There are many European citizens who move from one country to another in the Union for work, some to move permanently, some to work on secondment. Over 14 million Europeans live, work or retire in a country other than their own. To make their lives easier and give them more certainty about their rights, Brussels has proposed a reform of the rules on social security.
After years of failed negotiations, yesterday Parliament and the EU Council reached an agreement that updates the rules on the coordination of regulations on the subject, with five main innovations: clearer rules for unemployment benefits between countries, greater protection for family allowances and long-term care, strengthened controls against fraud, more administrative cooperation and digital procedures for workers and businesses.
Ten years of negotiations
“Almost ten years after the Commission’s proposal, citizens will be able to benefit from clearer and more predictable rules on the coordination of social security systems, including unemployment benefits, family benefits and long-term care benefits”, claimed the rapporteur for the Chamber, the German socialist Gabriele Bischoff.
“At the same time, we are strengthening cooperation between Member States to more effectively prevent abuses and counter social dumping. Free movement of workers is a fundamental right, but it must go hand in hand with fair and enforceable rules,” he continued.
The rules currently in force date back to the 2004 and 2009 regulations, now dated texts governing coordination between national social security systems. The problem has never been the absence of rules, but their complexity: gaps in interpretation, conflicts between national legislation and practical difficulties in accessing benefits have made job mobility more complicated than necessary.
In the meantime, phenomena such as the so-called “ghost companies” (letterbox companies, companies formally registered in a country but without real activity, used to circumvent contribution obligations), have multiplied, creating distortions in the labor market and harm to workers.
A single social security flag
The key principle of the European social security coordination system remains that each worker is insured in only one country at a time and pays social security contributions only in that state. This avoids both double contributions and coverage gaps.
Another basic rule is that of “totalization”: periods of work, insurance or residence completed in other Member States must be taken into consideration for the calculation of benefits. A worker who has contributed for five years in Italy and three in Belgium does not lose those three Belgian years: they enter into the calculation when he requests a pension or subsidy in Italy (and vice versa).
The new regulation does not overturn these cornerstones, but clarifies and strengthens them in some specific areas where the rules were incomplete or contested.
Unemployment
One of the most relevant chapters concerns unemployment benefits. The new rules update the coordination of unemployment benefits in cross-border cases and clarify when and how a benefit can be “exported” if the person seeks work in another Member State. In practice, those who have worked in multiple countries will be able to use the contribution periods accumulated elsewhere to obtain the allowance, avoiding starting from scratch.
The topic is delicate because it involves both worker’s rights and the financial balance between states. A country that has welcomed a foreign worker for a few months, collecting contributions, may find itself having to finance a long-term subsidy if that person loses their job. The new text introduces a “fairer distribution of financial burdens between EU countries”, claims the European Parliament statement, without however fully transferring the burden to the country of residence when the worker has not yet acquired sufficient rights there.
Long-term care
Until now, long-term care benefits (benefits and services for those who are not self-sufficient, such as dependent elderly people or people with severe disabilities) did not have a specific coordination regime at European level. They fell into residual categories, with different interpretations from country to country.
The new regulation fills this gap by introducing for the first time a coherent regime for the coordination of long-term care benefits. In practice, those who find themselves in this condition and live in a Member State other than the one in which they worked or contributed will be able to know with certainty which system to refer to and which rights to claim.
Posted workers and ghost companies
Particularly relevant is the part dedicated to posted workers, i.e. those employees temporarily sent by a company to work in another member state. This category was already at the center of controversy: legitimate posting lends itself to being used abusively by companies that set up fictitious branches in countries with lower contributions and then “post” workers anywhere in the Union, saving on labor costs.
The new regulation strengthens the coordination rules for this category and introduces specific measures to identify and combat letterbox companies. Member States will be able to cooperate more effectively through a notification system that allows workers’ social security status to be verified. Employers also benefit from simplification: they will be able to access information and complete the necessary documents online, also through the Eessi (Electronic Exchange of Social Security Information) system, the European platform for the electronic exchange of social security data between national administrations.
