“Old” Europe is suddenly the new new thing.

Deepening gloom about the recession and job market is opening up debate in America about whether European-style employment and social welfare programs may prove to be a vital part of a healthy economy for employees and employers alike.

The sturdy safety net of universal health care, generous unemployment benefits and relatively secure pensions often has been derided as anti-entrepreneurial and part of the reason for Europe’s relatively high unemployment.

Indeed, those benefits and strong job protections may have played a role in high jobless rates in European nations such as Germany.

But now it appears ample jobless benefits and the like are cushioning the blow of the global recession. Government-provided health care helps prevent public panic around layoffs in Europe. And unemployment benefits that can cover 70 percent of net earnings or more for years at a time fuel continued consumer spending.

With the stimulus plan passed earlier this year, the U.S. took some steps in Europe’s direction. A COBRA subsidy makes it much easier to maintain health insurance after losing a job, and states were encouraged to loosen eligibility rules for unemployment insurance. In addition, jobless benefits were bolstered by $25 a week and the extended unemployment benefits program—which provides up to 33 weeks of additional benefits—was continued through 2009.
 
Even so, U.S. workers still face the prospect of running out of jobless benefits after about a year. And despite the $25-per-week boost, U.S. unemployment insurance checks are paltry: The average weekly benefit in 2007 was $288, or just 34 percent of the average weekly wage.

What’s more, many out-of-work Americans don’t receive unemployment benefits.

Amid evidence of increased employer aggressiveness in challenging jobless-benefit claims, the rate of recipiency—which captures the percentage of unemployed people who have qualified for and are claiming benefits—was 45 percent in the third quarter of last year when considering all unemployment insurance programs.

The stimulus act’s eligibility reforms should bring that number up. But all the insecurity built into the U.S. economy has already pushed people into their shells. Americans have been spending less at a time when companies need their business.

Better benefits for those out of work in Europe may help explain why economic contraction in the European Union in the fourth quarter of 2008 was not quite as severe as the shrinking in the United States.

Also finding its way into the spotlight is a German program to preserve jobs through reduced hours and wages. Similar “work sharing” programs in the U.S., where businesses can cut employee hours and pay but government helps make up the difference, exist in just a minority of states. But those programs are getting more attention, as is the idea of a tax credit for paid time off.

European countries also have been lowering payroll tax rates, another intriguing idea for battling the recession.

Critics who claim Europe should invest in larger stimulus programs—closer to the scale of the U.S. effort—may have a point. But it seems clear we, too, have some lessons to learn from our friends across the pond. “Old” Europe could help a sluggish America put a spring back in its step.