Guest Editor’s overview of the Special Issue

Introduction

The aim of this Special Issue is to examine and critically assess key aspects of the reform of the coordination of social security in the light of the 2016-2019 revision of EU Regulations on the coordination of social security focusing on the Commission’s proposal for amending Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009, which lays down the procedure for implementing Regulation (EC) No 883/2004. ¹ The Special Issue is a collaborative project involving those who presented their research papers at a one-day workshop on ‘The future of coordination of social security in the European Union’, which took place in April 2019 at the University of Leicester. ²

The aim of the review of EU social security Regulations

In its resolution of 14 January 2014 on social protection for all, including self-employed workers, ³ the European Parliament called on the Commission to review legislation on the coordination of social security systems and the monitoring of its implementation so as to safeguard EU migrant workers’ entitlement to social security benefits.

On 13 December 2016, the European Commission came up with a proposal for a Regulation amending Regulation (EC) No 883/2004 and Regulation (EC) No 987/2009. ⁴ The main drive for the reform was the need to modernise EU law on social security coordination in response to social and economic realities in the Member States. In particular, the revision sought (i) to clarify the circumstances in which Member States could limit access to social benefits claimed by economically inactive mobile citizens; (ii) to establish a coherent regime for the coordination of long-term care benefits by introducing a separate chapter for their coordination in Regulation (EC) No 883/2004 and by including a definition and a list of these benefits; (iii) to introduce new arrangements for the coordination of unemployment benefits in cross-border cases; (iv) to establish new provisions for the coordination of family benefits; (v) to clarify the conflict rules governing applicable legislation; and (vi) to clarify the relationship between the Regulations and Directive 96/71/EC of the European Parliament and of the Council concerning the posting of workers in the framework of the provision of services. The reform of the Regulations endeavours to ensure a balance between a facilitation of EU citizens' rights and an equitable distribution of financial burdens among the Member States, to provide legal clarity and administrative simplicity, and to improve effectiveness of enforceability of the coordination rules.

The negotiation of the Commission’s proposal

At the European Parliament, the file was assigned to the Committee on Employment and Social Affairs (EMPL), which published its draft report on 10 November 2017. The report stressed that the exportation of unemployment benefits had to be extended until the end of the citizen’s right to unemployment benefits, the period required to apply the legislation of the last Member State of activity had to be reduced to one month, and, in the case of frontier workers, unemployment benefits should be paid by the last Member State of activity if it was carried out over a period of more than 12 months. The European Economic and Social Committee adopted its opinion on 5 July 2017; and the Committee of the Regions, on 12 July 2017.

In the Council, the file was discussed by the Social Questions Working Party on 6 June 2017. The main issues for discussion were the derogation from the fundamental principle of equal treatment as regards the entitlement of economically inactive mobile citizens to social benefits, and the codification of existing case law. On 11 October 2017, the Committee of Permanent Representatives (Coreper) confirmed the general understanding that codification of CJEU case law was not the best way forward. At its meeting on 7 December 2017, the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) reached partial agreement on its general approach to the Regulation on the coordination of social security systems which covered the chapters on long-term care benefits and family benefits.

The 2018 Commission’s work programme addressed labour mobility and social security challenges by proposing the creation of a European Labour Authority and the introduction of a multi-purpose European social security number. The Social Summit for Fair Jobs and Growth, held in Gothenburg on 17 November 2017, recalled the need for progressing swiftly on pending social files at EU level, including Social Security Coordination. In his Letter of Intent of September 2018, Commission President Juncker urged the adoption of the proposals addressing the social dimension, including the proposal on the modernisation of the rules for the coordination of social security systems.

The topic was discussed on several sessions of the Working Party on Social Questions. On 21 June 2018, the EPSCO Council agreed its negotiating position (general approach). ⁵

The EMPL Committee report was adopted on 20 November 2018. ⁶ On 23 November 2018 the report was tabled for the plenary session. On 11 December 2018, the plenary session confirmed the decision to enter into interinstitutional negotiations whereby the French MEP Guillaume Balas was granted the mandate to negotiate in the name of the Parliament within the tri-institutional meetings.

The first trilogue meeting ⁷ on the revision of Regulations 883/2004 and 987/2009 took place on 15 January 2019. It was hoped that agreement could be reached by February 2019, but this did not materialise. A provisional agreement was reached between the Council Presidency and the European Parliament, but it was rejected at the Coreper meeting on 29 March 2019, demonstrating that diplomats negotiating on behalf of national governments could effectively block legislative progress. Unusual alliances were formed in a display of different social and economic interests, depending on work and migration patterns. Austria, Belgium, Czech Republic, Denmark, Germany, Luxembourg, the Netherlands, and Sweden banded together to block the proposal from reaching the qualified majority needed for approval. Hungary, Malta and Poland abstained. ⁸

Finally, the divisions between MEPs became clear on 18 April 2019 when the work on revision of the Social Security Coordination regulations was paused, as the European Parliament, on the very last day of its last plenary session, decided that the vote on the revision of the Regulations 883/2004 and 987/2009 would not take place within the term of the 8th Parliament.

