German finance minister proposes European unemployment fund German finance minister proposes European unemployment fund

German finance minister proposes European unemployment fund
29 Jun 2018

German finance minister Olaf Scholz has proposed the creation of a Europe-wide unemployment insurance system.

The proposal would mean that if a Eurozone member was hit with major job losses with which its own social security system was unable to cope, it could borrow from a Europe-wide reinsurance fund.

In an interview with Der Spiegel, Scholz explained that once the individual country’s recession was over, it would pay back the funds it had borrowed. “It’s similar to how things work in the US,” he said. “There, individual states fund unemployment insurance, but pay into a federal fund. In times of crisis, they can borrow money from it to better share the burden without running into problems."

He added that the scheme would strengthen the financial stability of the Eurozone as a whole and also called for more harmonisation on corporate tax.

"Europe needs to tackle the issue of wage dumping and tax dumping in a determined manner," Scholz said. "For that reason, it is also especially important for me that we align rules pertaining to corporate tax rates across Europe, so that big companies can't pit countries against one another."

He also gave his backing to a proposed financial transaction tax that would see stock market transactions taxed, with the money going into the European Union’s budget. Scholz suggested such a move could bring in up to €7 billion (US$8.2 billion).

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

German finance minister Olaf Scholz has proposed the creation of a Europe-wide unemployment insurance system.

The proposal would mean that if a Eurozone member was hit with major job losses with which its own social security system was unable to cope, it could borrow from a Europe-wide reinsurance fund.

In an interview with Der Spiegel, Scholz explained that once the individual country’s recession was over, it would pay back the funds it had borrowed. “It’s similar to how things work in the US,” he said. “There, individual states fund unemployment insurance, but pay into a federal fund. In times of crisis, they can borrow money from it to better share the burden without running into problems."

He added that the scheme would strengthen the financial stability of the Eurozone as a whole and also called for more harmonisation on corporate tax.

"Europe needs to tackle the issue of wage dumping and tax dumping in a determined manner," Scholz said. "For that reason, it is also especially important for me that we align rules pertaining to corporate tax rates across Europe, so that big companies can't pit countries against one another."

He also gave his backing to a proposed financial transaction tax that would see stock market transactions taxed, with the money going into the European Union’s budget. Scholz suggested such a move could bring in up to €7 billion (US$8.2 billion).

 Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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