# Official Journal C 120/14 A

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 120 |
| | |
| English edition | Information and Notices | Volume 6314 April 2020 |

ISSN 1977-091X

Official Journal

of the European Union

C 120

English edition

Information and Notices

Volume 6314 April 2020

---

| Contents | page |
| --- | --- |
| | III   Preparatory acts |
| | European Economic and Social Committee |
| | 550th EESC plenary session, 19.2.2020–20.2.2020 |
| 2020/C 120/01 | Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Strategy 2020(COM(2019) 650 final) | 1 |
| 2020/C 120/02 | Opinion of the European Economic and Social Committee on Recommendation for a Council recommendation on the economic policy of the euro area(COM(2019) 652 final) | 7 |

Contents

page

III   Preparatory acts

European Economic and Social Committee

550th EESC plenary session, 19.2.2020–20.2.2020

2020/C 120/01

Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Strategy 2020(COM(2019) 650 final)

(COM(2019) 650 final)

1

2020/C 120/02

Opinion of the European Economic and Social Committee on Recommendation for a Council recommendation on the economic policy of the euro area(COM(2019) 652 final)

(COM(2019) 652 final)

7

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| EN | |
| --- | --- |

EN

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III Preparatory acts

European Economic and Social Committee

550th EESC plenary session, 19.2.2020–20.2.2020

| 14.4.2020 | EN | Official Journal of the European Union | C 120/1 |
| --- | --- | --- | --- |

14.4.2020

EN

Official Journal of the European Union

C 120/1

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Opinion of the European Economic and Social Committee on ‘Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Strategy 2020’

(COM(2019) 650 final)

(2020/C 120/01)

| Rapporteur: | Tommaso DI FAZIO |
| --- | --- |

Rapporteur:

Tommaso DI FAZIO

| Referral | European Commission, 6.2.2020 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 4.2.2020 |
| Adopted in plenary | 19.2.2020 |
| Plenary session No | 550 |
| Outcome of vote
  (for/against/abstentions) | 120/1/3 |

Referral

European Commission, 6.2.2020

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

4.2.2020

Adopted in plenary

19.2.2020

Plenary session No

550

Outcome of vote

(for/against/abstentions)

120/1/3

1.   Conclusions and recommendations

| 1.1. | The EESC welcomes the approach taken by the annual growth strategy for 2020, based on the four key pillars that are the environment, productivity, stability and fairness. It considers in particular that the goal of environmental sustainability represents, as quite rightly pointed out in the strategy, a compass point on which to align the decisions and steps taken by society as a whole, together with the means which it is able and willing to deploy in order to work effectively towards achieving the 2030 targets and climate neutrality. In this regard, the EESC recommends allowing these targets to be brought forward whenever indicators of environmental deterioration make this necessary. |
| --- | --- |

1.1.

| 1.2. | The EESC welcomes the inclusion of the United Nations’ 2030 Sustainable Development Goals (SDG) in the Commission’s strategic vision for all economic and employment policies, contributing to a European social market economy that works for all and ensuring the sustainability, inclusiveness and competitiveness of growth. |
| --- | --- |

1.2.

| 1.3. | The EESC is convinced that sustainability is a key component of any successful strategy for competitiveness, and that Europe should enhance its economic drivers to this end, boosting its global position as an innovator, based on the circular economy model and on the transition to new sustainable development paradigms. This will create the next generation of trade opportunities, steered by demand for sustainable solutions. |
| --- | --- |

1.3.

| 1.4. | The EESC welcomes the announced change in the annual strategy, moving away from the current thinking that focuses on programming and short- and medium-term objectives to finally make provision for long-term strategies. This is made necessary by the investment needed to implement the environmental sustainability strategy by means of complex, integrated energy and climate plans drawn up by the Member States and approved by the Commission. |
| --- | --- |

1.4.

| 1.5. | The EESC urges the Commission to ensure that this strategic vision incorporates the need for rapid development of smart, interoperative infrastructure networks, both physical and intangible, as these are essential to achieving and developing a single European market that is well-equipped and cohesive, in order to ensure harmonious, fair and inclusive growth. |
| --- | --- |

1.5.

| 1.6. | The EESC agrees with the indications made in the annual strategy concerning investment in the intangible sectors of education, training and skills development, as it sees them as absolutely crucial and decisive. These are long- and very long-term investments to enhance society, its culture and its global competitiveness. |
| --- | --- |

1.6.

| 1.7. | The EESC strongly supports the aim of boosting research and innovation and of increasing the funds earmarked for them — these are long-term strategic investments for the competitiveness of the EU as a whole at international level. This applies in particular in sectors marked by modernisation and replacement with clean technologies in the energy, transport and building heating and cooling sectors, as in all industrial sectors. It also applies to agriculture and services, through the increasingly widespread use of innovative technologies, especially digital, artificial intelligence and 5G technology. |
| --- | --- |

1.7.

| 1.8. | The EESC regrets that the Communication from the Commission gives little space to the annual report on growth in the Union, simply stating that ‘[t]he near-term economic outlook is overshadowed by a much less supportive economic and geopolitical environment and high uncertainty’ and that ‘investment and potential growth, however, still remain below pre-crisis levels’. An acrimonious Brexit process could also have an impact on this situation. In the EESC’s view, the greatest priority of all is to restore sustainable growth, above all in the weakest countries and regions, with a strong increase in European GDP in order to generate prosperity and the wealth that is crucial to supporting the strategy. |
| --- | --- |

1.8.

| 1.9. | The EESC approves each of the strategic indications put forward to boost growth and shape the 2020 European Semester. It also agrees with the key issues identified in terms of achieving each of the objectives, in particular the investment needed to implementing the environmental programmes which, under the current Stability Pact and its strict rules, could complicate uniform application of the plans for energy and climate in the Member States. It may readily be ascertained that the environmental recovery targets are met only by the EU countries that comply with or exceed the Stability Pact’s requirements. This hampers efforts to achieve the aim that the EU must meet in full, while obtaining a partial result for the entire planet, and moving away from the ambition for the EU as a whole to serve as a benchmark for the other countries of the world. |
| --- | --- |

