Equal treatment of foreigners in access to unemployment benefits and health insurance

Dear Prime Minister,

On November 20 2013, your government is to discuss the manner in which the Czech Republic implements EU directive 2011/98/EU on a single permit. Your government must decide over a dispute between the Government Commisioner for Human Rights and the Public Defender of Rights on one hand, who are calling for foreign nationals to enjoy equal treatment in the field of unemployment benefits and health insurance, and the Ministry of the Interior, Ministry of Health and Ministry of Labour and Social Affairs on the other hand, who want to continue the practice of denying equal rights to foreigners.

Discrimination against foreigners in the field of social rights

Migrants from countries outside the EU, who are working in the Czech Republic without yet having permanent residence, have for many years been discriminated against by the state in the field of social rights. These foreign nationals - just like all other employees - have the obligation to pay social insurance premiums, contributions to the state employment policy and also public health insurance premiums. Czech legislation, however, restricts their social rights, so if these foreigners lose their job, apart from other things, they

Such a restriction of their rights is unfair towards all foreign workers who pay their contributions, but are unable to benefit from them. What is particularly scandalous are the cases of foreign workers getting pregnant and for this reason not having their employment contract extended by their employer (which is unfortunately completely legal, as foreigners always have fixed-term contracts of employment only for the term for which the employment permit issued by the labour office is valid). These women, although having contributed to the public health insurance system (called "solidarity-based") for a number of years, are left with a system that pays them back with harshness and a complete lack of solidarity in their moment of needing health care. Termination of employment means losing participation in the system of public health insurance and the necessity to buy commercial health insurance (under the threat of a fine levied by foreign police). Commercial health insurance policies, however, contain many exemptions. For instance (in commercial insurance terminology) they never cover "an insured event whose cause or symptom occurred before the contract was entered", therefore they do not cover the treatment of a disease which the person is already suffering from at the time of signing the insurance contract. Commercial insurance companies, thus, do not cover the cost of care concerning childbirth for an already pregnant woman: usually, formerly employed foreigners must pay for their childbirth themselves. A similarly harsh approach can be seen as a result of the loss of employment due to (work-related) injuries.

Unfair "gastarbeiter" model

This unfair system setting is, of course, based on a logic of its own. Migration policy in the Czech Republic, under the remit of the Ministry of the Interior, is based on the assumption that a foreigner who has a residence permit for the purpose of employment is only here to work. When no longer working, s/he is to leave the Czech Republic. It is therefore not necessary to ensure the foreigner's access to health care for the time when no longer in employment. And because the state in general has no interest in employing foreigners – granting a foreigner a work permit is considered a privilege of sorts, to be explained only by the fact that it was not possible to fill the vacant post with a Czech citizen – it would not be logical to support foreigners in finding a new job (this implies that foreigners without permanent residence shall not become candidates for a job and receive unemployment benefits). On closer inspection, however, this logic falls into pieces:

1. First of all, it holds that reducing "work migrants" to work only is dehumanizing. All developed countries have had this experience in the sense of "We invited foreigners to work here, but then people came". The idea that we can invite a foreign national to work in our country, but as soon as s/he is not needed anymore, the police forces him or her to leave, is unduly harsh, and all the more so since that "inviting we" is often a specific employer, upon whom the foreigner becomes dependent and who can then take advantage of such a dependence. In addition, the "foreigner who does not work" is often a woman from the above-mentioned example losing her job because of pregnancy. Not only the woman from our example, but in practice most foreigners who lose their jobs are trying to stay in the Czech Republic and often - perhaps most of the time - they manage to do so. (In the case of this woman, this can be done by changing her purpose of stay from employment to living together as a family with her husband who also works in the CR.) However, the original concept of labour migration "As long as we want you, do the job, and then leave," is completely falling apart. Foreign nationals who have lost their jobs stay in the Czech Republic, yet they are lacking any social security.
2. In addition, many foreigners who have a different purpose of stay than employment (e.g. students or the above mentioned family members, or entrepreneurs, who are, besides their independent profit-making activity, also employed) may be employed in the Czech Republic. For these people, termination of employment can in no way mean the obligation to leave the Czech Republic. With them, unequal treatment shows very clearly, too. While a Czech citizen, after having worked for one year (and having paid pension insurance premiums and a contribution to the state employment policy) is, in the case of job loss, entitled to receive unemployment benefits for a period of six months, during which (and even after) his or her health insurance is covered by the labour office. A foreigner who had worked and paid the contributions for the same period of time, is deprived of these rights.

