Explanatory Memorandum to COM(2024)54 - 2017-2022 report on the financial situation of the unemployment insurance scheme for former members of the temporary or contract staff and parliamentary assistants who are unemployed after the termination of their service in a EU institution - Main contents
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| dossier | COM(2024)54 - 2017-2022 report on the financial situation of the unemployment insurance scheme for former members of the temporary or ... |
|---|---|
| source | COM(2024)54 |
| date | 06-02-2024 |
2017-2022 report on the financial situation of the unemployment insurance scheme for former members of the temporary or contract staff and parliamentary assistants who are unemployed after the termination of their service in a European Union institution
Summary
In accordance with the Conditions of Employment of Other Servants (CEOS), the EU unemployment allowance is intended for former Temporary Agents (TAs), Contract Agents (CAs), or Accredited Parliamentary Assistants (APAs) who find themselves in a situation of involuntary unemployment (excluding, for example, staff who have resigned) following termination of their service with a European Union institution, within the meaning of Article 1 of the Staff Regulations of Officials of the European Union1. This unemployment allowance is complementary to any national unemployment allowance received by the former staff member.
These allowances are financed from the Unemployment Fund (‘the Fund’), which is itself financed by the contributions of staff covered by the CEOS (who are potential beneficiaries) and by their employer’s contributions.
The conditions for granting the allowance, the beneficiary categories and the contribution rates were all changed significantly in the latest reforms of the Staff Regulations, affecting the Fund’s cash balance in particular.
The reform of the Staff Regulations and the CEOS, which entered into force on 1 May 2004, introduced into the CEOS a new category of staff engaged under contract (CAs), along with new rules governing contributions to the Unemployment Fund.
In accordance with Council Regulation No 160/2009 of 23 February 2009 amending the Conditions of Employment of Other Servants of the European Union2, APAs are also now covered by the Unemployment Fund.
The reform of the Staff Regulations and the CEOS which entered into force on 1 January 2014 changed the maximum duration of contracts of employment for CAs employed under Article 3b of the CEOS from 3 to 6 years.
Under Article 28a(11) and Article 96(11) of the CEOS, every 2 years the Commission must present a report on the financial situation of the unemployment insurance scheme. Moreover, independently of this report, the Commission may, by means of delegated acts in accordance with Articles 111 and 112 of the Staff Regulations, adjust the contributions provided for in Article 28a(7) and Article 96(7) of the CEOS if this is necessary in the interests of the balance of the scheme.
To make it easier to trace the evolution of the Fund, the Commission always makes this bi-annual report with a five years reference period. The previous report covered the period 2015-20203 and the reference period for the present report is December 2017 to December 2022.
Evolution of the Fund
The above graph shows that since 2017, the operating result has been constantly increasing with the exception of 2020, when there was an operating deficit of EUR 0.5 million. The positive operating result accumulated over the last six years and consequently, the accumulated balance amounted to EUR 60.5 million at the end of 2022.
Change in number of allowances paid
During the reference period, there was a 37% increase in the number of monthly unemployment allowances paid, from 8183 in 2017 to 11230 in 2022. In total, more than 65 000 benefits were paid to the TAs, CAs and APAs during the reference period. The trends for the Fund’s beneficiaries are related to the following cyclical factors:
- the end of APA contracts as a result of the end of the parliamentary term in 2019 which impacted the number of allowances paid in 2019 and 2020.
- an increase in the number of allowances for TAs in 2020, corresponding to the departure of TAs employed by the cabinets (March 2020).
The highest number of benefits is paid to CAs. The highest number of monthly allowances was paid in 2018 (6191).
Change in the average monthly allowance (EUR)
The average monthly allowance for TAs slightly decreased. Over the period 2017-2022, the average CA allocation remained stable whilst the APA allocation decreased, resulting in particular from the degressive amount of the allocations paid since the end of the parliamentary term.
