Promoting inclusive growth and social cohesion – Europe


Promoting inclusive growth and social cohesion – Europe

The social security systems of the region of Europe have a track record of promoting inclusive growth and social cohesion. In addition to workers’ social insurance, systems typically address income poverty and its root causes through tax-financed income transfers and social assistance. A life-course approach to social protection is a priority, especially for the region’s comprehensive systems. Generally, social protection in Europe mitigates risks that occur from birth through to the start of the working life, as well as in work and during periods of unemployment, incapacity for work or when work is no longer possible.

Most contributory and non-contributory programmes in the region are well-established. Prior to the COVID-19 pandemic, the region’s social expenditure (excluding health) in terms of GDP averaged 16.5 per cent (ILO, 2017). The measures implemented to respond to the pandemic – including new benefits for workers, dependants, and vulnerable groups; and wage subsidies and higher benefit levels – have amplified expenditures (ILO, 2021a).

The region’s social security systems face challenges, including how best to improve benefit adequacy, financial sustainability, and the scale and scope of coverage. Informality, poverty and wider inequalities require tailored responses, as do the needs of all vulnerable groups.

The public health and socioeconomic effects of the pandemic complicate a policy environment shaped by globalization, demographic ageing, climate change, technological developments and evolving labour markets. As reliable partners of government working in support of economic development and recovery, the region’s social security institutions are responding successfully to meet the challenge of ensuring inclusive growth and social cohesion.

Key messages

  • The concept of economic empowerment – enabling people to respond to their own needs and sense of well-being – is fundamental to any definition of inclusive growth and social cohesion. It is through economic empowerment that social security creates important pathways to inclusive growth and social cohesion. Both the demand-side and supply-side effects of social security are empowering.
  • Social security is one key policy instrument that promotes the broader agenda of inclusion and social cohesion. To this end, policy synergies are important. The country examples of Malta and Ireland showcase the efficiencies that come with effective coordination and integration across agencies and social partners.
  • The life-course approach to social security enables people continually to develop capabilities for their improved financial security and social mobility. Breaking the bonds of intergenerational poverty means addressing vulnerabilities, starting from infancy through to childhood, youth, the working life and old age.
  • Youth face many challenges in the school-to-work transition. The economic downturn caused by the pandemic has exacerbated job scarcity. Active labour market and employment policies are key to facilitating successful job searches to enter decent employment.
  • Work opportunities for young workers in the digital platform economy have increased. Disputes concerning the legal employment status of many workers in the digital platform economy is a challenge that can deny workers their full rights to OSH and social security.
  • International social security agreements help secure the rights of migrant workers and families. Some countries in the region have taken unilateral action to protect the rights of migrant workers in irregular situations. Such action should be accompanied by communication and information campaigns, on the one hand, to enable access to services without fear of repercussions and, on the other hand, to build acceptance and support among the local population.

Facts & trends

Facts and trends
Unemployment and poverty rates
Informality levels
Vulnerable groups: Women, workers in economically high-risk jobs and trainees

Social security, inclusion and social cohesion

The potency of social security as a policy instrument in economic development and inclusive growth rests on its inherent capacity to influence both sides of the economy. On the one hand, the demand side effects are immediate and come from the income multipliers of social security expenditures. The supply side effects, on the other hand, may not be as immediate as these are essentially returns on a country’s investments in its human resources. Social investment to transition people out of poverty through education and capacity building, for example, may take some time to yield returns, but the effects may be more robust to the extent that the acquired skills subsequently enable greater income security and social mobility. In sum, social security is empowering, whether looked at from its demand side or supply side effects.

The concept of economic empowerment – enabling people to respond to their own needs and sense of well-being – is fundamental to any definition of inclusion and social cohesion. Without economic empowerment, it would be difficult for people to feel included in society. Nurturing, enabling and supporting people’s productive capacities across the life cycle is an investment in their economic empowerment, which in turn creates important pathways to inclusion and social cohesion.

Building on the base of conventional employer-employee contributory programmes, social security also includes noncontributory schemes that address poverty and its roots. While social assistance programmes with a focus on poverty alleviation have long been recognized as an important part of multi-pillared social security systems, current development paradigms also emphasize their role as enablers for people to escape poverty, prevent their falling back into poverty and, over time, to end the cycle of intergenerational poverty.