1.9.

| 1.10. | The EESC hopes that measures governing investment will be studied and adopted and that they will, while taking account of the constraints of the Stability Pact — or by way of exception from them and from the State aid rules — enable all countries to invest the amounts needed to meet their own objectives set in the integrated energy and climate plans approved by the Commission. |
| --- | --- |

1.10.

| 1.11. | The EESC welcomes the proposal set out in the 2020 growth strategy to make use of every means and financial leverage that is already available through the current instruments under the 2021–2027 multiannual financial framework. This proposal was made public in a presentation at the European Parliament on 15 January 2020. It also hopes, however, that the financial means will be increased where there is needed to meet the objectives. |
| --- | --- |

1.11.

| 1.12. | The EESC calls for effective and proactive monitoring by the Commission of the results to be achieved by the Member States on the basis of the agreed energy and climate plans, fostering efforts to help resolve financial and methodological problems rather than apportioning blame. |
| --- | --- |

1.12.

| 1.13. | The EESC agrees on the need to strengthen the stability and resilience of the financial system and tighten the rules governing the financial markets in order to reinforce the international role of the European currency and to take precautions against any future crises that may emerge elsewhere in the world and have an impact on Europe as a result of globalisation. This can be done by beefing up macro prudential rules and other measures aimed at safeguarding the financial stability of the Member States. In addition to the ongoing process of completing the Banking and Capital Markets Unions, the upcoming strategic review of the ECB (1) monetary policy should focus more specifically on fostering economic growth in the euro area and strengthening the international role of the euro. |
| --- | --- |

1.13.

| 1.14. | The EESC highlights the importance of keeping the well-being of people at the heart of the 2020 growth strategy, by preserving and strengthening the social advances that make the EU a world leader. |
| --- | --- |

1.14.

| 1.15. | Regarding the fundamental Pillar of Social Rights, the EESC welcomes the fact that these social rights are highlighted in the 2020 growth strategy. The EESC hopes that, among the objectives of the European Semester, special attention will be given to the gender issue, particularly concerning women’s rights at work, the achievement of pay parity, employment protection for mothers — not least to counter the negative demographic trend — and the introduction of significant enhancements to legislation protecting the family. These should include improvements to parental leave for fathers and the creation of a work environment that prevents all forms of physical or psychological violence against women. In terms of gender equality, divorce legislation should also be applied consistently and fairly to ensure that both spouses enjoy equal rights with regard to their children. |
| --- | --- |

1.15.

| 1.16. | The EESC considers that the EU should strengthen its international position in order to safeguard its prosperity, security and the values on which it is founded, taking on a global leadership role, backed by full, convinced and consistent achievement of the United Nations’ SDGs and by a rules-based multilateral world order. This should revolve around the UN itself, vigorously upholding the principles of democracy and planetary conservation, the rule of law and fundamental rights. |
| --- | --- |

1.16.

| 1.17. | The EESC is convinced that completing a single market that is well-equipped and cohesive, focusing on the needs of individuals and businesses, can make a key contribution to growth if it focuses on people and businesses, and must be at the heart of harmonious and inclusive European integration that is revitalised, up-to-date and in keeping with the new technologies and infrastructure of a fully interoperable digital single market. In the European Green Deal transition, particular emphasis would be attached to the role of the people-centred enterprise model, such as social economy enterprises. |
| --- | --- |

1.17.

| 1.18. | The EESC believes that more robust single market governance infrastructure needs to be put in place at EU and national level, together with thorough-going administrative simplification, an ambitious process of digitalisation and intensive capacity-building initiatives for all stakeholders. |
| --- | --- |

1.18.

| 1.19. | The EESC considers that turning the proposed strategic vision into reality may run up against risks and resistance if there are no governance mechanisms capable of actively involving citizens and businesses alongside public and private actors at local and regional level, in a bottom-up process than can give voice and weight to practical grassroots demands and problems. |
| --- | --- |

1.19.

| 1.20. | The EESC consequently advocates new governance structures across a range of levels that can ensure the involvement of the local economy and civil society in designing and implementing fair measures that reflect the circumstances in which they operate. |
| --- | --- |

1.20.

2.   The Annual Sustainable Growth Strategy 2020 proposed by the Commission

| 2.1. | The call for a new, long-term and comprehensive sustainable and inclusive growth strategy for the future of Europe — backed by a comprehensive action plan to achieve the SDGs by 2030 — that covers all aspects having an impact on European society and citizens, on the businesses and environment in which they operate, and on industry and its competitiveness, from investment and public procurement to trade, skills, innovation and support for small- and medium-sized enterprises (SMEs), seems now to be shared by all. |
| --- | --- |

2.1.

| 2.2. | With the annual EU growth report, the EU Member States should take account of the priorities that the Commission lays down in it, when they are drawing up their national policies and strategies that will be come together in the respective stability or convergence programmes and in the national reform programmes. |
| --- | --- |

2.2.

| 2.3. | The Communication on the Annual Sustainable Growth Strategy 2020 (2) seeks to represent the Commission’s point of view on the political priorities that the Member States should take into consideration when framing their economic policies for 2020, and entails mainstreaming the United Nations’ 2030 SDGs into all European policies, and in particular:






  — | environmental sustainability, productivity gains, fairness and macroeconomic stability underpinning a new paradigm for EU economic policy in the years to come, |
| --- | --- | --- |

2.3.

