A European unemployment benefits scheme: Lessons from Canada

Abstract:

In many federal political systems, responsibility for unemployment has a multi-tiered architecture, with competence for key elements − including unemployment insurance, social assistance, and the public employment service − dispersed across different orders of government.

This paper tells the story of the long transformation of unemployment insurance into a federal responsibility in Canada, and seeks to identify lessons from Canada’s experience that might be useful as Europeans consider the potential of an EU-wide unemployment benefits scheme in response to the financial and euro crisis that started in 2008. Most European scholars look to the United States for transferable ideas. The paper argues that Canada is a more salient comparator, given that it has similar institutional features to the EU, and has successfully managed a pan-Canadian unemployment insurance benefits scheme for over 75 years.

Lessons for the EU from Canada include the place of a centrally managed unemployment insurance programme in a monetary union, and insights with respect to stabilisation, labour mobility, redistribution, social solidarity, legitimacy, and institutional moral hazard.