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Centralization decentralization and the division of responsibilities in social policy: a European perspective Frank Vandenbroucke University Amsterdam EISS Conference 29 9 2017 • A case for centralisation? Unemployment insurance monetary union problem ‘institutional moral hazard’ Freedom movement vulnerable citizens: which labour EU? Why are stabilization instruments centralized unions? – Risk sharing (pooling) Externalities (vaccination) Vaccination: compulsory (minimum requirements) subsidized (re-insurance) Minimum requirements an effective stabilisation capacity: sufficiently generous unemployment benefits notably short-term; sufficient coverage rates benefit schemes; no market segmentation that leaves part force poorly insured; proliferation employment relations not integrated into insurance; activation unemployed individuals; budgetary buffers good times so automatic stabilisers can do their work bad These principles become fortiori imperative if Eurozone would be equipped with re-insurance national systems: institutional hazard Re-insurance schemes The European/US paradox Obsession makes it impossible to reap Experiences multi-tiered welfare states: incentives (design) minimum Design features mitigate model Relative deviations short-term from historical record Large shocks Experience rating claw-back mechanisms requirements: cf Youth Guarantee Pillar Social Rights In 1990s reform was justified by advent EMU: supply-side flexibility ‘enabling’ policies Today we need broader approach : EMU requires consensus on institutions support ‘stability’ ‘symmetry’ Therefore ‘protective’ collective action order Enabling protective mutually reinforcing creating resilient systems Symmetry: member states deliver wage coordination; this excludes totally decentralised uncoordinated bargaining Institutions monitor competitiveness should embedded dialogue distributive concerns mainstreamed monitoring Four questions: 1) How justify free movement? 2) non-discriminatory access those who move? 3) difference between active non- citizens application (1) (2)? 4) Who is responsible non-active citizens? as matter fairness: Equality opportunities across EU ‘Posting’ workers both needed Single Market Non-discrimination: competition different one territory No denying tensions but ‘balancing act’ possible Viking & Laval Posted Workers Directive (Feenstra) Active / non-active: earned citizenship positive reading ‘earned citizenship’ there duty adequately protect Robust defense idea needs posting fairness Reform Improvements mobile Adequate regulation importance security all next slide Rights: important initiative made operational (legislative financial policy coordination instruments) Priority areas capacity successful integration migrant workers: – Access protection Quality Universality regimes income protection: Upward convergence supporting view eventual organization scheme (‘vaccination metaphor’) Union systemic level some key functions (e g fair corporate taxation ) guide substantive development via general standards objectives leaving ways means Member States basis definition ‘the model’ European countries cooperate explicit purpose pursuing pan-European cohesion (reconnecting founding fathers’ inspiration) Resources On concept ESU: Barnard De Baere after Crisis CUP Therein: see chapter Feenstra posted workers… Reduction Sharing Moral Hazard: Vaccination Metaphor Intereconomics Vol 52 May/June Number 3 pp 154-159 non-discrimination: speak non-mobile EUDO/GlOBALCIT forum ‘Should duty-free?’ http://eudo- eu/commentaries/citizenship-forum/citizenship-forum-cat/1852- should-eu-citizenship-be-duty-free?showall=&start=3 Basic Union: conundrum rather than solution ACCESS EUROPE Research Paper 2017/02 01 August (http://ssrn com/abstract=3008621) www frankvandenbroucke uva nl