Milan, 18/07/2014 (Agence Europe) - At a meeting of EU labour ministers in Milan on Friday 18 July, the Italian Presidency of the Council of the EU asked the European Commission to prepare a Green Paper on automatic stabilisers in economic and monetary union (EMU). Employment and Social Affairs Commissioner Laszlo Andor said he was more than happy to do so but pointed out that it was not on the Commission's work schedule for 2014, and therefore a formal decision to this effect would be needed in advance from the European Commission.
All the ingredients were in place to highlight this politically sensitive issue. The Italian Presidency wanted to focus from the start on the question of automatic stabilisers, particularly the idea of setting up a supplementary unemployment benefit system at EMU level. It has instructed deputy secretary of state for the economy and finances, Pier Paolo Baretta, to coordinate work at the Council. Commissioner Andor is delighted as he believes that this question is crucial for the future of EMU (see EUROPE 11102). The aim is to have a mechanism that allows speedy reaction to a crisis that severely hits only a limited number of member states. With the time between a crisis breaking out and the structural reforms to deal with it being so important, a special ad hoc mechanism is needed to make it possible to react immediately if required, Baretta said.
The debate among ministers did not ultimately bring any surprises. It had been rich and had revealed differing sensibilities, Baretta said at the press conference ending the two-day informal Employment and Social Affairs Council, adding that progress had nevertheless been made. He explained that three approaches had been compared and contrasted in a workshop on the subject. Some countries, particularly those that would benefit from such a system today (in southern Europe, for example) favour the immediate introduction of an unemployment benefit system at eurozone level managed by the European institutions. A second group of countries is more cautious, pointing to that the overwhelming responsibility for employment and tackling unemployment lies with national authorities. The third group suggests an intermediate solution that gives EMU a reassuring role. It would be a type of “guarantee fund” that would activate an additional unemployment benefit system in the event of a serious crisis, explained Baretta.
It is early days yet. Baretta says the talks could last five years or longer. Andor pointed out that it takes time to set up automatic stabilisers, there is a price to be paid and also legislation to be brought in, including possibly a change in the EU treaties if that is required. In response to a question from this newsletter, he said that what can be done today is to launch the political debate, share studies and assess the various options. This is precisely the aim of the Green Paper, and the Italian Presidency says the time is sufficiently ripe to do so. Andor said it was technically possible to draft a Green Paper, but wants European finance ministers to contribute to it too. (JK)