Free Movement Under Challenge: The Indexation of Family Benefits

This paper traces the political debate(s) about the indexation of family benefits in the European Union (EU), i.e. the adjustment of national welfare benefits for EU migrants to the cost of living in the country of residence of their children. We ask why such a technical-legal issue got heavily politicized in recent years. Two obvious explanations prove to be insufficient: the financial implications of the indexation of family benefits for national welfare budgets are relatively small and the debate has not been simply driven by welfare chauvinists of the political right. The indexation of family benefits, we argue instead, receives broad political attention because it is paradigmatic for fundamental controversies on the free movement and equal treatment of workers in the EU. While free movement of workers is a founding principle of European integration, it has become politically much more salient due to Eastern enlargement with unprecedented levels of intra-EU mobility and wage competition. At the same time, the legal framework of worker mobility and equal treatment in the EU is largely removed from political adjustments as it is “constitutionalized” in the Treaties and progressively interpreted by the Court of Justice (CJEU). At least symbolically, the indexation of family benefits promises to address these economic and legal challenges: it mainly affects EU migrants with low income, for whom generous family benefits constitute a wage subsidy, and it is one of few EU legal options to qualify equal treatment without requiring Treaty amendment. We illustrate our argument with empirical evidence from the debates on indexation preceding the Brexit referendum, the Austrian reform of family benefits and the revision of the EU social coordination regulation.