Regulatory framework
1. Description of the scheme
The reform of the Staff Regulations and the CEOS which entered into force on 1 May 2004 amended the legal basis governing eligibility for the Unemployment Fund and the rules on the payment of contributions to the Fund that had applied since 1985. The changes can be summarised as follows:
| Before May 2004 | After May 2004 |
| Cover against the risk of unemployment solely for TAs leaving the service. | A new category of staff engaged under contract (i.e. CAs) benefitting from cover against the risk of unemployment. |
| A 0.4% employee’s contribution and a 0.8% employer’s contribution. | New rules on the payment of contributions to the Unemployment Fund (i.e. employee’s contribution increasing to 0.81% and employer’s contribution to 1.62%). |
| Entitlement to unemployment allowance limited to a maximum of 24 months. | Entitlement to unemployment allowance limited to a third of the period spent in active employment as a TA or CA or as an APA, and to a maximum of 36 months. Allowance capped as of the seventh month of unemployment, and minimum allowance increased. |
The table below shows the maximum and minimum amounts payable to the different categories of staff:
in EUR, as of January 2023:
| TA | CA | APA | |
| Maximum (as from the seventh month) | 3 352.86 | 2 514.60 | 2 602.75 |
| Minimum | 1 676.42 | 1 257.32 | 1 106.15 |
Standard allowance and maximum and minimum amounts payable are updated annually in the same way as remuneration and in line with Article 65 of the Staff Regulations.
Any family allowances due are paid in addition to the unemployment allowance. The contribution to the Joint Sickness Insurance Scheme (JSIS) of the European Union (5.1% of the unemployed person’s reference basic salary) is paid by the Unemployment Fund.
2. Legal framework
- Article 28a of the CEOS as amended by Regulation No 1023/2013 of the European Parliament and of the Council of 22 October 2013.
- Article 96 of the CEOS and Article 5 of the Annex to the CEOS as amended by Regulation No 1023/2013 of the European Parliament and of the Council of 22 October 2013.
- Articles 135 and 136 of the CEOS as amended by Regulation No 1239/2010 of the European Parliament and of the Council of 20 December 2010 (OJ L338, 22.12.2010)4.
- Article 65(1) of the Staff Regulations on the updating of remuneration and other amounts.
- Commission Regulation No 91/88 of 13 January 1988 laying down provisions for implementing Article 28a(2) of the Conditions of Employment of Other Servants of the European Union (OJ L 11, 15.1.1989)5.
- Commission Rules of 14 July 1988, common agreement having been recorded by the President of the Court of Justice of the European Communities on 4 July 1989, laying down the detailed arrangements for applying the provisions relating to the grant of the unemployment allowance to members of the temporary staff, implementing Article 28a(10) of the Conditions of Employment of Other Servants of the European Union.
2 Financial position and cash balance of the Unemployment Fund 2017-2022
This section presents developments in the financial position of the Unemployment Fund, in particular its revenue and expenditure.
The amounts under ‘Unemployment allowances’ systematically include the basic unemployment allowance, the JSIS contributions6 and any family allowances. Any social benefits received at national level (unemployment benefits, family allowances, sickness benefits, childbirth benefits, etc.) are deducted.
Finally, as indicated above (1.1), the JSIS contribution is financed by the Unemployment Fund (5.1% of the reference basic salary of the unemployed person).
The Unemployment Fund uses two management instruments for its revenue and expenditure:
- a current account for collecting revenue and paying allowances;
- term accounts for investing accumulated surpluses.
2.1 Cash balance: operating results and accumulated balances 2017-2022
Under cash-based accounting, transactions are recorded only when there is money incoming or outgoing.
Table 1 gives a summary of revenue and expenditure as entered in the accounts and the resulting current balance.
7
Table 2 shows the evolution of the Unemployment Fund's financial assets both in the current account incorporated in the European Commission’s accounting system (part I) and in the investment accounts managed by DG BUDG (before 2019, DG ECFIN) (part II) In 2017-2022, the amounts invested remained stable, however discussions on possible options to increase the investment portfolio were initiated between the responsible parties. Part III shows the total accumulated surpluses for these two accounts. Between 2017 and 2022, the accumulated surplus increased by 209% from EUR 19.6 million in 2017 up to EUR 60.5 million in 2022.
Table 3 shows the accumulated balance of the Fund. Revenue from contributions from the various institutions and agencies increased by almost EUR 41 million over the period concerned.