—

environmental sustainability, productivity gains, fairness and macroeconomic stability underpinning a new paradigm for EU economic policy in the years to come,

| — | the need to develop this new growth paradigm in such a way as to effectively address the long-term challenges transforming European society, |
| --- | --- |

—

the need to develop this new growth paradigm in such a way as to effectively address the long-term challenges transforming European society,

| — | the establishment of European political and economic leadership at global level, based on the new paradigm as a spur for potential growth, |
| --- | --- |

—

the establishment of European political and economic leadership at global level, based on the new paradigm as a spur for potential growth,

| — | short and long-term balancing of the costs and benefits of these policies and of structural reforms: sharing of benefits and minimal costs for the more vulnerable groups of citizens, |
| --- | --- |

—

short and long-term balancing of the costs and benefits of these policies and of structural reforms: sharing of benefits and minimal costs for the more vulnerable groups of citizens,

| — | significant public and private investments to maximise synergies between the various policy goals outlined, in part to ‘invest record amounts in cutting-edge research and innovation’ and in training, and more specifically, to ‘achiev[e] the existing 2030 climate and energy targets’, |
| --- | --- |

—

significant public and private investments to maximise synergies between the various policy goals outlined, in part to ‘invest record amounts in cutting-edge research and innovation’ and in training, and more specifically, to ‘achiev[e] the existing 2030 climate and energy targets’,

| — | optimisation of the key factor of the EU budget for 2021–2027 to bring these political ambitions to life: ‘building on existing and new mechanisms, a Sustainable Europe Investment Plan will deliver investments necessary to deliver on the European Green Deal’ and ‘a Just Transition Mechanism will deal with the most affected regions and ensure no one is left behind’, |
| --- | --- |

—

optimisation of the key factor of the EU budget for 2021–2027 to bring these political ambitions to life: ‘building on existing and new mechanisms, a Sustainable Europe Investment Plan will deliver investments necessary to deliver on the European Green Deal’ and ‘a Just Transition Mechanism will deal with the most affected regions and ensure no one is left behind’,

| — | strengthened economic governance and democratic accountability must go hand in hand: enhanced democratic accountability of the European Semester and, more broadly, the Commission’s intention to continue the dialogue with the Member States and to invite them to involve national parliaments, social partners and all other relevant stakeholders. |
| --- | --- |

—

strengthened economic governance and democratic accountability must go hand in hand: enhanced democratic accountability of the European Semester and, more broadly, the Commission’s intention to continue the dialogue with the Member States and to invite them to involve national parliaments, social partners and all other relevant stakeholders.

| 2.4. | The EU and the Member States should now turn these into a strategy and a series of practical measures. If sustainability is to be a cornerstone of policy and action, the European institutions, the Member States and the regions must assemble a range of tools enabling all citizens to take part, at the same time enhancing the quality of life and the competitiveness of the EU economy. |
| --- | --- |

2.4.

| 2.5. | In its resolution of 30 October 2019, the EESC drew attention to the need to ‘act at all levels simultaneously and create a dynamic of action to address urgent economic, social and environmental challenges’ (3), calling for an overarching EU strategy on sustainability in order to implement the UN 2030 Agenda (4). |
| --- | --- |

2.5.

| 2.6. | In the resolution, the EESC also pointed out that ‘this paradigm shift requires:






  — | changes in governance, i.e. dedicated governance mechanisms are needed to address urgent problems faster and tackle complex issues. The role of such mechanisms would be to link the EU and the Member State levels, not to replace action at either, |
| --- | --- | --- |

2.6.

—

changes in governance, i.e. dedicated governance mechanisms are needed to address urgent problems faster and tackle complex issues. The role of such mechanisms would be to link the EU and the Member State levels, not to replace action at either,

| — | integrating the SDGs into the EU’s economic and social monitoring and budgeting processes’, |
| --- | --- |

—

integrating the SDGs into the EU’s economic and social monitoring and budgeting processes’,

| — | equipping the European Semester with ‘new, improved, measurable and complementary social, economic and environmental indicators to monitor and keep track of all aspects of the European Pillar of Social Rights and its principles as well as the 17 SDGs’. |
| --- | --- |

—

equipping the European Semester with ‘new, improved, measurable and complementary social, economic and environmental indicators to monitor and keep track of all aspects of the European Pillar of Social Rights and its principles as well as the 17 SDGs’.

| 2.7. | Sustainability is a key component of any successful strategy for competitiveness, and Europe should enhance its economic drivers to this end, boosting its global position as an innovator, based on the circular economy model and creating the next generation of trade opportunities, steered by demand for sustainable solutions. Robust growth in market demand for sustainable solutions requires consistency between policy objectives that are geared to sustainability. |
| --- | --- |

2.7.

| 2.8. | In its additional opinion on the Annual Growth Survey 2019 (5), the EESC emphasised:






  — | the need to increase public and private investment, especially in social and educational infrastructure, |
| --- | --- | --- |

2.8.

—

the need to increase public and private investment, especially in social and educational infrastructure,

| — | alignment with the UN’s Sustainable Development Goals for 2030 and the plan for energy transition and the climate, |
| --- | --- |

—

alignment with the UN’s Sustainable Development Goals for 2030 and the plan for energy transition and the climate,

| — | stepping up structural reforms, in particular regarding structural imbalances and current account surpluses, |
| --- | --- |

—

stepping up structural reforms, in particular regarding structural imbalances and current account surpluses,

| — | the use of funds for physical, digital and environmental investment, and for developing skills and qualifications, |
| --- | --- |

—

the use of funds for physical, digital and environmental investment, and for developing skills and qualifications,

| — | the central role of upholding the social rights to be included in the European Semester on an equal footing with the macroeconomic and fiscal goals, |
| --- | --- |

—

the central role of upholding the social rights to be included in the European Semester on an equal footing with the macroeconomic and fiscal goals,

| — | taxation to favour productive investment and spending in the real economy, |
| --- | --- |

—

taxation to favour productive investment and spending in the real economy,

| — | consultation of the social partners at various stages during the European Semester, |
| --- | --- |

—

consultation of the social partners at various stages during the European Semester,

| — | the exclusion from privatisation of assets of strategic importance. |
| --- | --- |

—

the exclusion from privatisation of assets of strategic importance.

| 2.9. | On the macroeconomic level, ‘there is a clear need for a new European economic strategy: a positive narrative for the future development of the EU economy in the wider world that would help increase the resilience of the EU to economic shocks and the sustainability — economic, social and environmental — of its economic model, thus bringing back confidence, stability and shared prosperity to all Europeans’ (6). |
| --- | --- |

2.9.

