Stabilising the European Economic and Monetary Union: What to expect from a common unemployment benefits scheme? CEPS Research Report No 2017/02, February 2017

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 economic shocks and to mitigate their impact. 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