Support for the unemployed has always been a small fraction of total social expenditure in European countries, but has nonetheless been the focus of much of the political controversy around the ‘European social model’. This chapter describes the key similarities and differences in the systems of unemployment compensation and other labour market policies that developed in Europe in the immediate post-war decades. It analyses the political and institutional factors that shaped their very different fates when confronted with new pressures and challenges generated by socio-economic changes and intellectual challenges from the 1970s onwards. The chapter goes on to discuss the gradual emergence in recent years of a shared new labour market policy paradigm in Europe, in part due to the growing agenda-setting and policy coordination role of the European Union in this area. It concludes by assessing the future of labour market policy in Europe in the light of the fallout from the financial and economic crisis.