Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

minimum wage tend to have higher proportions of in-work poor, not
lower. 11 Therefore the statutory minimum wage can be seen as an effect
of the decline of collective bargaining and the strength of trade unions
in Europe but not necessarily as a solution to the growing problem of
the in-work poor. The better policy solution would be to foster collective
bargaining in order to extend coverage to those areas where the in-work
poor are located.
Minimum incomes, the tax wedge
and in-work benefits
Social assistance and poverty relief schemes guaranteeing at least a
subsistence income are developed throughout the EU, although huge
differences exist in the amount given, the applicable eligibility criteria
and the duration of possible support. 12 In many cases, the complexity
of the system poses specific problems to claimants, who are hindered in
receiving their benefits, especially when transfer schemes are scattered
and uncoordinated, as in Greece. 13 In some countries, discussions about
a basic income have entered the policy agenda, which propose general
transfer payments to all citizens regardless of need. The basic income is,
however, unlikely to become a reform paradigm within the EU, given the
detrimental effect it has on work incentives and therefore incompatible
with the goal of high employment levels.
Rather, in the context of the recent activation policies in the EU member
states, more emphasis should be put on keeping the low skilled in the
labour market, even if the market wage does not provide a living wage.
This is often rendered difficult through “inadequate ‘activation’ policies”
– especially high tax wedges in combination with unemployment benefits
leading to institutional features that tend to create or enhance disincentives
to participate in the labour market and thus realise the goals set in the
Lisbon strategy. 14 Here, the process of streamlining existing institutions
and policies for fostering and reconciling work and social equality has not
yet been finalised.
This also applies to various forms of tax credit systems. On the one hand,
different working tax credits are created as an incentive for low wage
earners to work more hours. This is the case in the UK or Poland, where
tax credits count as income in means tested benefits. Other countries have
tax credit systems for workers, independent of their household situation.
But only in some countries, such as Slovakia and Hungary, have these
reforms had a positive impact on the employment rate. 15 Another form
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After the crisis: A new socio-economic settlement for the EU