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Brussels, 31.8.2010

COM(2010) 449 final

REPORT FROM THE COMMISSION TO THE COUNCIL

2006-2008 Report on the financial situation of the Community unemployment benefit scheme for former members of the temporary staff and contract staff who are unemployed after the termination of their service in a European Union institution

REPORT FROM THE COMMISSION TO THE COUNCIL

2006-2008 Report on the financial situation of the Community unemployment benefit scheme for former members of the temporary staff and contract staff who are unemployed after the termination of their service in a European Union institution

SUMMARY

Under Article 28a(11) and Article 96(11) of the Conditions of Employment of Other Servants of the European Communities (CEOS), every two years the Commission must present a report to the Council on the financial situation of the Community unemployment benefit scheme and the Special Unemployment Fund. This report sets out the situation for the period 2006-2008; however, in the interests of comparability with the previous report, the 2005 figures are also given as a matter of course.

The current financial situation of the Unemployment Fund is satisfactory from an accounting perspective as its accumulated reserves increased from €9 205 000 at the end of 2005 to €16 160 000 at the end of 2008.

However, the new CEOS, which entered into force on 1 May 2004 with the creation of the category of member of the contract staff, made significant changes to the rules on contributions to the Fund, the population covered and the eligibility criteria. As a result, the scheme went through a transitional stage in 2005-2008 and did not yet seem to have reached a stable operating speed by the end of that period, particularly as regards the changing number of future beneficiaries. Regular monitoring is therefore necessary.

With the creation of the category of member of the contract staff and the growth in EU agencies, contributions to and payments by the Fund had in fact doubled by 2008 compared to what they were in 2005. Receipts rose sharply in 2006 and more gradually in 2007 and 2008, while payments increased mainly in 2007 and 2008. This time-lag meant that the annual surplus rose from €755 000 in 2005 to €3 410 000 in 2006 and €2 275 000 in 2007, which in 2008 was then converted, in financial terms, into a slight deficit of €330 000.

REGULATORY FRAMEWORK

Description of the scheme

The entry into force of the new Staff Regulations on 1 May 2004 put an end to the old scheme , which ran from 1985 to April 2004.

The old scheme covered temporary staff against the risk of unemployment when they left the service. The Community unemployment allowance was paid in addition to any national benefits that former staff could claim. Temporary staff who had worked a minimum of six months could claim benefits for up to two years. The top-up Community unemployment allowances had both a lower limit and an upper limit. Neither limit had ever been changed. Cover under the Community health insurance scheme (5.1% of the unemployed person’s reference basic salary) was met by the Unemployment Fund.

If the member of the temporary staff so requested, the old scheme continued to apply for a transitional period for people who were already unemployed and for contracts which had been concluded before 1 May 2004 and would end after that date.

The new scheme - applicable since May 2004 - also provides unemployment cover for the new category of contract staff.

This entitlement is now limited to a third of the period actually spent working as a member of the temporary or contract staff, and may not exceed 36 months. The upper limit (which only applies from the seventh month of unemployment), and the lower limit for temporary staff, have been revised. There are also upper and lower limits for contract staff, but they are different from those for temporary staff. They will be adjusted annually from now on (like salaries).

Legal references

- Article 28a of the Conditions of Employment of Other Servants of the European Communities (CEOS) introduced by Article 33 of Council Regulation No 2799/85 of 27 September 1985 (OJ L 265, 8.10.1985); amended by Council Regulation No 723/2004 of 22 March 2004 (OJ L 124, 27.4.2004).

- Commission Regulation No 91/88 of 13 January 1988 laying down provisions for implementing Article 28a(2) of the Conditions of Employment of Other Servants of the European Communities (OJ L 11, 15.1.1989).

- Commission Rules of 14 July 1988, common accord having been recorded by the President of the Court of Justice of the European Communities on 4 July 1989, laying down the detailed arrangements for applying the provisions relating to the grant of the unemployment allowance to members of the temporary staff, implementing Article 28a(10) of the Conditions of Employment of Other Servants of the European Communities.

- Article 96 and Article 5 of the Annex to the Conditions of Employment of Other Servants of the European Communities introduced by Council Regulation No 723/2004 of 22 March 2004 (OJ L 124, 27.4.2004).

- Annual regulations on the adjustment of salaries, pensions and other allowances.

THE FINANCIAL SITUATION OF THE UNEMPLOYMENT FUND

The situation of the Unemployment Fund is set out below in two different ways. In the first point (“Accounting situation”) the figures are set out as they appear in the accounts: a financial operation is listed for the year in which it was entered in the accounts (“Accounting situation”). However, some receipts and payments relate to operations which began in the year preceding the entry. In the second point (“Financial situation”) the figures are set out in line with the accrual accounting system. To this end, the entries must be listed under the year in which they originated.

Accounting situation: 2005-2008 operating results and accumulated balances

Table 1 gives a summary of receipts and payments as entered in the accounts and the resulting current balance.

The amounts recorded under “unemployment allowances” systematically include the basic unemployment allowance, any family allowances and, for the original scheme only, the effect of the weighting. Any social benefits received at a national level (including unemployment benefits, family allowances, sickness benefits, maternity benefits, etc.) are deducted.

Contributions to the Community sickness insurance scheme (JSIS) are covered in their entirety by the Community unemployment scheme (5.1% of the unemployed person’s reference basic salary). Personal contributions to the JSIS are not deducted from Community unemployment benefit.

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The Unemployment Fund uses two management instruments for its receipts and payments: a current account for receiving payments and paying allowances, and a number of term accounts for investing surpluses accumulated in the current account.

The first part of Table 2 shows operations on the current account; the second part of the table shows the income from the term accounts, as well as the movements between the two accounts. The third part shows the total accumulated surpluses for the two accounts.

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The surplus increased by 40% in 2006 and 23% in 2007. It fell by 1% in 2008. With an accumulated surplus of almost €16.2 million in 2008, the current situation of the Fund is therefore satisfactory from an accounting perspective.

Table 3 and diagram 1 also list the accumulated five-year balances mentioned in the previous report and thus show the trend of the cumulative balance in the long term (1985-2008).

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Financial situation: 2005-2008 operating results

Some of the receipts entered in the accounts at the start of year N are amounts deducted from salaries at the end of year N-1, and some of the unemployment allowance payments made and entered at the start of year N cover periods of unemployment at the end of year N-1. In accordance with the principles of accrual accounting, these accounting entries should be entered in year N-1.

Table 4 and diagram 2 show receipts and payments according to this principle and therefore indicate the Unemployment Fund’s annual “financial” situation as regards receipts and payments.

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Receipts increased sharply in 2006 compared with the previous year (36%) and continued to grow in 2007 (15%) and 2008 (12%). Payments fell in 2006 (-5%) and increased sharply in 2007 (45%) and 2008 (48%). This time-lag between receipts and payments led to substantial surpluses in 2006 and 2007 but a slight deficit in 2008. This deficit is offset by interest on investments. Diagram 3 sets out the current balance and the interest for 2005-2008.

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This trend in receipts and payments is largely due to the creation of new agencies and the introduction since 2004 of a new category of staff: contract staff employed for a fixed period (maximum three years). The recruitment of contract staff over the period 2004-2007 led to an increase in receipts with no immediate effect on payments, whereas when the first contracts came to an end, giving the right to an unemployment allowance, payments increased considerably from 2007.

Financial situation: breakdown of payments and receipts by institution and for all the agencies in 2005-2008

Table 5 provides a breakdown of payments and receipts by institution and for all the agencies.

The first part of the table gives absolute figures, the second part the percentages for each institution and all the agencies as a proportion of total payments and receipts.

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