No C 172/12 Official  Journal  of the European  Communities 20.7,  77 
Opinion  on the economic  situation  in the Community 
The text  referred  to the Committee  has not yet been  published  in the Official  Journal 
of the European  Communities. 
A. LEGAL  BASIS  FOR  THE  OPINION 
The Council  Decision  of 18 February  1974  on achieving  a high  degree  of convergence 
between  the  economic  policies  of the  Member  States  of the  European  Economic 
Community. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
150th  plenary  session,  held  in Brussels  on 22 and 23 June  1977. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Article  198  thereof, 
Having  regard  to the Decision  of the Council  and  the 
representatives  of the  Governments  of the  Member 
States  of 22  March  1971  on  the  progressive 
achievement  of economic  and  monetary  union  in the 
Community, 
Having  regard  to the Council  Decision  of 18 February 
1974  on achieving  a high  degree  of convergence 
between  the economic  policies  of the Member  States 
of the European  Economic  Community, 
Having  regard  to the  opinion  adopted  by  the 
Economic  and  Social  Committee  on 28 October  1976 
on the  Commission's  report  on  the  economic 
situation  in the Community  in 1976  (*), 
Having  regard  to the decision  taken  by its Bureau  on 
14 December  1976,  instructing  the  Section  for 
Economic  and  Financial  Questions  to draw  up an 
opinion  and  a report  on this  subject, 
Having  regard  to the  report  submitted  by  the 
Rapporteur,  Mr Pfeiffer,  and to the opinion  adopted 
by the Section  on 31 May  1977, 
Having  regard  to the discussions  at its 150th  plenary  ' 
session  held  on 22 and  23 June  1977  (meeting  of 23 
June  1977), HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 67 votes  to 4 with  22 abstentions: 
I. SUMMARY  OF THE  SITUATION  IN THE 
COMMUNITY 
The economic  situation  in the  Community  has 
basically  not  changed  since  the  last  Economic  and 
Social  Committee  opinion  of 28 October  1976,  and 
the prospects  for economic  development  are more  or 
less the same  as then  (see  report). 
At the  moment  there  is not  much  evidence  that 
economic  recovery  in the  Community  is gathering 
momentum.  The  total  volume  of orders  on hand  rose 
slightly  in March,  but there  is still  considerable  spare 
production  capacity.  Output  is only  picking  up 
slowly. 
The Community's  level  of inflation  has  remained 
relatively  stable  in recent  months,  and  there  is little 
likelihood  of it dipping  below  10 % in 1977.  There 
are considerable  divergences  between  inflation  rates 
in the Member  States.  For example,  the annual  rise  in 
prices  up to March  1977  was  3 9 % (5-4  % for  the 
same  period  in 1975/76)  in Germany,  as against 
21-1 % (13-9%)  in Italy,  16-7%  (21-1%)  in the 
United  Kingdom  and  16-7  % (16%)  in Ireland  (2) 
(see table  1). 
(!) OJ  No C 297,  16. 12. 1976. (2) Quarter  ending  February  1977  as compared  with  the 
same  period  in the previous  year. 
20. 7. 77 Official  Journal  of the  European  Communities No C 172/13 
The unemployment  rate  in March  1977  was  around 
5*3 %. The  differences  in the rates  of unemployment 
in the Member  States  are not  nearly  as pronounced 
as the  differences  in  economic  growth, 
balance-of-payment  difficulties  or even  inflation  rates 
(see table). 
Private  investment  has  not  picked  up  to  any 
noticeable  extent  and  private  consumption,  too,  has 
increased  only  moderately.  Neither  of these  is 
expected  to provide  much  of a stimulus  for economic 
growth  in 1977. 
In 1977  Community  exports  will  expand  less 
vigorously  than  in 1976,  but  the  real  increase  will 
nevertheless  be around  7 %. Imports  will,  however, 
rise less  quickly,  so that,  despite  a slight  deterioration 
in the terms  of trade,  there  is likely  to be a significant 
improvement  in  the  Community's  balance  of 
payments,  which  should  again  move  towards 
equilibrium. 
The stimulus  given  by  public  investments  has. 
generally  tailed  off,  even  though  an improvement  is 
expected  during  the year  in some  countries. 
Nevertheless,  the prospects  for  a self-sustaining  and 
accelerating  economic  upturn  in  1977  remain 
uncertain. 