2. Financial position: operating results 2017-2022
Contents
In accruals accounting, transactions are recorded in the accounts at the moment when the contribution to the Unemployment Fund or the payment of unemployment benefit is due. This means that
- some contributions received at the start of year N cover periods of activity at the end of year N-1,
- some amounts paid at the start of year N cover periods of unemployment at the end of year N-1.
In accordance with the relevant accounting standards, these transactions are charged to financial year N-1.
Table 4 sets out the revenue and expenditure according to this principle and therefore reflects the Unemployment Fund’s annual financial position with regard to revenue and expenditure.
There were significant increases in expenditure from 2017 to 2020, primarily owing to the new parliamentary term of the European Parliament and the payment of unemployment allowance to eligible APAs. Since 2020, the expenditure decreased from EUR 32 million to EUR 20 million at the end of 2022.
When it comes to the Fund’s operating result, it amounted to 10 M EUR in 2017 and 2018. Following a smaller surplus in 2019 (EUR 4.2 million), the Fund noted a deficit of EUR 0.5 million in 2020, due to the end of the European Parliament’s parliamentary term and the end of the Commission’s term of office. In 2021 and 2022, the Fund recorded a surplus of EUR 11.2 million and EUR 19.9 million, respectively.
Operating results 2017 -2022
1. Financial position: breakdown of expenditure and revenue by institution and for all the agencies 2017-2022
Table 5 provides a breakdown of expenditure and revenue by institution and for all the agencies. The first part of the table provides the absolute amounts, while the second part shows the amounts as percentages of total expenditure and revenue.
The cyclical effect at the end of European Parliament’s parliamentary term is reflected in the increased expenditure related to the Parliament in 2019 and 2020, that amounted to EUR 10.4 million and EUR 13.1 million, respectively. The expenditure related to the Parliament decreased to EUR 6.6 million in 2021 and EUR 4.6 million EUR in 2022.
It should be noted that the contribution of the agencies has increased from EUR 13 million in 2017 to EUR 21 million in 2022.
2. Analysis of persons insured, beneficiaries and allowances paid
1. Number of persons insured and average contribution
Table 6 shows the number of TAs, CAs and APAs paying into the Unemployment Fund who were in active service on 31 December of each year.
2. Number of persons receiving unemployment allowance in absolute terms and as a percentage of the number of persons insured: ‘unemployment rate’ at 31 December of the year in question
Table 7 shows the number of unemployed persons who received an unemployment allowance in full or as a top-up to benefits received under the national system for the month of December each year.
It should be noted that the above table shows the results for the month of December of each year.
By combining the data on TAs, CAs and APAs in service on 31 December in Table 6 and the number of beneficiaries who received an unemployment allowance shown in Table 7, it is possible to calculate the ratio of beneficiaries of the Unemployment Fund to the number of persons insured under that Fund. The results are set out in Table 8.
For TAs, the number of recipients of unemployment allowance as a ratio of members of the scheme ranged between 1% and 3%. During the reference period, the highest ratio was registered in 2020 (3.04%) and it has decreased in 2021 (1.26%) and 2022 (1.01%). As far as CAs are concerned, the ratio decreased from 3.53% in 2017 to 1.47% in 2022.
Concerning the APAs, a high number of former APAs were drawing the allowance in 2019 and 2020 (400 and 291, respectively) which was triggered by the end of the parliamentary term. Since 2021, this number has considerably decreased to 68 in 2021 and 51 in 2022.
This trend is reflected in the ratio of recipients of unemployment allowance for APAs. While in 2019 and 2020 it amounted to (22% and 15% respectively), the ratio decreased to 3.38% in 2021 and 2.52% in 2022.
3. Number of monthly unemployment allowances paid, average amount, beneficiaries, and country of residence of beneficiaries
Pursuant to Articles 28a(4) and 96(4) of the CEOS, unemployment allowance is paid for a period corresponding to one third of the period of service but not exceeding 36 months. Table 9 shows the number of monthly unemployment allowances paid to all beneficiaries each year. The table shows the impact on APAs of the change of parliamentary term, and the impact on TAs of the change of Commission (impact in 2020).
