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The past several decades in Canada have been marked by systematic attempts to restructure the federally regulated unemployment insurance system, despite growing unemployment and the need for labour market relief. Several program changes, including tightening eligibility requirements, lowering benefits, increasing administrative burdens, limiting enrolment duration and intensifying surveillance have significantly impacted the level and quality of support available to some of the most vulnerable sections of the population. Although Canada weathered the 2008 crisis relatively well, it undertook similar cuts as some of the worst hit European Union members. In line with OECD recommendations, Canadian measures have been rationalised as a means of strengthening work incentives, stimulating growth and reducing deficits. The effect of the coronavirus has been to challenge these longstanding assumptions and policies, pointing to the need for expanded state efforts to cushion social and economic risks in the face of clear evidence of market failure.

This contribution develops a blueprint for a European fiscal union. We argue that a viable European fiscal union can be constructed without joint liability for public debt or a centralized government with a large common budget. Such a fiscal union should combine elements of market discipline with stabilisation in case of asymmetric shocks. Our proposal addresses the shortcomings of most other reform designs, which fail to offer a solution for insolvent or non-cooperative euro countries. We suggest a design which combines limited fiscal insurance with an orderly procedure to restructure the debt of insolvent member states. We show that fiscal insurance and a sovereign insolvency procedure are no contradiction but, on the contrary, are mutually reinforcing. Effective fiscal insurance helps to limit the stability risks involved in the implementation of an insolvency regime for sovereigns. And vice versa, a well-defined insolvency procedure reduces the risk that a fiscal capacity motivated as an insurance against transitory asymmetric shocks degenerates into a permanent transfer system. Moreover, we show that both elements promote the functioning of the European banking union and the new European fiscal governance.

Our public arrangements in this country for compensating unemployment (including the aggregate of federal and state legislation to that end) are quite properly referred to as an "insurance" program.' Study of the elements of coverage in an insurance policy will be found instructive, therefore, in the matter of eligibility and disqualification for unemployment benefits. A contract of insurance is designed to transfer certain defined risks from the insured to the insurer. The risks selected for this process in a particular policy will be described or stated affirmatively in its provisions. Certain exclusions from the risk may be specified for even greater precision in delineating the boundaries of the insured event--thus the process of inclusion and exclusion establishes the affirmative conditions of the insurer's liability and defines the insured event or, more precisely, the event insured against. Risks must be selected and defined to provide the subject matter for the operation of the agreement between the parties. In addition, the insurer will probably insert provisions designed to control or minimize the risk assumed.