Brussels set to tighten rules on jobless benefits for EU citizens

Brussels is set to tighten rules on when foreign workers can claim unemployment benefit, amid fears that EU law is open to abuse.

According to an internal policy paper seen by the Financial Times, the European Commission will propose the measure as part of a series of "targeted" changes to EU standards for determining where cross-border workers should claim social security benefits.

The move builds on recent case law from the European Court of Justice, which says governments can, in some instances, deny unemployment benefit to EU nationals from elsewhere in the bloc. It is likely to be welcomed in countries such as Germany, Austria and Denmark, where there are concerns that relatively generous welfare systems attract “benefit tourists”.

At the same time, Brussels has tended to be sceptical about the more sweeping claims made by governments, notably the UK’s, around benefit tourism. It will argue that this week’s proposals focus on several specific anomalies in EU rules, which have not been updated for more than 10 years, rather than any generalised problem.

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Losing job

The document gives the example that, at present, it is possible for someone to work in Spain for 10 years, move to France and lose their job after a week, and still have their previous years of work taken into account by the French authorities when their unemployment benefit is calculated.

Under proposals expected to be adopted by the commission on Tuesday, an individual would only be eligible to have this previous work taken into account if they had worked in the place where they were claiming benefits for at least three months. Until then, they would continue to be covered by the unemployment scheme of wherever they had lived before.

According to commission data, in more than 40 per cent of the cases where someone asks for recognition of work abroad, the person has been in the country where they are seeking benefits for less than three months.

In addition to the three-month rule for recognition of work abroad, the plans will also seek to address situations where an individual lives in one EU country but works in another, and then loses their job. The country of residency pays unemployment benefit, even though social security contributions have been made elsewhere.

Brussels sees this as unfair and out of line with principles that underpin the EU rules.

Jobseekers’ rights

The proposals will also seek, in some instances, to boost the rights of jobseekers to encourage people to seek work across the single market.

People would have greater rights to carry on receiving unemployment benefit from their home country even when they travel to other EU nations in an attempt to find work. At present, people can only “export” their rights for three months. This would be extended to six.

Tuesday’s proposals are expected to feed into already fractious discussions between member states over freedom of movement. A draft law, unveiled by the commission earlier this year, would make it more difficult for so-called posted workers to undercut local labour laws.

The draft has been strongly welcomed by countries such as France, Belgium and Germany, but has provoked a furious backlash from the central and eastern European nations that joined the EU in 2004. They argue that the step is protectionist.

– Copyright The Financial Times Limited 2016