Table 10 below shows the average amount of unemployment allowance by beneficiary category. This amount corresponds to the total annual expenditure for each type of beneficiary (TA, CA and APA), divided by the number of monthly payments made. It should be noted that in any given month the allowance paid may be the full amount or a pro-rata amount based on the number of days on which the person was actually entitled to the unemployment allowance.
Table 11.1 sets out the average duration in months of unemployment allowance paid during one year, including any earlier benefits owed. This duration corresponds to the total number of days for which the allowance was paid up to 31 December of the year in question, divided by the number of recipients of the unemployment allowance. The result obtained is divided by 30 to obtain the average period in months for which the unemployment allowance was paid8.
The average duration in months of unemployment allowance has been stable over the past 6 years (between 8 and 10 months).
The following tables show the duration of payments by staff category (TAs, CAs and APAs).
APA:
The average duration in months of unemployment allowance has been stable over the past 6 years for CAs and TAs Agents (between 8 and 10 months).
As for APAs, the average duration in months of unemployment allowance ranged from 5 to 10 months in the reference period. The shortest duration was registered in 2019 (5 months) and the longest duration was noted in 2020 (10 months). In 2022, the average duration was 9 months.
Having regard to the principle of complementarity as applied to the unemployment insurance scheme, the country of residence of the recipient of the unemployment allowance is significant, particularly in view of the different eligibility criteria for national unemployment benefit in the different Member States.
Table 12 shows the countries of residence of beneficiaries who received at least one monthly allowance during the year.
It should be noted that, until the end of the transition period on 31 December 2020, the UK was considered to be a Member State9, allowing former staff to receive unemployment allowance while living in the UK. Moreover, after the end of the transition period and pursuant to Article 115 of the Withdrawal Agreement, Articles 28a, 96 and 136 of the CEOS will apply to other servants of the Union of any nationality, including former servants who contributed to the EU unemployment scheme before the end of the transition period if they reside in the United Kingdom and are registered with the UK unemployment services.
2. CONCLUSIONS
1. Period 2017 –2022
Overall, the Fund has noted a positive operational performance from 2017 to 2022. In particular, the contributions have significantly increased in the last two years, reaching almost EUR 20 million in 2022.
The operational performance of the Fund had an impact on the accumulated balance. At the end of 2022, the Fund has accumulated a reserve of more than EUR 60 million.
At the end of 2022, the Commission decided to protect the growing reserve from the negative impact of the inflation and invested EUR 50 million in line with the investment mandate for the Fund. The transaction was executed in 2023.
2. Prospects of the Unemployment Fund in the short and medium term
Based on the observations included in the report, it can be expected that the accumulated reserve will continue growing. It is expected that the accumulated balance would be sufficient to cover several years of the Fund operational needs including the periodic fluctuations related to the end of the current parliamentary term and the new mandate of the College of Commissioners in 2024-2025.
In light of the foregoing, and in order to ensure its financial equilibrium of the Fund, the Commission will consider proposing an adjustment of the contributions to the unemployment insurance scheme by means of a delegated act, in accordance with Articles 28a(11) and 96(11) of the CEOS.
1 Regulation (EU, Euratom) No 1023/2013 of the European Parliament and of the Council of 22 October 2013.
2 OJ L 55, 27.02.2009.
3 COM(2022) 388 final.
4 OJ L 338, 22.12.2010.
5 OJ L 11, 15.1.1989
6 As of 2021, JSIS contributions are paid at the same time as the other allowances, through an automatized mass payment process and therefore included in the unemployment allowance category. Until 2020 these payments were the only ones executed manually, reason for which they were recorded and presented separately. This change was a result of IT developments meant to increase efficiency and reduce the error risks associated to manual payments.
7 For information purposes, the JSIS contributions in 2021 amounted to 1,636,067.14 EUR and in 2022 to 1,209,776.99 EUR, numbers already included in the unemployment allowance line. The data is no longer presented separately for the last two years because now these contributions are paid at the same with the other components of the unemployment allowance (more than 15) and do not constitute a separate element, paid through a manual procedure.
8 For Table 11.1, 11.2 and 11.3, the duration for years 2021 and 2022 was calculated on the basis of the available data in IT system NAP (Nouvelle Application Paye) recorded since July 2020, due to the change of the IT systems used by the European Commission.
9 Article 127(6) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, 2019/C 384 I/01.
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