Soziale Sicherheit in Der Europäischen Union

Working Package 3: Mapping of convergence and divergence

Part 1:

Preliminary Remarks:

The aim of this compilation is to give an basal outline of convergence and divergence concerning social security systems, tax systems and immigra - tion policies in the PEMINT countries. The part of this roundup that deals with the different social security systems is based essentially on the „ Mu- tual Information System on Social Protection in the Member States of the European Union“ (MISSOC). MISSOC is updated every year and provides a good empirical and introducing base for the analysis of social security systems. The second part of the set that deals with the different designs of fiscal systems in Europe rests upon different publications, because there is no special reporting on tax systems as MISSOC provides for the social security systems1. The forthcoming compilation of convergence and divergence of immigration policies in the PEMINT countries is based on the reports of every single PEMINT country. This mapping of convergence and divergence could be a possibly useful indicator for the so-called „incomplete European integration“, which is a central item for the PEMINT research tasks. It can be suggested that the problems and consequences of this “incomplete European integration“ influence recruitment strategies of the employers and the labour mobility. So this mapping of convergence and divergence should provide a useful basis to recognise significance and impact of the incomplete European integration in the range of fiscal systems and social security systems with regard to the recruitment of the labour force, the allocation of the factor human capital and the mobility of the factor human capital. According to this this compilation is just a straight descriptive roundup of the most important aspects of the different systems. Thereby only these parts of fiscal systems and social security systems and immigration policies that seemed to be highly relevant to the re-

1 Most important publications for reporting on fiscal systems are: Federal Ministry of Finance: Most important taxes in international comparison. Monthly report 10/2001. (Bundesministerium für Finanzen: Die wichtigsten Steuern im internationalen Vergleich. Monatsbericht 10/2001). Mennel, Annemarie/Förster, Jutta: Taxes in Europe, America, Asia (Steuern in Europa, Amerika und Asien). Herne 2001. search tasks of PEMINT are integrated in the following set. A comprehensive summary of all aspects in the complex system of social security, taxes and immigration policies would not be possible. Concerning the aspect of social security the elements of old age, sickness insurance, unemployment, family allowances and Guaranteeing sufficient resources were taken into consideration. In the range of the fiscal systems the aspects of income tax and company taxes (direct taxes) and the general sales tax (value-added tax) are regarded. The summary of the different immigration policies will deal with naturalization, Legislation and Regulation of work permits and residence permits, family reunification and asylum policy.

Part 1: Social Security in the European Union

As outlined in the preliminary remarks this first part of the mapping should provide a short overview concerning the most important elemts in the different social security systems. Nevertheless the frame of reverence of the PEMINT project should not be lost sight of. On the one hand the relevant organisations that are affected, on the other hand the individual actors, the potential migrants. Discussing the different design of the social security systems in the relevant PEMINT countries it should be taken into account who is adressed by the different elements of the sociasl security systems, who is getting the possible benefits and who is paying the cost for it.

A. Old Age/Seniority

Pension schemes are one of the oldest parts – beneath accident insurance and sickness insurance – of the Social Security systems. In some countries the old age insurance was established already at the end of the 19th century.

1. Systems of the old age insurance In principle there are two different systems in terms of the old age insurance. The Netherlands and the United Kingdom prefer a system of universal coverage and basic pension system organised by the government. Portugal, Italy and Germany arrange the old age insurance in a different way. They established the system of the statutory pension insurance that is organised via pay-as-you-go.

a) System of universal coverage/basic pension system: contributions

Employees contributions in % Employers contributions in % Retirement Age NL2 16,5 0 65 UK 03 04 65/60

b) Statutory pension insurance: contributions

Employees contributions in % Employers contributions in % Retirement Age G 10,15 10,15 65/60 I 8,9 24,1 65/60 P 115 23,756 65 CH 4,2 4,2 65/64