The paradigm shift recognizes, among other things, that the disadvantages that children are born into tend to be compounded over the life course. Thus, inequalities and vulnerabilities must be addressed from the youngest age. The region’s comprehensive social protection systems reflect this life-cycle approach and seek to address identifiable risks in different life stages related to age; namely, the prenatal period, infancy, childhood, adolescence and youth, adulthood (working life), and old age.

While there may be considerable variations in social protection coverage across the region, the effective level of social protection coverage (excluding health) for the region is high, with 83.9 per cent of the population having access to at least one social protection benefit. Two in three vulnerable persons – defined as all children, all adults not covered by contributory schemes, or those above retirement age but without a contributory pension – are covered by social assistance (ILO, 2017, pp. 158–163).

As is discussed below, a number of social security innovations are helping to make the region of Europe more inclusive of children, youth, migrant workers, informal workers and working-age adults.

Investing in the future of vulnerable children

To help end intergenerational poverty, the Organisation for Economic Co-operation and Development (OECD) recommends that countries build and develop child well-being strategies that prioritize the needs of vulnerable children and enable them to overcome early life disadvantage. Child vulnerability has many roots, some of which may be traced to individual factors (disability, mental health difficulties, immigrant background, maltreatment, instable home environment), family factors (material deprivation, parenting skills, parents’ level of education, family stress and violence), and community factors associated with school and neighbourhood environments (OECD, 2019, pp. 19–22). Should these disadvantages remain unchecked, the OECD estimates that it could take from four to five generations, or up to 150 years, before a child born into a low-income family would be able to earn a country’s average level of income (OECD, 2018).

Building and improving education outcomes is key to improving opportunities for vulnerable children (OECD, 2019). Some country examples include Scotland where, since 2014, children aged 2–4 from disadvantaged families are entitled to the free provision of early learning and childcare for 16 hours per week (600 hours per year) on top of the normal number of hours of free provision of around 12 hours per week. In the Netherlands, targeted programmes for children aged 3–4 from disadvantaged backgrounds are available in both childcare and playgroups. In Norway, the enrolment rate in early childhood education and care improved after a series of incentives were given to disadvantaged families, including capping annual fees to no more than 6 per cent of family income (OECD, 2019).

In France, the National Family Allowances Fund (Caisse nationale d’allocations familiales – CNAF) helps refugee families integrate and break down cultural barriers by providing access to pre-school childcare facilities, out-of-school facilities for schoolchildren, socio-cultural centres and parental support. Also, CNAF recently launched a new website Birth pathway that provides access to all information on available services and benefits that soon-to-be parents are entitled to from the third month of pregnancy to the child’s third. To simplify administrative procedures, the website is coordinated across all social protection partners in France including the Family Allowances Fund (Caisse d’allocations familiales – CAF), the Primary Health Insurance Fund (Caisse primaire d’assurance maladie – CPAM) and the Employment Centre (Pôle emploi).

The State Social Insurance Fund of Kazakhstan is leveraging a government programme Digital Kazakhstan to proactively (instead of reactively) inform members of childcare provision services, maternity benefits, and benefits for adopted newborns and childcare up to the child’s first birthday. In Monaco, new legislation was passed in 2020 to give self-employed workers access to the same family benefits provided to employees. In Turkey in 2019, the Social Security Institution launched EDU-CARE and INST‑CARE programmes, which provide early childhood education and care support to enable women with young children to continue in employment.

School-to-work transitions

For a number of years, youth unemployment rates and the labour participation rates of youth (young workers aged 15–24) have been a cause for concern.

In a survey of school-to-work transitions, young workers aged 15–29 identified five main reasons for becoming discouraged in their job searches, namely, i) no jobs locally available, ii) no knowledge of how or where to seek work, iii) unable to find appropriate work, iv) unsuccessful job searches and v) too young to find a job (Elder and Kring, 2021).

These findings underline the importance of employment services. Moreover, these should be coordinated and interconnected with education and employment policies as well as with social security. The latter should facilitate education and training as well as provide social protection to workers.

Efforts to help the school-to-work transition may include apprenticeships or a combination of classroom learning and practical training, and support for youth entrepreneurship and self‑employment.


Austria, Germany and Switzerland have a strong labour market tradition of apprenticeship programmes. Apprenticeship courses match young workers with private- or public-sector employers, typically for a period long enough for them to acquire a skill.