Opt-out of foreign nationals is not a solution

The above-mentioned discrimination against foreigners has already been discussed quite often. For example the fundamental limitations of the commercial health insurance system for foreigners are a relatively hot topic among government officials and non-governmental organizations. As to the inequality regarding access to the register of job-seekers, a proposal was raised to return the foreigners' contributions to a state employment policy (which they had to pay during their employment, and which they were unable to profit from) – probably in the event that they would be forced to leave the CR. This proposal, however, in my opinion is going in the wrong direction. If foreigners were to receive back part of their contributions (or if there was a possibility to return these levies), then foreigners' work would become cheaper than that of Czech citizens and employers would logically give preference to employing foreigners: their work would be less burdened with social security obligations and, being cheaper, it would give rise to unfair competition. Also, any possibility of foreigners' opting-out of the insurance system would go against the principle of solidarity, since a different strategy would be chosen by the foreigner who had already benefited from these systems or who had plans for doing so (that person would not opt out) and a different strategy would be pursued by someone not intending to draw any benefits: the system would then logically be left with those drawing benefits. Also, from the point of view of human rights, it would be a step back. The social security system was put in place precisely because it is better to pay and be insured than not to pay and not be insured.

Foreigners should be integrated into the social security system

If the practice of a (partial) foreigner opt-out of public insurance systems is contrary to the principles on which these systems are based, then the solution to the existing discriminatory system settings can be seen as a step in the opposite direction: enhancing or accelerating the integration of foreigners into these insurance systems. In legal terms, what matters is the abolition of the condition of permanent residence for the foreign national to enjoy the possibility of entering the register of job seekers and participate in public health insurance. Working foreigners must enjoy equal treatment with Czech nationals who work - in the case of having worked for the time stipulated by law (at the moment, it is 12 months during the last 2 years), they shall be entitled to receive unemployment benefits, while of course they also have to meet all the obligations imposed on job seekers. The European Union is currently requiring that the Czech Republic does the same thing.

EU single permit directive and a common set of rights for workers

The directive of the European Parliament and of the Council 2011/98/EU on a single permit [1]  provides that the rights of foreigners in the field  of social security (see the Regulation (EC) No 883/2004 on the coordination of social security systems) cannot be restricted from those foreigners who "have been employed for a minimum period of six months and who are registered as unemployed"  (see Article 12, Paragraph 2 (b) of the Directive). The Directive must be implemented into Czech legislation no later than December 25th 2013 and from this date on these foreigners must enjoy equal rights as Czech citizens. Otherwise the Czech Republc is at risk of EU sanctions for failure to implement the directive.

The officials of the Czech Ministry of the Interior, Ministry of Labour and Social Affairs and Ministry of Health have, however, made the decision that foreigners shall not be given equal rights, and they produced a report on the issue to serve as a reference document for the government in which they give certain arguments for their position. It is these arguments I would now like to address.

The main argument of the Ministry of Labour and Social Affairs is that the condition of permanent residence is not discriminatory, since  "The condition of permanent residence in the territory of the Czech Republic for being included in the register of job seekers, according to the existing legislation, is required even from Czech citizens. The Czech Republic upholds the right of third-country nationals to equal treatment as regards granting unemployment benefits within the meaning of Regulation (EC) No. 883/2004 because they have the same access to these benefits as nationals of the Czech Republic."  This claim must be rejected for the following reasons (if no other):