2. Term/ field of application

2 The following abbreviations are used in the following: NL: Netherlands; UK: United Kingdom; I: Italy, G: Germany, P: Portugal. 3 Total amount for all branches of the social security. Higher earnings: 2-10 or 3-10 % 4 Total amount for all branches of the social security. Higher earnings: 2-10 or 3-10 % 5 Total amount for all branches of the social security. 6 Total amount for all branches of the social security. System of insurance Field of application G Statutory pension insurance Employees I Statutory pension insurance Employees UK Universal coverage by the state. Additional retirement pensions for employees All inhabitants, employees for the additional retirement pensions NL Universal coverage (AOW) in the form of rent charge, additionally occupational pension scheme All inhabitants over 65 P General social insurance Employees CH Statutory pension insurance Employees The table specifies the public terms of the insurance systems and their ambit and field of application. In accordance with the different systematic conception the systems of the statutory pension insurance depends on the principle of insurance. Only assured persons who pay contributions over a fixed period have a right to obtain benefits. The system of the universal coverage/basic pension secures all inhabitants in the concerning country7.

3. Funding/Financing

Employees Employers State G 10,15 % (1.4.1999: 9,75 %) of gross income 10,15 % (1.4.1999: 9,75 %) of Government grants (about 20 % of the pen- gross income sion payments) I 8,89 % of gross income 24,11 % of gross income Completely expenditure for social pensions, early retirement, topping-up pensions to minimum and a part of the total amount of pensions paid by the general system8 UK Overall contributions for Sickness and Maternity - No contribution for weekly Government grant Cash Benefits, Invalidity, Old Age, Survivors and Un- earnings below €90. In other employment. No contribution is paid if the weekly cases, 3%, 5%, 7% or 10% de-

7 Basic Pension payable in Great Britain if contributions paid for at least 10 years In the Netherlands there is no waiting period for receiving a pension 8 Total contribution f 33% for workers in private industrial sectors. Contribution rate differs in other cases, e.g. public sector, self-employed, agriculture, cooperative workers, do- mestic workers, “atypical” workers. Some of these exceptions that can not all be listed in that summary might be quite relevant and important in some PEMINT sectors of activ- ity. earnings are below € 90. In other cases: 2% of € 90 pending on the level of earnings plus 10% of earnings between € 90 and € 682. on all earnings (no upper limit). NL 16,5 % of the total income 0 P Contribution is included in the overall rate. Overall Contribution is included in the - rate 11.00% employee overall rate. Overall rate 23.75% employer CH 4,2 % 4,2 % 20 % of the total payments

The table above provides a short, simplified synopsis of the main financing channels of the different pension schemes. The financing in the systems of a statutory old age insurance (Germany, Italy, Portugal) results mainly in the contributions of employees and employers. These contributions depend on the gross income. In most of the countries there are different contribution assessment ceilings. Except Ger- many (contributions of employees and employers are identical) the contributions of the employers are higher than these of the employees. Indeed also the state contributes to the financing of the benefits. In many cases he is responsible for the compensation of deficits in the pension funds. The state is mainly responsible for financing in the systems of universal coverage/basic pension schemes. You can find this system in the Netherlands and in the UK. In the Netherlands compulsory supplementary pension schemes for employees are additional instruments for the retirement arrange- ment.

4. Benefits

Legal retire- Latency/ Minimum period Minimum pension Adjustment ment age of membership G 65 years 60 month of insurance No statutory minimum pension Annual adjustment (1 July) of the current pension value (women at age 60 after (aktueller Rentenwert) according to the net salary devel- 180 contribution months) opment in the past calendar year compared to the calendar year preceding the past year. I Men: 64 years 18 years of contribu- € 370 The old-age pension is As of 1 January 1999, annual adjustment based on the de- Women: 59 brought up to the amount of the velopment of the cost of living 9 tionSince 1.1.1999: 19 years ) years, since 1.1.2001: 20 minimum pension if the annual tax- years able income of the pensioner is less than 2 times the minimum pension. Recent Reform: Pensions related to contribution10 UK Men: 65 years Basic pension: Generally Basic Pension: € 76,7 weekly Adjustment by legislation at least annually in line with Women: 60 contributions paid for at movements in the general level of prices years least 10 years

NL Men: 65 years None flat-rate pension benefits: Single Adjustment on 1 January and 1 July in accordance with Women: 65 Person: € 741. Married and unmar- the average development of contract wages. years ried persons, both 65 and over (also 2 men or 2 women sharing a house- hold): NLG 1,162.27 (EUR 527) per month for each person;

