protection benefits. In October 2022 the Council and the Parliament also reached an agreement on a Minimum Wage Directive (Council of the European Union, 2022). Where statutory minimum wages exist, Member States are recommended to benchmark them at at least 60 per cent of the country’s median salary or 50 per cent of the average wage. Meanwhile, Member States in which wage formation is done exclusively via collective agreements are not required to introduce statutory minimum wages. In addition, Member States with collective bargaining coverage of less than 80 per cent are required to formulate action plans to extend coverage. The Commission also considered issuing a directive on minimum income, which it regards as a key tool to alleviate those at risk of poverty or social exclusion, but settled for a Commission Recommendation. Within the Council, divisions between the Member States signalled to the Commission that an agreement would not be reached on a proposed directive (Shahini et al., 2022).

The Council Recommendation on Minimum Income highlights the simultaneous growth of Commission and Council Recommendations related either directly or indirectly to policy aimed at those at risk of poverty or social exclusion. The Juncker Commission secured an agreement on a Council Recommendation on Access to Social Protection for Workers and the Self-Employed. Originally the idea was to issue a directive, but the view was that a Recommendation would be more likely to win the backing of the Council. The Recommendation covers the right of all workers, including the self-employed, to participate in social protection schemes. Extending coverage to previously ineligible individuals is to be monitored by the European Semester (Council of the European Union, 2019). Meanwhile, Recommendations, strategies and initiatives have also been agreed upon or are in the pipeline under the von der Leyen Commission (European Commission, 2021a). Those concerning action to help those at risk of poverty or social exclusion include the European Platform on Combating Homelessness, the Affordable Housing Initiative, the Initiative on Long-Term Care, the Council Recommendation establishing the European Child Guarantee, and an EU Report on access to essential services. There is also considerable soft-law activity in the field of education and training, including supporting EU young people.

A final weapon in the EU’s arsenal for tackling the rate of those at risk of poverty or social exclusion concerns the EU’s financial resources, particularly those aimed at redistribution in the context of the European Social Fund Plus and the Recovery and Resilience Fund. The scale of the two funding streams, combined with the sheer quantity of projects across the Member States, makes it difficult to take anything other than a broad overview of developments. The European Social Fund Plus (ESF+) provides grants of almost €99.3bn (2021–2027), which, combined with matched funding from the Member States, is designed to support economic, territorial and social cohesion in the EU. Underpinning the ESF+ is the EPSR in the areas of employment, education and skills, and social inclusion. For example, the European Skills Agenda is designed to ensure that people can reskill, as well as upskill to remain in employment and/or new working environments (European Commission, 2020a). Combined with the above-mentioned legislative initiatives in the area of employment, the EU’s current emphasis on decent jobs could have an impact on reducing the number of those at risk of poverty or social exclusion over the longer term. In this specific area, Member States are being asked to pay particular attention to the integration of third-country nationals and marginalised communities, the social integration of those at risk of poverty or social exclusion, and measures to address those experiencing severe material deprivation (European Commission, 2022c). In many respects, the ESF+ provides substantial support in reducing the number of those at risk of poverty or social exclusion across the EU. Meanwhile, the Recovery and Resilience Fund is the EU’s temporary recovery instrument. It has enabled the Commission to raise funds to help the Member States implement reforms and investments. It was forged to mitigate the economic and social impact of the COVID-19 pandemic and provides a mixture of grants and loans to the Member States, totalling €672.5bn. In designing their National Plans the Member States are supposed to address all or at least a significant number of the challenges identified in the 2019 and 2020 Country Specific Recommendations (CSRs). In addition, the Member States are encouraged to align their plans with the Commission’s six pillars, three of which relate to being at risk of poverty or social exclusion: social and territorial transition; health, and economic, social and institutional resilience; and policies for the next generation (Official Journal of the European Union, 2021). The other three areas are the green transition, the digital transition, and smart, sustainable and inclusive growth. Current estimates suggest that around 30 per cent of the funding has been allocated to the broader fields of the social dimension (Vanhercke and Verdun, 2022: 209).

