1. 10. 79 Official Journal of the European Communities No C 247/59 
Opinion on the economic situation in the Community (mid-1979) 
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 the attainment of a high degree of convergence 
of the economic policies of the Member States of the European Community. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 169th 
plenary session held in Brussels on 27 and 28 June 1979. 
The full text of the opinion is as follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, HAS ADOPTED THE FOLLOWING OPINION 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 198 
thereof, 
Having regard to the resolution of 22 March 1971 of the 
Council and the representatives of the Governments of 
the Member States concerning the realization, by stages, 
of economic and monetary union in the Community, 
Having regard to the Council Decision of 18 February 
1974 on the attainment of a high degree of convergence 
of the economic policies of the Member States of the 
European Community, 
Having regard to the opinion adopted by the Economic 
and Social Committee on 30 November 1978 on the 
annual report on the economic situation in the 
Community in 1978 (1), 
Having regard to the decision taken by its Bureau on 
14 March 1979 instructing the Section for Economic and 
Financial Questions to draw up an opinion on the 
matter, 
Having regard to the report submitted by the rapporteur, 
Mr Goris, to the Section for Economic and Financial 
Questions at its meeting held on 12 June 1979, 
Having regard to the discussions at its 169th plenary 
session held on 27 and 28 June 1979 (meeting of 28 June 
1979), 
(!) OJ No C 105, 26. 4. 1979. by 45 votes to 21 with one abstention: 
1. General comments 
1.1. This report accompanying this opinion, and 
above all its analysis of the current situation and the 
economic prospects for 1979, make it clear that the 
position is far from satisfactory. This is because of the 
high rate of unemployment, oil prices and supplies, the 
prices of raw materials, and factors making for monetary 
instability. 
The Committee believes that national policies will almost 
certainly have to be adjusted in 1979 for the purpose of 
achieving, or at least making more headway than in the 
past towards, the Community objectives outlined in the 
annual report (a high level of employment, high living 
standards and monetary stability). There are no grounds 
for optimism as regards the long-term prospects for the 
achievement of these objectives. 
The objectives, and the way they are to be furthered, 
should therefore be reviewed in the Community context. 
The annual report underscores this by stating that (a), 
attempts to coordinate policies should be based on more 
explicit economic and financial objectives and (b), the 
practical aspects of the objectives must be spelled out in 
greater detail. A review of the technical aspects would 
not however be enough, given the socio-political 
situation in the Community. If Community policy is to 
be effective and efficient, its content and institutional 
machinery must take account of the socio-political 
realities. Previous attempts at coordination have relied 
too much on voluntary agreements on monetary and 
budgetary measures and the socio-political dimension 
has been ignored. In this connection the Committee 
underlines that if (in particular) the newly launched EMS 
No C 247/60 Official Journal of the European Communities 1. 10. 79 
is to succeed, Community-level coordination of 
socio-economic policy must be more rigorous. 
The key aim here is to strike a balance between economic 
growth policy, structural change and social welfare 
policy. In this connection, it should be examined whether 
and to what extent living standards can be raised in the 
present situation. The tug-of-war between growth, 
structural change and social welfare should be borne in 
mind when Community policy is framed and 
implemented. 
As stated above, what is needed is a Community 
blueprint. There would of course be national differences 
within this framework but these must not be allowed to 
harm Community objectives. 
In the final analysis, a clear-cut choice has to be made 
between (a), measures taken and financed by the 
Member States and (b), measures taken and financed by 
the Community. The policy-making bodies will therefore 
have to consider the impact of their decisions on the 
relationship between the public sector and the market 
sector. They will also, where appropriate, have to 
examine how action requested from public authorities is 
to be financed. 
