How to lift 18 million Europeans out of poverty: evidence from JRC research

Ninety-three million people, one in five Europeans, live in poverty or social exclusion. As the European Commission adopts its first-ever anti-poverty strategy, the Joint Research Centre (JRC) shows that combining minimum wage increase, employment expansion, and minimum income reform could lift 18.5 million people out of poverty by 2030. 

JRC research provides evidence that the EU’s 2030 poverty reduction target is achievable following certain policy reforms. The JRC used EUROMOD, the EU tax-benefit microsimulation model, to simulate the combined effect of three policy instruments available to Member States: raising minimum wages, expanding employment, and reforming minimum income schemes. 

The analysis, which directly underpins the new Strategy, covers all 27 EU Member States and builds three scenarios from a shared baseline. The full methodology and results are set out in the JRC working paper Reducing AROPE in the EU: combining minimum income, minimum wages, and employment expansion.

Inaction is not neutral 

The first scenario projects current demographic and skills trends to 2030 without policy reform. It would reduce poverty or social exclusion by 7.7 million people, roughly half the 15 million target set by the European Pillar of Social Rights. In several Member States, the outlook without reform is actually worse than the present.  

A coherent reform package can meet the target 

The implementation scenario combines three instruments simultaneously: raising minimum wages to 60% of the national median, meeting national employment targets under the European Pillar of Social Rights, and improving minimum income schemes in both their level and the share of households they reach. Under this package, 18.5 million people would be lifted out of poverty or social exclusion by 2030, surpassing the headline target of 15 million. The additional fiscal cost is around 0.25% of EU gross domestic product. 

The real challenge is coverage 

Not all reform options deliver the same results. While raising benefit levels for current recipients reduces poverty to a degree, the most substantial gains come from extending coverage to eligible households that are not yet receiving support. The key barrier is not how generous the benefits are, but whether they reach those who need them. 

An acceleration scenario, extending minimum income coverage to all households in poverty, would lift close to 55 million people out of poverty or social exclusion across the EU. Administrative simplification, automatic enrolment, and proactive outreach are identified as the highest-return interventions available to Member States. 

Even under the most ambitious scenario, 37 million people (around 8% of the EU population) remain in poverty or social exclusion. Social exclusion persists even where income poverty is nearly eliminated, driven by accumulated material deprivation and low work intensity.  

JRC research supporting the EU’s Social Package 

The poverty reduction scenarios are part of a broader JRC contribution to the Social Package, including

• an analysis of the effectiveness of child benefit designs in reducing child income poverty across the EU
• a decomposition of poverty trends between 2019 and 2024 identifying the specific contribution of tax and benefit reforms in each Member State
• stress-testing of welfare state resilience under unemployment shocks
• an examination of poverty persistence and long-term trajectories across the EU, produced jointly with the Directorate-General for Employment, Social Affairs and Inclusion
• a distributional analysis of the cost-of-living crisis, examining how price increases affected households across the income spectrum

The full set of JRC analytical inputs is documented in the Staff Working Document accompanying the Anti-Poverty Strategy.

Background 

The European Pillar of Social Rights (EPSR), jointly proclaimed in 2017 by the European Parliament, the Council, and the European Commission, reinforced the EU's social dimension. Its 2021 Action Plan sets a headline target of reducing the number of people at risk of poverty or social exclusion by at least 15 million by 2030, including at least five million children. By 2025, the EU had reduced that figure by an estimated 3.4 million compared to the 2019 baseline, progress that is significant but insufficient. 

The EU's legislative framework for the three policy instruments modelled in the JRC study includes the Directive on adequate minimum wages (EU) 2022/2041, the 2023 Council Recommendation on adequate minimum income ensuring active inclusion, and the employment targets set out under the EPSR Action Plan.  

EUROMOD is the EU tax-benefit microsimulation model, maintained and developed by the JRC of the European Commission in collaboration with national teams in each Member State. It uses microdata from EU Statistics on Income and Living Conditions (EU-SILC) to simulate the distributional effects of tax and benefit policies across all 27 Member States. 

Related links 

Reducing AROPE in the EU: combining minimum income, minimum wages, and employment expansion  

Report: Addressing poverty in the EU - Insights from science and practice for an anti-poverty strategy

European Pillar of Social Rights (EPSR)

EUROMOD