Constructive research on European unemployment benefits scheme

While Europe is still recovering from one of the most severe economic downturns it has ever experienced, many have called for reform of the Economic and Monetary Union (EMU). The crisis has indeed uncovered the shortcomings of EMU and addressing them will be one of the main challenges ahead. One solution that has been put forward is to introduce  a supranational automatic stabilisation mechanism for Europe. This point was made in the 2012 Four Presidents’ Report and was reiterated in the 2015 Five Presidents’ Report. So far, much of the discussion has focused on which of the many possible mechanisms that exist would be the most effective. Since February 2015, CEPS has led a consortium of research institutes that is conducting a comprehensive study on the feasibility and added value of a European unemployment benefits scheme. A common unemployment benefits scheme could serve as an automatic stabiliser. Such a scheme in fact may have several positive features: it could provide support to those who suffer the most in the event of a downturn, it could contribute to macroeconomic stabilisation and it could respond quickly. With the support of DG Employment, Social Affairs and Inclusion of the European Commission, the consortium aims to assess the legal and operational feasibility of such a scheme as well as its economic value added. Other parts of the project focus on the design of the scheme, the issue of moral hazard and permanent transfers, and the lessons learned from previous proposals for a common unemployment insurance. The project is now reaching its last stages and the final report is being prepared.