Blog Articles

By Maxime Gehrenbeck, Social Platform Intern working on Social Policy.

Last Tuesday [27 October], Frank Vandenbroucke (University of Leuven) and Ilaria Maselli, Research Fellow at the Center for European Policy Studies (CEPS), were invited by the European Trade Union Institute (ETUI) to give a few insights on the first paper of their research project on “The Feasibility and Added Value of a European Unemployment Benefits Scheme”. This issue is of great relevance to us, as Social Platform’s position paper on Minimum Standards for an EU Unemployment Benefit Scheme (EUBS) demonstrates.

As Ilaria Maselli explained, there are some sound arguments in favour of the creation of a European automatic stabiliser. Its existence would limit the impact of economic crises in the most vulnerable countries, and therefore prevent their spread to other Member States. It would also compensate the fact that labour mobility is still too low to regulate high differences in employment rates within the European Union.

It is not enough, however, to recognise the positive impact an EUBS would have. Ilaria Maselli and Franck Vandebroucke have also addressed the issue of its feasibility. According to them, the main challenge is to ensure that this mechanism would not become a system of permanent transfers from some Member States to others, otherwise it would probably have never been accepted by net contributor countries. This is directly linked to the “institutional moral hazard” question, i.e. the fact that national governments may for example refuse to tackle structural problems in their countries if they know that their bad economic performance will be compensated by European Unemployment Benefits. However irrational this fear might be, it has to be addressed since it is an important cause of some Member States’ reluctance.

The two researchers proposed a very interesting solution in this regard; triggering the transfer mechanism to a Member State only when the increase in the unemployment rate (and not its level) has reached a certain threshold. The EUBS would therefore potentially benefit to similar extents all Member States, and not only countries that have the highest levels of unemployment. Another and possibly complementary tool they mentioned is the “claw-back” principle: in the long-term, Member States that have benefited most from the system would contribute more to it.

The second main challenge to the creation of an EUBS is, of course, the need for harmonisation of national unemployment benefits schemes. The eligibility requirements, generosity and duration of benefits strongly vary within the European Union, and harmonisation would be an extremely sensitive topic for Member States. Again, it is possible to overcome this difficulty, some models proposed in the report requiring less harmonisation than others. This is especially the case for equivalent models of EUBS, in which financial transfers occur from and to Member States, the latter remaining free to redistribute the benefits according to their national traditions.

Obviously, it is hard to make a clear assessment of the findings presented during the conference. As Frank Vandenbroucke said, a lot of work still has to be done. It is still unclear what form an EUBS could take. At this stage of their work, the two researchers insisted on the fact that they remain totally open-minded and have not taken a position on whether this tool would be the right instrument to consolidate the stability of the Economic and Monetary Union or the European Union as a whole.

The interest of the Commission in this new tool and the mention of a euro area stabilisation function in the Five Presidents’ Report are encouraging signs, but our role as civil society organisations will be to closely scrutinise the follow-up of the process and to ensure it is translated into concrete proposals that cope with people’s needs and enhance solidarity between Member States.