László Andor, EU Commissioner for Employment, Social Affairs and Inclusion, set out his proposal in June in Berlin to share the burden of unemployment benefits among EU countries.
The plan is now "not far from the table" CDU politician and MEP Herbert Reul told Welt newspaper on Monday.
Andor claims that in a time of economic downturn this concept could stabilize and revive struggling economies.
He told the Welt on Monday that his plan would not replace countries' unemployment systems but would take over some core tasks.
EU member states would only share the costs for short-term unemployment benefits. The fund would pay 40 percent of the claimants' final wage for the first six months of unemployment, but after that point the national system would pay.
"Citizens would directly benefit from EU solidarity in times of hardship and member states would be required to upgrade their employment services and labour market institutions to the best EU standards," said Andor in June.
At a Lecture at the Hertie School of Governance he said: "There is no way around it," pointing out that EU countries used to help each other by devaluing their own currencies before the euro was introduced.
The Welt reported calculations from the Institute for Employment Research (IAB) which showed that had a similar benefit system existed between 2006 and 2011 it would have cost Germany €20 billion. The country would have funded nearly a third of European unemployment benefits. Spain would have been the main beneficiary.
Politician and economist Herbert Reul told the paper: "This is an attempt to shift certain responsibilities to the EU that shouldn't be shifted. EU unemployment insurance would cause a massive redistribution in Europe that Germany would largely co-finance."
But Andor denied claims that Germany would be the main provider for the insurance and it would only benefit southern EU countries.
He stated in June that everybody could benefit since "those countries which today enjoy higher levels of employment may consider themselves to be safe from the impact of financial crises".
The scheme would also provide a safety net. "The point is to maintain enough spending during a downturn before failed companies are turned around or replaced by new ones and before workers who lost their jobs can find new employment," Andor said.
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