The State of the European Union. The European Parliament faces its most important elections yet

SOCIAL EUROPE – NAMING THE MYTH, PRESERVING THE MODEL AND TAKING CONCRETE ACTION 91 age, the losses incurred are absorbed to a large extent by the insurance community.’ This basic insight from insurance theory in- spired our proposal for a workable euro area un- employment insurance framework. In normal times, euro area Member States would pay 0.1 % of GDP per year into a common European un- employment fund. The lion’s share of this would go into a national compartment earmarked spe- cifically for this country which is the self-insur- ance compartment. The rest would go into a common “rainy day” compartment for very large shocks for the purpose of re-insurance. If a Member State experiences a rise in un- employment over a set reference value (say 0.2 percentage points), it would receive a net pay- out from its national compartment to support the increased unemployment benefits. If a country is hit by a very large economic shock (say over 2 percentage point rise in unemploy- ment), it would receive additional payments from the stormy day fund as re-insurance. By excluding net payments into the system from the Stability and Growth Pact in good times, the fiscal restriction in good times would de facto become tighter. Conversely, in bad times , the net payments out of the system would also not be counted for the purpose of the Stability and Growth Pact so that these extra funds would relax the overall fiscal constraint of a country in shock. In this way, the system would contribute significantly to more reliable and credible fiscal stabil i sation in the face of asym- metric and even, to some extent, symmetric shocks. The extent to which the different compart- ments would be allowed to run a deficit in order to enhance the stabilisation effect beyond the workings of a pure rainy day fund will depend on the credibility of the overall institutional set- up. In any event, Member States with deficits in their national compartments would be required to make higher contributions once their econo- mies recover. Simulations based on these princi- ples show a significant economic stabilisation potential from the system, with minimal net costs to its contributors over time. This form of unemployment insurance would be as much an institutionalisation of counter-cyclical economic policy, as it would be a form of solidarity that would ensure a much smoother ride for the citizens of the euro area. Third step – work in an era of digital challenges, the Personal Activity Account The Personal Activity Account was proposed as an instrument for discussion in the white paper entitled Re-imagining Work. Work 4.0. pre- pared by Germany’s Federal Ministry of Labour and Social Affairs (BMAS). Such an account could ensure a work-centric social policy over the course of a person’s life and could be more responsive to individual needs. 14 Elsewhere, ref- erence is made to comparable approaches in other EU Member States, which could make it into a shared project focused on labour and so- cial policy. 15 Such an account could be created for every- one who enters the labour force. Even if the details differ in many respects, particularly in relation to financing and “drawing rights”, the objective to increase individual autonomy, com- 14   https://www.bmas.de/SharedDocs/Downloads/EN/PDF- Publikationen/a883-white-paper.pdf;jsessionid=F7A03817 C6861C736FAC36A252301231?__blob=publica tionFile&v=3 15   https://www.bmas.de/SharedDocs/Downloads/DE/PDF- Publikationen/Forschungsberichte/fb493-persoenliches-er werbstaetigenkonto.pdf;jsessionid=2BD8D0F1A87F32CB1 AAF5D280457F71F?__blob=publicationFile&v=3