Five years of economic crisis has left millions more people in financial distress, or in danger of poverty and social exclusion. Homelessness has grown across the EU. Most national welfare systems are stretched to their limits and governments are having difficulty helping the increasing number of people who need support.

To address the problem, the Commission is providing guidance on how EU countries can best use their welfare budgets to protect people in need and strengthen social cohesion.

The advice is based on the strategies taken by countries that have yielded proven benefits to people and economic growth as a whole. They are investing in services to strengthen skills and help people take advantage of opportunities. These countries generally have lower rates of poverty, a better educated workforce, higher employment and better economic conditions. The advice focuses on:

• responding to people's needs at critical moments in life – more can be done in advance to reduce the risk of social breakdown and avoid higher social spending in future

• targeting those in real need by simplifying the rules and becoming more efficient at providing adequate support

• improving people's integration into society and the job market – providing more affordable childcare and education, training and job-search assistance, housing support and accessible healthcare, for example.

The package includes recommendations for tackling child poverty and for a more integrated approach to child-friendly social investment.

Investing in children and young people is an effective way to break the cycle of poverty and social exclusion that can be passed on from one generation to the next. More must be done to improve people's opportunities later in life.

The package supports other Commission proposals to address Europe's social and economic challenges, including those on employment, youth employment, and pensions.

Next steps

The Commission will monitor EU countries as they adjust their welfare systems and, if necessary, make recommendations to particular countries.

More on EU welfare and social inclusion