The thorny issue of state benefits

The debate about migration within the European Union (EU) is linked to a further issue that we have not mentioned yet, namely state benefits such as unemployment benefits or social assistance for people with insufficient income.

There is no harmonised Union system in this regard. In other words, there is no common level of state benefits that has to be granted throughout the EU. Rather, each Member State defines itself what benefits it wants to grant and at what level. However, once a national system has been set up, EU law demands that it must not be discriminatory on grounds of, among others, nationality. This means that, if covered by the relevant Union legislation, migrant EU nationals and their family members have the right to be treated in the same manner as the nationals of their host state.

In practice, the combined effect of the differences between the levels of state benefits in different EU Member States and of the right to equal treatment means that immigration into a country with a higher level of benefits may be attractive. This in turn has raised fears of what is sometimes called ‘welfare tourism’, notably by eurosceptics. However, the following remarks will show that there are limits to the right to equal treatment in this field.

The legal basis for the right to equal treatment differs according to the category of person and the benefit at issue. Most notably:

1. Workers have a right to equal treatment with respect to social advantages (Art. 7(2) of Regulation 492/2011). [1] (Note that workers who lose their job for some time remain part of the legal category of ‘workers’ if they are looking for new work);
2. Persons coming to the host Member State in order to look for work have a right to equal treatment with respect to benefits intended to facilitate their integration into the employment market (Art. 45(2) of the Treaty on the Functioning of the European Union (TFEU)). This is the result of decisions of the Court of Justice of the European Union (CJEU);
3. Persons who are not economically active (eg pensioners) and who are entitled to reside in a different Member State based on Directive 2004/38 have a right to equal treatment with respect to social assistance (Art. 24 of the same Directive). Again, this right was originally recognised through CJEU decisions and subsequently put into the Directive. [2]

As you can see, the decisions of the CJEU have played an important role in recognising equal treatment rights for those in categories 2 and 3. Notably in the latter context (rights of persons who are not economically active), it is also through the Court’s case law that limits to these rights were developed. Thus, the Court held that the Member States are allowed to make the right to equal treatment dependent on, for example, residence requirements meant to guarantee that a certain bond has been established between the state in question and the migrant before the latter can claim certain state benefits.

Overall, it is only with respect to the first of the above categories (workers) that there is a full right to equal treatment in relation to social benefits. The deal made in February 2016 between the UK and the other Member States foresaw a change in this respect as far as certain types of benefits were concerned. However, its entry into force depended on a positive vote in the UK on remaining in the EU. As a majority of the voters were in favour of leaving, the deal did not enter into force.

It must be said that the legal issues in such cases are complex, not least because the Union’s coordinating social security law (Regulation 883/2004) often applies simultaneously. [3]

Finally, what about Switzerland and the European Economic Area (EEA)? In your educator’s opinion, for these states only the first of the above categories is relevant, ie that of workers. The EU case-law on the other two categories shows that here the right to equal treatment is based on a legal concept that is not part of either EEA law or the Swiss–EU sectoral/bilateral law, namely Union citizenship. Accordingly, here the fear of welfare migration is even less well-founded than under EU law (though national law is always allowed to be more generous than the agreements). In addition, the Swiss–EU Agreement on the free movement of persons explicitly allows for the exclusion of social assistance for persons looking for work (Art. 2(1) of Annex I to the Agreement).

Further reading

Read the blog entry by Prof. Steve Peers of the University of Essex (UK) entitled ‘The final UK renegotiation deal: immigration issues’ and available through the website eulawanalysis. You may also want to consult this blog for further entries on the UK deal.

For those of you who already know about EU law and who are interested in more information about the right to equal treatment, social security coordination and social benefits, we recommend four important CJEU judgments for further reading, namely Brey, Dano, Alimanovic and García-Nieto, all of them available through the Court’s website.

References

[1] Regulation 492/2011/EU on freedom of movement for workers within the Union, OJ 2011 L 141/1.

[2] Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC, OJ 2004 L 158/77.

[3] Regulation 883/2004/EC on the coordination of social security systems, OJ 2004 L 166/1.