Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) on coordination of social security systems'
Date: 2000-01-27
Institutions: European Economic and Social Committee
Subjects: European Union, administrative formalities, consolidation of EU law, labour mobility, social security

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C 75/29

Reason

The focus on drug trafficking as the leading evil that drives this element of the black economy creates an impression
that the Council document over relies on the emotive abhorrence of the destructive outcomes of drug use, and allows
‘ordinary decent criminal’ money laundering activities to escape lightly. The inclusion of concern for exploitation of
differential taxation will increase post enlargement, when in all probably a majority of Members will be outside
Euroland.

Result of the vote

For: 36, against: 49, abstentions: 10.

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation (EC)
on coordination of social security systems’ (1)

(2000/C 75/11)

On 9 September 1999 the Council decided to consult the Economic and Social Committee, under
Article 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 16 December 1999. The rapporteur was
Mr Rodrı´guez Garcı´a Caro.

At its 369th plenary session (meeting of 27 January 2000), the Economic and Social Committee adopted
the following opinion by 78 votes to 5 with 20 abstentions.

1.

Introduction

In June 1971, the European Economic Community
1.1.
adopted Regulation (EEC) No 1408/71 on the application of
social security schemes to employed persons, to self-employed
persons, and to members of their families moving within the
Community.

At its 59th plenary session of

1.2.
January 1967, the
Economic and Social Committee adopted its opinion (2) on the
regulation, making a number of comments on the text
submitted to it.

Since they originally came into force, both the regu-
1.3.
lation in question and Regulation (EEC) No 574/72 fixing the
procedure for implementing it have been amended several
times to bring them into line with changes in national
legislation, bilateral agreements between Member States, and
with successive EU enlargements since 1971.

In 1992 the Edinburgh European Council (3) recog-
1.4.
nized the need to carry out a general overhaul of legislation in
order to simplify the coordination rules.

Point 3.1.6 of the Communication from the Commission ‘An
Action Plan for free movement of workers’ (4), presented in
1997, contains an undertaking to submit a proposal to reform
and simplify Regulation (EEC) No 1408/71, as a major and
necessary part of the measures required to remove the obstacles
to free movement and mobility within the European Union.

In its opinion of 28 May 1998 on the communi-
1.5.
cation (5), the Committee welcomed the reform of Regulation
(EEC) No 1408/71, agreeing to simplified and improved
coordination of EU social security systems.

(1) OJ C 38, 12.2.1999, p. 11.
(2) OJ C 64, 5.4.1967.

(3) Edinburgh European Council, 11 and 12.12.1992. Presidency

Conclusions (SN 456/92).

(4) COM(97) 586 final.
(5) OJ C 235, 27.7.1998, p. 82.

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Similarly, the opinion (1) adopted by the Committee
1.6.
on 9 September 1998, on the social action programme
1998-2000 (2), also agrees with the need to improve social
protection systems and adjust them in line with changing
labour market conditions, so as to maintain high quality social
security in Europe.

Although the proposal’s Explanatory Memorandum refers to
reform and simplification of Regulation (EEC) No 1408/71,
its scope is in fact greater, since it introduces important
amendments to the way certain matters are regulated com-
pared to the current rules.

2. Main points of the draft regulation

The proposal focuses on the twin aims of simplifying

2.1.
and improving the current regulation.

2.1.1.
in the number of articles.

Simplification is reflected in the substantial reduction

2.1.2.
Improvement entails extension of provisions to
groups of citizens who were not explicitly included in the
original regulation, such as third country nationals affiliated to
a social security system in any Member State and people taking
early retirement.

2.2.
The principle of equality, by virtue of which citizens
covered by the regulation enjoy the same rights and are subject
to the same obligations as the nationals of the Member State
in which they reside and/or work,
is a pivotal factor in
coordinating social security systems.

This principle is based on three basic elements: assimilation of
the facts, aggregation of periods, and retention of rights,
regardless of the citizen’s place of residence.

As the proposal quite clearly argues in its explanatory memor-
andum, without such coordination,
free movement could
remain a dead letter, since people would be unlikely to exercise
this right if it meant losing social security entitlements already
acquired in another Member State.

The text contains six titles. The first and third titles are
2.3.
of particular importance, concerning respectively the general
and specific provisions affecting the various benefits. The
second title determines the legislation to which individuals are
subject. The fourth concerns the Administrative Commission.
The fifth contains miscellaneous provisions, and the sixth
contains the transitional and final provisions of the regulation.

3. General comments

The Committee broadly approves the text of

3.1.
the
proposal, regardless of any general and specific comments
which it may propose to introduce into the text of the draft
regulation.

(1) OJ C 407, 28.12.1998, p. 187.
(2) COM(1998) 259 final.

The Committee welcomes the continuing progress in

3.2.
consolidating the equality of EU citizens’ rights.