P Men: 65 years Contributions paid or € 189,54 Normally increased once a year by government decision Women: 64, 5 credited for 15 years. It is with regard to the price level years (since necessary to prove 120 re- 1999: 65 gistered days of pay for years) each year to be taken into account. 55 with 30 civil years of wage contributions CH Men: 65 1 year of insurance 12’360 sFr. per year Adjustment every two years; average of the price- and

9 Since 1.1.2000: Men: 65 years, Women: 60 years. 10 Besides old age pension, there’s another possibility: the seniority pension. Requirements are: 57 years of age and 35 years of contribution or 37 years of contribution with no age requirement (40 years in 2008). The benefits are calculated on the contribution as well. Women: salary-index till 2005: 63 After 2005: 64

The extent of the benefits differs in the viewed countries obviously. Beside that the predefinition and fixing of the benefits is very different in the viewed countries and the two systems. The basic pensions are equal for all recipients (normally family allowances are paid). The benefits of the statutory old age insurance are dependent on the wages. The exact calculation of the pension payment is very complex and complicated and cannot be shown in this context. In all countries the pension payments are suited to the economic development every year (Netherlands: Every six month). Most countries limit the re-adjustment to the development of the inflation rate. The re-adjustment in Germany orientates itself on the development of the net wages, the re- adjustment in the Netherlands on the negotiated wages.

B. Health Care

Legal regulations in the health care are quite old and traditional in many countries. There are enormous differences concerning the organisation of the health care system and the benefits. They become rather bigger than smaller. Growing expenses in the health care system have forced many countries to reduce benefits and to establish patients’ participation

1. Insurance scheme:

G Compulsory sickness insurance (nursing care insurance) I National Health Service UK National Health Service NL Compulsory sickness insurance: benefits in kind (ZFW), cash benefits (ZW) Exceptional Medical Expenses Act (AWBZ) P National Health Service CH Compulsory sickness insurance

With regard to the design of the security in the health care there are two different systems. There is a common trend in many European countries that many security systems in the health care, that were originally based on an insurance system, were substituted by national health services. The United Kingdom was the first country in Europe that established the National Health Service (NHS) after the Second World War. In the 70s and 80s a couple of European countries implemented a national health service (Ireland, Denmark, Portugal, Italy and Spain) and abolished the system of sickness insurance. Only Germany and the Netherlands sustained an insurance-based system (statutory sickness insurance). The different ways of health care schemes implicate a very important difference concerning the duty to generate the security in the context of the health care. National health services in Italy and the United Kingdom provide benefits in their own responsibility. They produce the security benefits on their own. Systems that are based on statutory sickness insurance chose another possibility. They buy the benefits from companies and entrepreneurs of health care products and services.

2. Field of application

All persons in paid employment and those receiving vocational training, trainees. Pensioners with a sufficient period of insurance. Unemployed, receiving benefits of unemployment insurance. Handicapped persons in sheltered employment. Trainees in G vocational rehabilitation so as people being trained for some form of employment in special youth training institutions. Stu- dents of recognised higher education. Farmers, and helping members of their family. Artists, and writers. Voluntary insured persons. Dependants. I All residents (including foreign residents) who are registered at the National Health Services UK All residents. NL AWBZ: All residents and Non residents liable to Dutch wages and salaries tax in connection with employment in the Nether- lands. ZFW: All persons under 65 in paid employment P All residents. Subject to reciprocity principle where nationals of other states are concerned CH KV: All residents (including foreign residents, if the stay longer than three months) have to pay their contributions to the insurance, so all residents are insured. UV: All employees

The differentiation concerning the systematic organisation between national health services on the one hand and statutory sickness insurance on the other hand influences also the field of application of the health care system. National health services provide non-cash benefits for all inhabitants. Statutory sickness insurance provides non-cash benefits only for the insured.

