Worlds of Welfare Collide: Implementing a European Unemployment Benefit Scheme in the UK

Abstract

The post-2007 financial crisis has brought renewed interest in a European Unemployment Benefit Scheme (EUBS) as a manifestation of solidarity between citizens of different member states and an economic stabiliser in the event of future asymmetric shocks. The EU-wide benefit would operate in tandem with existing national unemployment benefits. This creates challenges of compatibility given the diversity of approaches to social security within the Union, based on at least four philosophies of welfare: liberal, conservative, social democratic and southern European. This article examines potential legal, operational and political difficulties associated with marrying a EUBS that is at heart a conservative system of social insurance to the UK’s liberal welfare state. Few legal obstacles exist and although the addition of a new, earnings-related benefit to an already complex mix of social protection would raise significant operational issues, these need not be insurmountable. However, fundamental ideological differences would have rendered the EUBS as proposed politically ill-matched with the UK even absent the June 2016 vote to leave the EU. A contributory income maintenance benefit is a poor fit with a residual, largely means-tested national system whose role is limited to offering protection against severe poverty while maintaining work incentives and minimising costs.

Keywords: social security, unemployment benefit, social insurance

JEL Classification: K39