Necessary actions both throughout and within the EU to tackle the problem of being at risk of poverty or social exclusion

The EU’s approach to reducing the rate of people at risk of poverty or social exclusion is subject to several structural constraints. These include the dominance of legally non-binding modes of governance; the complexity of the policy problem; limited resources given the scale of the challenge; a low priority within the European Semester in comparison with employment and macroeconomic policy; and the fact that reducing relative poverty is difficult without income redistribution.

While these obstacles may seem insurmountable, they provide both opportunities and points of reflection in terms of making efforts to reduce the rate of those at risk of poverty or social exclusion an EU priority. Furthermore, there has never been more activity devoted to tackling the policy problem. Surveying the various policy tools and initiatives that have been adopted, one can only be impressed by the scale of ambition and the multi-faceted governance tools through which a reduction in the number of people at risk of poverty or social exclusion is to be achieved. Central to the EU’s approach has been the EPSR, which has been used to set the agenda and to mainstream other policy areas in the fight to reduce the number of people at risk of poverty or social exclusion. Further encouraging aspects include channelling more EU financial resources into tackling the problem and the maintenance of policy autonomy in this area in the context of some strong structural forces over the past decade. That is, tackling the policy problem has not succumbed to paradigm reductionism, such as viewing its cause – and thereby the proposed solution – from a very narrow perspective, such as employment status.

Nevertheless, at present EU governance arrangements are characterised as being a third-order priority for the EU, as well as a form of ‘complementary hybridisation’. If the EU is to deliver on its 2030 pledge, two further challenges can be identified in the context of what needs to happen throughout EU governance arrangements and within the field. Governance arrangements throughout the EU, in combination with political divisions within the Council, remain one of the biggest obstacles to reaching the 2030 target. Improving the third-order status of efforts to improve the rate of those at risk of poverty or social exclusion is unlikely to happen as a direct consequence of Treaty changes to deepen integration in this area. In the absence of such changes, a horizontal approach to policy interdependence is needed in an effort to understand where reforms in other policy areas could have an impact. One such area is taxation and the need for the EU to reduce competition between Member State tax regimes. In an EU (and global) economy in which capital is free-flowing, EU countries have been trapped in a race to the bottom in terms of tax rates, particularly corporation tax. Much of the EU’s efforts in this area focus on the global dynamics of the debate, particularly in the context of the G7, the G20, the OECD, and negotiations with the USA. In December 2021 the EU proposed a minimum corporation tax rate of 15 per cent for corporations with an annual turnover of about €750m, although the road to securing an agreement remains long (EUobserver, 2021). If such agreements can be made, they could have a material impact on the EU’s ability to reduce the rate of people at risk of poverty or social exclusion, as well as dealing with other social policy problems. A second dimension of the debate on taxation concerns the EU’s current attempts to agree on forms of revenue raising to pay for the Recovery and Resilience Facility (Reuters, 2021). While these taxes are supposed to fund existing financial commitments, they highlight the growing momentum surrounding the need for the EU to develop more revenue-raising powers. Such powers could be used in the future to support further programmes to reduce the number of people at risk of poverty or social exclusion.

A further key issue is the debate on taxation and inequality emerging from the European Central Bank (ECB). Recently, the ECB has become increasingly concerned by the growth of inequality and the potential long-term economic consequences of failing to act. The ECB has called into question its asset purchases – known as quantitative easing – which leads to a rapid increase in their value. Needless to say, the vast bulk of such assets are held by the wealthy. While the ECB acknowledges that its policies have contributed to rising inequality, it also argues that governments have a responsibility to tackle the problem with income and wealth taxes (Euractiv, 2021). In many respects, this potential shift within the ECB’s position is at an early stage and such ideas could fail to gain traction, but they point to potential cognitive shifts across the EU on taxation and where the EU’s social actors could build alliances and channel their advocacy.