3. Financing Financing Employees Employers State G 6,75 % of gross income (0,85% 6,75 % of gross income (0,85% Lump sum payment of € 400 nursing care insurance) nursing care insurance) for maternity I 1,00 % of gross income 14,35 % of gross income) Government grants The UK Overall contributions for all Overall contributions for all Services provided by the Na- finan- branches. Contributions vary with branches. Contributions vary tional Health Service: Financed cing the level of earnings. No contri- with the level of earnings. No by the Government and (to a bution if weekly earnings are be- contribution for weekly earn- lesser extent) from contribu- of the low € 90. In other cases: 2% of ings below € 90. In other cases, tions. 3%, 5%, 7% or 10% depending na- € 90 plus 10% of earnings between € 90 and € 682. on the level of earnings on all tional earnings (no upper limit). NL AWBZ ZFW ZW 9,6% 1,2% 1% 0% 5,6% 0,95% Government grant for AWBZ health and ZFW ser- P Global rate for the systems of 11,00 % of gross income 23,75 % of gross income Financing of the national health social security service vices (Italy, CH KV: The price differs between The employer pays the whole KV: - KV: The state pays a certain the cantons and insurances amount but in fact there is a re- UV: 50% amount of the contributions for Por- The swiss average is: duction in salary as well. It’s dif- people with a low salary. tugal, 245.00 sFr. per month and ficult to say how much each part It’s about 15% of all contribu- person. pays. But as a approx. 50% tions. UK) UV: this insurance is based on results the sum of all wages in a com- UV: - pany. from nearly exclusively taxes. The statutory sickness insurance is predominantly financed by the contributions of the insured employees and the employers. In Portugal and in the UK security against sickness is financed exclusively by public resources. The contributions that have to be paid in Por- tugal and the UK are global rates for all parts of the social security systems. In Italy there is a mixed financing for the national health service (contributions of employees, contributions of employers, government subsidy). In Italy the special case occurs that workers and employees have to pay different contribution rates for social security. The contribution rates of the employers are in the statutory systems in the most cases higher than the contribution rates of the employees. The only exception is the Netherlands.

4. Benefits

Discussing divergence and convergence of benefits in the health care there must be a differentiation between cash benefits and non-cash benefits.

4.1 Cash benefits

• Cash benefits - Conditions Deferred Period Duration of Benefits Amount of the benefits • Sickness benefit G Following the continuation Incapacity for work certified None Sickness benefit (Kranken- Sickness benefit: 70% of payments (Care allow- by doctor. geld) for the same illness, of the normal salary ance € 204,5 / 409 / 664,7 limited to 78 weeks over a but not exceeding 90% monthly) 3-year period of the net salary.

I Only Manual workers. No work period or qualify- 3 Days (Excep- Maximum of 6 months (180 50%. From 21st day White-collar workers do ing period required. tion: Tbc) days) per year. 66.66% (earnings not receive cash benefits in taken as basis: Real the event of sickness but earnings). employers must by law continue to pay their salaries for at least three months UK Statutory Sick Pay: paid by Incapable of carrying out 3 Days Maximum of 28 weeks, 52 € 84,3 weekly. No ad- employer in case of illness normal occupation. Must weeks maximum in a period ditions for dependants lasting at least 4 consecut- have paid sufficient contri- of incapacity for work ive days up to a maximum butions in any one tax year, of 28 weeks. and have been paid with sufficient contributions in two relevant tax years; normally the two preceding the year of the claim. NL Following continued pay- No qualifying conditions. None 12 months (52 weeks). 70% of the daily wage. ment of 70% of wages by Maximum daily wage the employer for 52 weeks considered: € 141. P After waiting period of Six months membership 3 days per peri- Maximum 3 years (then, Daily benefit: 65% of three days cash benefits with registered salary and od of absence possibly, invalidity). average daily. 12 days salary registered owing to incapa- during the 4 months prior to city. None in the the one proceeding the day event of hospit- of incapacity. alisation, maternity or tubercu- losis.

CH Following continued pay- Incapacity for work certified None Depends on the duration Min. 80 % of the nor- ment of wages by the em- by doctor worked for the same em- mal salary ployer ployer but max. 6 month

The rates of the cash benefits are dependent on the earned gross income. The exception is the United Kingdom. In the UK you get fixed amounts. The rates in the relevant countries range between 50 and 75% of the gross income. The cash benefits become effective after a certain period of time. In this interval continuation of payments (to sick workers) is valid. Another difference is the implementation of a deferred period. National heath services established a deferred period of three days. In the Nether- lands and in Germany (statutory sickness insurance) there is no deferred period. 4.2 Non cash benefits

Person eligible Doctors Patient's participation Hospitalisation • Pharmaceutical products (Patients participa- for benefits tion)