As regards the involvement of social security organizations, Italy’s National Institute for Insurance against Accidents at Work (INAIL) supports the training needs of student apprentices through an e-learning platform, Studiare il Lavoro. Using live case studies, interactive video games and animation, students aged 15–18 are trained on the importance of health and safety at work.

Youth entrepreneurship and self-employment

Starting a business as an entrepreneur or self-employed worker is another option for young people to enter gainful activity. Policy support includes access to financial services and life-long learning to build the relevant skills, including technical and vocational skills (Weidenkaff and Witte, 2021). The goal is to provide start-ups with access to skills, knowledge, finance, markets and networks that could, in turn, create jobs for young workers and their peers.

A growing number of young people are turning to digital platform work, often because of limited opportunities to find decent waged employment. Based on a 2016–17 survey, an average of 4.9 per cent of young workers in Austria, Germany, Italy, Netherlands, Sweden, Switzerland and the United Kingdom were working in the digital platform economy (Pinedo Caro, O’Higgins and Berg, 2021).

For all countries in the region, the labour market status of workers in the digital platform economy presents a complex set of legal issues. A common legal challenge is to determine whether workers in the digital platform economy are self-employed or employed. This distinction is important because employment status determines workers’ rights, including access to social security. Although the growing digital platform economy provides new employment opportunities, such work remains precarious, wage levels are often low and uncertain, and workers have limited access to occupational safety and health (OSH) measures and social security protection.

When looking forward to the post-COVID recovery, one urgent need is to strengthen the labour market and social protection rights of workers in the digital platform economy in a more coordinated way (ILO, 2021b).

Social inclusion of migrant workers

There are an estimated 169 million international migrant workers globally, of which 63.8 million or 37.7 per cent are in the region of Europe (ILO, 2021c).

Bilateral or multilateral social security agreements are among the most effective means to extend social protection to migrant workers. EU Regulation No. 883/2004 is the largest multilateral social security agreement in the region and is applicable to 31 countries, namely, the EU 27, and the four countries of the European Free Trade Association (Iha, 2022).

Many countries in Europe extend social protection to migrant workers in irregular situations (ILO, 2021d, pp. 165–168). Irregular migrants, as defined by the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, are those who are not “authorized to enter, to stay and to engage in a remunerated activity in the State of employment pursuant to the law of that State and to international agreements to which that State is a party”.

Among the countries that have taken unilateral action in this regard are:

  • Belgium, where migrants in an irregular situation are entitled to urgent medical care if they reside in an area covered by a public social assistance centre and/or do not have the financial means to pay for their own medical care;
  • Cyprus, where labour inspectors who encounter unregistered or irregularly employed workers require the employer to register them with the Social Insurance Scheme, which covers every gainfully employed person in the country;
  • France, where migrant workers in an irregular situation may be eligible for State medical assistance (Aide médicale d’Etat – AME) that covers up to 100 per cent of their health-care expenses, provided that they have been living in France for at least 3 months without interruption and whose financial resources are below a certain threshold;
  • Germany, where migrant workers in an irregular situation have access to emergency medical care and can request reimbursement of costs without fear of denouncement or deportation since the procedure is confidential;
  • Portugal, where migrants in an irregular situation who cannot prove residence in Portugal for more than 90 days are nonetheless eligible for certain health benefits at no cost, such as urgent health care; maternal, reproductive and child health-care; treatment of certain communicable diseases such as HIV/AIDS or tuberculosis; and immunization.
  • Sweden, where legislation on health and medical care for persons without a necessary permit entitles them to health care; and
  • Switzerland, where coverage of migrant workers is not based on legal status but on the obligation to enrol in a social insurance scheme.

Informal workers and working‑age adults


The region has a sizeable informal economy. It is estimated that one out of four (25.1 per cent) of the region’s employed population is in informal employment. The number reduces to one in five (20.9 per cent) if the agriculture sector is excluded. There is considerable variation across the sub-regions. In Northern, Southern and Western Europe, the informal economy accounts for 14.3 per cent of the working population; in Eastern Europe it is at 31.5 per cent; and in Central and Western Asia it is at 43.4 per cent. The share of informal employment is highest in Tajikistan (74.8 per cent), Albania (61 per cent) and Armenia (52.1 per cent), while in the Nordic countries as well as Estonia, Luxembourg, Malta and Slovenia, the proportions are in single digits (ILO, 2018).

