In 2016, Luxembourg paid €31 millions in unemployment benefits to France, Belgium, Germany and the Netherlands.
Luxembourg is opposing a European Commission proposal to pay jobseekers allowance for 12 months to unemployed people living over the border, if they formerly worked in Luxembourg.
The project seeks to provide an allowance for 12 months after the employee was made redundant, which would be paid by the state in which they were last employed.
“Luxembourg’s government cannot support the European Commission proposal,” employment minister Nicolas Schmit said on Friday, responding to a parliamentary question from MP Gast Gibéryen.
The commission justifies the proposal saying that if a state collects taxes from an employee, they should also pay compensation to that same individual. It proposes to abolish the existing system, which obliges states to pay a benefit for three months to the country in which the jobseeker lives.
Freedom of movement
Schmit said the proposal did not take into account a number of factors, for example, whether the unemployed person was actively seeking a job. If this were the case, the jobseeker would be obliged to seek and accept a job in the grand duchy “even if he doesn’t want to”, Schmit argued. In this way, “freedom of movement” would no longer be a right but, “almost an obligation.”
The Luxembourg government has raised these and other issues with the commission. It is not alone in its scepticism: Germany, the Netherlands, Austria, Denmark and Malta, as well as “various committees representing cross-border workers in Luxembourg” oppose the proposal. Luxembourg and its allies instead want to maintain the status quo and improve the system.
Asked by our colleagues at Paperjam, the ministry said it was concerned opponents were not numerous enough to block the minority of supporters. The regulations, which require a qualified majority in the European Council, are currently negotiated in working groups in the council and the European Parliament.
“Even if the repercussions of the regulation are not yet known in their entirety, we do not envisage an increase in the solidarity tax or a benefits reduction,” minister Schmit said.
The employment fund (Fonds pour l’emploi), which is funded by 2.5% of income tax, is not limited to the financing of unemployment. Therefore, Schmit said he cannot provide an estimate for the financial impact of the commission proposal. The figure of €60 million per year was circulating at the beginning of 2017.
In a reply to a second parliamentary question by Gast Gibéryen, Schmit also provided the amounts paid to the French, German, Belgian and Dutch administrations under the system of reimbursements. In 2016, Luxembourg paid more than €31 million, €20 million of which was destined for France.
The changes foreseen by the commission would mean, however, that staff numbers at employment office Adem “should be increased considerably, in order to guarantee the same quality of service for each jobseeker.”