August 25, 2016

Dominik Steiger on Access to Social Benefits in the European Union

In this post, network member Dominik Steiger (Berlin) explores one of the most complex and controversial areas of EU law: access to social benefits.  Focusing on the apparent retreat from the aggressive position staked out by the Court in the Grzelczyk case, Steiger identifies and explores an apparent conflict between national solidarity and European identity.

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Cutting Back on Equal Access to Social Benefits for EU Foreigners: National Solidarity vs. European Identity

European solidarity and national identity alike have been put to the test during recent years, especially during the banking and state debt crisis. In these days, Europe was on the verge of breaking apart. Angela Merkel appeared to complain about “lazy Greeks” and Greeks marched in the streets showing pictures of her as a Nazi. It took many legal documents and even more late-night sessions in Brussels, but Europe managed to handle the crisis. It rescued the banking system and the states alike – and, at least for the time being, European solidarity prevailed, even if states had to give up on some of the principles that they like to think to form part of their national identity.

European identity and the development from the “market citizen” to the “social citizen”

Today Europe faces an even bigger crisis, as European identity is at stake – the Brexit referendum is a symptom, not the cause, of that crisis. Usually national identity is at the forefront of today’s identity discussion: it has rightly been called a “#trending topic”. But there also exists, possibly still in statu nascendi or as the Commission says “unfinished business”, a distinctive European identity. Even if we do not exactly know what the European identity consists of, the rights of European citizenship (Article 20 TFEU), the rights to free movement (Arts. 21, 45, 49, 56 TFEU and Art. 45 Charter of Fundamental Rights of the EU) and the principle of non-discrimination among European citizens (Article 18 TFEU) are among its essential elements.

These norms have been interpreted by the European Court of Justice in the early 2000s, during an unprecedented time of EUphoria, in a very progressive and inclusive manner. The Court’s decisive move was to find that the principle of non-discrimination applies to every EU citizen who made use of her right to move and reside freely within the territory of the Member States. This reading of the European treaties led to the application of the principle of non-discrimination in scenarios which had probably not been foreseen by the Member States: The ECJ granted access to a variety of forms of social benefits as long as an EU citizen has made use of her right of freedom of movement. In the famous 2001 Grzelczyk judgment, the Court for the first time proclaimed that the concept of citizenship of the Union is “destined to be the fundamental status of the nationals of the Member States.” In this case, Rudy Grzelczyk, a French student who studied for three years in Belgium, applied in vain in his fourth year for access to “minimex” under the Belgian social security system.. The ECJ held that the denial amounted to discrimination on the basis of nationality, contrary to Articles 18 and 21 TFEU. Other cases followed, in which the ECJ granted EU foreigners equal access to other forms of social benefits.

This jurisprudence has been hailed as a development from the “market citizen” to the “social citizen.” In fact, the European Union, often described as an elitist project, has opened itself up to those unable to support themselves by granting every EU citizen non-discriminatory access to the means of subsistence and thereby enabling everybody to effectively make use of the freedom of movement. This inclusion and empowerment of everybody to engage in free movement can indeed be regarded as an important factor in creating a European identity, because freedom of movement is a prerequisite for getting to know, experience, touch, feel, and live Europe.

Brexit referendum and cutbacks of in-work benefits

Today, these achievements are under pressure. Cutting back on equal access to benefits has come to the forefront of a discussion that threatens to tear Europe apart: the British government renegotiated parts of the European project. Although the British people still voted to leave the Union in the famous Brexit referendum, some of the envisaged new rules might still be put into place as other Member States, inter alia Germany, have an own interest in their entry into force. One of the four points that were renegotiated concerned the influx of EU foreigners and their equal access to a Member State’s non-contributory in-work benefits regime which serves to top-up low pay: for the first four years of residence, the renegotiation provides for a Member State to limit the access to social welfare of works on a proposal from the Commission after an authorization from the Council. This would be triggered by an inflow of workers from other Member States of an exceptional magnitude over an extended period of time on a scale that affects essential aspects of its social security system. The limitation must be graduated, starting from an initial complete exclusion but gradually increasing access to such benefits to take account of the growing connection of the worker with the labor market of the host member state. Furthermore, child benefits for children who have not followed their migrant parents to the UK but still live in their home country, may be adjusted to the standard of living in the respective country.