The inclusion of new groups who may be eligible for
3.3.
the rights set out in the regulation strengthens and increases
the perception that progress is being made towards a citizens’
Europe.

It is essential that EU citizens are made to understand that a
Europe without borders is of benefit to the free movement not
only of capital and goods, but also of people.

3.4.
The ongoing aim of improving the coordination of
social security systems in the EU has been confirmed by the
range of proposals for reform of Regulation (EEC) No 1408/71
submitted by the Commission. In practice, some of these
proposals coincide with the comprehensive overhaul of the
text.

The Committee voices its satisfaction at the EU institutions’
continuing awareness of the social factor.

3.5. While improving the coordination of social security
systems is unarguably a major step forward, the individual
features of the national laws of each Member State should
however be respected.

3.6.
Obstacles which may hamper free movement can also
affect citizens’ right to work. The Committee considers that
the proposal will definitely help to remove obstacles to
cross-border movement of EU citizens, although much remains
to be done.

3.7.
In view of the complexity and importance of the draft
regulation; the working methods adopted by the Council and
Parliament; and the likely changes to the text during the
legislative process at
the different Council
the hands of
presidencies, and without prejudice to the following points,
the Committee will constantly monitor the progress of the
proposal in appropriate ways.

3.8.
An improved and simplified regulation must go hand
in hand with improved and simplified administrative pro-
cedures for those entitled to benefits. Further development of
the regulation should include instruments ensuring stream-
lined, flexible procedures for both workers and businesses.

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4. Specific comments

4.1. Article 2

The article determines the matters covered by the draft
regulation, listing the types of benefits concerned.

in
The initial sentence uses the expression ‘in particular’
referring to these benefits. This suggests either that such
benefits are viewed as the main ones in a social security system,
or that the draft regulation applies more particularly to these
benefits than to others which are also mentioned in the text
but not included in the list.

Given this lack of definition, an open list of benefits may give
rise to legal uncertainty and undesirable effects.

4.2. Articles 6 and 7

It is stated in Article 6 that ‘this Regulation shall replace any
social security convention falling under its scope’. In Article 7
‘Definitions’, the third paragraph of indent (h) then states
that the term ‘legislation’
‘also includes the social security
conventions concluded between two or more Member States
and one or more States not belonging to the European Union’.
This appears in principle to contradict the content of Article 6.
Clarification is required here. It would also be better to leave
definitions to the final stage in drafting the regulation.

4.3. Article 8

4.3.1.
tion (EEC) No 1408/71 should be retained in Article 8(3).

The content of the current Article 14(b) of Regula-

4.3.2.
The Committee notes that a difficulty exists for
persons exercising representative functions vis-à-vis the EU
institutions, including those working for Member State socio-
economic organisations. It therefore considers that the Euro-
pean Commission should look closely at how it is decided
which legislation applies to them.

it

The new text is largely based on existing rules governing the
application of social security. It confirms the procedure by
which two Member States may grant derogations. On the
other hand,
the derogation option under
Article 14(1)(b) of the present regulation, which authorizes the
appropriate authority in the Member State to which the
employee has been posted to grant an extension of the period
of application of the social security system of the country of
origin (for not more than 12 months).

removes

the current possibility of
The Committee considers that
derogation, contained in Article 14(1)(b) of the present Regu-
lation (EEC) No 1408/71 should be maintained: certain high-
ly-qualified functions in the field of research and development,
establishment of new technologies or other strategic services,
where it is known from the outset that the posting will last for
more than 12 months, raise problems which need to be
examined in greater detail by the Commission.

4.5. Article 10

This refers to persons pursuing activities as employees in the
territory of two or more Member States. Paragraphs 1 and 2
repeat the expression ‘substantial’, in reference to the activity
pursued by the workers.

The legislation applicable to the worker is determined on the
basis of this substantial activity.

The term used is ambiguous, and not clearly enough defined
to determine the legislation applicable to the worker. The
meaning of the term will be clarified when the Court of Justice
issues its judgement on the Fitzwilliam case, which is presently
at the deliberation stage.

The legal certainty of the persons covered by the conditions
described in the article must be adequately ensured. The
Commission should therefore be urged to define clearly what
is meant by ‘substantial’ activity, in terms of precise figures,
leaving no room for arbitrary or subjective application of the
rules and taking the expected judgement of the EC Court of
Justice on this matter, when it comes, into account.

4.6. Article 18

4.4. Article 9(1)

This article lays down specific rules determining the legislation
to which an employed person posted to another Member State
is subject.

At the end of this article, the phrase ‘cannot be given such
treatment within the necessary time’ perpetuates the ambiguity
of the present Article 22(1)(c). The following should therefore
be added: ‘provided that this assessment is made on the basis
of medical criteria’.

