November 10, 2015
In the current economic and political context, solidarity is shattered by the spillover of the economic problems Member States have been struggling to deal with in the aftermath of the economic crisis, and now, the refugee crisis. Meanwhile Euroscepticism is rising along with extremist, nationalist movements and the European Union’s values and pillars – labour mobility in particular – are contested across the continent.
Despite the fact that the European project has functioned during times of economic growth, it has become clear that as soon as challenges arise, national interests are prioritised, European principles forgotten and European states are not as eager to share the costs of the alliance as they were to enjoy the benefits.
Now is the time for the 1989 Generation Initiative to emphasise the need for solidarity and unity in dealing with these challenges. We are the ones who have enjoyed the benefits of the union, and are now standing up to deal with the costs, as a union.
One of the most pressing problems across the EU is rising unemployment, and migration waves which have contributed to the increased popularity of far-right, anti-EU parties and Eurosceptic movements. With unemployment gaps between Member States as wide as 20% , countries on both ends of the spectrum are failing to find national solutions while the people’s frustration is growing, translating into increased support for Eurosceptics and extremist parties.
From making it more difficult for migrants to access benefits, to the struggle to create jobs and programs to increase employability, national solutions are insufficient and inefficient in tackling a European crisis. That is why we believe common unemployment insurance is the European solution required to absorb EU-wide shocks, addressing macroeconomic imbalances between Member States. Additionally, it will support countries with budget constraints that are struggling to deal with high unemployment and states dealing with increasing migration pressure and all the subsequent effects of falling support for labour mobility.
The 1989 Generation Initiative supports the provision of a common European fund to support Eurozone’s weakest regions in providing unemployment benefits. This is not a new proposal, and the debates around it are controversial, but the fact that it has been widely debated suggests that it is realistic and can be implemented. This will require a political consensus difficult to achieve at this time of crisis and divisions within the union. However, that only makes it more necessary, as any solution that could have a real impact will require political consensus – there are no quick fixes or easy solutions to the crises and challenges the EU is facing.
A common unemployment insurance scheme will be a mechanism to fundamentally reform labour markets and a powerful signal of solidarity and unity that the EU now desperately needs. A variety of European unemployment insurance schemes have been discussed so far. We are proposing a common fund pooling resources from the Eurozone states at first and redirecting the funds towards the countries that require most support. This will be based on the unemployment rates and the analysis of their economic situation, perhaps similar to the refugee aid to be distributed in the EU, after quotas are implemented. It would first be implemented in the Eurozone, as it is urgently need to address the macroeconomic imbalances, reduce the impact of asymmetric shocks and strengthen the single currency, with the potential to be extended to the EU level. Despite the fact that it will be difficult to garner support for this measure in the current political climate, (since the last thing elected politicians want is to use their taxpayers’ money to address problems in different regions of the union that do not directly or immediately affect their voters) we agree with the Jean-Claude Juncker, the President of the European Commission, that a European unemployment scheme must be an aspiration for the EU.
Juncker stated that “there is not enough Europe in this union; and there is not enough union in this union.” The unemployment scheme would be both a strong political statement to strengthen the union and a viable economic solution to address unemployment, migration and the rise of far-right, populist anti-EU movements. It would have a stabilising effect, it would foster solidarity and would facilitate policy harmonisation across states. It would reduce the incentive for unemployed people to migrate and address the problem of ‘benefits scroungers’, arguments which can be used to persuade states with lower unemployment rates to contribute to the fund – they will face less challenges in dealing with migration and the population’s reactions to it, along with the benefits it would bring for the euro and the EU economy. It would also prevent employers from driving down wages as the supply of cheaper labour will decrease with the reduction of migration. It might moreover reduce brain drain in the countries with high unemployment rates and could improve the business cycle, minimising shocks to aggregate demand by reducing fluctuation in incomes.
Despite all its advantages, currently national interests are hindering the development of European unemployment insurance. In the short-term party politics arena it is highly unpopular with voters, which prevents any progress on the topic. We know such a measure is ambitious, as it would be a step towards a fiscal union, whilst during this solidarity shortage crisis, any burden sharing proposal is a compromise unlikely to be achieved through political consensus. But the 1989 Generation Initiative believes that is precisely why it needs to be implemented. It is an ambitious solution, but for the complex issues the EU is currently facing, including the divisions within it and the lack of unity, only ambitious solutions have the potential to address the problems. We want the European Union to survive, and it can only do so by responding to crises through solidarity and unity.
By Adela Alexandra Iacobov
 Unemployment reached 25.6% in Greece in 2015 compared to Germany’s 4.7%, the EU’s 9.6% and the Eurozone’s 11.1%,1989 Generation Initiative