The European Court of Justice Issues a Judgment on “Welfare Tourism”

Directive 2004/38 EC merged into a single document all the legislation on the right of entry and residence for Union citizens, which consisted of two regulations and nine directives. The Directive reaffirmed one of the founding principles of the European Union – the free movement of persons, by stating that all Union citizens have the right to enter another Member State by virtue of having an identity card or valid passport (which is also the only requirement for stays under three months).

Furthermore, under no circumstances can an entry or exit visa be required. Nevertheless, the right to stay in a Member State up to three months is qualified by the following requirements for the person in question: (1) being engaged in economic activity; or (2) having sufficient resources and sickness insurance; or (3) be following vocational training as a student and have sufficient resources and sickness insurance. However, a number of Member States has argued in the recent years that the above right that is established by the Directive is increasingly becoming a burden on the Member States’ social welfare systems in light of people moving to other countries only to claim social benefits for unemployment. This is the reason why the decision from 11 November 2014 of the European Court of Justice on case No. C-333/13 is a landmark one.

The case concerns a Romanian national who is appealing the refusal of the local German authority to grant her unemployment support; she was receiving child benefits that were not stopped or objected against by the German authority. In its ruling, the European Court of Justice reached the conclusion that “A Member State must … have the possibility … of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence.” The meaning of this reasoning is such that Member States wishing to relieve their welfare systems from immigrants from other Member States will have the necessary tools to do that in this specific regard. In particular, the most interested in this matter will be the governments of the UK, Germany, the Netherlands and Austria which sent a letter to the European Commission in the spring of 2013 claiming that a number of their “cities had come under considerable pressure from EU immigrants claiming welfare benefits”.

However, the claim of governments that people, moving to their Member States from other European Union countries, are a burden on their welfare systems lacks substantial grounds, supported by empirical data. On the contrary, a report published by the European Commission on 14 October 2013 found out that in most EU countries immigrants represent only 5% of the welfare beneficiaries. Moreover, unemployed EU immigrants cost only 0.2% of the entire health budgets. Furthermore, the European Commission stated that on overall the immigrants make net contributions to the economies of their host countries. This fact was further confirmed by a study of academics from the renowned University College London as to the effect of immigrants on the UK. The researchers found out that for the last ten years, immigrants from EU countries made a net contribution to the UK economy of more than GBP 20 billion. However, it is still likely that a number of Member States will act to implement changes to their social benefits system having the support to do that by virtue of the decision of the ECJ in the above cited case.