| 2.10. | There is a need for ‘sustainable and inclusive growth, reducing inequalities, upward convergence, ensuring productivity growth and competitiveness in line with the Europe 2020 objectives, a business- and investment-friendly environment, quality jobs and adequate pay, combating poverty and social exclusion, stable and sustainable public finances, a stable financial sector, and achieving the 2030 sustainable development goals (SDGs) and the goals of the Paris climate agreement’ (7). |
| --- | --- |

2.10.

| 2.11. | Believing that a realistic future for the EU can only be based on marrying a sound economic basis with a strong social dimension (8), the EESC ‘has consistently advocated upward convergence and a more effective social policy at both EU and Member State levels’ (9), with ‘a clear and coordinated roadmap setting priorities for the implementation of the Pillar and the enforcement of existing social rights and standards’. ‘A new European Semester process should achieve social objectives in the framework of a social imbalance monitoring and new, measurable indicators should be introduced, together with targeted Country Specific Recommendations’ (10). |
| --- | --- |

2.11.

| 2.12. | As part of efforts to strengthen the single market, encouragement should be given to ‘the creation of a framework that is suited to the development of a range of types of businesses that are ready to meet the challenges facing society’. ‘[T]he different types of business must be brought together and integrated with one another. However, each of these areas requires dedicated attention in terms of legislative measures and public investment’, rejecting a ‘one size fits all’ approach (11). |
| --- | --- |

2.12.

| 2.13. | The EESC has underlined that ‘[t]he changes to productive processes and to the economy in general brought about by the new technologies, artificial intelligence and big data will also radically change the labour market’ and that it is important that ‘these changes take place in the context of constructive social dialogue and with due respect for workers’ rights and quality of life’ (12). |
| --- | --- |

2.13.

3.   General comments

| 3.1. | The highest priority for the EESC is to recommend strengthening sustainable economic growth. This will create new and lasting jobs and generate the wealth needed to support investment to speed up the growth of overall productivity of circular economy factors, and to step up structural reforms in favour of better governance and greater accountability, especially in the digital and environmental spheres, and in favour of the development of skills and qualifications and the defence of the social rights necessary under the new European Green Deal paradigm. |
| --- | --- |

3.1.

| 3.2. | The shift to a new development model must be based on competitive sustainability as the main pillar of a successful European social market economy. This sustainability should in the future remain a guiding principle, provided it shields people and regions from the costs of changes that will inevitably occur, by means of investment in effective, integrated social protection systems. |
| --- | --- |

3.2.

| 3.3. | The financial crisis highlighted the importance of stable and integrated capital and financial markets, on which fragmentation continues to hamper the growth of businesses and investment: further measures need to be taken, particularly in the financial sector, to restore market confidence and trust in all the Member States. |
| --- | --- |

3.3.

| 3.4. | The EU needs a new economic strategy that promotes constant, inclusive and sustainable economic growth and provides full and productive employment with decent work for all. The EESC is convinced that completing a single market that is well-equipped and cohesive, focusing on the needs of individuals and businesses, must be at the heart of harmonious and inclusive European integration that is revitalised, up-to-date and in keeping with the new technologies and infrastructure of a fully interoperable digital single market. In the European Green Deal transition, particular emphasis would be attached to the role of the people-centred enterprise model, such as social economy enterprises. |
| --- | --- |

3.4.

| 3.5. | Alongside thorough-going administrative simplification, an ambitious process of digitalisation and intensive capacity-building initiatives for all stakeholders, the EESC considers it necessary to put in place more robust single market governance infrastructure at EU and national level. This would entail the proactive involvement of citizens, consumers and businesses, to develop simplified, user-friendly designs and timely, transparent and efficient implementation and application of the single market rules as a basis for a successful transition to a digital, efficient, balanced and sustainable EU in economic, environmental and social terms. |
| --- | --- |

3.5.

| 3.6. | The Committee would draw attention to its earlier views on the need to ‘clos[e] the infrastructure, regional and cultural digital divide as soon as possible, as it now acts as a brake on the EU’s economic and social development and a source of inequality in the living conditions and opportunities for individuals and businesses’ (13). |
| --- | --- |

3.6.

| 3.7. | The EESC considers that, without new governance mechanisms capable of actively involving citizens and businesses alongside public and private actors at local and regional level in a bottom-up process that can give voice and weight to practical grassroots demands and problems, turning the proposed strategic vision into reality may run up against risks and resistance. This could slow down the process of implementation: the EESC recommends that the European and national institutions introduce new governance structures that can ensure the active involvement of the local economy and civil society in designing and implementing fair measures that reflect the circumstances in which they operate. |
| --- | --- |

3.7.

Brussels, 19 February 2020.

The President of the European Economic and Social Committee

Luca JAHIER

---

(1)  Introductory statement, press conference, Christine Lagarde, President of the ECB, 12 December 2019.

1

(2)  Annual Sustainable Growth Strategy 2020 (COM(2019) 650 final).

2

(3)  EESC resolution on the Reflection Paper The European Economic and Social Committee’s contribution to the 2020 Commission’s work programme and beyond (OJ C 47, 11.2.2020, p. 1).

3

The European Economic and Social Committee’s contribution to the 2020 Commission’s work programme and beyond

(4)  Transforming our World: The 2030 Agenda for Sustainable Development.

4

Transforming our World: The 2030 Agenda for Sustainable Development

(5)  OJ C 190, 5.6.2019, p. 24.

5

(6)  EESC opinion of 17 July 2019 on Towards a more resilient and sustainable European economy (OJ C 353, 18.10.2019, p. 23).

6

Towards a more resilient and sustainable European economy

(7)  EESC opinion of 17 July 2019 on A new vision for completing the Economic and Monetary Union (OJ C 353, 18.10.2019, p. 32).

7

A new vision for completing the Economic and Monetary Union

(8)  EESC opinion of 19 October 2017 on the Impact of the social dimension and the EPSR on the future of the EU (OJ C 81, 2.3.2018, p.145). points 1.2 and 2.2.