Benefit dependency

The risk of benefit dependency, especially regarding social assistance payments, is one that is often flagged up by bodies administering income transfers and non-contributory programmes. This was a challenge that confronted Malta’s Ministry for Family, Children’s Rights and Social Solidarity. The policy concern was that Malta’s social assistance programmes were nurturing dependency, disincentivizing the take-up of work, and creating a so-called benefit trap.

In 2014, the Maltese government launched its Making work pay programme, which consisted of a host of active labour market policies that aimed to build, over a three-year cycle, the skills of programme participants, provide them with work, and promote their re-entry to the labour market with the support of privatesector employers. The programme has helped Malta to successfully reduce benefit dependency, increase employment, reduce poverty and increase inclusion.

Supporting the employment of working‑age adults

The global financial crisis in 2007–08 and the economic recession that followed increased the unemployment rate in Ireland by 300 per cent across the period 2008–2012. At that time, the country’s social protection and employment services were administered by three large and separate agencies, which led to fragmented service delivery. To respond to this challenge, administrative responsibility was centralized in one of the agencies, the Department of Social Protection (DSP), into which the other two agencies were merged. Welfare and employment services were delivered through one-stop shops called “Intreo” centres. Transaction processing times were reduced from three weeks to about three days. The lead time for engagement with employment services was reduced from at least three months to about two weeks. The persistence rate, a measure of those who move from short- to long-term unemployment, was reduced from 35 per cent to 26 per cent. The progression rate, a measure of those who leave a benefit programme, for those who were long-term unemployed, increased from 25 per cent to 44 per cent.

By bringing social protection and employment services together, it is possible for the payment of benefits to people without jobs to be linked better to the important task of supporting their job search and related opportunities. In Ireland, the transaction‑based services of the original three agencies (claims processing and payments) have thus been transformed to a more proactive and effective case management of clients. The efficiency gains realized by the DSP demonstrates what can be achieved by the coordinated implementation of policies and programmes across agencies. Capturing and building synergies, in this case between social protection and employment services, enhances and maximizes social security outcomes.

Good practices

Malta: Making work pay

In 2014, the Government of Malta launched the Making work pay programme, with the aim of reducing welfare dependency, increasing insured employment and boosting the economy. Offering a host of active labour market policies that incentivize the return to work of inactive or unemployed persons, the programme offers an in-work benefit scheme, free childcare for parents in employment and education, as well as care for primary pupils before and after school hours. Importantly, benefit amounts are tapered over a three-year period to wean programme recipients from social assistance. In addition:

  • To incentivize the second parent (usually the mother) to work, the benefit for a dual‑earner family is higher than a single-earner family.
  • The free child care and after-school care for young children aim to enable the mother to work full-time.
  • The Ministry for the Family, Children’s Rights and Social Solidarity coordinates with private-sector employers to offer job placements to programme participants.
  • The social assistance benefits taper off over a period of three years, from 65 per cent to 45 per cent to 25 per cent. The idea is to motivate programme participants.
  • In the same three-year period, private-sector employers receive 25 per cent of the social assistance benefit as training support for the programme participants.
  • In the same three-year period, the Ministry makes progressive savings equivalent to 10 per cent, 30 per cent, and then 50 per cent of social assistance expenditure, which it re-channels to placement services, training programmes, and other poverty alleviation programmes.

Source: ISSA (2022).

Turkey: Implementation of the Transition to Formality programme

The refugee crisis triggered by the Syrian conflict that began in 2011 was initially seen as an emergency humanitarian case. The mass migration of Syrians into neighbouring countries has since brought new questions on their integration and development, as well as the sharing of responsibilities to help their situation. In this context, Turkey launched the Transition to Formality programme (TFP).

The TFP seeks to promote formal employment and access to decent work in host communities for Syrians Under Temporary Protection (SUTP) who have taken refuge in Turkey because of the conflict in Syria. The programme is also open to Turkish citizens. In practice, TFP provides financial support to employers who hire refugees listed with the SUTP and Turkish nationals. Employers apply for work permits on behalf of refugees to enable them to work in Turkey. The TFP reimburses employers for work permit fees as well as for social security contributions paid on behalf of TFP beneficiaries for up to six months, upon verification by the Social Security Institution of their registered employment.

The TFP promotes a culture of formal employment and encourages employers to fulfil their social security obligations. The TFP as been progressively rolled out in phases across provinces of Tukey since 2019.

Source: ISSA (2022).


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