The subject of the vote was not meant to be the so-called ‘preliminary agreement’ of the EU institutions because no agreement had been reached among the Member States in the Council as to its final shape. Therefore, Parliament decided to vote on the report drawn up by Guillaume Balas, and on a few dozen ‘last-minute’ amendments tabled to the report in the week preceding the vote. There were concerns that the text contained certain provisions that were intended to put the protection of insured persons above the interest of the Member States, contrary to the Commission’s proposal, and that what actually mattered was voting the report through at all costs in the first reading, just before the May Parliamentary elections, without an in-depth analysis of the consequences of the provisions contained in it.

A short debate was planned before the start of the vote. On behalf of the ECR (European Conservatives and Reformists) faction, the Belgian MEP Helga Stevens proposed a motion based on Art. 190(4) of the Rules of Procedure of the European Parliament to postpone the vote on the Balas report. According to Stevens, a vote would only have highlighted the division in the Parliament in the previous parliamentary session. A small majority (291 to 284, with 6 abstentions) accepted the request. ⁹

On Tuesday 3 September 2019, hearings and debates regarding the revision of the Regulations on the coordination of social security systems 883/2004 and 987/2009 were held. Two separate meetings took place within the EMPL Committee in the presence of two key officials: Joost Korte, the Dutch General Director of EMPL; and Commissioner Marianne Thyssen. An exchange of views with the Commissioner for Employment, Social Affairs, Skills and Labour Mobility was followed by a gathering of the coordinators of the political factions who unofficially decided that work would be continued on the basis of the existing compromise.

There was a certain pressure within the Commission to close the dossier as soon as possible. Commissioner Thyssen recalled that the coordination of EU social security systems was a sine qua non element of EU labour and service mobility and that, without it, the free movement of people and services would not be possible. It was noted that the preliminary agreement reached by the Romanian Presidency in March 2019 meant that only two negotiation chapters had still not fully been agreed. The first of these concerned the applicable legislation; and the second social security for migrant and cross-border workers. Both meetings showed that swift completion of the revision was a priority for the majority of the EMPL Members. However, this pressure was not felt among officials of the Finnish Presidency.

During hearings and debates, three options for further work on the review were discussed. First, starting work from scratch in line with the principle of discontinuity of work in the European Parliament, which required that a draft not adopted in a given term of office falls through, unless the Conference of Presidents decides otherwise; second, to proceed on the basis of Guillaume Balas’ report of 11 December 2018; and third, working on the basis of the initial agreement of the EU institutions, adopted on 19 March 2019.

Gabriele Bischoff (S&D, Germany) was appointed as a rapporteur for the revision project during further proceedings. Jeroen Lenaers (EPP, the Netherlands), Dragos Pislar (RenewEurope, Romania), Katrin Langensiepen (Greens, Germany), Elżbieta Rafalska (ECR, Poland), France Jamet (I&D Group, France) and Marc Botenga (GUE, Belgium) were appointed ‘shadow rapporteurs’. During the debates, the differences of opinions between the rapporteurs were clear as regards the progress of the negotiations. Whilst Bischoff shared the optimistic assessment of Commissioner Thyssen, Lenaers and Rafalska expressed more reserved opinions, highlighting the differences between Member States. ¹⁰

After the exchange of views with Commissioner Thyssen, a meeting of the coordinators of the political factions took place. It was decided that the EMPL Committee would recommend, on behalf of the European Parliament, working on the revision on the basis of the preliminary agreement of the EU institutions of 19 March 2019, as approved by a decision of Conference of Presidents which represents the various factions in Parliament. Some of the debaters indicated that this solution would be the most advantageous in terms of the quality of legislation, because the text of this agreement contained the highest number of solutions, which had already been agreed among the institutions. According to the decision taken at the October Plenary 2019, the text became a part of the unfinished business to be carried over. ¹¹

What does the Commission’s proposal and its negotiation reveal as regards the future of EU coordination of social security? The divisions among Member States and the disagreement between EU institutions may lead to compromises affecting the rights of persons who derive rights under Regulation 883/2004. At the same time, the outcomes of the reform may have ramifications for the welfare systems of the Member States. Ultimately, the negotiation process raises conceptual questions regarding the current trend of EU integration in the area of social security and the vexed question of striking the right balance between the rights of individuals with the interests of Member States. Finally, the negotiation of the Commission’s proposal highlights the conceptual and practical challenges for the coordination of social security in the context of the disintegration caused by Brexit and the need to provide answers to problems arising from it.

The structure of the Special Issue

This Special Issue comprises a collection of articles that address all the main aspects of the reform of coordination of social security schemes in the Commission’s proposal for amending Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009 which lays down the procedure for implementing Regulation (EC) No 883/2004. Together, the contributions provide a comprehensive overview of the proposal and its negotiation. At the same time, the critical analysis of the current reform of the coordination of social security in this volume goes beyond the Commission’s proposal. The authors approach the discussion of the proposed reform from various theoretical and methodological perspectives to fuse the analysis of the Commission’s proposal with wider intellectual discourse on the coordination of social security in the EU and its future.