8

Impact of the social dimension and the EPSR on the future of the EU

(9)  E.g. in the following opinions on: Principles for effective and reliable welfare provision systems (OJ C 13, 15.1.2016, p. 40); Impact of the social dimension and the EPSR on the future of the EU (OJ C 81, 2.3.2018, p. 145); and the Proposal for a Council Recommendation on access to social protection for workers and the self-employed (OJ C 440, 6.12.2018, p. 135).

9

Principles for effective and reliable welfare provision systems

Impact of the social dimension and the EPSR on the future of the EU

Proposal for a Council Recommendation on access to social protection for workers and the self-employed

(10)  EESC opinion of 25 September 2019 on The European Pillar of Social Rights — evaluation of the initial implementation and recommendations for the future (OJ C 14, 15.1.2020, p. 1).

10

The European Pillar of Social Rights — evaluation of the initial implementation and recommendations for the future

(11)  EESC opinion of 17 July 2019 on Fostering an entrepreneurship and innovation-friendly single market (OJ C 353, 18.10.2019, p. 6), points 1.3 and 1.5.

11

Fostering an entrepreneurship and innovation-friendly single market

(12)  EESC opinion of 17 July 2019 on Fostering an entrepreneurship and innovation-friendly single market (OJ C 353, 18.10.2019, p. 6), points 1.3 and 1.5.

12

Fostering an entrepreneurship and innovation-friendly single market

(13)  EESC opinion of 18 October 2017 on the Digital Single Market/Mid-term review (OJ C 81, 2.3.2018, p. 102), point 1.8.

13

Digital Single Market/Mid-term review

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| 14.4.2020 | EN | Official Journal of the European Union | C 120/7 |
| --- | --- | --- | --- |

14.4.2020

EN

Official Journal of the European Union

C 120/7

---

Opinion of the European Economic and Social Committee on ‘Recommendation for a Council recommendation on the economic policy of the euro area’

(COM(2019) 652 final)

(2020/C 120/02)

| Rapporteur: | Petr ZAHRADNÍK |
| --- | --- |

Rapporteur:

Petr ZAHRADNÍK

| Consultation | European Commission, 6.2.2020 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Section responsible | Economic and Monetary Union and Economic and Social Cohesion |
| Adopted in section | 4.2.2020 |
| Adopted at plenary | 19.2.2020 |
| Plenary session No | 550 |
| Outcome of vote
  (for/against/abstentions) | 129/10/17 |

Consultation

European Commission, 6.2.2020

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Section responsible

Economic and Monetary Union and Economic and Social Cohesion

Adopted in section

4.2.2020

Adopted at plenary

19.2.2020

Plenary session No

550

Outcome of vote

(for/against/abstentions)

129/10/17

1.   Conclusions and recommendations

| 1.1. | The EESC is concerned to note the euro area’s economic downturn and the gradual end to a fall in unemployment, wedded to the persistent higher incidence of risk factors affecting economic performance. |
| --- | --- |

1.1.

| 1.2. | However, it is the European Green Deal that the EESC sees as the backbone of the future EU and euro-area economic configuration — the potential start of a fundamental change and a turning point. Much will depend on how we deal with this change. If managed successfully, it could move Europe up a gear economically and socially; if not, its failure could fatally jeopardise the integrity of the EU. |
| --- | --- |

1.2.

| 1.3. | An important marker of economic development — from both the traditional perspective and that of new elements in the European Green Deal — are the enduring geographical disparity and differences within the EU, which remain despite some relatively successful convergence over the past few years. |
| --- | --- |

1.3.

| 1.4. | The EESC endorses the view that the European Green Deal could provide a platform for promoting common European added value, which is needed to help and expedite convergence. |
| --- | --- |

1.4.

| 1.5. | The EESC notes that, notwithstanding persistent risk factors, particularly in some Member States, improvements have been seen in the state, stability and functioning of the financial sector in the euro area. |
| --- | --- |

1.5.

| 1.6. | The EESC is convinced that the structural reforms and investments required by the European Green Deal could do much to further the economic prosperity of the euro area, including of those Member States whose growth potential is currently below average. This could help convergence within the euro area and the EU as a whole. |
| --- | --- |

1.6.

| 1.7. | The EESC points out, as a matter of urgency, that meeting the European Green Deal goals will necessitate a healthy injection of funding, not all of which has yet been secured. In particular, we are concerned about the shortfall in proposed funding for the Just Transition Fund and Mechanism. National public and private resources will have to be enlisted and the mechanism provided for these to be allocated to meet the Green Deal goals. |
| --- | --- |

1.7.

| 1.8. | The EESC stresses the continuing need for a cautiously aggressive fiscal policy in the coming period, especially with a view to the expected economic slowdown, while at the same time ensuring a balanced interplay between economic policy and the pillars on which the EMU is based. Adopting the ‘golden rule’ for public investment would help to achieve these goals. |
| --- | --- |

1.8.

| 1.9. | The EESC recommends that greater attention be given to tailoring the tax system to future needs, in terms both of encouraging more environmentally friendly behaviour from consumers and producers and of ensuring fair taxation that avoids exacerbating discrepancies in the level of income and wealth, as well as using legal requirements to prevent tax fraud, evasion and avoidance. |
| --- | --- |

1.9.

| 1.10. | The EESC points out the need to strike the right balance between enabling financial innovation and setting rules for financial market supervision and regulation at a time when new kinds of financial platform are proliferating apace. The Committee points out the high importance of ensuring financial market stability. The Committee has, in fact, repeatedly drawn attention to hold-ups in implementing the remaining key elements that are essential to completion of the financial union. |
| --- | --- |

1.10.

