No C 125/62 Official  Journal  of the European  Communities 16.10.  74 
Opinion  on the  proposal  for a Council  Regulation  amending  Article  107  of Council 
Regulation  (EEC)  No 574/72  of 21 March  1972  fixing  the procedure  for implementing 
Regulation  (EEC)  No 1408/71  on the application  of social  security  schemes  to employed 
persons  and  their  families  moving  within  the  Community 
The text  referred  to the  Committee  has  been  published  in Official  Journal  of the 
European  Communities  No  C 81 of 13 July  1974,  page  30. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 24 June  1974,  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  in accordance  with  Article  198  of the  Tieaty  establishing  the 
European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the above  matter  at its 
122nd  plenary  session,  held  in Brussels  on 17 and  18 July  1974. 
The full  text  of the Opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the  request,  dated  24 June  1974, 
from  the Council  of the European  Communities  for 
an opinion  on the proposal  for a Council  Regulation 
amending  Article  107  of Council  Regulation  (EEC) 
No 574/72  of 21 March  1972  fixing  the procedure 
for implementing  Regulation  (EEC)  No  1408/71  on 
the application  of  social  security  schemes  to 
employed  persons  and  their  families  moving  within 
the Community; 
Having  regard  to the  Treaty  establishing  the  Euro-
pean  Economic  Community,  and  in particular  Article 
198 thereof; 
Having  regard  to the  Decision  taken  by its Bureau 
on 25 June  1974  entrusting  the  Section  for  Social 
Questions  with  the preparation  of an opinion  on the 
matter; 
Having  regard  to its Opinions  on Council  Regulation 
(EEC)  No  1408/71  and  Council  Regulation  (EEC) 
No 574/72  fixing  the  procedure  for  implementing 
Regulation  (EEC)  No  1408/71  on the application  of 
social  security  schemes  to employed  persons  and  their 
families  moving  within  the  Community  and  its 
Opinions  on amendments  to these  Regulations; 
Having  regard  to the Opinion  delivered  by the Section 
for Social  Questions  at its meeting  on 11 July  1974; Having  regard  to the  oral  report  presented  by the 
Rapporteur,  Mr Purpura; 
Having  regard  to the discussions  at its 122nd  plenary 
session,  held  on 17 and  18 July  1974,  sitting  of 
17 July  1974; 
Whereas  the current  international  monetary  situation 
should  be taken  into  account  when  calculating  social 
security  benefits  payable  - to employed  persons  and 
their  families  which  have  moved,  or move,  within 
the Community; 
Whereas  the  way  in which  this  aspect  is at present 
regulated  under  Article  107  of Council  Regulation 
(EEC)  No  574/72  is inappropriate  to the  new  mon-
etary  situation; 
Whereas  it follows  that  Article  107  of Regulation 
(EEC)  No  574/72  should  be  amended  so as to 
establish,  for  the purposes  of social  security  payments, 
currency  conversion  rates  which  are based  as closely 
as possible  on the prevailing  monetary  situation, 
16. 10.74 Official  Journal  of the European  Communities No C 125/63 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
unanimously: 
The Committee  approves,  subject  to the  following 
general  and  specific  comments,  the  proposal  for  a 
Council  Regulation  amending  Article  107  of Council 
Regulation  (EEC)  No 574/72  of 21 March  1972  fixing 
the procedures  for  implementing  Regulation  (EEC) 
No 1408/71  on the  application  of social  security 
schemes  to employed  persons  and  their  families 
moving  within  the Community. 
1. General  comments 
1.1. The  failure  to put  into  effect,  even  in stages, 
the economic  and  monetary  union  scheduled  in the 
Resolution  of the  Council  and  representatives  of the 
Member  State  Governments  of 22 March  1971  has 
had the  extremely  deplorable  effect  of increasing  the 
fluctuation  of exchange  rates  between  the  nine 
Member  States  of the  Community.  Some  exchange 
rates  are  tied  in a certain  sense  to the  'snake',  while 
others  continue  to float.  The  Committee  is unable 
to hide  its profound  bitterness  at having  to make 
this statement,  especially  in view  of the  way  it wel-
comed  the  initiation  of the  first  phase  of economic 
and monetary  union  in its Study  of 24 February  1972 
on the  monetary  problems  of the  Community  and 
the concern  expressed  in the Opinions  of 13 Decem-
ber 1973  about  the  failure  to make  the  transition 
to the second  phase. 
1.2. Council  Regulation  (EEC)  No  574/72  deals  in 
a single  article,  namely  Article  107,  with  all questions 
concerning  the  conversion  of one  currency  into 
another  for  the  calculation,  payment  or refund  of 
benefits.  This  Article  refers  to the  various  cases  and 
contingencies  listed  in Regulation  Nos  3 and  4 on the 
social  security  of migrant  workers.  The  Committee 
notes  that  Article  107  was  based  on  the  Bretton 
Woods  Agreement,  which  was  amended  by  the 
Washington  Agreements  of 18 December  1971  and 
later  changed  by  the,  Community  Agreements  of 
April  1972  which  established  an exchange  rate  system 
(better  known  as the  'snake').  However,  the  United 
Kingdom  and  Irish  pounds  left  the system,  followed 
by the Italian  lira and  the French  franc. 
1.3. In view  of these  developments,  the  Committee 
agrees  that  Article  107  of Regulation  (EEC)  No  574/ 
72 should  be amended.  It endorses  the Commission's 
proposed  new  version,  which  covers  the  exchange rate variations  of both  currencies  in the  'snake'  and 
independently  fluctuating  currencies.  It also  agrees 
that the  Commission  should  calculate  the  exchange 
rates  of currencies  outside  the  'snake'  in the  two 
contingencies  of fluctuations  of more  than  10%  and 
fluctuations  of 10%  or less  (new  version  of Article 
107 (1)  (b)  and  (4))  and  endorses  the  choice  of 
exchanges  to be used  in determining  the  exchange 
rates  of individual  currencies  (new  version  of Article 
107 (2)). 
1.4. The  Committee  stresses  the need  for the Coun-
cil of Ministers  to adopt  the  draft  Regulation  as a 
matter  of urgency,  so as to make  good  the delay  with 
which  the  document  has  been  drafted  (the  Adminis-
trative  Commission  has  been  discussing  it since 
autumn  last  year)  and  submitted  to the Council. 
2. Specific  comments 
2.1. The  new  version  of Article  107  (1) (c) states 
that the  reference  period  will  be the month  of April 
for exchange  rates  to be used  for  the  six  months 
from  1 July,  and  the month  of October  for exchange 
rates  to be used  for the six months  from  1 January. 
2.2. Although  the  Administrative  Commission  is 
empowered  to alter  the  reference  period  whenever 
the rates  fluctuate  by more  than  10 % (new  Article 
107 (4)),  the  calendar  year  could  be divided  with 
.great  advantage  into  four  quarters,  rather  than  into 
two 6-month  periods.  In this  way  any  abrupt  vari-
ations  in exchange  rates  would  be reflected  to the 
maximum  in the  amounts  of social  security  benefits 
in a given  currency  to which  the  workers  involved 
and their  families  are  entitled.  The  Committee 
proposes  that  Article  107  (1) (c) of the  Commission 
proposal  be amended  accordingly. 
2.3. Reducing  the reference  period  from  six months 
to three  months  may  bring  increased  work  for  the 
social  security  agencies  of the  countries  involved. 
Such  agencies  will  have  to organize  themselves  to 
cope  with  the new  method  of calculation. 
Done  at Brussels,  17 July  1974. 
The Chariman 
of the Economic  and  Social  Committee 
Alfons  LAPPAS