1.2. A satisfactory solution to the energy problem will 
be a major factor in efforts to achieve stable economic 
growth. The Committee considers that the Community 
has an unmistakable duty here and that Community 
action should be taken as soon as possible concerning 
(a), research into the use of alternative energy sources 
(i.e. other than oil and natural gas) and (b), the drafting 
of an energy conservation programme. If wider use is 
made of nuclear energy, maximum attention will of 
course have to be paid to nuclear safety. The Community 
will also have to speak with one voice; and it is vital to 
secure coordination between the Community and 
non-member countries (oil-producing and 
non-oil-producing countries). In this connection, the 
Committee would refer to its recent opinion on the 
Commission communication to the Council on the 
energy objectives for 1990 and programmes of the 
Member States. The Committee stressed the importance 
of encouraging investment in energy conservation as part 
of an industrial policy. The Committee also urged the 
Member States to adopt, as part of a coherent 
Community policy, all necessary measures to develop the 
Community's indigeneous energy sources to the 
maximum, so as to safeguard vital imports and ensure 
optimum use of their energy supplies. 
As stated under 1.1, in the short term, balanced 
economic growth may be hampered by the energy 
situation, and in particular by price trends. 1.3. There is also the related problem of inflation, 
which may well be severe enough to impede economic 
growth. 
Public finance is another problem area; in many cases 
budgetary deficits are threatening to reach a level 
incompatible with the requirements of stability. 
1.4. In addition, increasing competition from 
non-member countries is creating problems of structural 
adjustment in many parts of the European Community. 
1.5. The above prospects for 1979 therefore have 
far-reaching structural aspects. Against this background 
the Committee considers that renewed economic growth 
is necessary and indispensable, although growth alone 
cannot solve all problems. A carefully thought-out, 
coordinated combination of different measures is 
required, as are also measures of a selective nature. A 
balance must be achieved which respects the functions of 
both private and public sectors if we are to attain a rate 
of growth which will raise living standards, not only at 
Community level, but also at national and regional level. 
2. Policy proposals 
2.1. General comments 
The above comments, and in particular the analysis on 
the economic outlook for 1979, indicate that the 
Community may fail to achieve the most recently 
predicted growth rate of 3-4%. The longer-term 
prospects are not particularly rosy either. As stated 
above, the Committee believes it necessary to review 
Community objectives (high employment, high living 
standards and monetary stability) and, more 
particularly, the way they are to be achieved. In this 
connection, it is necessary to consider the practical 
impact of macro-economic measures on trends in 
individual business sectors (meso-level) and companies 
(micro-level). 
The problem is that macro-economic measures to 
stimulate demand are having an inadequate impact on 
growth and employment. 
The Committee therefore makes the recommendations 
listed below. 
1. 10. 79 Official Journal of the European Communities No C 247/61 
2.2. Measures in respect of production and 
consumption (supply and demand) 
2.2.1. Given the importance attached - inter alia by 
the Commission - to the structural aspects of 
unemployment, efforts should be geared to the supply 
side of the production process. For instance, the public 
authorities could use government contracts, purchasing 
policy, loans and company tax concessions in order to 
encourage innovatory production methods, especially 
those which create jobs. 
A campaign should also be launched to encourage 
producers and consumers to use energy more efficiently, 
and to foster research into and production of alternatives 
to oil. 
2.2.2. Blanket stimulatory measures should of course 
also be taken, within the constraints imposed by the 
budget and by the need to achieve internal and external 
balance. This is essential if the desired growth rate is to 
be achieved in 1979. 
2.2.3. The appropriateness of such measures must be 
judged in the light of their repercussions and of economic 
and social objectives. On the one hand it might be 
preferable to concentrate on cuts in personal taxation. 
The resultant increases in consumers' disposable income 
would boost demand and thus create jobs in the short 
term. And employment would also be pushed up in the 
longer term, since such cuts would encourage greater 
effort and productivity and could help to reduce 
pressures for higher money wages, thus assisting the fight 
against inflation and improving the competitiveness of 
Community industry. On the other hand consideration 
could be given to cutting taxes on consumption, which 
would be more directly counter-inflationary and at the 
same time would effectively raise disposable incomes. 
2.2.4. Another angle is that increased public spending 
on investment and services would provide more 
additional jobs in the short term, without having any 
adverse effects on efforts to reduce inflation. 
2.3. Measures to boost employment 
2.3.1. Apart from blanket-demand management 
measures and specific measures directed at production, 
the Committee feels that there is a pressing need for 
specific measures to boost employment. 2.3.2. A variety of measures may be appropriate, 
depending on the situation in individual Member States. 