The Community's  national  product  is expected  to 
grow  by 3-5  % in real  terms  in 1977.  This  means 
that,  allowing  for  the  current  increases  in 
productivity,  the average  unemployment  rate  for the 
year is unlikely  to be much  better  than  the figure  for 
1976,  (4-5  %) and  will  probably  even  tend  to get 
worse  in some  countries,  unless  special  measures  are 
taken. 
The differences  in economic  performance  between 
the Member  States  are still  too great.  This  applies  to 
almost  all significant  economic  parameters  (see  table). 
The averages  for the Community  are therefore  only 
of limited  value  as pointers. 
The economic  situation  in  the  Community  is 
influenced  by world  economic  trends.  Despite  the 
improvement  in these  trends,  economic  activity  in the 
Community  is still  sluggish,  and  the prospects  for the 
months  ahead  do not suggest  that  lasting  solutions  to 
the present  difficulties  are in the offing. 
The real  problem  here  is reducing  unemployment  and 
combating  inflation,  which  will  require  a return  to 
steady  growth.  The  structural  problems  affecting 
certain  industries  and  regions  have  emerged  more clearly  as a result  of the recession.  Some  sections  of 
the population  have  been  particularly  hard  hit.  The 
unusual  extent  of the  crisis  leaves  no hope  of any 
decisive  improvement  in the  situation  in the  short 
term. 
II. ECONOMIC  POLICY  OBJECTIVES  OF THE 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Against  this  background,  the  Economic  and  Social 
Committee  reiterates  what  it said  in its previous 
opinion.  In particular,  it maintains  that: 
— economic  policy  for  1977  should  be made  an 
integral  part  of a medium-term  Community 
policy  up to 1980, 
— full  employment  and  stable  prices  should  be 
achieved  simultaneously  and  as a matter  of 
priority, 
— full  employment  should  be re-established  by 1980, 
— the  Community's  real  national  product  should 
therefore  increase  by an average  of 5 % per  year 
between  1976  and  1980,  with  the  growth  target 
for 1977  being  4 %, 
— the  annual  inflation  rate  in all Member  States 
should  be gradually  reduced  to at least  4-5 % by 
1980  at the latest. 
The Committee  would  point  out  that,  according  to 
the foreseeable  economic  trends  in 1977,  achievement 
of these  objectives  will  be in jeopardy  or will  involve 
additional  difficulties.  The  Committee  therefore 
agrees  with  the  Commission  that  the  Community 
must  intensify  its efforts  in this  area. 
III. REVIEW  OF THE  MEASURES  CALLED  FOR  BY 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
As well  as setting  out  objectives  in its previous 
opinion,  the  Committee  called  for  a number  of 
economic  policy  measures  to be taken  at Community 
and Member  State  level.  Since  the economic  situation 
has hardly  changed,  these  recommendations  hold 
good  today.  The  main  aim  of the  present  opinion, 
therefore,  is to establish  to what  extent  the measures 
taken  or planned  at Community  and  Member  State 
level  since  the  autumn  of 1976  correspond  to the 
recommendations  made  by the  Committee  on 28 
October  1976. 
No C 172/14 Official  Journal  of the  European  Communities 20.7.77 
A. Measures  at Community  level 
The Committee's  recommendations  and  the measures 
since  taken  at Community  level  are  described  in 
detail  in the report. 
1. Better  coordination  of national  economic  policies 
In paragraph  8.1 of its opinion  of 28 October  1976, 
the Committee  said  that  coordination  of national 
economic  policies  should  be  improved  and 
scrutinized  by the  Commission  and  the  Council  of 
Economic  Affairs  and Finance  Ministers. 
The Committee  is pleased  that  the  need  for  better 
coordination  of national  economic  policies  was 
clearly  recognized  by  the  Commission  and  the 
Council  of Economic  Affairs  and  Finance  Ministers, 
and that  agreement  was  reached  on what  approach  to 
adopt.  This  found  expression  in two  important 
Council  decisions.  On  14  March,  the  Council  of 
Economic  Affairs  and  Finance  Ministers  carried  out 
the first  quarterly  survey  of the economic  situation  in 
the Community  and  took  a decision  on  the 
adjustment  of the  economic  policy  guidelines  for 
1977.  The  Council  made  it clear  that  its decision 
obliged  the  Member  States  to follow  an economic 
policy  in keeping  with  the guidelines.  The  Committee 
also welcomes  the  fact  that  on the  same  day  the 
Council  adopted  the Fourth  Medium-Term  Economic 
Policy  Programme. 