G Spouse and chil- Free choice No participation in the Free hospitalisation in A charge of € 4.09, € 4.60, and € 5.11, depend- dren, income not among con- case of treatment by con- a shared room with ing on the packet size of the pharmaceutical exceeding € 322 tracted sick- tracted doctors, except in exception of participa- product prescribed, except for children and hard- in old Länder and ness insur- the case of treatment (e.g. tion of € 8.69 per cal- ship cases. Insured persons must pay for comfort € 271 in new ance fund massages, baths or endar day during a drugs. Certain uneconomical drugs are not paid Länder doctors physiotherapy). maximum of 14 days. by the insurance.

I All inhabitants Free choice Free for some special Free choice of public Classification of medication into three groups: of general groups. Other insured per- or private hospital Group A: Medication termed "essential" for practitioner sons pay up to € 36 for among those re- treatment of serious complaints: Free. Group B: among those each prescription. In the gistered under the Medication for the treatment of serious com- approved for case of pregnancy all tests scheme. Direct assist- plaints but less serious than those in group A: the region free. For each test carried ance free (sharing a Free of charge for some categories of persons. out or each visit to a spe- room). The rest pays half price. Group C: Other medica- cialist the insured person tion and medication for which a prescription is is expected to contribute not required: The cost is borne fully by the in- € 3.10. sured person. Each prescription may not include more than 2 items. The patient is expected to contribute € 2.07 for the prescription of 1 item and € 3.10 for the prescription of 2 items;

UK All inhabitants Free choice No charge No charge, except Charge € 8.16 per prescribed item. Many social by patient (or where the patient asks exceptions. Annual (or 4 months) season ticket parent/guard- ian), subject for special can be bought entitling the holder to an unlim- to acceptance amenities/extra treat- ited number of prescribed items without charge by doctor ment. in the period of its validity. The cost of the ticket is €42 for 4 months and € 116.

NL Subject to certain Free choice None Free choice among Registration of insured person with a chemist. conditions can be of doctor hospitals or institu- Benefit in kind. Insured person is entitled to a extended to the (twice a tions approved by the qualitatively good package of medicines without partner (up to the year) Minister of Health. it being necessary to make additional payment age of 65) of an insured person (subject to the insured person being the breadwin- ner) and children P All residents. patients are Variable insured person's Free choice among Depending on type of illness, the state contrib- Subject to reci- not allowed share set by government public hospitals. utes 70% or 40% of the cost of medicines on the procity principle to choice Hospitalisation is lim- official list drawn up by the health services. where nationals freely the ited by the place of These percentages are increased by 15% for pen- of other states are general prac- residence and/or the sioners whose pensions are less than the minim- concerned titioner and needed medical speci- um wage. the specialist ality. working Health Na- tional Ser- vices.

CH All insured resi- Individual Min. 230 sFr. per year as Free choice among Insurance has to pay all the products except the dents contracts be- Franchise plus 10% Selb- public hospitals. amount mentioned in patients participation tween insur- stbehalt (max. 600 sFr.) ance und costumer.

Concerning the non-cash-benefits there is a lot of convergence between the two possible systems (national health service and statutory sickness insurance). In both systems non-cash benefits are provided free of charge. The other possibility, the cost reimbursement principle (the insured pay for the benefit and get these expenses back later) is not established in any of the PEMINT countries. In nearly every European country the self-retention of the patients has been established for special non-cash benefits. The extent of the self-retention for hospitalisation and pharmaceuticals differs in the relevant countries seriously as the table above shows.

C. Unemployment

In all member states of the European Union – exception: Denmark - insurance systems in terms of unemployment have been established.

1. Insurance scheme

Insurance scheme Field of application G Statutory unemployment insurance All employees (= manual and white-collar workers and trainees including young handicapped persons). I No general scheme against unem- All employees ployment, different schemes apply- ing to specific situations Full unemployment: Ordinary unemployment benefit Special unemployment benefit Mobility allowance. Similar to Stat- utory unemployment insurance UK Statutory unemployment insurance All employed persons except married women who chose before April 1977 not to be insured. NL Statutory unemployment insurance All employees under 65. P Statutory unemployment insurance All insured employees CH Statutory unemployment insurance All employees

All PEMINT countries established statutory unemployment insurance systems. In all PEMINT-countries employees are obligatory insured on a legal regulation. The conception of the social security concerning the risk of unemployment is quite similar in the relevant countries. According to this also the field of application is similar. The protection is granted to all the insured employees. Concerning social protection in the case of unemployment the Dutch situation must be handled very carefully. A very important point of concern is the low effective retirement age (Effective retirement age: males 58,8 years, females 55,3 years)11. The most popular public scheme for retiring early from the labour force is the disability program. At present, about a third of the males between 55 and 64 collect a disability.

