The Italian Presidency of the EU has asked Bruegel to give a presentation to European Labour and Social Ministers at the informal EPSCO meeting in Milan on July 18. The aim of our presentation was to clearly lay out the major issues and to discuss the pros and cons of a European Unemployment Insurance (EUI). A number of important technical papers have already been done on the topic, for example by the French treasury. Taking one step back, we gave the following key messages.
- Prior political consent to fiscal risk sharing needed
- Ambitious project with implications for
- labour market institutions, activation policies etc.
- moral hazard (e.g. early retirement policies, health insurance(?), etc.)
- and public finances
- While more European stabilization mechanisms desirable, other mechanisms may be quicker
- EUI not easy to build therefore rather for next crisis
- Investment fund and better use of EU budget may be more practicable
- Could be a powerful signal of a further „federalisation“ of Europe and solidarity if political consensus
- Could be a strong mechanism to fundamentally reform labour markets.
The detailed powerpoint is available below.