The Committee  notes  with  regret  that  all aspects  of 
the coordination  of national  economic  policies  have 
not yet been  investigated.  In particular,  the main  task 
is still  to examine  and  influence  the extent  to which 
the Governments  of the Member  States  abide  by the 
recommendations  and  guidelines  laid  down  by the 
Commission  and  Council.  The  Committee  believes 
that the machinery  for monitoring  and  translating  the 
guidelines  into  action  should  be improved. 
2. Coordination  between  the  Social  and  Regional 
Funds,  the  Investment  Bank  and  agricultural 
policy 
In paragraphs  7.1 to 7.3 of its previous  opinion,  the 
Committee  called  for coordination  between  the Social 
Fund,  the  Regional  Fund,  the  European  Investment 
Bank,  social  measures  under  the common  agricultural 
policy  and  ECSC  grants. 
The Committee  is glad  that  the Commission  and  the 
Council  realize  the  need  for  better  coordination  of 
the various  EEC  funds  (i.e.  the  Social  Fund,  the Regional  Fund,  the  EIB  and  the  European 
Agricultural  Guidance  and  Guarantee  Fund).  The 
measures  introduced  (assignment  of  formal 
responsibility  for  fund  coordination  to Mr  Giolitti, 
submission  or preparation  of proposals  for reforming 
the European  Social  Fund  and  the  Regional  Fund, 
boosting  the Social  Fund's  resources  by 66 % and  the 
Regional  Fund's  by 25 %) can  be seen  as a step  in the 
right  direction. 
It remains,  however,  to be seen  how  far  the  other 
Committee  recommendations  are  put  into  practice 
(closer  coordination  of policies  on employment  and 
retraining,  extension  of eligibility  for aid to include 
areas  of especially  high  unemployment,  such  as urban 
agglomerations,  which  up to now  have  not  been 
considered  to be in need  of help). 
3. Coordination  of trade  policy 
In paragraph  8.3  the Committee  recommended  that 
the coordination  of trade  policy  be reviewed  and 
adapted  where  necessary. 
The Committee  is glad  that,  through  numerous 
measures,  progress  has  been  made  in coordinating 
trade  policy.  The  Committee  also  considers  it a plus 
point  that  even  during  the economic  recession,  it was 
possible  to avoid  trade  restrictions  and  thus  maintain 
the conditions  for an open,  non-discriminatory  world 
trading  system. 
The Committee  would,  however,  point  out  that 
certain  agreements  the  Community  has  concluded 
with  third  countries  provide  for  concessions  on its 
part that  could  aggravate  the  difficulties  already 
affecting  certain  sectors  and  have  a negative  impact 
on employment  unless  preventive  measures  are taken 
to avoid  this  impact.  Since  the  Committee  has 
repeatedly  supported  a policy  of assistance  to the 
exports  of developing  countries,  the  effects  of such 
concessions  to them  should  be carefully  monitored, 
so that  measures  of restructuring  can  be taken  in 
good  time  if they  prove  to be necessary. 
4. Community  action  to stabilize  exchange  rates  and 
reduce  balance-of-payments  difficulties 
In paragraphs  8.4 and  8.5  the Committee  expressed 
the view  that  Community  action  was  needed  to 
achieve  greater  stability  of exchange  rates  and  reduce 
balance-of-payments  difficulties.  It considered  that 
more  stringent  criteria  were  required  here. 
20. 7. 77 Official  Journal  of the European  Communities No C 172/15 
No real  progress  has  been  made  in this  area, 
although  the  Monetary  Committee  and  the 
Committee  of  Central  Bank  Governors  have 
repeatedly  given  this  problem  their  attention  and 
although  there  have  been  some  positive  signs. 
Exchange  rates  have  not  been  stable  and  since  last 
autumn  the  relationship  between  Member  States' 
currencies  both  inside  and  outside  the snake  has  at 
times  changed  considerably.  The  Committee 
reiterates  that  Community  action  must  be taken  to 
achieve  greater  exchange  rate  stability.  Experience 
has shown  that  when  particularly  severe 
balance-of-payments  difficulties  arise,  the  Member 
States  are willing  to give  each  other  mutual  support. 