Persons aged 55-64 by labour-market status in the Netherlands as percentage of the population in that age category.

Men 55-59 Men 60-64 Women 55-59 Woman 60-64 Employed 54,9 21,1 12,7 4,3 Disabled 31,3 37,1 10,5 10,8 partly disabled/unemployed 1,8 1 0,4 0,3 Early retirement 3,9 26,5 0,6 5,1 Social assistance 0,4 0,4 2,4 2 Unemployed 4,6 8,7 1,1 1,6

In the special case of the Netherlands the invalidity scheme is so highly relevant for discussing different social security schemes concerning unemployment. A distinctive invalidity scheme as a major route facilitating early retirement so aggravates the mapping of convergence and divergence in

11 CPB: Challenging Neighbours; Rethinking German and Dutch Economic Institutions,’ Berlin 1999. the special elements of the social security schemes, because invalidity schemes and unemployment schemes are closely interrelated and cannot be analysed separately in the Netherlands.

2. Financing

Employer Employee State G 3,25 % of gross income 3,25 % of gross income Tax-financed Unemploy- ment assistance and cover I 0,30 % of gross income 2,21 % (commerce); 4,41 % (industry). Governmental grants UK Overall contributions for all branches Overall contributions for all branches Governmental grants NL 6,45 % of gross income (average) 6,35 % of gross income (average, different contributions - in different branches) P Overall contributions for all parts Overall contributions for all parts - CH 1.5% of salary up to 106800 per year 1.5% of salary up to 106800 per year About 7% of all expendi- 1 % of the salary from 106800 to 1 % of the salary from 106800 to 267000 per year tures are paid by the state 267000 per year

The financing of the benefits mainly takes place by the contributions of the employees and the employers. Governmental subsidies are used to cover deficits in the insurance funds (especially in times of high unemployment). In Portugal and in the UK the contributions for the unemployment insurance are part of the global rate for all parts of the social security. Only in Germany the contributions of the employees and of the employers are the same. In Italy and in the Netherlands the contributions of the employees vary dependent on the branch of the economy. In Italy employees in the industry have to pay the double contribution rate compared to the employees in commerce.

3. Benefits The unemployment insurance is supplemented in the most countries by a public support system (unemployment assistance). The security in the context of unemployment consists of two different structured elements. The first part contains the contribution based unemployment insurance. After expiry of the unemployment insurance benefits there is the tax financed unemployment assistance.

3.1 Unemployment benefit

Qualifying period Waiting Duration of payment Rate Period G Unemployment Insurance: The unem- None Proportional to periods of com- Beneficiaries with children: 67% of net earnings ployed person must have been compulsory insurance coverage and to (fixed scale of net earnings established according to a pulsorily insured for at least 12 months age. global rate). Beneficiaries without children: 60% of during the last 3 years. net earnings.

I Two years of insurance and 52 weekly None Ordinary unemployment benefit: 40% of the average pay received during the last 3 contributions during the last 2 years. 180 days. Special unemployment months with a monthly ceiling of € 735 for earnings benefit:90 days with of extension < € 1,591 and € 884 for earnings > € 1,591). in the event of a recession. Mo- Mobility allowances bility allowance: 36 months with possibility of extension until 48 months for regions in South Italy.

U Contributions paid in one of the 2 tax 3 Days Limited to 182 days in any job- Single aged 25 or over: € 71) per week. Single aged K years on which the claim is based seeking period 18-24: € 56 per week. amounting to at least 25 times the minimum contribution for that year

NL At least 26 weeks of paid employment None Basic benefit: 6 months. Earnings 70% of statutory minimum wage during the last 39 weeks (26-weeks con- related benefit: The duration of dition). 26-weeks-condition and employ- extended benefits depends on a ment in at least 4 years during the last 5 person's unemployment record years, in each of which a salary over 52 days was paid (4-out-of-5 condition).

