European unemployment insurance

European unemployment insurance (also known as a European unemployment benefit scheme) is a proposed transfer system for the Eurozone that is intended to provide macroeconomic stabilization. Such a system would drain purchasing power from booming economies, preventing overheating while bolstering economies which experience a recession.[1]

Variants under discussion

There are two basic variants of the system discussed: a "genuine" European unemployment insurance and an "equivalent" European unemployment insurance. In a "genuine" system, employees in the Eurozone would be directly insured against the unemployment risk through a European insurance scheme which would pay a wage replacement in the case of unemployment. In an "equivalent" system, a European fund would pay out funds to either the national budget or national unemployment insurance in case unemployment increases steeply in a member state.[2]

Thus, an "equivalent" European unemployment insurance can also be seen as a reinsurance for national unemployment systems.[3]

History

The idea of a European unemployment insurance goes back to the 1970s, when the possibility of introducing a common currency for the European Community was first mentioned in the Marjolin Report. The authors of the Marjolin Report state:[4] "...the means of redressing imbalances between Community countries should be considerably reinforced…. The introduction of a community system of unemployment benefit would constitute an effective approach."

Reference to the debate was made in the MacDougall Report and in a number of works on possible transfer systems commissioned by the European Commission in the early 1990s, when the institutions for managing the common currency were designed.[5]

The modern debate was started with proposals by the German economist Sebastian Dullien who in 2007 and 2008 published several papers on a possible European unemployment insurance[6] and later worked on the concept more in detail for the European Commission.[7][8] The idea gained new prominence after the onset of the European debt crisis, when the lack of a fiscal capacity for the euro area became evident, and the idea was mentioned in the four presidents' report of 2012.[9]

In 2014, a large consortium under the leadership of the Centre for European Policy Studies think tank in Brussels was asked by the European Commission to write an extensive feasibility study on a potential unemployment scheme which detailed the different options for such a proposal, the technical challenges and the macroeconomic impact. The study was presented in early 2017.[10]

Political debate

Former European Commissioner for Employment, Social Affairs and Inclusion László Andor repeatedly called for the introduction of a European unemployment insurance.[11]

In June 2018, the German finance minister Olaf Scholz proposed European unemployment insurance as an element of Eurozone governance reform.[12]

See also

References

  1. ↑ Dullien, Sebastian (2015). "European Unemployment Insurance". The New Palgrave Dictionary of Economics. p. 1. doi:10.1057/978-1-349-95121-5_3006-1. ISBN 978-1-349-95121-5.
  2. ↑ "A European Unemployment Benefit Scheme - The rationale and the challenges ahead".
  3. ↑ Beblavý, Miroslav. "Design of a European unemployment benefits scheme and its dimensions: What is examined in the pilot project?" (PDF). CEPS website. Retrieved 11 August 2018.
  4. ↑ "Report of the study group 'Economic and Monetary Union 1980'" (PDF). p. 34.
  5. ↑ "The history and debate in Europe on a European Unemployment Benefit Scheme" (PDF).
  6. ↑ "Improving Economic Stability in Europe: What the euro area can learn from the United States' Unemployment Insurance" (PDF).
  7. ↑ "A European unemployment insurance as a stabilization device - selected issues".
  8. ↑ "A euro-area wide unemployment insurance as an automatic stabilizer: Who benefits and who pays?".
  9. ↑ "Towards a genuine economic and monetary union" (PDF).
  10. ↑ "Feasibility and Added Value of a European Unemployment Benefit Scheme".
  11. ↑ "Basic European unemployment insurance: Countering divergences within the Economic and Monetary Union". Europa. 29 Sep 2014. Retrieved 5 Aug 2018.
  12. ↑ "Germany's Scholz proposes Europe-wide unemployment insurance scheme".
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