The Committee  would,  however,  urge  the  Member 
States  to make  their  mutual  assistance  within  the 
framework  of the  European  Monetary  Cooperation 
Fund  more  effective  and to step  up the adoption  of a 
common  line  within  the IMF. 
5. Effect  of farm  price  decisions  on inflation 
In line  with  the request  made  in paragraph  8.6 of the 
Committee's  previous  opinion,  the  Commission  and 
the Council  have  taken  account  of the  inflationary 
impact  of  farm-price  increases.  The  farm-price 
decisions  have  accordingly  provided  for  relatively 
modest  increases. 7. Improved  information  and  statistics 
Finally,  in paragraph  1.3 of its previous  opinion,  the 
Committee  said  that  the Commission  should  urgently 
consider  with  the Member  States  ways  of expanding 
and improving  national  statistics  and  making  them 
available  more  rapidly. 
The Committee  has  taken  note  of the Commission's 
statistical  programme  for  the  period  1977  to 1979 
and thinks  that  this  is a step  in the right  direction. 
The Committee,  in which  the people  directly  affected 
by the  compilation  and  use  of  statistics  are 
represented,  regrets  that  it was  not  asked  to play  a 
part in the  preparation  of this  programme.  It 
therefore  asks  the  Commission  to  arrange  for 
consultation  between  the  Community's  Statistical 
Office  and  the  Committee  so as to arrive  at some 
form  of cooperation  in the  finalization  of the 
statistical  programme. 
On account  of  the  continuing  high  levels  of 
unemployment  and  inflation  in the Community,  the 
Committee  considers  that  it is particularly  important 
to improve  and  expand  statistics  on the  labour 
market  and  on the  distribution  of incomes  in the 
Member  States  by social  group.  It is not  convinced 
that this  need  has  so far been  taken  into  account  in 
the statistical  programme. 
6. Impact  of indirect  taxes  and  public  sector  charges 
In paragraph  8.7  of its  previous  opinion  the 
Committee  observed  that  the  Commission's 
suggestion  for increasing  indirect  taxation  and  public 
sector  charges  could  be dangerous  in aggravating 
retail  price  inflation  and  hence  wage  pressures.  It 
would  like  to underline  that  point  here  and  add  that 
it holds  good  quite  apart  from  the  need  to 
consolidate  public  finances.  What  is more,  the 
propensity  to invest  would  also  be affected. 
The Committee  also  calls  on the  Commission  to 
undertake  a  comparative  analysis  of  public 
expenditure.  This  analysis  should  pay  particular 
attention  to the  structure  of transfer  payments  and 
economic  and  social  aids.  Such  assessment  criteria 
could  be  of  value  to  Member  States  whose 
international  commitments  oblige  them  at least  to 
reduce  their  budget  deficits.  The  Member  States  in 
question  would  then  be in a better  position  to bring 
their  domestic  situation  into  line  with  that  of the 
other  Member  States. B. Measures  by the individual  Member  States 
It is not easy  to assess  the economic  measures  taken 
in the Member  States  (see  report)  in the light  of the 
recommendations  made  last  autumn,  simply  because 
the economic  situation  varies  so much  from  one 
country  to another  and  the  measures  have  to be 
tailored  to these  specific  national  circumstances.  The 
governments  have  little  room  for  manoeuvre,  being 
obliged  to combat  inflation  while  at the same  time 
pursuing  a policy  of supporting  growth  aimed  at 
raising  production  and  eliminating  unemployment. 
1. Stimulation  of  the  economy  through  public 
expenditure 
In paragraphs  6.1  and  6.3  of its opinion  of 28 
October  1976,  the  Committee  recommended  that 
public  expenditure,  particularly  public  investment, 
should  provide  a greater  stimulus  to the  economy, 
No C 172/16 Official  Journal  of the European  Communities 20. 7. 77 
and that  recovery  programmes  should  not  be 
disrupted  by spending  cuts  to reduce  budget  deficits. 
The Committee  notes  that  none  of the Member  States 
has since  put  into  effect  a comprehensive  economic 
recovery  programme.  All have  confined  themselves  to 
specific  and selective  measures  to promote  investment 
or improve  the employment  situation. 
However,  the individual  Member  States  influence  the 
state  of the economy  and  economic  growth  through 
the rate  of expansion  of public  expenditure. 