These include: 
— training and retraining schemes to meet future needs, 
— job-creating investment, 
— temporary employment subsidies, 
— better organization of working hours, 
— special projects to assist labour-intensive firms, 
— encouragement of new small enterprises likely to 
provide specialized goods or services. 
2.3.3. The Committee reiterates the importance of 
expanding training and retraining schemes in order to 
improve occupational mobility. There is s> me evidence 
that, even with the present high level of unemployment, 
the number of unfilled vacancies is being pushed up by a 
number of factors, including shortages of skilled 
workers, and the fact that in some areas unemployment 
is below average. Expansion and better use of training 
facilities is of special importance in combating youth 
unemployment, whose victims are particularly liable to 
become demoralized. 
Special consideration should be given to training for 
self-employment, particularly for young people, not only 
in the established trades and crafts, but also in new ones 
for which new technology or changing patterns in 
consumer spending continuously create new demands. 
2.3.4. It is essential to adopt a selective approach to 
specific schemes for job-creating investment and for 
temporary employment subsidies. The Committee 
reiterates that such schemes must be forward looking 
and must not impede necessary structural change or lead 
to distortions of competition between Member States. 
2.3.5. In addition is is felt that there is scope for job 
creation in the non-commercial service sector. 
The social objective of better organization of working 
hours should take full account of the current 
international economic context, in which productivity 
and competitiveness are still the keys to effective job 
protection. Any measures which ignore these 
preconditions would run counter to the objective. 
No C 247/62 Official Journal of the European Communities 1. 10. 79 
2.3.6. The Committee considers that the 
unemployment problem should be evaluated in more 
detail. 
3. Community aspects 
3.1. Although some of the abovementioned specific 
policy measures have both national and Community 
aspects, the Committee would make the following 
comments on Community policy. 
3.2. We endorse the general Community objective of 
ensuring, via a macro-economic strategy coordinated at 
Community level, that economic instruments are used 
correctly and thus yield better results. 
The Committee would however point out that 
Community objectives can be achieved only if national 
socio-economic policies are incorporated into a 
long-term Community blueprint. This blueprint must 
take account of the socio-political differences between 
the Member States and must also have the requisite 
degree of stringency. This is particularly important in 
view of the introduction of the EMS, which is itself a first 
step towards implementation of a more rigorous 
Community coordination machinery. 
3.3. The Committee favours a Community level 
review of objectives and the way they should be 
furthered. 
In particular, more attention should be paid to striking a 
balance between (a) (traditional), policy geared to 
maximum economic growth and (b), welfare policy, 
which lays more emphasis on improving the quality of 
life. In this connection, the Committee would welcome a 
Community level investigation of the pros and cons of 
Done at Brussels, 28 June 1979. environmental investment and the way it is financed. 
This investigation should also examine the net impact of 
such investment on growth and employment. 
The conflict between economic growth policy and 
welfare policy would be eliminated if, when establishing 
the national product, national accounting methods took 
account of the destruction of free but irreplaceable assets 
such as the purity of the air and water and the beauty of 
the countryside. It is extremely expensive to replace 
these. By incorporating the cost of these destructive 
processes, which often accompany the development of 
traffic, industrialization and urban sprawl, national 
accounting systems would achieve a more realistic 
national product and growth rates and would 
automatically steer economic policy towards the 
preservation of these 'free' assets which are extremely 
valuable and often irreplaceable. 
3.4. Stiff competition from non-member countries 
may increase the drift towards protectionism. The 
Committee feels that this drift should be curbed as far as 
possible in view inter alia of the fact that the 
Community's economy is heavily dependent on world 
trade. The Community should adopt a policy on the 
matter, and where action has to be taken, the 
Community's contribution should be significant and 
decisive. 
3.5. In addition to Community action to coordinate 
national economic policies, the production of studies and 
action programmes and above all measures on the 
monetary front, the resources of the Regional Fund, the 
Social Fund, the European Investment Bank, etc., must 
be used directly to promote economic progress and to 
combat unemployment. There is still a feeling that not 
enough money has been made available here and that the 
activities of the Funds in question could be better 
coordinated. 