P At least 540 days of salaried work and None General benefits proportional to 65% of reference wage. Maximum: 3 x minimum contribution payment, in 24 months pri- age: 12 month to 30 month guaranteed wage. Minimum: Minimum guaranteed or to unemployment. wage unless worker's remuneration is below that level.

CH 6 month of insurance, in case of recur- None Max. 520 days 80% or 70% of the insured income, depends on the rence 12 months level of income and the family status (with or without children)

In all countries (exception: UK) there is a kind of double security system in terms of unemployment. Concerning the extent of the benefits precise differences come to the fore. But the comparison of the intensity of the benefits is very difficult, because there are lot of differences in the organisation of placement and advanced training. The following table points up the differences of the governmental expenses concerning unemployment.

Benefits for unemployment and provision of employment 1994 per capita unemployed

€ Randomized with purchasing power parity Deutschland 12476 UK 5611 14.610 I 1999 5.260 NL 17305 37.395 P 2300 8.010 3.2 Unemployment assistance

Filed of application Conditions Duration Rate G All employees (= manual The unemployed person must Assistance will be granted Beneficiaries with children: 57% of net earnings and white-collar workers have received unemployment for maximum of 1 year and (lump sum net payments on a fixed scale). Benefi- and trainees including insurance benefit during the can thereafter be applied ciaries without children: 53% of net earnings. young handicapped per- last year, or must have spent at for anew. The conditions sons). least 5 months in employment for entitlement are to be re- under insurance cover, or fulfil examined before each re- similar conditions (original newed grant. unemployment assistance)

I Workers in the building in- 10 monthly contributions of 90 days with of extension dustry. Mobility allowance: 43 weekly contributions dur- in the event of a recession. All salaried workers (ex- ing the last two years in the cept in the building trade) building industry. who qualified for the ex- traordinary earnings supplement. Not a general unemployment assistance scheme, Special schemes for different sectors UK No Unemployment assistance NL All employees under 65. 26-weeks-condition and em- 1 year 70% of the statutory minimum wage (or 70% of the daily wage if this is less than the statutory ployment in at least 4 years during the last 5 years, in each minimum wage). of which a salary over 52 days was paid (4-out-of-5 condition). P All insured employees. At least 180 days' salaried General benefits propor- 80% to 100% of minimum wage in line with num- work in the 12 months preced- tional to age ber of dependants ing commencement of unemployment

The unemployment assistance is similar to the social benefits (Sozialhilfe). Unemployed people can obtain unemployment assistance after the expiry of the benefits from the unemployment insurance (Exception: UK and Switzerland. There is no unemployment assistance). Rates, duration and conditions are very different in the concerning countries. Indeed there is an important difference between the unemployment assistance and the social benefits. The rates of the unemployment assistance are dependent on the former gross income. So the unemployment assistance re-produces differences in income and status. The social benefits is granted after a poverty test on a fixed scale.

D. Family Allowances

In all European countries family allowances are established. Organisation and intensity are very different indeed. The most important element in the context of family allowances is the granting of the child allowances. Beside that there are allowances and benefits in the form of tax privileges. Looking at the element “family allowances” the difficulties of description and analysis of governmental benefits become visible. It is possible to quantify and to compare the transfer payments and in a restricted way the tax privileges. But there are also many elements, that are part of the social security in the context of family allowances, that cannot be quantified, e.g. the dependents' co-insurance. A comparative analysis in this context is so very difficult.

1. System of Insurance System Field of application G Legal regulation All people who are taxable in Germany and are responsible for children, adopted children, foster children and grandchildren- UK Legal regulation Total population I Legal regulation Total population NL Legal regulation Total population P Legal regulation Total population CH Insurance system and All the employees. In five cantons all residents. legal regulation

There is an element of convergence. All countries prefer a legal solution.