The Committee  notes  with  regret  that  national 
budgets,  and  especially  public  investments,  in many 
countries  have  not helped  to stimulate  growth  in the 
Community  in 1977  to the extent  necessary  to achieve 
the medium-term  growth-rate  target. 
2. Promotion  of job-creating  private  investment 
In paragraphs  6.2 and  6.8 of its previous  opinion,  the 
Committee  called  for selective  encouragement  to be 
given  to job-creating  private  investment.  Steps  must 
be taken  to ensure  that  the measures  in question  are 
effective  in promoting  employment. 
The Committee  is pleased  to note  that  in all Member 
States  (except  Luxembourg)  financial  measures  have 
been  taken  to stimulate  private  investment  (see 
report).  Some  were  aimed  at certain  regions  or 
sectors.  Others  applied  only  to investments  in 
expansion  projects  and  the  founding  of  new 
businesses.  One  Member  State  encouraged  only 
investments  in labour-intensive  projects. 
Some  countries  did  not  differentiate  between 
investments  but  introduced  general  investment 
subsidies  or tax relief  for depreciation.  Sometimes  the 
financial  encouragement  given  to firms  was  not  tied 
to investment,  but was  designed  to generally  improve 
earnings. 
Such  measures  have  only  been  partially  successful  in 
creating  new  and  permanent  jobs,  and  up to now 
they have  not  been  on a sufficiently  large  scale  to 
provide  a strong  stimulus  for private  investment.  But 
they have  followed  the  Committee's  recommenda-
tions  and  not  disturbed  competition  between  the 
Member  States. The Committee  would,  however,  stress  that 
expansion  of private  investment  does  not  depend 
simply  on financial  encouragement  from  the State.  It 
is more  important  to create  an economic  climate 
conducive  to investment  so that  there  are  more 
favourable  expectations  as regards  demand  and  sales 
as well  as adequate  earning  prospects. 
3. Special  action  on employment 
In point  6.5  of the  Committee's  opinion  of 28 
October  1976,  a more  active  manpower  policy  and  in 
particular  extension  of industrial  training  were  called 
for. 
In view  of the need  for greater  manpower  flexibility 
and mobility  the Committee  is glad  that  many  types 
of labour  market  measures  have  been  taken  in all the 
Member  States  (see  report).  Among  such  measures 
are employment  premiums  for  firms  that  hire  the 
longer-term  or young  unemployed.  Firms  that  take 
on additional  workers  are  also  given  financial 
encouragement.  Similar  schemes  exist  for  the 
handicapped.  To assist  mobility,  one  Member  State 
reimburses  removal  and  settling-in  costs.  Also 
compensation  is paid  if any  financial  loss  is involved 
in taking  up a new  job.  In two  Member  States 
part-time  working  is encouraged  by a system  of 
premiums.  Some  Member  States  pay  subsidies 
towards  the  cost  of training  young  people  or 
extending  compulsory  vocational  training.  In certain 
Member  States  the State  foots  almost  the whole  bill 
for retraining  and  further  training. 
The Committee  notes,  however,  with  regret  that  in 
most  countries  these  schemes  were  either  on too 
small  a scale  or not sufficiently  made  use of for there 
to be  a clear  improvement  in the  employment 
situation  of the groups  concerned. 
A lot of these  measures  broke  new  ground  in the field 
of economic  policy,  and  it is not yet clear  whether  all 
of them  are  effective  or whether  some  of them  can 
lead to abuse  and  unnecessary  public  expenditure. 
The Committee  would  welcome  it if the  individual 
Member  States  would  learn  from  each  other  and 
exchange  experience  more.  For  this  reason  it would 
like a comparative  study  to be made  of the measures 
taken  to create  jobs,  especially  those  measures 
designed  to help  young  people. 
20. 7. 77 Official  Journal  of the European  Communities No € 172/17 
But when  these  measures  are assessed,  consideration 
should  be given  to the costs  that  would  have  arisen  if 
no action  had  been  taken  and  the people  concerned 
had just  been  allowed  to remain  unemployed. 
4. Re-assessing  prices  and  incomes  policy  measures 
In paragraph  6.11  of its opinion  of 28 October  1976, 
the Committee  called  upon  those  countries  that  had 
introduced  prices  or  incomes  measures  or  a 
combination  of the  two  as a means  of combating 
inflation  to re-assess  their  relevance  in the light  of the 
economic  recovery  and  of the  Directives  adopted  at 
Community  level. 
