Recommendation for a

COUNCIL RECOMMENDATION

On the establishment of National Competitiveness Boards within the Euro Area

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292, in conjunction with Articles 121(2) and 136 thereof,

Having regard to the recommendation of the European Commission,

Whereas:

(1)While there is a need to improve the coordination and the surveillance of competitiveness developments within the Union, the recent crisis made visible that Member States whose currency is the euro ('euro area Member States') can be particularly subject to the possible build-up and sudden unwinding of macroeconomic imbalances that may spill-over into other euro area Member States. In the absence of flexible nominal exchange rates, they also need adequate adjustment mechanisms to country-specific shocks. Competitiveness dynamics are of relevance both for the accumulation and correction of macroeconomic imbalances (e.g., trade and current account deficits, stocks of domestic and external liabilities) and an effective adjustment to asymmetric shocks. Competitiveness deterioration may also be responsible for reduced potential growth, which makes high debt less easy to be paid back. Coordination of policies having a bearing on competitiveness dynamics would help to ensure that competitiveness developments are compatible with the objective of a smooth functioning of the economic and monetary union (EMU). While this Recommendation is addressed to the euro area Member States, the other Member States are also encouraged to set up similar bodies.

(2)The European Semester, in particular the macroeconomic imbalance procedure as established in Regulation (EU) No 1176/2011 and Regulation (EU) No 1174/2011, provides a framework for integrated economic policy coordination and surveillance. In view of the need to foster progress with structural reforms in the competitiveness domain, these existing mechanisms need to be backed by stronger national ownership of reform agendas. To this purpose, raising independent policy expertise at national level and reinforcing the policy dialogue between the Union and the euro area Member States appear warranted.

(3)The setting up of national competitiveness boards in charge of tracking performance and policies in the field of competitiveness should contribute to the enhancement of ownership of the necessary policies and reforms at national levels and to improving the knowledge basis for Union economic policy coordination in the field of competitiveness. These boards should assess competitiveness developments and policies, but also provide policy advice for reform implementation, taking into account national specificities and established practices.

(4)The scope of intervention of competitiveness boards should span a comprehensive notion of competitiveness. Wage dynamics as well as non-wage factors and productivity drivers and dynamic considerations related to investment, innovation and the attractiveness of the economy to businesses should fall under the remit of these boards.

(5)Competitiveness boards should be entrusted with the capacity to ensure high-quality economic analysis as the basis for their advisory role.

(6)Competitiveness boards should be independent from the ministries or public authorities that deal with competitiveness-related issues. The competitiveness boards should also be unbiased, in the sense that they should not convey only or mainly views of specific groups of stakeholders. Such independence and unbiasedness requirements are aimed at ensuring that the advisory role of competitiveness boards adequately reflects expert judgement formulated in the general interest.

(7)The characteristics of the competitiveness boards should be in compliance with Article 152 of the Treaty and should take into account the national practice and institutions for wage formation. In accordance with Article 28 of the Charter of Fundamental Rights of the European Union, their functioning should not affect the right of workers and employers, or their respective organisations, to negotiate and conclude collective agreements at the appropriate levels or to take collective action in accordance with Union law and national laws and practices.

(8)The Commission should coordinate the activities of the competitiveness boards with a view to fostering the achievement of euro-area-wide objectives and taking into account inputs from the system of competitiveness boards in Union economic policy coordination.

(9)Competitiveness boards should compile and publish their analysis and advice in an annual report. In order to ensure that euro-area and Union objectives are taken into account in the work of the boards consultations between the Commission and the boards should take place for the production of these reports and during fact-finding missions to Member States. The reports will inform the Commission analysis undertaken in the context of the European Semester and the Macroeconomic Imbalances Procedure.

(10)In order to ease coordination at supra-national level, there should be one identifiable competitiveness board in each Member State. However, to carry out their activities properly, competitiveness boards could in turn rely on different separate existing bodies, provided that they meet the common principles exposed above.