Bertelsmann Stiftung calls for European unemployment re-insurance scheme

A study published by Bertelsmann Stiftung in December 2018 reiterates its previously published position on the introduction of a European stabilisation fund in times of crisis. As such, it lands right in the middle of the current debate, which has now been taken up again by Finance Minister Olaf Scholz and is in line with the Franco-German eurozone reform plan, which is also committed to introducing such an instrument.

According to the study, if such an insurance scheme had already been in place at the beginning of the financial crisis, a quarter of the loss of income could have been absorbed, including in Germany. In the period from 2000 to 2016, no country would have been a ‘permanent’ net contributor or beneficiary; however, this does not say who ultimately would have received the most in relation to contributions. The stabilisation fund should only provide assistance in times of ‘severe economic crises’ and only for the short term. However, the fund should only compensate for fluctuations in the unemployment rate, and not differences in levels.

Whereas the German Ministry of Finance’s proposal wants to help countries exposed to shock via loans, the authors from Bertelsmann Stiftung have proposed transfer payments because it is not just about an intertemporal smoothing, but also about interregional stabilisation.