1. For a Czech citizen, obtaining permanent residence is very smooth: s/he either has it from birth, or s/he gets one together with receiving an identity card at the age of fifteen (see Section 10, Act No. 133/2000 Coll., on civil registers). Basically, only a proof of Czech citizenship needs to be submitted. On the other hand, a foreign national cannot obtain permanent residence in the CR before reaching the limit of 5 years of residence in the Czech Republic; and even then, very strict conditions must be met (see Sections 66 to 75, and 87g of Act No. 326/1999 Coll., on the residence of aliens). Having shown that for one person, fulfilling the conditions is very easy, and for another it is virtually impossible, it cannot be argued that there is equality between these two. Equality can only be achieved either by not deeming permanent residence necessary for foreigners with long-term residence, or by granting all foreigners an automatic right to obtain permanent residence after 6 months of employment in the CR (the latter would contradict the current logic of Czech immigration legislation).
2. Those foreign nationals to whom the directive on a single permit applies are not the only group of foreigners to whom EU legislation guarantees equal treatment in the field of unemployment benefits. For all other groups (EU citizens, family members of EU citizens, blue card holders), in order to enter the register of job seekers it is sufficient to have a temporary stay (see Section 5 (b). (b) of Act No. 435/2004 Coll., on employment). So why have the officials of the Ministry of Labour and Social Affairs not claimed to EU citizens that they, too, must obtain permanent residence, and that it is not to be viewed as discriminatory?
3. The single permit directive does not guarantee foreigners' rights only in the field of unemployment benefits and public health insurance, but also in other areas of social security. The same officials of the Ministry of Labour and Social Affairs who argue that requiring permanent residence to receive unemployment benefits is not discriminatory at the same time suggest that, for example, permanent residence should not be a condition that would prevent work migrants from access to government social support or social services (see Section 3 of Act No.117/1995 Coll., and Section 4 of Act No. 108/2006 Coll., on social services). So why do officials amend these laws, when they deem the condition of permanent residence non-discriminatory?

Government officials further claim that the job seekers' register does not lie within the scope of the single permit directive (quote from the report submitted to the government:  "It should also be noted that the registration of job seekers who are third-country nationals does not fall within the scope of the 2011/98 /EU directive. The directive does not provide any specific criteria under which third-country nationals should be included in the register of job seekers. It continues to be the case that setting conditions for entering the register of job seekers is within the competence of the Member States and their national legislation."). This argument, which by the way is inconsistent with the previous argument, seems to be the officials' way of trying to get around the sense of the directive by emphasising the formal procedure: for the foreign national to enjoy equal rights, s/he must be registered as unemployed – we make registration impossible for him or her, and thus deprive him or her of equal rights. I believe that the meaning, context [2]  and text[3] of the directive make it very clear that the "registration as unemployed" is not only a condition for granting equal rights, but also in itself a right guaranteed by the directive. The purpose of this registration is to distinguish between those foreigners who do not cooperate with the state anymore after having lost their jobs, and those who are looking for a new job. The purpose of the registration is in no way to give the Member States an option of preventing this registration through a formally correct procedure and thus denying foreigners equal rights.

It is misleading to instill fear of high costs of equal treatment of foreigners

The report submitted to the government presents a bleak scenario of the many bad things that would take place if foreigners gained access to the job seekers' register (quote from the report):

• "due to his or her inclusion in the register of job seekers, a foreign national would be treated as any other candidate for employment, but such a registration would pose serious problems; e.g. when mediating employment to third-country nationals, one would be confronted with communication barriers. Thus, it would not be possible to work with these foreigners sufficiently, the only possible retraining option would be a Czech language course ...
• if these jobseekers were provided unemployment benefits, it would mean an increased cost to the state in unemployment benefits (of approximately 1 020 000 000 CZK – 3.7 million EUR – per year) and the cost of health insurance covered by the state."

I consider such fear-instilling words to be utterly misleading. At this point, it is necessary to quote a few numbers. As of December 31st 2011[4] (due to the reforms of minister Drábek, statistical data for the period following are either unavailable or unreliable)[5] there were officially 217.862 employees of foreign nationality working in the Czech Republic, out of which

• 154.560 migrants came from EU countries and thus have equal rights
• 26.510 migrants did not need an employment permit: most of them were foreign nationals with permanent residency, who have equal rights as Czech citizens, and a lesser part of them were long-term residents such as students of foreign nationality or family members of permanently residing foreigners, who, while they do not require work permits, cannot enter the register of job seekers, and
• 36.792 migrants were holding an employment permit issued by the labour office (since 2008, the number of employment permits keeps falling: from 128.934 at the end of 2008 to 73.714 at the end of 2009, and to 49.244 at the end of 2010. The reason for this is that foreigners are deliberately pushed out of the labour market and also the fact that foreign employees are gradually gaining permanent residencies, and therefore do not need employment permits to perform work anymore).

