Home / Chapter III / Unemployment benefits

Principle 13

Unemployment benefits

The Stability and Growth Pact (SGP) tends to reduce the adequacy and coverage of unemployment benefits schemes in favour of balancing government budgets, but to the detriment of workers’ protection. Unemployment benefits have nevertheless decreased (replacement ratio, or duration of the benefits, obligations of the beneficiary not linked to participation in ALMP, etc.). The objective of aligning it to a greater extent with Active Labour Market Policies remains valid for a few countries. It is dependent on national models and the EU does not harmonise the performance of activation measures. The consequences of this can be seen in national accounts and poverty rates as part of the benchmarking process within the EU Semester.

An EU initiative on free movement of workers and the portability of rights in labour market transitions may trigger convergence in the field of workers’ rights to adequate unemployment benefits and/or activation measures to transition from unemployment to employment, or from temporary to standard employment contracts.

The European Commission is working on a proposal for a European Unemployment Benefit Reinsurance scheme. It will likely be conceived as an instrument of fiscal stability rather than a labour market instrument, with the unwanted consequence that sustainability will be more relevant than adequacy of performance. The Reinsurance Scheme should not interfere with the rules and practices of national systems or serve as a new instrument for disciplining Member States and/or harmonising national systems for unemployment insurance. A European unemployment reinsurance scheme could contribute to ensure a basic standard of support during unemployment cycles. The idea of establishing EURS was already discussed before the Covid-19 outbreak, yet the economic and social consequences of the pandemic are making the discussion of such an instrument all the more necessary. It must be made clear that SURE does not substitute the need for a discussion on a more permanent scheme.

Regarding benchmarking within the European Semester, more emphasis could be placed on young workers that are particularly affected by precariousness at the beginning of their career path and who are sometimes penalised even more within the existing national unemployment benefit scheme or even ignored. The same may apply to workers aged between 52 and 67. The question of penalties also seems relevant in view of the structural reforms spreading across Europe to reduce job seeker access to unemployment benefit schemes or to create more precariousness among job seekers through the prism of austerity. Furthermore, the growing tendency, in some Member States, of rendering job seekers “invisible” in order to serve short-term political gains – starting with young NEETs – should also be addressed.

Actions aimed at setting a minimum floor of rights in the EU, a level playing field in the Single Market

  1. Investigate the added value of a legal instrument that, under the framework of free movement of workers, would establish a right of access and portability of entitlements to both unemployment benefits and ALMP packages available to unemployed workers.
  2. Establishing a European Unemployment Reinsurance scheme.
  3. Reference to Title X of the TFEU, setting of legally-binding minimum standards for unemployment benefits in terms of coverage, adequacy, the right to training, and the duration of the entitlements.

Actions aimed at establishing upward convergence in living and working conditions

  1. Benchmarking systems for indicators: long-term unemployment and government expenditure for ALMP.
  2. The European Employment Strategy and the European Network of Public Employment Services should be further developed.
  3. Development of indicators and benchmarks that drive upward convergence in performance of unemployment benefit schemes, in support of the establishment of minimum standards and safeguarding features for national systems.