Stabilising the European Economic and Monetary Union: What to expect from a common unemployment benefits scheme?
In the aftermath of the Great Recession, there has been a widespread call for reform of the Economic and Monetary Union (EMU), as it became clear that its current institutional architecture lacks an automatic stabilisation mechanism to prevent and mitigate the effects of economic shocks. A European unemployment benefits scheme (EUBS) has long been discussed as one potential stabilisation mechanism. In this report, we explore this option in more depth. We start from 18 EUBS variants, of two types – equivalent and genuine – for which we assess the legal and operational feasibility of introducing these schemes and the added value that they would bring. Our analysis focuses on added value in terms of macroeconomic stabilisation as well as the potential contribution to labour mobility and Europe’s social dimension. The feasibility assessment covers legal and operational options and constraints at the national and EU levels. The report further devotes attention to important challenges such as institutional moral hazard, permanent transfers and EUBS implementation.
This report was first written as an Executive Summary for the research project “Feasibility and Added Value of a European Unemployment Benefit Scheme”, commissioned by the European Commission, Directorate-General for Employment, Social Affairs and Inclusion and initiated by the European Parliament. It is re-published by CEPS with the kind permission of the European Commission and can also be found on the Commission’s website, where it is also available in French and German. For more information on the project, see here.
Unless otherwise indicated, the views expressed are attributable only to the author in a personal capacity and not to any institution with which they are associated, nor do they necessarily reflect the views or policy of the European Commission.
Miroslav Beblavý is Senior Research Fellow at CEPS and Karolien Lenaerts is Researcher at CEPS.