It only takes an hour to travel from Berlin to Brussels but despite the short distance the debates on European issues that take place in both cities could not be more diverse. A case in point is the idea of a European unemployment insurance. The concept of such an insurance could help countries in crisis as it would absorb some of the costs of a sudden and deep recession. A European unemployment insurance – instead of a national one – would cover the costs connected to the increase in unemployment and would leave more money in the national budgets to stabilise national economies during a recession. It is a possible way to realise the so-called “fiscal capacity” (a term that made it into quite a few EU documents) which is supposed to help euro countries to deal with idiosyncratic shocks. (here is a more detailed explanation of how the concept could work)
A debate in Brussels…
In Brussels the idea seems to be gaining traction: In December 2012 the “four presidents” mentioned the idea of a common unemployment insurance for the eurozone in their roadmap “Towards a Genuine Economic and Monetary Union”.
No debate in Berlin…
The debate is very different when you travel to Berlin. If you listen to German officials (interestingly, widely absent from the Bertelsmann conference in Brussels), the European unemployment insurance has zero chance to be implemented. Internal discussions in the German finance ministry actually debunk the whole idea of “fiscal stabilisers”. Stabilisers, after all, can only work if there are transfers, even if only temporary, and this idea runs completely against what the German finance ministry is willing to accept at the moment.
Chosen excerpts by Job Market Monitor. Read the whole story at
One of the most promising measure normally present in monetary unions is unemployment compensation. This idea is currently being given a push in the EU – including by the Employment Commissioner Laszlo Andor who has talked about it as serving as an automatic stabiliser and argued that “We need and must study the possible set-up … Continue reading »