2.   Background

| 2.1. | The performance of the euro area’s economy is slowing down, unemployment has ceased to decline and, despite moderate growth, inflation remains low and below the inflation target. |
| --- | --- |

2.1.

| 2.2. | The outlook for 2020 is associated with a higher incidence of risk factors and the resulting uncertainties. These risks may result in a longer period of weak growth and low inflation and wage growth and increasing income inequality over the coming years, unless there is a strong upturn in investment, especially in high-productivity sectors in which the euro area and the EU can compete globally. |
| --- | --- |

2.2.

| 2.3. | Despite a favourable labour market, there was only a slow, moderate increase in real wages of below 1 % in 2018 and 2019 — and even this remains very unevenly spread, with an imbalance in wealth distribution. In many cases, indeed, wage inequalities have risen, with real wages in some countries still lower than 10 years ago. This helps swell the ranks of the working poor — those who find it difficult, despite being in work, to surmount the poverty threshold or who are at risk of social exclusion. Increasing real wages and cutting poverty are important in raising living standards and private consumption, with the benefits this has for production and growth. |
| --- | --- |

2.3.

| 2.4. | The large current account surplus has decreased and the gap between the deficit and surplus Member States has narrowed slightly, primarily on account of weakening external demand. However, some Member States still have excessive surpluses. Measures to reduce them — through investments and wages — would help reverse the weak growth of the euro area. |
| --- | --- |

2.4.

| 2.5. | The European Green Deal represents a fundamentally new element; it is perceived as a long-term opportunity that could already have an impact on sustainable economic growth in the short term. In the short and medium term, however, it will entail huge financial costs. Hugely important, too, will be the new instruments proposed: the Sustainable Europe Investment Plan and the Just Transition Fund. |
| --- | --- |

2.5.

| 2.6. | The asymmetries in the euro area’s economic development remain a challenge, caused by both the profound effects of the previous economic crisis and the diversity of structural problems in individual Member State economies, which prevent the economic potential in each Member State from being fully achieved. These asymmetries also lead to serious social consequences, in particular persistent poverty and social exclusion. Although there are currently about five million fewer people affected by these issues compared to 2012, the EESC is still entitled to ask whether, given the expected economic slowdown, there is a risk that this situation will recur, and whether the EU and the Member States are now better prepared to face this threat. |
| --- | --- |

2.6.

| 2.7. | The situation, stability and functioning of the financial sector in the euro area have improved considerably since the crisis, yet risks persist and there are still areas that do not enjoy full health, particularly in the case of certain national financial systems. |
| --- | --- |

2.7.

3.   General comments

| 3.1. | The EESC notes that although the euro area is still in a period of economic growth, this is starting to weaken. At this stage, it is important to recognise that the EMU is based on a monetary and financial pillar, an economic pillar, a social pillar and a political pillar. In line with its previous opinions (1), the EESC recommends making sure these pillars are evenly balanced; neglecting or upsetting this balance could trigger dangerous disparities. |
| --- | --- |

3.1.

| 3.2. | Nevertheless, the EESC feels that the European Green Deal can be seen as a fundamental parameter for the implementation of necessary structural reforms and deployment of the investment these entail. A symbiosis of the European Green Deal and structural reforms can significantly strengthen the conditions for long-term sustainable economic growth and eliminate negative social and environmental externalities along with certain other market failures — provided the UN’s Sustainable Development Goals and the principles of the European Pillar of Social Rights are respected. |
| --- | --- |

3.2.

| 3.3. | The EESC believes that these reforms are particularly important for those Member States whose growth potential is well below the euro area average. Robust investments targeted at productive sectors will enable them to bridge this gap in the coming decade. |
| --- | --- |

3.3.

| 3.4. | The EESC strongly emphasises the importance of bearing in mind that without adequate and sustainable investments the euro area risks entering into a longer period of low potential growth and productivity, low wages, growing inequalities and unpredictable inflation. |
| --- | --- |

3.4.

| 3.5. | The EESC notes that in the coming period the euro area will need to demonstrate a greater degree of accountability and sensitivity with regard to the impact of the economy on climate change. The scope and intensity of climate change currently constitute one of the most significant global systemic risks, which are known and well recognised. |
| --- | --- |

3.5.

| 3.6. | The EESC believes that 2020 will most likely be a turning point, with a shift in the economic paradigm leading to the integration of environmental criteria that will form part of market decision-making. This will have far-reaching consequences far beyond 2020. This turning point is seen as crucial not only in terms of how the economic system operates, but also in terms of what economic policy is expected to deliver. The EESC warns that if this pivotal phase is mismanaged, the impact on the whole EU project could be extremely damaging. A consensus on this is therefore absolutely crucial and must be reached between a whole range of parties: between the European Commission and the Member States, for example, and between Member States themselves. This involves respecting marked regional differences and differences between the interests of various sections of civil society, and so on. |
| --- | --- |

3.6.

| 3.7. | The EESC therefore sees the European Green Deal and the main instruments implementing it — above all the Sustainable Europe Investment Plan and the Just Transition Fund — as an opportunity to respond to the challenges and needs that have arisen; its implementation will be an important test as to whether the interests of euro area members and the EU as a whole are coherent. In that regard, the Member States must not only defend their own needs, but also respect the needs of the other Members and seek a common position that will benefit everyone. This must involve taking account of the impact on individual segments of society, including by ensuring a fair distribution of the costs and benefits of climate policy between and within Member States. |
| --- | --- |

3.7.

| 3.8. | The EESC draws attention to the fact that, given the huge challenge presented by the European Green Deal, the common resources available in the EU budget will no doubt be totally inadequate. It is therefore imperative to consider a new framework for financing common EU strategic needs that will also involve national public and private funds in this process. The EESC adds that opportunities for allocating these resources exist not only in exclusively ‘green areas’ but also in areas that can make a significant contribution to achieving the aims of the European Green Deal, such as digital transformation, the development of network industries, and smart and sustainable transport infrastructure. |
| --- | --- |

3.8.

| 3.9. | The EESC considers it essential that the investment strategies of both the euro area and the EU for the upcoming decade are carefully coordinated and that the interests of all relevant stakeholders are respected. From 2021 onwards, two new tools — the Budgetary Instrument for Convergence and Competitiveness and the InvestEU programme (2) — will serve this purpose well, when accompanied effectively by traditional ways of managing the EU’s budgetary resources, such as cohesion policy. |
| --- | --- |

3.9.