2. Financing

employees Employers State G - - Tax financed UK - - Tax financed I - 1,68 % of gross income Partly absorption of costs NL Tax financed P - Part of the global contribution for all parts of the social security - CH - 0,1 – 5 % of the salaries Pays for the allowance of farmers

Relating to the financing of the child allowances there can be observed two different solutions in Europe. In Germany, UK, Netherlands child allowances are tax financed. In Portugal and Italy the employers finance child allowances by their contributions. In Portugal the contributions for child allowances are part of the global contribution for all parts of the social security. 3. Benefits

There are two main elements of the benefits: direct transfers (child allowances) and tax privileges.

3.1 Child allowances

Age limit Rates G Normal: 18 years. Prolongation to 21 possible for Monthly amounts: 1. child: € 154; 2. child: € 154; 3. child: € 154; 4. u.w. those available for work as unemployed. Vocational child: € 179 training / further education/ applicants for a vocational training opportunity: 27 years. Child income: no claims if income or earnings designed for the child's upbringing or for the purpose of his/her education is exceeding € 6,320 per year. Earnings destined for par- ticular educational purposes are not included. Handi- capped persons: No limit.

UK Normal: 16 years. Continuing non-advanced educa- Eldest qualifying child: of a couple: € 71; of a single parent: €104. Each tion: To 19th birthday. other child: €57.

I 18 The amount of benefit for the family is in inverse function to the family income and in direct function to the number of family members.

NL Normal: 17 years. Vocational training/further educa- - 1. child: € 68, 2. child: € 77,7. 3. child: € 81,3. 4. child: € 88,4 tion: 24 years (only if not entitled to student grants). - 1. child: € 57,8, 2. child: € 66,5. 3. child: € 69. 4. child: € 75,2 Serious infirmity: 17 years. - All children: € 57,8 Depends on the year of birth. P Normal: 16 years. Further education/vocational train- 1. child: € 26,24. 2. child: € 26,24. 3. child and more: € 39,36. ing: 24 years. Serious infirmity: Extension in certain cases up to 3 years. CH Normal: 16 years Depends on the canton and on the “Ausgleichskasse” and on the family Children in education: 25 years structure

In the majority of the countries the rates of the child allowances are dependent on the number of children. Exception: UK and Portugal.

3.2 Tax privileges

Beside the direct transfers (child allowances) tax privileges play a very important role in the context of family allowances. Tax privileges are very hard to recognise, to integrate in the context of benefits and to analyse. So the European comparison in the area of family allowances is very difficult.

E. Guaranteeing sufficient resources /social benefits

1. Term/ Financing

Name Financinmg G Sozialhilfe 25 % of the Länder, 75 % of town councils UK Einkommensunterstützung 100 % of the state I Existenzminimum 100 % of the town councils NL Sozialer Beistand (ABW) 90 % of the state, 10 % of town councils P Rendimento Mínimo 100 % of the state Garantido (RMG).

CH Sozialhilfe Varies between the cantons In all non-contributary benefits are granted to guarantee sufficient resources for the poor. Concerning the financing there is a important difference. In Germany, Italy and the Netherlands the town councils are responsible for the financing.

2. Conditions

Age Willingness to work Exhaustion of other claims G No age condition; minors Persons capable of working must be prepared to Claims on other social benefits and relating to per- can claim on their own carry out all work offered to them, within reason. sons obliged to pay maintenance have to be ex- right hausted. Exceptions.

UK In general, from 18 years Not a condition for Income Support from October Capital, excluding home, of applicant and/or part- of age. In special circum- 1996 (see also Jobseeker's Allowance). ner if any, must be below € 11,250 or € 22,500 for stances, persons aged 16 applicants in residential care or nursing homes. and 17 may qualify I No age limit The beneficiary must be prepared to participate in Generally speaking the gain of other supplement- activities in an effort to improve his situation. With ary benefit allowances doesn't cause the suspension this intention communities or the region organise of the allocation of the subsistence level0 special professional courses in certain cases.

NL As from 18 years; excep- Register for employment, if of working age. Social assistance is complementary to all other sub- tions for minor having left sistence allowances and is provided as a last resort their parents' house (safety net).

P 18 years of age or older, Availability for employment, as well as occupa- Besides not having earnings of one's own or from or less than 18 years of tional training and integration activities the family that amount to more than the level set age if the person is eman- out by law and being able to request other social cipated and has minor security benefits to which one is entitled, the bene- child dependants. ficiary must also, among other things, furnish all the necessary legal proof as demanded of him with respect to his financial situation