The Chairman 
of the Economic and Social Committee 
Raffaele VANNI 
1, 10. 79 Official Journal of the European Communities No C 247/63 
ANNEX 
to the opinion of the Economic and Social Committee 
The following amendments were rejected during the discussions: 
Paragraph 1.6 
Insert a new paragraph 1.6 as follows: 
'The above comments show that fundamental decisions must be taken on the cyclical and structural 
aspects of the Community's economic and social objectives. 
Since 1973, EEC attempts to define and implement growth of a different quality from that developed 
since 1960 have got no further than lip-service or discussions between experts. 
The present recession and its future impact on the industrialized nations require: 
— a systematic quest for production processes which use less energy, 
— priority for energy saving by industry, services and households, 
— selectivity favouring job-creating investments, 
— priority for collective consumption, particularly in the field of transport, 
— a fairer share-out of income, 
— Community level outline agreements on shorter working hours, 
— the achievement - within the framework of the Treaty of Rome of European planning of 
Community economic and social development objectives. The drafting stage of such planning 
should involve the entire range of the socio-occupational categories affected by the Community's 
medium-term policy so that the instruments employed take account of specific national 
situations.' 
Reasons 
Since 1973 the Commission has requested numerous expert studies on the new aspects of the economic 
and social situation in the Community in the wake of energy and raw material price hikes. 
'Intellectual' attempts to define a new 'type of growth' have had little real impact on the industrial 
structures which have emerged since 1950 - not to mention the sharp rise in unemployment and the 
stagnation of the economies of the Member States. Excessive consumption and waste are still more or less 
the order of the day. 
Consequently, adaptations are made either via the price mechanism (price increases, continuing inflation), 
or by unemployment. 
Europe must change its face immediately. 
The definition followed by the implementation of another type of development goes hand in glove with 
closely linked industrial and energy policies. 
The goals of restoring full employment and essential social progress both for the industrialized nations 
and for the peoples of the third and fourth worlds must be defined within a European planning process 
involving all the socio-occupational categories via a Community initiative. 
Voting 
For: 33; against: 34; abstentions: 6. 
No C 247/64 Official Journal of the European Communities 1. 10. 79 
Paragraph 3.4 
Add a new subparagraph as follows: 
'Nevertheless Community measures to liberalize trade should not be unconditional, nor one-way. 
Community import concessions to non-member countries should be related to the beneficiaries' 
attitude to goods imported from the Community and to their level of development.' 
Voting 
For: 25; against: 34; abstentions: 5. 
The following passages were replaced as a result of an amendment adopted during the discussions: 
Paragraph 1.5 
'The above prospects for 1979 therefore have a far-reaching structural aspect. In the longer term and 
against this background it has to be asked whether renewed economic growth (if it can be achieved) 
is essential. Growth alone cannot solve all problems. A selective economic recovery and 
differentiated, selective measures are also necessary here. At all events efforts must be made to ensure 
the right balance, i.e. cooperation, between the market sector and the public sector with the objective 
of securing the desired living standards, not only at Community level but also at national and 
regional level.' 
Paragraph 2.3.2, fourth indent 
'work-sharing, including shorter working hours, earlier retirement, etc.' 
Opinion on the proposal for a Council Directive on the approximation of the laws of the 
Member States relating to edible caseins and caseinates 
The text referred to the Committee has been published in Official Journal of the European 
Communities No C 50 of 24 January 1979, page 5. 
A. LEGAL BASIS FOR THE OPINION 
On 9 February 1979 the Council referred the abovementioned proposal to the Economic and 
Social Committee in accordance with Articles 43 and 100 of the Treaty establishing 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 169th 
plenary session held in Brussels on 27 and 28 June 1979. 
The full text of the opinion is a follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Articles 43 and 
100 thereof, Having regard to the request made by the Council of the 
European Communities on 9 February 1979 for an 
opinion, 
Having regard to the decision taken by its Bureau on 
20 February 1979 instructing the Section for Agriculture 
to draw up an opinion on the matter,