Debate over unemployment benefit for redundant cross-border workers

The Luxembourg Confederation of Independent Trade Unions (OGB-L) is advocating that cross-border workers who have lost their job in Luxembourg should remain covered by the country’s unemployment benefit system, rather than seeking benefits in their home country. It is argued that cross-border workers have made a significant contribution to the economy and that it makes sense in economic terms to enhance their employability within the Luxembourg labour market.

Effect of crisis on cross-border workers

Cross-border workers account for over 40% of Luxembourg’s private sector workforce. In the context of the current economic crisis, about 8,000 of these workers could henceforth be unemployed, according to estimates by the Ministry of Labour and Employment (Ministère du Travail et de l’Emploi).

In theory, unemployed cross-border workers have the right to register with Luxembourg’s Employment Administration (Administration de l’Emploi, ADEM). However, at present, this right remains more a matter of theory than of practice. In the event of dismissals, ADEM issues a form to the cross-border worker, enabling them to be registered as a jobseeker in their home country and to receive unemployment benefit there.

Harmonisation of social security systems

Under the terms of EU Regulation No. 883/2004 regarding the coordination of social security systems, Luxembourg will have to reimburse, as of May 2010, the home country of a cross-border worker who has lost their job in Luxembourg. The payment should be for the entire unemployment benefit amount that was due to the redundant worker during the first three months of the allowance. According to the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschaftsbond Lëtzebuerg, OGB-L), it is important that this issue is not addressed from a merely monetary point of view.

Equality and economic justifications

In view of this deadline, OGB-L is asking Luxembourg’s government to do its utmost to ensure that cross-border workers who lose their job in a collective redundancy context keep their Luxembourg employee status and the benefits from continuous training and other measures, rather than being sent back to their home country as unemployed. For OGB-L, it is not only a question of equal treatment but also one of economic intelligence. The 148,000 or so cross-border workers constitute a substantial proportion of private sector workers in Luxembourg and play a large part in the creation of national economic wealth – for example, through the payment of taxes, including the solidarity tax that finances the unemployment fund. These workers also pay their national insurance contributions in Luxembourg.

OGB-L believes that the funds that would have to be transferred to the competent institution in the worker’s home country in the event of unemployment could be used more efficiently – more specifically, to improve the workers’ employability and, if necessary, allow their transition to another branch of industry within the Luxembourg economy.

Measuring cross-border workers’ unemployment

There is not, thus far, any instrument for measuring cross-border unemployment. However, in light of the economic crisis and the May 2010 deadline, this is a matter for debate. The Chamber of Deputies has asked the Minister for Labour and Employment, Nicolas Schmit, to submit a progress report on this matter. The only indicator of cross-border employment in 2009 has been the 22,000 ‘E301’ forms requested from ADEM – however, this indicator does not reflect the number of unemployed persons, because every temporary worker asks for a form at the end of an assignment.

Cross-border workers’ share of the 600 dismissals identified by the Economic Situation Committee in 2009 is also unknown. The Minister for Labour and Employment is planning to hold meetings with the employment agencies of the adjoining countries in order to clarify this figure before May 2010, when the state will have to reimburse three months of the cross-border workers’ unemployment benefit.

Employment Administration reform a priority

In order to include unemployed cross-border workers in the Luxembourg benefit system, ADEM would have to have the necessary means and structures at its disposal. Currently, this is not the case, in the view of the Minister for Labour and Employment. A reform of ADEM is therefore among the list of priorities in order to increase its functionality. Furthermore, ADEM is facing a rise in the number of jobseekers, and both the structures and means of this agency are insufficient to meet this increase.

Nevertheless, Luxembourg has benefited from a thriving economy in recent years, enjoying a growth rate that is unique in Europe. This has enabled the country to have advantageous welfare benefits and a better standard of living compared with the adjoining countries. Cross-border workers have contributed to this success, Minister Schmit believes. The minister added: ‘Thus, you cannot want to take advantage when everything is alright and think differently when it is less so.’

Odette Wlodarski, Prevent