Paris, November 22, 2007 Beyond negative integration: towards a EU-wide minimum guaranteed income scheme? Tito Boeri Università Bocconi and Fondazione Rodolfo Debenedetti

EU Constitutional Treaty New draft: reference to stronger co- ordination in the social policy area What does it mean? What should it mean? Can co-ordination help in dealing with the pressures coming from globalisation?

The pressures coming from globalisation Eurobarometer, 2001

Hourly gross wage: 0,50 Gross wage: 108,14 Taxes and contributions: 10,32 Meals 11,39 Net wage 83,92 The pay slip of Mr. Huan Guoj 200 hours per month

Globalisation increases the employment costs of redistribution E E w D0D0 D1D1 S

…unless there is increase in efficiency E E w D0D0 D1D1 D1D1 S

…or in labor supply E w S S1S1 D1D1 D0D0 E

Policies increasing labor supply Activation strategies –Job search assistance and tests –Job counselling –Controls and sanctions Financial Incentives –Employment Conditional Incentives (ECI) –Wage Subsidies for low-wage employees (or social security deductions) Selective migration

A EU-wide approach? No evidence of economies of scale in social protection Large differences in the size of redistributive policies and in values- preferences Policies decentralised: decided and implemented at national level …BUT immigration is different: it needs a strong co-ordination at supranational level!

Moreover problem of migration and welfare access % of respondents stating that minority groups exploit the system of social welfare EU 12 EU EU12EU 15

Migrants are over-represented among beneficiaries of several transfers.. Odds Ratios Pension Unemployment Benefits Family Allowances Sickness Benefits Education Allowances Social Assistance Housing Allowances Note: (M B /M) / (N B /N)

A EU-wide safety net? EU-wide minimum welfare floor (Atkinson (1998)) preventing a race to the bottom in non- contributory transfers The devil is in the details: need to harmonise in absolute levels, adjusted to PPP Costs (not too large actually: MGI at 430 Euros for singles costs about 30 billion, ½ of the CAP) If provided as citizenship right, necessary to coordinate migration policies as well.

Back to the Constitutional Treaty Case for allocating tasks to supra- national authorities in presence of important spillover effects Migration is a case in point Activation and ECIs should be carried out at the national level; experimentation. Open method of co-ordination

Summarising We need co-ompetition across social policy systems. Learning from experiments in policies mobilising labour supply. Coordination in migration policies. and a European social welfare minima like a citizenship income