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Nordic countries fight unwanted consequences of EU benefit rules

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

The EU’s rules on social security benefits need modernisation and the cost must be shared more equally between member states. If not, liberal benefit systems like those found in Nordic countries might not be sustainable, argue Nordic governments as they join forces to push the issue in the EU.

Strictly speaking, all member states can decide for themselves who is entitled to claim unemployment benefit, parents’ allowance, child benefit and so on. They also decide the benefits’ size. There are no EU rules covering these issues. However, there is an EU regulation saying social security systems should be coordinated, without having to be similar.

The aim is to ensure that workers who move between countries do not lose the benefits they have already acquired in their home country. And if they go on to claim social benefits in their new country, these should be in line with what the citizens of that country get. This is all to prevent people losing out by making use of the freedom of movement. 

In reality these EU rules are chipping away at EU and EEA countries’ self-determination, even if that is not the intention. A country might have to pay benefits which the legislator had not envisaged during the creation of the social security system.

Stay-at-home mum in a different country

One example is that  rights belonging to the individual worker according to the member state’s own legislation, could be turned into rights covering the entire family when the Court of Justice of the European Union interprets the EU regulation. In practical terms this could mean that a woman who does not herself meet the requirements of the Swedish parental allowance system, might still be able to claim it if her husband has gone to Sweden to work. She might well be a stay-at-home mum in the country where the husband comes from.

Another consequence of EU rules is that a member state might have to pay social security benefits without having received the taxes meant to finance them. This is because you also have to take into consideration the amount of time someone has spent working in other countries, when deciding whether he or she qualifies for benefits in their new country.

That is why a woman, who had only been working in Switzerland and for whom Sweden had never received any social security contributions, was still entitled to the full Swedish parental benefit.

Two statements

These consequences of the EUs social security regulation are particularly obvious in countries with advanced welfare systems. But now this regulation is due a review. In light of that, Nordic governments have agreed to strengthen their cooperation on social security matters. They have presented a range of conditions that the revised regulation should fulfil.

They begin by underlining that the regulation is an important tool for supporting the freedom of movement for workers in Europe and the Nordic region. The Nordic countries do not wish to limit the freedom of movement. In that sense they differ from the UK, which right now is trying to negotiate a deal where citizens from other member states are not entitled to any social benefits until they have been working and paying taxes in the UK for four years.  

They argue the regulation on coordination of social security systems needs to be developed and modernised to mirror the current situation and the Nordic countries’ welfare system. You need to secure a balanced distribution of costs and solidarity between the member states.

Gender equality important

The government ministers responsible for health and social affairs underline the importance of gender equality to Nordic social security systems. Therefore, they argue, the EU regulation should as much as possible build on individual rights and mirror today’s family situations and the work/family life balance. The definition of family benefits must be just and fair.

The statement from the Nordic labour ministers centres on unemployment benefits. They point to the fact that there are considerable differences in wages and living conditions between the 32 EU/EEA countries. They argue that any coordination of unemployment benefit systems must take this into consideration. The regulations must also not undermine the use of active labour market measures which Nordic countries have been using for years. 

Today unemployed people can keep their unemployment benefit for three months while looking for work in other countries. One proposal put forward in the debate, is to prolong that to six months. That is not necessary, argue the Nordic governments. Recruitment processes have changed and people use the Internet and modern communication technology to apply for jobs across borders, the labour ministers write.

They might not spell it out, but the entire statement suggests they suspect there is quite a bit of fiddling going on. That is why EU rules must support the use of an active labour market policy, which links benefits to the applicant being active and available. They must also make it easier for member states to check that people who carry their unemployment benefits to other countries are actually actively looking for work.

The coordinated regulation must not undermine some of the countries’ high benefit levels, the labour ministers conclude.

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