Social Safety Nets and Targeted Social Assistance: Lessons from the European Experience

The objective of this paper is to review and compare the performance of social assistance non-contributory income support programs for the poor within the context of the Social Protection (SP) systems in European and other advanced economies. The performance and design of targeted income support to the poor differ across the advanced countries analyzed. Yet in most European countries, social assistance can be seen as an instrument of last resort after all other components of the Social Protection system have contributed to lower inequality and reduced poverty levels. The European Social Protection systems are effective and efficient, but reforms are needed as a response to changing socio-economic conditions. Of special importance are the reforms with respect to the provision of incentives for beneficiaries to become more active on the labor market, for providers to operate to be more critical when handing our benefits by changing entitlement rights as well as the containing operational costs. After all, it is the design and adjustment to local circumstances that matter when the role of social assistance in a broader SP system has been well understood. The first section of the paper provides the background necessary for analyzing the differences in the construction of the Welfare States in the various countries. The discussion is focused on the role of various components of SP systems and illustrates the large international differences in their components and their role in alleviating poverty and reducing inequality. The second section provides details on the characteristics of the social assistance (targeted income support to the poor) programs in the nine European countries. The third section discusses the differences in the performance of the social assistance systems in terms of coverage and participation, effectiveness towards reducing poverty and inequality, efficiency in delivering the benefits, and implementation issues. The fourth section reviews the recent debate towards reforms in the systems. The concluding section draws lessons from the experiences of the European countries related to the design and implementation of Social Protection systems aimed at fighting poverty and reducing inequality.