Germany’s plans to cut back social benefits for non-workers

Germany and France also plan to cut back on the equal access to social benefits of EU foreigners. By contrast with the UK, these two countries concentrate on social benefits for non-workers. In the last week of April, Germany unveiled a plan to exclude EU foreigners from social benefits to up to five years. France plans to follow suit but has not yet released any proposal.

The ECJ’s endorsement of cutbacks of social benefits 

The European Court of Justice is playing along: In four recent major judgments on the access to social welfare for EU foreigners (Dano, Alimanovic, García-Nieto, Commission v. UK) the European Court of Justice has allowed states to cut back on social benefits. In the view of the ECJ, the cutbacks were all consistent with the Citizens’ Rights Directive 2004/38 and the Regulation on the Coordination of Social Benefits 883/2004. Thus, in its 2014 Dano judgment, the Grand Chamber allowed Germany to exclude EU foreigners from social benefits if they are not seeking a job. The litigation concerned Ms. Dano, a Romanian citizen who had lived in Germany for more than three months but never worked, and who had been excluded from access to social benefits. In the 2015 Alimanovic judgment, the ECJ clarified and deepened its Dano jurisprudence. The Alimanovic case concerned a woman from Sweden who had lived and worked in Germany for more than three months but eventually lost her job. Although she was searching for new work, she was—lawfully, the Court held—excluded from social benefits after six months. Then, in the 2016 García-Nieto judgment, the ECJ considered the position of those persons applying for social security who arrived in Germany less than three months before the date of the application, and who were actively looking for a job but had not found any yet. Again, the ECJ allowed for the exclusion of EU foreigners from social benefits. Finally, the ECJ in its judgment in Commission v. UK of 14 June 2016—just 10 days before the Brexit referendum—held that Member States may exclude non-workers from child benefits and child tax credits.

National solidarity vs. European identity

This rollback in equal access to social benefits for workers and non-workers alike is justified, by the states and the ECJ alike, by reference to the stability of the national social systems. The rationale goes like this: only cutbacks on social benefits for EU-foreigners allow the social system, which relies on general tax revenue, to remain stable and reliable. Thus, solidarity vis-à-vis nationals is understood as a justification for limitations of rights that are fundamental in creating a European identity.

This understanding changes the discourse on solidarity and identity in a fundamental way. National identity is closely connected to the principle of subsidiarity. Both principles are protected by the Treaties and serve the aim of finding the right balance between the competences of the European Union on the one hand and the competences of the Member States on the other hand. Thus, national identity serves as a defense shield against a too-powerful Union. On the contrary, national solidarity points in another direction as it neither serves the preservation of national competences nor is it directed against a too-powerful Union. Rather, the notion of national solidarity may lead to the factual and even legal discrimination against EU foreigners and is thus directed against individuals from other EU member states.

While it is certainly true that some of the described limitations of equal access to social benefits pass the proportionality test, the limitations granted by the ECJ (and apparently envisaged by the Member States) show where Europe might be heading: towards more nationalism, towards more exclusion and towards “less Europe.” The current developments go to the very heart of the idea of the European Union, allowing for discrimination and exclusion on grounds of nationality against EU citizens, thereby reserving the right of free movement to the strong and the fortunate. Allowing such discrimination undermines the European identity and calls European solidarity into question. In these times in which nationalism is on the rise everywhere, the European Union and its Member States need to be reminded that Europe can only remain strong and prosperous and unified as long as the European citizenship remains “the fundamental status of the nationals of the Member States.”

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