The Committee  notes  that  in a number  of Member 
States  prices  and  incomes  measures  have  been 
reviewed  and  changed  to make  them  more  effective. 
It is still  too early  to say conclusively  what  the results 
are. The  fact  is that  nominal  incomes  have  risen  only 
slightly  faster  than  inflation. 
The Committee  also  suggests  that  the  Commission 
carry  out  a comparison  on national  laws  concerning 
indexing  and  assess  their  effectiveness  in curbing 
inflation. 
This  should  enable  the Commission  to put  forward 
proposals  for  the  alignment  of the  relevant  laws  if 
this course  of action  is deemed  appropriate. 
5. Medium-term  targets 
The Committee  considered  that  each  Member  State 
should  adopt  a medium-term  programme  up to 1980 
for an orderly  economic  recovery  (paragraphs  6.10 
and 8.1  of the  opinion  of 28 October  1976).  This 
should  contain  for  each  year  targets  in respect  of 
employment,  growth  of output,  inflation  demand 
components  in the  national  product  and  exports  to 
the Member  States. 
No such  medium-term  programme  has  yet  been 
drawn  up in any  of the Member  States.  In Germany, 
however,  the  government  fixes  targets  for  each 
successive  year  in the form  of broken-down  national 
accounts  (although  these  do not cover  exports  to the 
Member  States  of the EEC). 
6. Selective  measures  to back  up overall  monetary 
and credit  policy 
In its opinion  of 28 October  1976,  the  Committee 
agreed  with  the Commission  that  recovery  could  not be induced  or inflation  checked  merely  by blanket 
measures  in the area  of monetary  and  credit  policy. 
Selective  back-up  measures  were  also  needed. 
In all Member  States,  monetary  and  credit  policy  was 
used  to varying  degrees  to combat  inflation.  The 
committee  urged  that  this  general  policy  of curbing 
prices  must  not  endanger  economic  recovery  and 
hence  the  reduction  of unemployment.  It therefore 
recommended  that  special  credit  policy  measures  be 
operated  simultaneously  as a back-up  so that  the 
investments  necessary  for  growth  should  not  be 
lacking. 
The Committee  is pleased  to note  that  consistent 
specific  credit  policy  measures  have  been  taken,  albeit 
only in some  Member  States,  in order  to make 
possible  investments  that  are  important  from  the 
point  of view  of sectoral,  regional  or industrial  policy. 
The Committee  also  urges  those  Member  States 
which  have  not  yet fixed  targets  for the volume  of 
the money  supply  to introduce  such  targets  and 
adhere  to them. 
IV. CONCLUSIONS 
In general,  it can  be stated  that  at Community  level, 
all the  recommendations  made  by the  Committee 
have  been  implemented  though  to varying  degrees. 
This  is a step  in the  right  direction.  Nevertheless, 
given  the  persistently  high  levels  of unemployment 
and inflation  obtaining  in the  Community,  the 
individual  measures  must  be further  intensified,  and 
expanded. 
As regards  measures  in the individual  Member  States, 
numerous  steps  have  been  taken  in all countries  to 
combat  unemployment  and  inflation,  but  nowhere 
were  these  measures  combined  in such  a way  as to 
ensure  fulfilment  of the  economic  policy  objectives 
and requirements  which  were  laid  down  by  the 
Committee  in its opinion  of 28 October  1976  and 
which,  subject  to the following  remarks,  are still  valid 
today. 
In this  connection  the  Committee  would  expressly 
emphasize  that  the  Member  States  should  follow 
more  closely  the economic  policy  guidelines  decided 
upon  by the  Council  of Ministers,  so that  national 
economic  and  social  policies  can  be  better 
coordinated. 
No €172/18 Official  Journal  of the  European  Communities 20. 7. 77 
The Committee  therefore  concludes  that  the 
Community  and  the  Member  States  must  intensify 
and expand  their  efforts.  The  Committee  would  also 
repeat  its view  that  the  objectives  cannot  be achieved 
unless  new  economic  measures  are  taken  and  a 
disciplined  attack  is made  on  the  root  causes  of 
unemployment  and  inflation. 