The theme of the Special Issue is introduced by Golynker’s analysis of the negotiation of the Commission’s proposal for a Regulation amending Regulation (EC) No 883/2004 on the coordination of social security systems and Regulation (EC) No 987/2009 in the context of EU integration theories. She argues that the reform is a complex process and displays elements of intergovernmentalism, neo-functionalism and post-functionalism. The negotiation process highlights the disagreements between the key players which may have important consequences for the future of EU regulation in the area of coordination of social security. The article explores the prevalent signs of intergovernmentalism and post-functionalism evident in the attention of the Commission’s proposal to the concerns of the Member States, the negotiating position of the Council, and even in the vote of the European Parliament that failed to approve the proposal at the first reading.

The articles that follow scrutinise the reform of coordination of social security schemes focusing on specific areas of regulation.

Vonk addresses the controversial attempt in the Commission’s proposal to address the concerns of the Member States and align Regulation 883/2004 with Residence Directive 2004/38 as interpreted in the case law of the CJEU. ¹² This would restrict access to minimum subsistence benefits for economically non-active EU citizens who fail to meet the conditions of residence under Directive 2004/38. Although the Commission’s proposal on this matter was rejected by the European Parliament, the problem of differences in the regulation of social security and social assistance remains. Vonk proposes that EU co-ordination of minimum subsistence benefits should be analysed from the point of view of changes in the architecture of the social security systems of the Member States. He argues that, in order to avoid regressive measures that would affect the poorest EU migrants, a radically different approach is needed: the present distinction between social assistance schemes and non-contributory benefits should be abolished and social assistance should be brought within the scope of Regulation 883/2004.

Pennings scrutinises the revision of the coordination of unemployment benefits from the vantage point of the conflict of interests between poorer Member States and richer Member States that tend to bear the burden of exporting unemployment benefits and aggregation periods. He shows how the dichotomy between East and West dominated the rationale for, and the negotiation of, the changes proposed by the Commission in the regulation of aggregation rules, the rule of the competent State, and the export of unemployment benefits. Coming to the conclusion that no satisfactory solution has been achieved during the negotiation, Pennings suggests an alternative approach that would make it possible to take into account the interests of the Member States without undermining the right to free movement of workers.

Essers and Pennings turn their attention to cases where, as the result of the application of coordination rules, there is either reduced protection or no protection for migrant persons. The authors expose the flaws of the current Regulation in a number of case studies. They criticise the attempt by the European Parliament to address the existing problems in the amendments to the Commission’s proposal as insufficient because the proposed changes do not create any firm obligations on the Member States. The article makes specific proposals about how the coordination Regulations should be further amended.

Devetzi and McHale examine the implications of the reform of social security coordination Regulations for long-term care benefits in respect of the proposal to include long-term care in Regulation 883/2004. The authors question the extent to which the revised regulation will lead to an improvement in the regulation of long-term care benefits. Their analysis of the proposal and its negotiation shows that, instead of putting the objective of respect for rights of individuals at the heart of the reform, the regulation of long-term care benefits is approached from the perspective of Member States’ resources.

Holm focuses on the problems of regulating entitlement to family benefits. She welcomes the more nuanced approach to the definition of what is a family benefit in the proposed changes to coordination Regulations. At the same time, she highlights the problems that remain unsolved by the reform: Member States may continue to classify similar benefits in different ways, even with new specific co-ordination rules on family benefits compensating income-loss when parents are responsible for child care; the definition of a family member may vary; and problems can arise regarding anti-overlapping situations.

Rennuy analyses the proposed changes in the regulation of posting, in particular the problem of enforcement. He argues that the current reform fails to engage with the reasons for non-compliance of Member States with EU law. The author builds on rationalist and managerial theories and argues that the effectiveness of administrative enforcement depends on whether each posting requirement can be monitored by a State that is both willing and capable to do so. The existing and envisaged allocation of administrative enforcement powers suffers from a misalignment between incentives, capacities and competences to monitor, which can be addressed by heightening incentives, enhancing capacities, and transferring competences to the State of destination.

The Special Issue concludes with a contribution by Roberts who examines the implications of Brexit for the negotiation of the Commission’s proposal. This socio-legal study investigates the UK participation in the negotiations and the reaction of other Member States’ negotiators regarding the relevance of the current reform for the future of coordination of social security between the EU and the UK.

Whilst there is a broad consensus that the coordination of social security schemes is essential for enabling labour mobility in the EU and for protecting workers, the negotiation of the Commission’s proposal shows that this politically, socially and economically sensitive area remains challenging and controversial for policymakers at both national and EU levels. This Special Issue endeavours to make a timely contribution to our conceptual understanding of the current reform of EU social security Regulations and the future of coordination of social security schemes in the EU.