Tourism, without the benefits.

Photographer: Chris Ratcliffe/Bloomberg

A Post-Brexit Europe Will Be Less Charitable

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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The European Union after Brexit is not going to be an indulgent place. The remaining members of the bloc will do what they can to defuse political issues that worked in favor of Brexit, and killing so-called benefit tourism is one of the top items on the agenda.

Benefit tourism -- citizens of poorer EU countries moving to the richer ones for the sake of receiving social benefits -- was a hot issue in the U.K. Former Prime Minister David Cameron pushed the EU to curb it and, in the final deal he presented to British voters, some of his demands were met. The U.K. got an "emergency brake" on in-work social benefits and the right to cut child benefits to the cost of living in a migrant's country of origin. Clearly, these concessions weren't enough. The EU bureaucracy, upon consultation with member states, is looking to adopt more restrictions. And Germany, facing an election next year, is spearheading the trend.

Some left-wing critics have called benefit tourism a myth. The EU has found that "mobile citizens" -- those who live and work outside their home countries but still within the EU -- are net contributors to host countries' public finances because they are younger and more economically active than the native workforce. These kinds of arguments, however, are unpopular in this age of rising nationalism, and certain statistics can be used to shoot them down. For example, unemployment among Romanian and Bulgarian citizens living in Germany reached 9.4 percent in September, compared with 6.9 percent in Germany as a whole. Greeks, Italians, Spanish and Portuguese had an even higher unemployment rate -- 10 percent. There are tens of thousands of these extra unemployed who have been able to claim benefits, even though they may not have come specifically for this purpose. 

Of course, it often takes a period of time before immigrants acquire the language and other skills necessary to obtain work; over time, immigrants tend to be net contributors. But Germans are more interested in migrants who can hit the ground working. 

Have they Come Here to Work?
Unemployment rates among EU migrants in Germany, September 2016
 
Source: IAB

This year, Germany moved to end the practice. Earlier this month, it passed a law that only allows EU citizens to claim unemployment benefits after five years of living and working in Germany. Those who lose their jobs before they meet this requirement will only be eligible for the most basic assistance, including a free ticket home. There will be no way to apply for German benefits on the basis of having looked for work and failed to find it within six months. In a pre-election year, the ruling centrist parties need to show they are tough on immigration; only the extreme leftists and the Greens in the German parliament objected to the measure.

The rest of the EU won't be far behind. On Monday, Politico obtained a copy of a draft European regulation that limits benefits for Europe's 3.7 million "mobile citizens." The document, developed in consultation with national governments, makes it harder for intra-EU migrants to access host countries' unemployment and long-term care benefits, allowing them instead to keep home country benefits for a longer period. 

A 2015 ruling by the European Court of Justice allowed EU member countries to withhold benefits from migrants under certain circumstances. It was Germany, not the U.K., that sued to obtain that right. After Brexit, Germany, as the biggest and wealthiest job market in the EU, may find itself under greater pressure. Economic migrants from eastern Europe often preferred to move to the U.K. and Ireland because more of them spoke English than German. But since dissatisfaction with this inflow was of the major reasons for the Brexit vote, it's likely that the U.K. will try to impose tougher rules. That would mean more of them will be tempted to try their luck in Germany, Ireland, the Netherlands and the Scandinavian countries.

Before that happens, these countries will try to change the rules to make sure people come to work and leave if they can't get a job. Europe's principle of equal treatment for all its citizens, which entitles internal migrants to the same protections as locals, is a beautiful ideal; but, like many others, it's being tested by the reality of divergent economies and resilient ethnic nationalism in politics. Europe is a common market, but it's not a common welfare system. It makes sense that in the foreseeable future, it will likely approach the income inequality among EU member states from a market perspective rather than an egalitarian human rights one. A more pragmatic EU will be less of an idealistic example for the rest of the world -- but perhaps it will be a stronger union for these non-idealistic times.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net