| 3.10. | The 2008 economic crisis brought the process of economic convergence between the euro area countries to a halt. Generally speaking, recovery has been uneven: there are signs of recovery in central and eastern Europe, but not in the south. At the same time, the most successful countries from central, eastern and south-eastern Europe have overtaken or are catching up with some of the more traditional EU economies, and this process is likely to continue in the coming decade. However, the convergence needs to be stepped up, since significant differences between Member States persist. On this front, the EESC supports the sustainable and inclusive growth of the EU as a whole, reducing social and economic imbalances within and between Member States. |
| --- | --- |

3.10.

| 3.11. | The EESC strongly emphasises the fact that the various components of economic policy need to be balanced. In particular, it is essential to use fiscal policy instruments as well, something the ECB has been calling for in recent years. The ECB is likely to continue to apply a pro-growth, accommodative monetary policy that aims not only to bring inflation closer to the inflation target, but also to maintain favourable growth conditions while ensuring financial stability. The EESC also recommends that the ECB’s role as lender of last resort be consolidated. |
| --- | --- |

3.11.

| 3.12. | Improved fiscal discipline over the previous period makes it possible for a prudently aggressive fiscal policy to be applied in the near future, while also keeping in mind the effects of real economic slowdown in the coming years. There is now considerable room not only for investment, but also for further visibly strengthening the implementation of structural policy, with a view to increasing economic potential and eliminating persistent imbalances and manifestations of market failure, at the same time as ensuring fair working conditions and social protection. This means, for instance, supporting the functioning of effective institutions, an independent justice system that works, good public administration, solid foundations for tackling corruption, effective taxation systems, good education systems, market-conform tools to promote business, high standards in unemployment provision and strengthening the mechanisms for social dialogue, including collective bargaining. |
| --- | --- |

3.12.

| 3.13. | The EESC is convinced that there is scope for further reflection on the relevance and sustainability of the existing parameters of the tax system. The euro area is characterised by a relatively high tax burden, which is also skewed towards labour taxation. At the same time, environmental and property taxes generally account for very little of the overall tax take. The EESC therefore notes the need to bring in forms of taxation that ease the tax burden on labour and raise it, for example, on speculation. It recommends introducing fair taxation arrangements, particularly in relation to new forms of the digital economy, where capital is concentrated more into the extraction of value than the production of goods and provision of services. In future, environmental taxes could be an important instrument for driving greener consumer and producer behaviour, without significantly affecting the conditions for economic growth. At the same time, the EESC notes that any changes in tax systems must avoid further aggravating the heavily skewed distribution of income and wealth. The EESC calls for efforts to be continued and strengthened in the fight against tax fraud, evasion and avoidance (aggressive tax planning), which would make the tax system more efficient. The EESC agrees with the European Commission that there should be closer coordination and collaboration between Member States in designing tax policy that helps to create fair conditions in the Single Market. The EESC also supports the European Commission in its efforts and deliberations to achieve consensus on the CCCTB and an overview of the allocation of profits between Member States. As stated in the previous opinion (3) and restated in the EESC publication Taxation — The views of organised civil society, the EESC states that taxation policy in general and combating tax fraud in particular must remain a priority for the next European Commission. In this line, the EESC endorses a debate on gradually shifting to QMV and the ordinary legislative procedure in tax matters, while recognising that all Member States must at all times have sufficient possibilities to participate in the decision-making process. |
| --- | --- |

3.13.

| 3.14. | The EESC has repeatedly noted that the need to cultivate and improve the functioning of the Single Market, as well as to create and ensure conditions for fair competition and a quality business environment, remains fundamental. This problem can be addressed through activities and measures within the European Semester process. |
| --- | --- |

3.14.

| 3.15. | The EESC is very aware that the enormous structural challenges of the European economy have inevitable social impacts and consequences. Guaranteeing and fostering the conditions for the development of new professional skills, as well as establishing ways of moving between professions and ensuring effective and adequate social protection, are essential if these challenges are to be successfully overcome. The EESC feels that the European Pillar of Social Rights is an appropriate platform for this purpose and agrees with its provisions being incorporated into EU law. |
| --- | --- |

3.15.

| 3.16. | The EESC draws attention to the mismatch between the speed of innovation in the financial sector and the ability of regulatory systems to adapt in the form of rules and protection. The traditional credit services sector seems to be very well safeguarded by increasingly stringent rules, though these necessitate high compliance costs, while the business environment would often need more flexible and accessible tools. In this sense, the Banking Union and the euro area are an important ecosystem, but we would nevertheless expect it to have more effective regulatory systems and rules to boost investment across the entire Single Market and to remove barriers so that financial markets and their operations were no longer largely constrained by national borders. |
| --- | --- |

3.16.

| 3.17. | The EESC points out that, at the end of the second decade of the 21st century, the process of establishing a financial union (i.e. integrating the Banking Union with the Capital Markets Union) and an Economic and Monetary Union remains incomplete. The EESC welcomes the progress made in particular in the area of economic union, where the European Semester instrument and the continuous improvement of this instrument have undoubtedly proven worthwhile. At the same time, it notes with concern that, in the case of monetary union (both from the perspective of those Member States that are still outside the euro area, as well as with regard to progress on the euro area’s external representation and administration), and in the case of financial union, no tangible progress has been made in recent months. The EESC welcomes the fact that the resilience and robustness of the euro area financial sector has increased and supports measures to mitigate remaining weaknesses. It calls for swift implementation of the European Deposit Insurance Scheme (EDIS) and welcomes the European Commission’s communication on strengthening of the European supervisory and regulatory framework, including measures on money laundering. |
| --- | --- |

3.17.

| 3.18. | With a view to also strengthening the EMU’s political pillar, the EESC welcomes the European Commission’s position on the involvement of the social partners in reforms covering employment and social and economic matters, which it sees as essential in strengthening ownership and support for the implementation of reforms. Above all, however, bringing the social partners and civil society as a whole on board is crucial to the balance between the financial, economic, social and political pillars of the EMU. |
| --- | --- |

3.18.

