EESC calls for EU-wide minimum unemployment insurance standards

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With more than one in five citizens at risk of poverty or social exclusion, the EESC proposes minimum standards in unemployment insurance to better support, protect and reintegrate those who are out of work, no matter where in the EU they live.

The European Economic and Social Committee (EESC) is proposing measures to ensure that unemployed workers enjoy better protection across the EU. Currently, unemployment benefits vary greatly between Member States, in terms both of financial support and of the duration of entitlement, which is why the EESC is calling for EU-wide minimum standards.

For example, the maximum period for receiving unemployment benefits ranges from 90 days in Hungary to an unlimited period in Belgium. Net benefit rates for a low-wage worker with a short work history vary from less than 20% of previous net earnings in Hungary to approximately 90% in Luxembourg. EU-wide minimum standards are not intended to harmonise the different Member State systems, but to establish a floor so that rights cannot be undermined.

In an own-initiative opinion adopted at its plenary session in December, the EESC said that setting EU-wide targets for unemployment benefits would improve the functioning of the single market and labour markets in general, as well as playing an important role as automatic stabilisers.

It is unacceptable that in some countries workers receive only three months of unemployment compensation, even after decades of contributing to the system, said Oliver Röpke, rapporteur for the opinion and president of the EESC's Workers' Group.

Such an EU scheme would complement national efforts, respecting national competences. As an integral part of the European Pillar of Social Rights (EPSR), these minimum standards should be integrated into the European semester. If the benchmarking process does not yield sufficient progress, we will need binding measures, such as an EU directive. Europe cannot withdraw from social policy, Mr Röpke stressed.

The opinion was adopted by 141 votes, with 65 votes against and 14 abstentions. A majority of the EESC's Employers' Group voted against the opinion.

In a statement released after the plenary session, the president of the Employers' Group, Jacek Krawczyk, said: Any policies and action concerning EU-wide minimum standards in the field of unemployment insurance must be based on a gradual approach.

In the opinion, the EESC stressed that Member States with more generous systems were better able to reintegrate unemployed people into the labour market, while effective unemployment benefits enabled people to find jobs that correspond to their skills or to complete retraining courses.

At the same time, since unemployment insurance is a central component of the social welfare system, acting as a safety net when people lose their jobs, minimum common standards would offer protection against poverty, the threat of which still hangs over Europe, with as many as 22% of EU citizens at risk of poverty or social exclusion.

The EESC said that such measures would aim to achieve upward social convergence of Member States in the EU.

Social targets must lead to social convergence over time. People need to see that the principles of the EPSR do not exist on paper only, but are also implemented in practice and gradually improve people's living conditions, Mr Röpke said.

The EESC therefore proposed introducing common minimum targets for:

  • the net replacement rate of unemployment benefits, meaning that a fixed proportion of previous in-work income should be maintained. The amount of benefit varies greatly between Member States and in some cases is not enough to ensure an adequate standard of living;
  • coverage, or the number of unemployed people receiving benefits as a proportion of the overall number of unemployed people. Low coverage can have many causes, including new or atypical forms of employment which make it difficult to acquire a benefit entitlement;
  • duration of unemployment benefit entitlement, as this has a direct impact on the risk of people falling into poverty after they lose their job;
  • the right to (re)qualification and training.

A common approach to providing such basic protection would be a step towards achieving the aims of the Social Pillar. Its principle 13 states that the unemployed have the right to government support to reintegrate into the job market and also the right to adequate unemployment benefits of reasonable duration, in line with their contributions and national eligibility rules.

The concrete targets would be set as part of the European semester benchmarking process and should be contained in country-specific recommendations that are drawn up by the Commission, adopted by the Council, and endorsed by the European Council. The whole process should be monitored by the Commission, working closely with the social partners.

Since the EPSR is supported by the social scoreboard, which is used to monitor implementation of the pillar by following trends in the EU countries, the EESC recommended that the scoreboard should also be the basis for monitoring unemployment benefits. Common standards should complement the scoreboard.

The benchmarking would not affect the right of Member States to define the principles of their social security systems. Minimum requirements should not prevent them from setting more ambitious standards, but existing standards in the Member States should not be reduced.

Implementing the EESC's proposals is also in line with the EU's target of cutting the number of people at risk of poverty or social exclusion by 20 million by 2020. As 2020 approaches, this objective is far from being reached.

The EESC opinion will also be a contribution to the Commission's work on an action plan for the implementation of the European Pillar of Social Rights.

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