Revision of rules on coordination of social security systems

The European Commission presented its proposal for a revision of the rules on coordination of social security systems in mid-December 2016. As part of this, regulation 883/2004 and its implementing regulation 987/2009 are set to be revised. For example, there could be amendments in the area of unemployment benefits and care benefits are included for the first time.

The greatest changes would be made in the area of unemployment benefits. For instance, the Member State of the last employment should be competent for frontier workers insofar as a worker has worked there for twelve months. Hitherto it has been the Member State of residence which pays unemployment benefits in cash.

In addition, the portability of unemployment benefits in cash from one Member State during a job search in another Member State (“export of unemployment benefits”) would be extended from at least three to six months. Furthermore, the existing possibility of a further extension would be maintained.

Moreover, insurance periods accumulated in other Member States would be taken into consideration if a mobile person makes a claim for unemployment benefits in cash in the Member State of the last employment. Nevertheless, a condition for claiming benefits in the Member State of the last employment is that this activity liable for social security contributions has lasted at least three months. Otherwise, the obligation to pay unemployment benefits falls on the State in which the last long-term employment was exercised.

Care benefits are to be included in regulation 883/2004 for the first time. As in the area of sickness benefits, the State of insurance will pay the benefits in cash when care is needed and the State of residence will provide benefits in kind.

ECJ case law on social benefits taken into account

In the area of access for non-active persons to social benefits, it is intended to incorporate the jurisprudence of the European Court of justice (ECJ) in the “Dano”, “Alimanovic” and “Garcia Nieto” cases in positive law. This is intended to establish that persons who neither work nor are actively seeking work in another Member State and do not have the right of residence in the Member State in question under the European free movement directive can be excluded from social benefits.

Broad thrust of Commission proposal correct, some points prompt criticism

The proposals concerning the payment of social benefits are correct and overdue. It must be established that persons have to have been working in the host country for at least three months before they can claim social benefits. This will prevent a possible abuse of free movement rights and excessive pressure on national social security systems.

By contrast, the extension of the export of unemployment benefits in cash prompts particular criticism. Because it would mean that the person in question would not be available to take up a new position on the home labour market. This impedes targeted integration efforts and an active labour market policy.

It is regrettable that the European Commission has not taken the opportunity to index child benefit. An EU citizen who works in another Member State currently is also entitled to claim full child benefit there. This is the case even when the children have remained in the home country. Yet this leads to inequality of treatment. Because the whole purpose of child benefit is to absorb some of the real additional expense of having children. But if the cost of living in the home country in which the children have remained is much lower, the objective is exceeded. And furthermore, children of parents who work in another Member State are better placed than children who live in the same Member State as their parents. This should be rejected. The situation can be remedied by indexing child benefit to reflect the real cost of living in the home country of the children. The German Federal Government has rightly called for this point to be revisited in the Employment Council (EPSCO).

BDA together with BUSINESSEUROPE will observe the discussions in the Council and European Parliament intensively and report on new developments and measures taken. Information about the text
drafted by: Eric Veillerobe (BDA)

Eric Veillerobe
Senior Adviser