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In May 1998, Luxembourg's Chamber of Deputies adopted a law that will bring into being a "dependency insurance" scheme designed to give support to people who can no longer carry out "activities of daily living" on their own. This new legislation has been given a warm welcome, but the funding, and particularly the employers' contribution, is still controversial.
Draft legislation introducing "dependency insurance" was approved by the Chamber of Deputies on 27 May 1998, with 55 voting in favour and three abstaining. Approval followed intensive negotiations and disagreements among political and social circles over the previous few months (LU9712136N). This new "pillar" of social security will cover an additional risk within the framework of national solidarity, and will be based on the principle of a compulsory contribution, giving insured people new rights from 1 January 1999 onwards.
The new "dependency insurance" (assurance-dépendance) scheme aims to assist dependent people with physical, mental or psychological conditions to perform "activities of daily living", that is to say physical hygiene, eating and mobility. After they are examined by an "assessment and guidance unit" - consisting of 16 full-time doctors, psychologists, social workers, nurses and trainers - they will be allocated a set number of hours' support. This will take the form of professional services, or a cash benefit if the assistance is provided by an "informal helper" such as a family member or neighbour.
Dependency insurance is available not only to older people, but also to people who have disabilities or have been involved in an accident, and covers all who work and live in Luxembourg. It is informed by the principle of enabling people to continue living in their own homes; in other words, dependent people have the right to remain as long as possible in their normal living environments, providing dependency insurance and associations working in this area can ensure that the people concerned will receive the appropriate care. However, it will be necessary to provide additional nursing beds in nursing homes, as Luxembourg lags some way behind the field in this regard.
Some 9,000 people are likely to be affected initially, and it is estimated that this figure will rise by approximately 1.5% a year. According to some Deputies, it has become necessary to rely on national solidarity in this area because of the decline of the family unit.
The scheme will cost an estimated LUF 6.7 billion in respect of Luxembourg residents alone.
As is normal in Luxembourg, the provisions of this legislation (sometimes known as the "law of the century") were finalised only after innumerable formal and informal meetings involving the various Ministries affected and representative organisations of all shades. This participative process included "objective, rational and realistic contributions" and it is sometimes difficult to identify the authors, their positions and the impact they have made. Nevertheless, a number of points can be made about the process.
The scheme originally contained a residence clause, but this was dropped by the government at the insistence of the trade unions, and the OGB-L confederation in particular.
Benefits may now be exported, and therefore cover immigrants and cross-border workers who work in Luxembourg and pay contributions. It seems appropriate that those who pay contributions should qualify for benefits.
Ways of funding the scheme were debated at length, particularly among the social partners, and the solution that was eventually reached is still controversial.
Of the total cost, 45% will be funded by the state budget: some of this will come from a form of tax on electricity prices, but it will mainly be financed out of the "universal social contribution" (Contribution sociale généralisée). The latter element consists of a 1% levy on all incomes, such as pay and rent - in this way, the contribution made by households is assured. The method of levying the tax on electricity is more controversial as it does not affect all companies. a notable example is the Arbed iron and steel concern, which is not supplied by CEGEDEL, the national electricity company, and therefore avoids payment.
The employers point out that they already contribute significantly to the 45% of the costs of the new scheme funded through the state budget. After the vote in the Chamber of Deputies had taken place, the trade unions, and the LCGB confederation in particular, argued that the principle of contributions, levied on pay, to the social security system means that companies must also pay by making such contributions: "Companies are one of the supports of our society, and are therefore a key player in our social security system. Companies have a social function, and must not restrict their activity to economic considerations."
The LCGB has argued, in the light of these developments, that employers' representatives should not have seats on tripartite bodies administering the new insurance scheme.
Controversy at the time of the vote encouraged the Chamber of Deputies to accept a motion calling on the government to bring in a new energy tax designed to ensure the scheme's long-term funding.
The law on dependency insurance is certainly not perfect; indeed, it has the same shortcomings that mark all new social legislation. However, it meets a significant need and fills a major lacuna in the country's social system.
Now that the statutory base is in place, it is down to the key national players to make sure that it works as well as possible, as all of those involved may eventually need to make use of it. (Marc Feyereisen, ITM)