Worlds of welfare collide
| Date | 01 March 2017 |
| DOI | 10.1177/1388262717699457 |
| Published date | 01 March 2017 |
| Subject Matter | Articles |
EJSS
Article
European Journal of Social Security
2017, Vol. 19(1) 21–44
Worlds of welfare collide:
ª The Author(s) 2017
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DOI: 10.1177/1388262717699457
unemployment benefit
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scheme in the UK
Gra´inne McKeever
School of Law, Ulster University, Newtownabbey, UK
Mark Simpson
School of Law, Ulster University, Derry-Londonderry, 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, welfare state, unemployment, European Union, welfare capitalism
Corresponding author:
Gra´inne McKeever, School of Law, Ulster University, Shore Road, Newtownabbey BT37 0QB, UK.
E-mail: g.mckeever@ulster.ac.uk
22
European Journal of Social Security 19(1)
Introduction
Despite the contention of the founding father of the European Union, Jacques Delors, that the
creation of the single European market must be accompanied by the creation of a single ‘social
area’,1 to date the role of the Union in social protection has been limited to two main interventions.
EU law has required the removal of discriminatory measures, notably those that discriminate on
the basis of gender, from national and occupational schemes.2 Secondly, the extent to which EU
citizens exercising their right to freedom of movement should be able to access the social security
and social assistance systems of their host state has been incrementally expanded – and, more
recently perhaps, rolled back3 – through case law4 and legislation.5 However, subject to these
constraints Member States retain full competence for national systems of social protection. The
principle that EU citizenship demands a ‘degree of financial solidarity’ between nationals of
different Member States6 does not require harmonisation of provision or extend that solidarity
to citizens living in other Member States.
That is not to say that national systems are immune to external influences. European welfare
states face similar challenges, such as sustainability of financing and the impact of an ageing
society, and have inevitably learned from their neighbours’ responses even before the Lisbon
strategy extended the open method of coordination to social protection. The influence of the New
Labour welfare-to-work agenda in the UK on claimant activation policies under Germany’s red-
green coalition, which took office a year later, has been well documented.7 France’s revenu
minimum d’inte´gration inspired the social assistance schemes devised by Spain’s autonomous
communities from the late 1980s, which in turn influenced developments in Portugal and Italy.8
The European Code of Social Security,9 European Social Charter10 and ILO Convention 10211
contain provisions on minimum standards for national social security/social assistance systems,
and have been ratified by most Member States.
A supranational European unemployment benefit has been advocated since the 1970s, but
interest has been revived in the wake of the post-2007 financial crisis, reflecting a search for an
automatic macro-economic stabiliser in the event of future asymmetric shocks as much as a desire
1. Cited by Hervey (2000: 233).
2. Court of Justice 17 May 1990, Case C-262/88 Barber v Guardian Royal Exchange Assurance Group [1990] 2 CMLR
513; for discussion, see Hervey (2000), Wikeley and Ogus (2002: 601).
3. Court of Justice 11 November 2014, Case C-333/13 Dano v Jobcenter Leipzig [2015] 1 CMLR 48; See also Peers
(2000).
4. Conanat (2008), Sieveking (1997).
5. Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within
the territory of the Member States; Regulation (EC) No. 883/2004 of the European Parliament and of the Council of
29 April 2004 on the coordination of social security systems.
6. Court of Justice 20 September 2001, Case C-184-99 Grzelczyk v Centre Public d’Aide Sociale d’Ottignies Louvain la
Neuve [2002] 1 CMLR 19, para 44.
7. Mohr (2007).
8. Ferrera (2005).
9. European Code of Social Security (Strasbourg, 18 April 1964, entry into force 17 March 1968, CETS048).
10. European Social Charter (Turin, 18 October 1961, entry into force 26 February 1965, ETS035); European Social
Charter (revised) (Strasbourg, 3 May 1996, entry into force 1999, CETS 163).
11. International Labour Organisation Convention 102 – Social Security (Minimum Standards) Convention (Geneva, 28
June 1952, entry into force 27 April 1955).
McKeever and Simpson
23
for deepened expressions of solidarity between citizens.12 The currency of this project remains
valid, particularly for those Member States that value the aspiration of economic and monetary
union. The Committee on Employment and Social Affairs called for ‘a pilot project on the
feasibility and added value of a European unemployment benefit scheme’ (EUBS) in its Opinion
on the Union budget for 2014.13 In a continuing search for economic stabilisers, this proposal
represents a leading contender for a solution, and so needs to be examined in depth. There is a need
to understand the relationship between this proposal and the political opposition to permanent
transfers between Member States that could characterise an ‘ever closer union’. There is also a
need to recognise the impact of the political ideology underpinning a EUBS model, which cuts
across policy intent in the varying welfare traditions across Europe, in relation to both vertical and
horizontal redistribution within Member States. And there is further value in examining specifi-
cally how the development of a EUBS model sits in contrast to the erosion of a contributions-based
social insurance model of social security and the increasingly residual nature of working age social
security in the UK. A simulation of how various models of unemployment benefit might work at
the European level was commissioned14 along with a discussion paper on the rationale for and
challenges facing a EUBS.15 National studies of the legal and operational feasibility of EUBS were
also carried out. Although many papers from the 1970s onward have assumed that any European
unemployment benefit would form an integral part of monetary union,16 these feasibility studies
included non-Eurozone states, with the authors contributing the UK case study. Completion of the
studies was followed by publication of a synthesis report and a conference supported by the Slovak
Presidency of the European Council and the Commission.17
The case study was completed prior to the UK’s European Union referendum of 23 June 2016 in
which 52 per cent of voters voted to leave the EU. Within this 52 per cent there are sub-state
differences, with the majority vote in Scotland and Northern Ireland being to remain in the EU,
while a majority voted to leave in England and Wales, creating the prospect that Scotland, in
particular, might seek to break the union with Britain in favour of maintaining the union with
Europe.18 The political fallout from the referendum continues to unfold, making predictions
uncertain and yet the case study provides clarity that, whatever the UK’s future within Europe,
it will not be a participant in any European unemployment benefit. As will become apparent, even
if the UK-wide vote had been to remain in the EU, it seems highly unlikely that the government
would have agreed to be part of any such experiment in supranational social insurance, at least as
envisaged at present. The referendum result, and subsequent European Union (Notification of
Withdrawal) Bill 2017, do not relegate the findings to a mere historical curiosity: many of the
factors identified as affecting the feasibility of EUBS in the UK are shared by other Member States,
and would be equally applicable to a Scottish state, independent of Britain but within the EU.
Despite the impending ‘Brexit’, then, this article forms a useful case study of the difficulties
inherent in establishing a European social security benefit, covering a single social risk, across
12. Beblavy´, Marconi and Maselli (2015).
13. Committee on Employment and Social Affairs (2013) ‘Opinion on the general budget of the European Union for the
financial year 2014’ (2013/2145(BUD)), Brussels: European Parliament.
14....
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