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In its Kohll (1) and Decker (2) judgments, the Court of Justice
of the European Communities indicates that without prior
agreement, reimbursement of medical costs incurred in a
Member State is currently ensured in line with the rates of the
Member State of origin.

the calculation is made by applying the legislation of a single
Member State. In the event of sickness resulting from the type
of work carried out in more than one Member State, benefits
should be guaranteed to be the most favourable for the worker
concerned.

Clarification from the Court of Justice on the exact scope of
the Kohll and Decker judgments must be awaited, particularly
in the light of two pending cases (Vanbraeckel and Smits-Peer-
boms), and the results of the study currently being carried out
in this area by the European Commission will also have to be
taken into account.

4.7. Article 20

Article 20(3) mentions ‘other pensioners’. This could give rise
to confusion, since it cannot be established whether this
refers to recipients of national pensions or persons who are
pensioners by virtue of the legislation of their country of
residence (all).

4.11. Article 50(3)

This paragraph stipulates that the worker must return to the
competent Member State if he has not found employment
within the six months following the posting, if he wishes to
continue receiving unemployment benefit in the competent
Member State. The existing text limited this period to three
months. The Committee agrees with the extension from three
to six months. It believes that a time limit remains justifiable,
in the light of the conditions for granting unemployment
benefit in many countries and the shortcomings of supervisory
mechanisms.

In addition to this reading of the article, it could be concluded
that a pensioner moving elsewhere would be subject to double
taxation. The Committee calls upon the Commission to clarify
the article.

4.12. Article 55

4.8. Article 26

Article 26(1) refers to ‘full reimbursement’. The paragraph of
the Explanatory Memorandum commenting on this article
says benefits are ‘fully refunded’ and goes on to add that ‘such
reimbursement will be on the basis of actual expenditure’.
Actual expenditure should be mentioned where it can be
determined: otherwise, reimbursement should be on the basis
of average costs.

4.9. Article 33

The Committee considers the following comments to be
necessary:

— This article covers two types of special benefit, one linked
to means-testing and the other to diagnosis of a disability.

Since their characters, origins and circumstances differ,
they should have been dealt with in two separate articles
under the same heading, allowing for different rules.

— The Committee notes that the Annex referred to in this

article is empty of content.

Article 33(3) should refer to ‘benefits of
the appropriate
scheme’ rather than ‘benefits of the general scheme or, in
default thereof, of the scheme applicable to manual or clerical
workers, as the case may be’, since the wording as proposed
would exclude contributions to other specific schemes, such
as those for self-employed workers or civil servants, which
may at present be taken into account.

As a result, it is impossible to be sure of the specific
benefits referred to in Article 55.

— In the particular case of benefits for disabled persons, the
Committee considers that those corresponding to what
Court of Justice case-law describes as ‘benefits of mixed
type’ should not be subject to the residence condition.

4.10. Article 43

The present wording does not provide sufficient guarantees
that the amount of the benefit will be the most favourable if

(1) Case C-158/96.
(2) Case C-120/95.

4.13. Title IV

The Committee endorses the provisions governing the mem-
bership and functions of the Administrative Commission for
the Coordination of Social Security Systems, as laid down in
this title.

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it believes that the title should also cover the
However,
membership and powers of
the Advisory Committee on
freedom of movement and social security for Community
workers, in accordance with the Commission’s proposal for a
decision (1).

The idea of merging the present two committees was endorsed
by the ESC in its opinion on the action plan for free movement
of workers, in which it stated that support depended on the
operating capacity given to the Advisory Committee. For its
part, the Commission has submitted a proposal for a European
Parliament and Council decision establishing an Advisory
Committee merging the existing committees on freedom of
movement and social security.

From this point of view, the ESC believes that this new
Advisory Committee should be mentioned in the document
now under discussion, clearly stating its functions in relation
to the coordination of social security systems.

4.14. Article 59

This article refers to cooperation between Member States.
Article 59(4) highlights EU citizens’ right to use their own

(1) OJ C 344, 12.11.1998.

Brussels, 27 January 2000.

languages. It stipulates that applications and other documents
shall be accepted, even if written in a language other than that
of the State to which they are submitted.

The Committee welcomes this token of tolerance and respect
for citizens’ cultural identity, which highlights the wealth of
Europe’s linguistic and cultural diversity.

4.15. Article 62

The actions and activities which may be funded by the
Community include informing citizens. In the Committee’s
view, the measures referred to in the second paragraph may be
judged to be highly selective and to have little impact on
public opinion.

Information campaign funding should concentrate on mass
media messages, targeting in the first place those recently
benefiting from the coordination rules, such as students and
public employees.

4.16.
notes that Annex II of
in Article 67,
provisions.

In the same way as for Article 55, the Committee
the draft regulation, referred to
is devoid of content concerning the special

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI