In-work ben­e­fits emerge as main stum­bling block ahead of Brexit

Financial Mirror (Cyprus) - - FRONT PAGE -

Coun­cil Pres­i­dent Don­ald Tusk pub­lished pro­pos­als aimed at re­spond­ing to Bri­tish rene­go­ti­a­tion de­mands on Fe­bru­ary 2. Those have been agreed with the UK, and are now the sub­ject of ne­go­ti­a­tion with the re­main­ing 27 mem­ber states. The Fe­bru­ary 18-19 sum­mit is ex­pected to en­dorse the pack­age, with pos­si­ble mod­i­fi­ca­tions.

Most mem­ber states have no prob­lems with the pro­posal in gen­eral, but many of them ex­press con­cerns that cuts to the in-work ben­e­fits would rep­re­sent dis­crim­i­na­tion and a breach to the prin­ci­ple of free­dom of move­ment of work­ers.

How­ever, none of the coun­tries ap­pears de­ter­mined to pick a fight, as all seem to agree that keep­ing the UK in the Union is in the com­mon in­ter­est. What could be ne­go­ti­ated is the du­ra­tion of the lim­i­ta­tion, which could last up to four years, and some mi­nor tweek­ing of the text. The in-work ben­e­fits in the UK are quite unique in the EU. In fact, they typ­i­cally sup­ple­ment the earn­ings of low-wage em­ploy­ees.

An­other el­e­ment of the pack­age, that child ben­e­fits for mi­grant work­ers whose chil­dren stay in their home coun­try would be in­dexed to the level of the mem­ber state where the child re­sides, doesn’t ap­pear to be con­tro­ver­sial.

Paris and Ber­lin are ex­pected to have sim­i­lar po­si­tions at the sum­mit. Ger­man Chan­cel­lor An­gela Merkel and French Pres­i­dent François Hol­lande met on Fe­bru­ary 7 in Stras­bourg to dis­cuss its repa­ra­tions.

France has had a rather cold re­ac­tion to Tusks’s pa­per sub­mit­ted to the EU mem­bers in prepa­ra­tion of the sum­mit. Be­fore­hand, Hol­lande had warned he would not sup­port any change in EU treaties nor al­low the UK to have his say about the eu­ro­zone. In­deed, the pack­age con­tains no such pro­vi­sions.

Hol­lande also warned that there should be no fur­ther changes to the deal at the sum­mit it­self, which means that the pack­age should be agreed on be­fore lead­ers ar­rive in Brus­sels.

How­ever, France can hardly be the cham­pion of nondis­crim­i­na­tion at a time when the coun­try’s leg­is­la­tors dis­cuss strip­ping “for­eign fight­ers” of French na­tion­al­ity.

France has also tried to wake up its neigh­bour about the con­crete con­se­quences of a Brexit. Some warned that the Calais Jun­gle camp might move straight to Dover in case of a Brexit, an idea that was re­taken by David Cameron over the week­end.

Ger­man Fed­eral Min­is­ter of Labour and So­cial Affairs An­drea Nahles stated that the prin­ci­ples of free move­ment of work­ers and non-dis­crim­i­na­tion are non-ne­go­tiable for her coun­try. But she also said that Ger­many was ready to find a so­lu­tion to the Bri­tish is­sue of ben­e­fits for for­eign EU cit­i­zens. “In our view, there are loop­holes when it comes to avoid ex­ist­ing dis­in­cen­tives,” Nahles said.

It is no se­cret that Ital­ian Prime Min­is­ter Mat­teo Renzi wants the UK to re­main in the EU. Rome and Lon­don share the same per­spec­tives on the need to change the EU, with the ex­cep­tion of the re­stric­tions af­fect­ing the free­dom of move­ment. Renzi is con­cerned about the neg­a­tive spillover that such a re­quest might have on the thou­sands of Ital­ian cit­i­zens work­ing in the UK.

Ac­cord­ing to re­cent data, there are ap­prox­i­mately 200,000 Ital­ians liv­ing in Bri­tain, about half of them in Lon­don. If, as ex­pected, a Brexit causes the loss of many jobs (the op­ti­mists pre­dict one mil­lion, the pes­simists three), tens of thou­sands of Ital­ians will re­turn home. Those who re­main will have to ap­ply for a res­i­dence per­mit and work per­mit, and the same will have to be done by 20,000 Bri­tish cit­i­zens liv­ing in Italy.

If Bri­tain leaves Europe, Ital­ian busi­nesses es­tab­lished in the UK — from Fin­mec­ca­nica to Eni, from Mer­loni to Calze­do­nia, from Pirelli to Fer­rero, from cloth­ing to food, fur­ni­ture and spots cars – might need to re­con­sider their trad­ing part­ner­ships, sub­ject to new rules. Apart from trade re­la­tions, the UK’s net con­tri­bu­tion to the EU is es­ti­mated to be around EUR 13.5 bln. In this re­spect, a Brexit would re­duce the EU bud­get, mak­ing it likely Italy will need to pay more. The in­con­gita re­mains the in­tense de­bate that Brexit has fu­elled among Euroscep­tic par­ties. The North­ern League and Five Star Move­ment in Italy have been the strong­est ad­vo­cates of a pos­si­ble im­i­ta­tion of Brexit in Italy. Mat­teo Salvini, MEP and head of the North­ern League, has launched a pe­ti­tion to col­lect sig­na­tures for a sim­i­lar EU ref­er­en­dum.

So far it seems that the Czech Re­pub­lic gen­er­ally sup­ports the Tusk pro­pos­als. The main con­cerns of the govern­ment are re­lated to the so­cial wel­fare cuts. Prague takes the view that there should not be any re­stric­tions on the Bri­tish labour mar­ket and so­cial wel­fare sys­tem, which would dis­crim­i­nate against mi­grants from cer­tain states, and that the po­ten­tial changes could have im­pact only on new­com­ers, not on work­ers who are al­ready in Bri­tain.

The pro­posed “emer­gency brake” mech­a­nism is ac­cept­able to the Czech Re­pub­lic. The cru­cial de­bate will be on how long the free move­ment can be re­duced un­der this mech­a­nism.

The coun­tries of the Viseg­rad group, of which the Czech Re­pub­lic holds the ro­tat­ing pres­i­dency, will hold a min­isum­mit on Fe­bru­ary 15 in an ef­fort to co­or­di­nate a com­mon po­si­tion ahead of the EU sum­mit.

Tusk will visit Prague on Fe­bru­ary 16 to dis­cuss the com­pro­mise pack­age with Prime Min­is­ter Bo­huslav Sobotka.

Re­fer­ring to the 60,000 Slo­vak cit­i­zens who of­fi­cially work in the UK, Slo­vak Prime Min­is­ter Robert Fico said he could not agree that they would be af­fected by the new con­di­tions, which would sig­nif­i­cantly limit their right to var­i­ous so­cial ben­e­fits.

He made this state­ment Cameron in Lon­don at the Fe­bru­ary 4.

“We in­sist that those who work cur­rently there (in the UK) will not be af­fected,” Fico stated, ask­ing for as­sur­ance that the deal would not have a retroac­tive ef­fect.

Slo­vak di­plo­mats have main­tained that a sit­u­a­tion when Bri­tish and Slo­vak na­tion­als work­ing be­hind “desks next to each other” were treated dif­fer­ently, rep­re­sented a red line.

As far as other ar­eas of re­form are con­cerned, Slo­vakia af­ter Syria bi­lat­eral meet­ing with donor con­fer­ence, on

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