Europe job insurance scheme proposed

Germany has suggested the creation of a Europe-wide unemployment insurance system to make the Eurozone more resilient to future economic shocks, Finance Minister Olaf Scholz said in an interview published yesterday.

The proposal, outlined in an interview with Der Spiegel magazine, is part of Germany’s efforts to seal a reform package together with France ahead of a summit of European Union leaders later this month.

“I’m in favour of supplementing national systems for unemployment insurance with a reinsurance for the overall Eurozone,” Scholz said in the interview.

If a Eurozone member faces an economic crisis that leads to massive job losses and a heavy burden on its social-security system, the country could borrow from this joint reinsurance fund, Scholz said.

“Once the recession is over, the country would pay back the funds it borrowed. At the same time, all countries should make efforts that their safety nets are as prepared for crisis as possible,” the minister added.

Asked if Germany would bear the risk of this new scheme, Scholz replied: “No, Germany profits. The German Federal Employment Agency’s reserves would remain untouched, and no debts will be communitised.” The minister said the step would strengthen the financial stability of the Eurozone as a whole. “It’s similar to how things work in the US. There, individual states fund unemployment insurance, but pay into a federal fund. In times of crisis, they can borrow money from it to better share the burden — without running into problems,” Scholz said.