EPRS Admin By / September 20, 2016

Assessment of proposals

Assessment of proposals

Assessment of proposals

In a 2016 paper, Spath analyses the pros and cons of the three major reform options sketched out earlier. Table 2 summarises the findings: Red cells indicate the major flaws of the proposals and obstacles, yellow cells indicate difficulties that can be overcome, and green cells are used when no flaws or major problems are identified. Grey cells are used where a judgement is not possible, or inappropriate. Instruments based on output gap estimates suffer from the imprecision of the indicator. On the other hand, such an instrument would not interfere with national labour markets and its implementation would not require Treaty change. A genuine European unemployment insurance on the other hand appears to be more demanding in legal terms. The biggest challenge for a re-insurance approach remains in finding an adequate threshold for when to trigger pay-outs. In other terms, how to determine as of what magnitude a euro-area wide system should deliver its stabilisation capacity.


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