4.   Specific comments

| 4.1. | The EESC believes that the incorporation of a green dimension and its social ramifications into the economic system and day-to-day behaviour of economic actors and those making and delivering policy is inevitable. |
| --- | --- |

4.1.

| 4.2. | The European Green Deal must be tied in with the social dimension. While we need to tackle the climate change challenge, we also have to promote inclusive growth, improve economic adaptability, curb inequalities, achieve fair working conditions for all workers, bolster education systems for training workers and address issues of poverty and social exclusion. The EESC welcomes the inclusion of the European Pillar of Social Rights and the SDGs in the European Semester process. However, this must be further formalised. |
| --- | --- |

4.2.

| 4.3. | The EESC notes with keen interest the proposal to introduce the Sustainable Europe Investment Plan and the Just Transition Fund, appreciates the setting of goals for these and welcomes the measures proposed for them, such as the increase in spending from the EU budget on climate and environmental initiatives. It would add, nevertheless, that the Sustainable Europe Investment Plan will still not be sufficient. While the plan is expected to net investments of around EUR 100 billion a year, the European Commission’s estimate of what is needed for reaching the EU’s 2030 climate and energy targets stands at around EUR 260 billion of additional annual investment. In the light of this, the Just Transition Fund, in particular, as the core of the entire Just Transition Mechanism, should be beefed up. Forthcoming EESC opinions on these initiatives will present a more detailed evaluation. |
| --- | --- |

4.3.

| 4.4. | The EESC proposes that the European Green Deal should be seen as a platform for advancing joint European added value, common needs and interests and co-investment, the proceeds of which will benefit the whole of the EU and the euro area, rather than just individual actors. |
| --- | --- |

4.4.

| 4.5. | From the point of view of the successful implementation of the European Green Deal, it is very important to have a balanced approach across the EU and the euro area. The EESC considers this parameter essential in order to ensure favourable conditions for continued convergence and macroeconomic stability. |
| --- | --- |

4.5.

| 4.6. | The EESC recognises that the prudent and procedurally unimpeachable functioning of national fiscal mechanisms is very important for fiscal sustainability. This could include for example, on the revenue side, the fairness and transparency of tax systems and tax compliance, and on the expenditure side, setting proper rules for public procurement and applying criteria to set out and measure the effectiveness and quality of public spending. |
| --- | --- |

4.6.

| 4.7. | The EESC recommends that — as part of improving the functioning of the Single Market and its links with the European Semester through a targeted focus in the country-specific recommendations, consistency with the EU budget and strict adherence to the commitments resulting from the recommendations — a systematic assessment should be performed of the benefits of these activities in terms of achieving a fiscal capacity, boosting the competitiveness of Europe as a whole and improving environmental and social sustainability. |
| --- | --- |

4.7.

| 4.8. | We should not be interested only in public debt, but also in the protection of public wealth. It is not only addressing climate change that requires significant resources. After a standstill in the volume of public investment, it is crucial to boost investment in public infrastructure (for example in digitalisation), which will not only support economic growth in the short term but also ensure longer-term production capacity for future prosperity and competitiveness. In line with the European Commission’s arguments, fiscal policy requires complementarity with the ECB’s monetary position. Adopting the fiscal policy ‘golden rule’ for public investment could trigger and stimulate greater growth in public investment for this purpose, providing fiscal discipline is maintained. |
| --- | --- |

4.8.

| 4.9. | To improve the elasticity and resilience of the euro area against economic shocks, an instrument should be introduced to help Member States deal with the fallout of such shocks and to make them even better prepared, on a preventive basis, for withstanding them. For this reason, the EESC welcomes both the proposed BICC instrument (4) and the agreement on the enhanced role of the European Stabilisation Mechanism (ESM). At the same time, the EESC warns of the risk of upsetting the balance between the key pillars (see above) on which the EMU is built. With regard to the management of stabilisation instruments, the EESC supports democratisation through greater involvement of the European Parliament and the social partners within the political pillar of the EMU, while respecting the principles of the European Pillar of Social Rights and the SDGs. |
| --- | --- |

4.9.

Brussels, 19 February 2020.

The President of the European Economic and Social Committee

Luca JAHIER

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(1)  OJ C 47, 11.2.2020, p. 106; OJ C 353, 18.10.2019, p. 32.

1

(2)  These matters were recently the focus of EESC opinions OJ C 47, 11.2.2020, p. 106, OJ C 62, 15.2.2019, p. 131, OJ C 282, 20.8.2019, p. 20.

2

(3)  OJ C 353, 18.10.2019, p. 90.

3

(4)  See EESC opinion OJ C 47, 11.2.2020, p. 106.

4

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APPENDIX

The following paragraph of the section opinion was amended to reflect the amendment adopted by the assembly but received more than one quarter of the votes cast (Rule 59(4) of the Rules of Procedure):

| 3.13. | The EESC is convinced that there is scope for further reflection on the relevance and sustainability of the existing parameters of the tax system. The euro area is characterised by a relatively high tax burden, which is also skewed towards labour taxation. At the same time, environmental and property taxes generally account for very little of the overall tax take. The EESC therefore notes the need to bring in forms of taxation that ease the tax burden on labour and raise it, for example, on speculation. It recommends introducing fair taxation arrangements, particularly in relation to new forms of the digital economy, where capital is concentrated more into the extraction of value than the production of goods and provision of services. In future, environmental taxes could be an important instrument for driving greener consumer and producer behaviour, without significantly affecting the conditions for economic growth. At the same time, the EESC notes that any changes in tax systems must avoid further aggravating the heavily skewed distribution of income and wealth. The EESC calls for efforts to be continued and strengthened in the fight against tax fraud, evasion and avoidance (aggressive tax planning), which would make the tax system more efficient. The EESC agrees with the European Commission that there should be closer coordination and collaboration between Member States in designing tax policy that helps to create fair conditions in the Single Market. The EESC also supports the European Commission in its efforts and deliberations to achieve consensus on the CCCTB and an overview of the allocation of profits between Member States. The EESC, supporting the Commission’s initiative on qualified majority voting, considers it important that it be implemented gradually and that a broad consensus be reached on the conditions for its application. |
| --- | --- |

3.13.

Outcome of the vote on the amendment:

| For: | 80 |
| --- | --- |
| Against: | 48 |
| Abstentions: | 21 |

For:

80

Against:

48

Abstentions:

21

---