Stabilising the EMU through European unemployment insurance: Final conference

The global crisis of 2008 re-opened the debate on a supranational automatic stabilisation mechanism for Europe that could prevent economic shocks or mitigate their impact on employment and income. While most EU member states are equipped with powerful automatic stabilisers, the EMU currently lacks such a mechanism. A European unemployment benefits scheme (EUBS) has long been discussed as one possible response to this issue, among others.

A high-level conference on the “Feasibility and Added Value of a European Unemployment Benefits Scheme”, was organised by CEPS on July 11th, in close collaboration with the Slovak Presidency of the Council of the EU and the European Commission. Over 280 policy-makers, academics and other stakeholders participated in the event, which was opened with speeches by Minister Peter Kažimír (Minister of Finance, Slovakia) and CEPS Director Daniel Gros, and a keynote speech by Commissioner Pierre Moscovici (European Commissioner for Economic and Financial Affairs, Taxation and Customs). Minister Kažimír emphasised that asymmetric shocks will happen in the future, making automatic stabilisers necessary. Commissioner Moscovici argued that an EUBS may be a good stabilisation mechanism.

In the first panel, Ministers Dana Reizniece-Ozola (Minister of Finance, Latvia) and José António Vieira da Silva (Minister of Labour, Solidarity and Social Security, Portugal) and Director of the French Treasury Odile Renaud-Basso debated why EMU needs a stabiliser and what is expected from such a mechanism, touching on the conditions stipulated in the Five Presidents’ Report. Minister Reizniece-Ozola called for fiscal neutrality, while Renaud-Basso brought forward the idea of a eurozone budget. The second panel looked at the concept of an EUBS in more detail, featuring interventions by Ministers Pier Carlo Padoan (Minister of Economy and Finances, Italy) and Kris Peeters (Minister of Employment, Economy and Consumer Affairs, Belgium) and Member of European Parliament Pervenche Berès. Minister Padoan argued that the EUBS could provide incentives for structural reform. Minister Peeters stressed the need to convince Europe’s citizens that the EU is good for them, further pointing to the issue of upward convergence.

The afternoon was dedicated to the work performed by the consortium. It started with a presentation on the potential design of an EUBS and the 18 options examined in the study. In two parallel sessions, the results of the feasibility analysis (in legal and operational terms) and the added value (in economic and social terms) were presented and discussed with academic experts and representatives from international organisations and member states. The last panel bridged the gap between the experts’ and policy-makers’ debates. It focused on whether the EUBS meets the requirements for a stabilisation mechanism and the role of the social partners. During these sessions, it became clear that the devil is in the details. Although there was a wide consensus on the need for a stabiliser, some doubts emerged on whether an EUBS can fit the bill. The conference closed with a keynote speech by Commissioner Marianne Thyssen (European Commissioner for Employment, Social Affairs, Skills and Labour Mobility), who highlighted the need for reform of national unemployment insurance schemes and labour market policies in order for the EUBS to be effective.