The single permit directive covers primarily the third group and smaller sections of the second group (others do not need any enhancement of equal treatment any more), i.e., taking into account all working foreigners, it applies only to a small group. At the end of 2011, it could have applied to 40 to 50 thousand people; today the figure is very likely to be much lower. According to the data from the Czech Ministry of the Interior (allegedly only of indicative nature), towards the end of 2012, only 20.745 foreigners worked in the Czech Republic on the basis of employment permits, and there were 415 green cards. Then, it can be estimated that the number of foreigners who would benefit from a proper implementation of the single permit directive is around 30 thousand people at maximum.

There is no reason to believe that these foreigners would dramatically differ from those foreign nationals who already enjoy equal rights in the field of employment services and who already have access to the register of job seekers. According to the report on the situation in the field of migration and integration of foreigners for the year 2012 (p. 88), regional branches of the labour office of the Czech Republic provided a Czech language retraining course to a total of 17 job-seekers of foreign nationality. Government officials' fear-spreading words about foreigners who cannot be communicated with and who will all have to learn Czech in order to become employable are misleading and even ring of xenophobia.

The claim that the costs of unemployment benefits of newly eligible foreigners might amount to 1 billion CZK (3,7 million EUR) is highly unlikely to come true as well. Considering the fact that the overall amount spent by the Czech Republic on unemployment benefits makes around 13 billion CZK (10.3 billion CZK in 2010, 13.3 billion CZK in 2009) [6] and that the workforce of the Czech Republic totals approximately 5.5 million people (of which about 0.5 million people are unemployed), it does not seem likely that an increase in the number of persons who might become unemployed by less than 1 % could increase the costs by one billion CZK.

Personally, I believe that, especially among those foreigners who are holders of employment permits, the unemployment rate would be lower than among comparable Czech citizens, because even after the implementation of the directive on a single permit these foreigners would be threatened by the fact that the Ministry of the Interior of the CR could discontinue their residence permits (see Section 46e of the Aliens Act, as amended by the submitted amendment). It is of course possible that an equal treatment of labour migrants will increase the cost of unemployment benefits and health insurance covered by the state. Such costs, however, result from the membership of the Czech Republic in the European Union, and these costs, which will be invested into a fairer treatment of foreigners, may also be taken as a contribution to the integration of foreigners into Czech society. Personally, I am convinced that such an investment in social cohesion will pay off on a grand scale.

I would like to add that the EU single permit directive in no way pushes the Czech Republic into issuing employment and residence permits to foreigners. If, however, a foreigner is granted permission, the Czech Republic is required to integrate him or her into its social security system and grant him or her equal rights in this area.

Given the facts described above, I would like to ask you, dear Prime Minister, to push through the approval of the draft law in the government meeting in such a version which amends the group of eligible persons in Section 5 (b) of Act No. 435/2004 Coll., on employment, and in Section 2 of Act No. 48/1997 Coll., on public health insurance, to the same scope of eligibility in which Section 4 of Act No. 117/1995 Coll., on state social support, and Section 4 of Act No. 108/2006 Coll., on social services is amended.

Furthermore, given the fact that the Human Rights Commisioner of the Czech government, Mrs. Monika Šimůnková, is no longer in office, I would like to ask you to allow Martin Rozumek, President of the Czech Government Human Rights Committee for Rights of Foreigners, to take part in the procedures connected to discussing the amendment.

In view of the fact that the Act on public health insurance needs to be amended, too, it would be appropriate to join this with the removal of a legislative error in Act No. 458/2011 Coll., on a single collection point (inkasní místo), (in Part 17, Section 2 (a)), due to which even foreigners with permanent residence may lose their public health insurance as of January 1st 2015 (the Ministry of Health officials agree with removing that).