Coming to developments within the field the vast range of initiatives launched has created a complex web. This is both a positive development and a cause for caution. On the one hand, the variety of governance tools used by the EU to address the problem is encouraging, but on the other hand, the field may become increasingly ungovernable. The complementary hybridisation is a result of ‘muddling through’ at the EU level and the seizing of various opportunities by EU social actors, including the European Commission. Care is needed to ensure that any further initiatives and developments remain complementary to both process and purpose. The endless monitoring and reporting of the different soft-law governance tools could create process fatigue across EU institutions and the Member States. One result might be that politicians and policy officials spend most of their time and energy on this rather than on tackling the issue. To minimise this, the EU needs to appoint someone to be responsible for reducing the rate of people at risk of poverty or social exclusion. While Commission Presidents Juncker and von der Leyen, as well as their respective Commissioners for Employment and Social Affairs, have led from the front, at present there is no single person who is championing the cause. The Commission President of course has multiple priorities at any given time. Meanwhile, Commissioners for Employment and Social Affairs again have multiple priorities, one of which is the policy to tackle the at risk of poverty or social exclusion rate. A Commissioner for this issue or a similarly high-profile post dedicated to handling the issue would promote sustained political leadership. This could also ensure relative coherence in terms of current mainstreaming activities and shift hybrid governance from being complementary to being transformative.

The appointment of a Commissioner for people at risk of poverty or social exclusion could also maximise the chances of hooking into broader developments around the social dimension, including the idea of a social imbalances procedure, as outlined by Sabato et al. (2022). This would further help to lock in the current integration momentum to ensure it does not falter as attention shifts to future crises in the EU. One first step might be to ensure the continuation of mainstreaming the EPSR in the EU’s legislative agenda, particularly those principles that concern reducing the rate of those at risk of poverty or social exclusion. A second aspect is related to EU financial commitments. While the priorities of the ESF+ and related finances are significant in terms of reducing the at risk of poverty or social exclusion rate, there is a real concern about the long-term finances of the projects funded under the Recovery and Resilience Facility. The expectation is that where continuity of funding is needed, national governments will step in, but this is not guaranteed. Reducing the numbers of those at risk of poverty or social exclusion therefore requires a long-term perspective with stable initiatives and programmes to be successful. Making a single person responsible for this in the EU could make a significant difference.

Conclusion

In many respects, the EU’s ability to deliver on its most recent commitment to reduce the number of people who are at risk of poverty or social exclusion remains open. While the EU’s attempts to tackle the issue can be characterised as a third-order priority, increased politicisation has resulted in a widening of the governance tools used and the emergence of a form of complementary hybridisation. This is an encouraging development. If anything, the current level of interest and activity is more promising than at any time over the past two decades. Nevertheless, important obstacles remain to be overcome within the field and throughout the process of European integration if the EU is to reduce the number of people at risk of poverty or social exclusion. The appointment of an EU Commissioner in this area would help, someone able to advocate for the issue, and provide oversight and coordination of the many different streams of activity that the EU has operationalised. In addition, changes within other EU policy areas would also be desirable, including agreements on corporation tax to prevent competition between the Member States and thereby alleviate some pressures of public finances. Broader reforms to national taxation systems to improve income inequality are also desirable.

Whether the current peak of activity in this domain can be transformed into a genuine shift within the field remains to be seen. Alleviating the at risk of poverty or social exclusion rate remains a third-order priority, but there is the potential for this to change and for it to become more central to the EU’s governance architecture. It is encouraging that the recent political attention stemming from the mainstreaming of the EPSR has broadened the number of governance tools being used, as well as some of the financial incentives for Member States to engage. The EU’s RRF and the ESF+ are important financial levers that are incentivising Member States to reform certain aspects of the welfare state. This may help to reduce the number of those at risk of poverty or social exclusion. While the RRF is only a temporary financial injection, given its scale and ambition, it will probably have at least some positive impacts on the EU’s social indicators. At the time of writing, there is real potential for the field to develop into a transformative form of hybrid governance, but much of that depends on the EU’s ability to deliver change both throughout EU governance and within the field to move beyond mere muddling through. As noted by Rainone (2022: 30), the window of opportunity created by the pandemic has not yet closed and this still leaves room for further changes to the EU’s social dimension. Nevertheless, the social turnaround brought about by the pandemic might fade away once the decision to reactivate the Stability and Growth Pact (SGP) at full speed is taken (Rainone, 2022: 29). The current political consensus within the Council could therefore shift either to support a deepening of the social dimension or for a move back to the approach adopted after the eurozone crisis. The evidence so far suggests there are more reasons to be optimistic than not.