These  tasks  in the  area  of economic  policy  would 
include  doing  everything  possible  to  forecast 
production  and  employment  trends  both  at 
macro-economic  level  and,  where  possible  in 
individual  sectors,  regions  and  sections  of  the 
population.  In this  way,  social  hardship  could  be 
avoided  and  suitable  action  taken  in good  time.  The 
Committee  also  considers  that  a careful  analysis 
should  be made  of future  technological  development. 
In addition,  a critical  look  must  be  taken  at all 
structural  measures  adopted  to  date.  All  these 
measures  should  be scrutinized  from  the  point  of 
view  of their  effectiveness  in creating  employment 
and curbing  inflation.  For  those  areas  that  are 
basically  dependent  -on  government  contracts  or 
government  decisions,  rhe  State  should  frame 
medium-term  guidelines. 
The Committee  also  feels  obliged  to point  out  that  in 
a number  of countries,  measures  to reduce  the  supply 
of labour  are  being  discussed  or have  already  been 
initiated.  Such  measures  include  lowering  the  retiring 
age, raising  the  school-leaving  age,  promoting 
part-time  work  and  shortening  the working  week. In the  Committee's  view,  a closer  and  more  critical 
look  should  be taken  at such  measures  to determine 
(i) their  effectiveness  with  regard  to employment,  (ii) 
what  their  impact  is  on  the  costs  affecting 
entrepreneurs  and  workers,  (iii)  whether  they  make 
for a mobile  work  force  and  (iv)  to what  extent  they 
can be financed  by the  State. 
But the  Committee  would  also  like  to point  out  that 
such  measures  can  make  a basic  contribution  towards 
banishing  the  threat  of  long-term  mass 
unemployment  in the  Community  and  re-establishing 
full employment  in the years  ahead. 
Finally,  the  Committee  welcomes  the  results  of the 
world  economic  conference  held  in London  on  8 
May  1977.  At that  conference:  i 
— emphasis  was  placed  on  the  fight  against  both 
unemployment  and  inflation, 
— the  heads  of  government  again  pledged 
themselves  to  achieve  the  economic  growth 
targets  set for 1977  — if necessary  by introducing 
further  measures, 
— the  governments  concerned  again  come  out  in 
favour  of an open  and  non-discriminatory  world 
trade  system. 
These  steps  will  have  beneficial  effects  on the  battle 
against  unemployment  and  inflation  in  the 
Community. 
Unemployment  in the Community 
(As percentage  of the active  population) 
(The  figures  are not  seasonally  adjusted) 
Country March  1977 March  1976 
Country 
Number % Number % 
Denmark 147 961 6-0 111 220 48 
Germany 1 084  200 4-2 1 119  200 46 
France 1 020  600 4-7 938 200 4-3 
Ireland •114 000 10-1 113 300 10-0 
Italy  (J) 1 290 200 6-6 1218  000 6-3 
Netherlands 201500 4 3 215 900 4-6 
Belgium 279 900 7-1 241 700 6-2 
Luxembourg 674 0-5 452 03 
United  Kingdom 1 383 800 5-4 1 284 900 5-0 
Community 5 522 835 5-3 5 242 872 5-1 
(') Ministry  of Labour  statistics. 
20.7.77 Official  Journal  of the  European  Communities No C 172/19 
Inflation 
(Most  recent  indication  of annual  price  rises:  March  1977  over  March  1976  and 
March  1976  over  March  1975) 
Country March  1977  over 
March  1976 March  1976  over 
March  1975 
Denmark 8-6 90 
Germany 39 5-4 
France 91 96 
Ireland 16-7 (») 16 0 (*) 
Italy 211 139 
Netherlands 7-3 89 
Belgium 7-4 99 
Luxembourg 83 10-5 
United  Kingdom 167 211 
Community 119 114 
(') Variation  between  quarters  ending  on 15 February. 
Economic  growth 
(Annual  rise  in GDP  (volume)) 
Country 1977  estimates 1976 
Denmark 20 4-8 
Germany 4-5 5-4 
France 30 5-0 
Ireland 3-5 3-5 
Italy 30 5-5 
Netherlands 40 36 
Belgium 30 3-5 
Luxembourg 30 29 
United  Kingdom 14 09 
Community 325 43 
Done  at Brussels,  23 June  1977. 
The Chairman 
of the  Economic  and  Social  Committee 
Basil  de FERRANTI