Since the EU single permit directive restricts the conditions for excluding certain foreign nationals from the public health insurance system and for leaving them dependent on commercial health insurance for foreigners, it would be more than appropriate to accompany this amendment with a formulation of a comprehensive solution to the problem of commercial health insurance by integrating foreigners who are long-term residents of the CR into the public system, as proposed by the Council of the Government of the Czech Republic for Human Rights, which voted in favour of this on October 7th 2013 [7]. Commercial health insurance for foreigners, which is in a way an island of medical care of the US kind in the Czech Republic, fails to fulfill its role. The health care needed by foreigners is not reimbursable, and it is a very easy profit source for commercial insurance companies (which spend only 20 % of collected insurance payments on health care) and for dealers with insurance contracts (they receive commissions of up to 50 %). Frequently, hospitals do not accept foreigners' commercial insurance, and, although insured, the foreigners cover most care in cash themselves. Commercial insurance systemically lives off public health insurance, since it only insures healthy foreigners, while the cost of seriously ill foreign nationals (e.g. sick newborn infants) is often covered by the state for humanitarian reasons.

May you, dear Prime Minister, take whatever stand to these proposals of mine, yet let me finally express my belief that the present amendment of the Alien Act and other laws regulating the status of foreign nationals is of great importance and that it is therefore highly risky to want to pass it in an excessive rush. The request of the Ministry of the Interior officials that the law be adopted by the Lower House of Parliament (Poslanecká sněmovna) already in the first reading brings with it the risk of limiting the possibility for a debate in the House and a poor quality implementation of the EU directive on a single permit, which would result in much higher costs in the end.

Best regards

Mgr. Pavel Čižinský,
Multicultural Center Prague,
member of the Committee for the Rights of Foreigners of the Council of the Government of the Czech Republic for Human Rights

The text was written under the project called "Foreign workers in the labour market," which was carried out by the Association for Integration and Migration, in cooperation with the Organization for Aid to Refugees and the Multicultural Center Prague. International project partners are Caritasverband für die Diezöse Osnabrück from Germany and the Anti-Slavery International from Great Britain.

[1] The full name of the directive is: Directive 2011/98/EU of the European Parliament and of the Council of 13 December 2011 on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State.

[2] When looking, for instance, into the original proposal of the directive by the European Commission of October 23rd 2007, No

COM (2007) 638 final, 2007/0229 (CNS), we can read on page 7: "Providing equal treatment to third-country workers in a Community instrument in employment-related fields comparable to own nationals would reduce unfair competition between EU citizens and third-country workers and serve as a safeguard for EU citizens, protecting the latter from cheap labour and migrants from exploitation. In addition granting a common set of rights through equal treatment in Community law would create a level playing field within the EU for all third-country nationals legally working irrespective of the Member State in which they stay. As regards the proposed procedural simplification it would ease the administrative requirements for third-country workers and employers throughout the EU." On page 10 of this proposal, the European Commission states that employment services should also include the services of the EURES system. (On the following page, it is then stated that a broader definition of the notion of a "worker" has been chosen specifically to cover also situations preceding the commencement of employment, i.e. for instance the recognition of diplomas or provision of employment services, and also situations following a job, e.g. providing unemployment benefits.)  Having said that, it follows that the European Commission intended to promote greater mobility of migrant workers between individual EU Member States. If the Czech Republic, however, fails to implement the social rights of migrants, then it obstructs achieving such an objective.

[3] E.g. Section 19 of the preamble of the EU single permit directive states: "With a view to developing further a coherent immigration policy and narrowing the rights gap between citizens of the Union and third-country nationals legally working in a Member State and complementing the existing immigration acquis, a set of rights should be laid down in order, in particular, to specify the fields in which equal treatment between a Member State’s own nationals and such third-country nationals who are not yet long-term residents is provided. Such provisions are intended to establish a minimum level playing field within the Union, to recognise that such third-country nationals contribute to the Union economy through their work and tax payments and to serve as a safeguard to reduce unfair competition between a Member State’s own nationals and third-country nationals resulting from the possible exploitation of the latter.“

[4] See an overview of the changes that can be seen in the numbers of foreigners registered with the labour office - monthly figures, sorted by sex, type of registration and selected countries of origin; time period 31.1.2006–31.12.2011 available here

[5] See e.g. Report on the situation in the field of migration and integration of foreigners for the year 2012, page 3, available on the web of the Lower House of Parliament (Poslanecká sněmovna) as print 1129 of the Lower House competent for 2010 to 2013, see here, It is the Ministry of the Interior which prepares the Report.

[6] See the website of the Ministry of Labour and Social Affairs

[7] See press release available here