A4-0193/98

Resolution on the Commission's Recommendation for the Broad Guidelines of the Economic Policies of the Member States and the Community (drawn up in conformity with Article 103 (2) of the Treaty establishing the European Community) (COM(98)0279 - C4-0291/98)

The European Parliament,

- having regard to the Commission's Recommendation (COM(98)0279 - C4-0291/98),

- having regard to the resolution of the European Council on the Stability and Growth Pact adopted in Amsterdam on 17 June 1997 ((OJ C 236, 2.8.1997, p. 1.)),

- having regard to the resolution of the European Council on growth and employment adopted in Amsterdam on 16 June 1997 ((OJ C 236, 2.8.1997, p. 3.)),

- having regard to the resolution of the European Council of 12 and 13 December 1997 on the coordination of economic policies during stage three of EMU and to Articles 109 and 109b of the EC Treaty,

- having regard to the resolution of the European Parliament of 30 April 1998 ((See Minutes of that Sitting, Part II, Item 21.)) on the Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on 'Growth and Employment in the Stability-Oriented Framework of EMU - Economic policy reflections in view of the forthcoming 1998 Broad Guidelines¨ (Annual Economic Report),

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy (A4-0193/98),

A. whereas the Commission's Recommendation sets out clearly the main policy priorities of high employment and a successful EMU,

B. whereas the Commission's Recommendation confirms that price stability is an essential requirement for realising sustained medium-term growth and draws attention to the fact that the Community has now achieved price stability in a sustainable manner,

C. whereas the Commission's Recommendation reiterates the growth and stability-oriented strategy recommended in previous guidelines as the appropriate macro-economic policy mix,

D. whereas the Commission's Recommendation urges Member States participating in the Single Currency to achieve a balanced macro-economic policy to take account of the need for convergence to a single interest rate and to a lesser extent convergence of exchange rates to the pre-announced bilateral exchange rates in the period up to 1 January 1999,

E. whereas the Commission's Recommendation sets out general guidelines to be followed at Community level and at individual country level in terms of maintaining sound and efficient public finances,

F. whereas the Commission's Recommendation urges Member States not participating in the Single Currency to treat their exchange rates as a matter of common interest,

G. whereas the Commission's Recommendation sets out general rules for wage developments both in Single Currency participating and in non-participating Member States to achieve an employment-friendly policy mix, and encourages a regular dialogue between the social partners and the authorities responsible for budgetary and monetary policies,

H. whereas the Commission indicates that structural policies have a role to play in fostering economic growth, restoring competitiveness and raising employment levels, and that EMU is likely to act as a catalyst for structural reform,

I. whereas in order to safeguard and promote the EC's competitiveness, employment and living standards in a world of free trade and constant change, it is essential that Member States and the Community as a whole intensify their efforts to improve the efficiency of product, service, and capital markets,

J. whereas the Commission's Recommendation is that solving the Community's unemployment and non-employment problem requires a simultaneous and comprehensive modernisation of the Community's labour markets,

High employment and a successful EMU

1. Welcomes the emphasis placed by the Commission on the priority which should be afforded to a high level and rate of growth of employment on the one hand and on the other hand the successful implementation of an EMU with a policy mix favourable to economic growth and employment, including a monetary policy conducive to investment-led growth;

2. Calls on the Commission and the Council to establish an effective parallelism between the processes leading to approval of the employment and the macroeconomic guidelines, in order to ensure strong coordination between macroeconomic and structural measures, and to transform the expected sustained growth into significant job creation; urges in particular the competent services in the Commission and in the Council to improve their cooperation in the preparatory work and in the decision-making process;

3. Agrees that the low level of employment in the EU (about 60% of the working-age population) is a source of large social, economic, and budgetary costs, and moreover represents a wasted growth potential beyond the growth coming from labour productivity;

4. Reiterates the view that accompanying structural policies and reforms are required to assist and cumulatively enhance the above investment in order to reinforce competitiveness and to make the growth more respectful of the environment;

Price stability

5. Agrees that the present below 2% average inflation rate represents price stability, and points out that, provided inflation price stability can be maintained by appropriate economic policies in the Member States participating in the Single Currency, then at the Euro-zone level monetary conditions can be set to achieve a high rate of investment-led growth;

6. Agrees that it is equally important for those Member States not participating in the Single Currency to consolidate their attempts to achieve levels of inflation comparable with the Euro-zone level, and in line with the relevant provisions of the EU Treaty, to ensure that these Member States are able to maintain stable exchange rates against the Euro;

Growth and stability-oriented macroeconomic policy mix

7. Strongly supports the Commission's views that the more the stability task of monetary policy is facilitated by appropriate budgetary measures and wage developments, the more monetary conditions, including exchange rates and long-term interest rates, will be favourable to growth and employment;

8. Further strongly supports the Commission¨s view, also expressed recently by the Interim Committee of the Board of Governors of the IMF, that it will be important that economic growth in Europe be led increasingly by domestic demand;

9. Calls for more explicit coordination of national budgetary policies within the framework of the Broad Economic Guidelines, taking account also of Articles 104 to 104c of the EC Treaty, the provisions of the Stability and Growth Pact now being implemented following the ECOFIN statement of 1 May 1998, and the need to achieve appropriate levels of private and public investment;

10. Draws attention to the absolute need for Member States not participating in the Single Currency to coordinate their macro-economic policies closely with those of the Euro-zone Member States in order to protect the integrity of the Single Market and its further development;

11. Agrees strongly that while Member States not participating in EMU from the outset retain sovereignty over their national monetary policies it is, in accordance with the Treaty, imperative that they should treat their exchange rates as a matter of common interest, and, to that end, should agree some structural mechanism which ensures the necessary exchange rate stability with the Euro;

12. Agrees that it is essential that monetary policy coordination between the Member States adopting the Euro will need to intensify during the run-up to 1 January 1999 to ensure convergence of both interest rates and market exchange rates and urges also - in order to avoid market misperceptions - that all official statements should reiterate the views of the Commission, the EMI and the European Parliament on the economic strength of the 11 Member Euro;

13. Welcomes the support of ECOFIN for the coordination, via the Euro-x Council, of economic policies among the 11 countries adopting the Euro, while respecting the pre-eminence of ECOFIN in relation to the overall coordination of economic policies;

14. Stresses the view that for all Member States it is important:

- to move towards budget balance, so enabling fiscal policy to preserve room for manoeuvre to deal with any shocks or cyclical disturbances, and to reassure economic agents that using deficits during a recessionary period will be temporary, so avoiding unnecessarily high interest rates,

- to use sound budgetary policies to keep long-term interest rates low thereby generating a 'crowding in' of private investment and avoiding the absorption of private savings,

- to maintain primary surpluses to ensure that, supported by higher economic growth, a sustained reduction in public debt levels is achieved,

15. Draws particular attention to the need to encourage further public and private investment through the various means at the disposal of public authorities in cooperation with the private sector, including the development of benchmarking tools for investment, public-private partnerships and the fostering of risk-capital practice throughout the Union;

16. Points out that in recent years deficit reduction has been achieved in many instances by reductions in the 'soft targets¨ of public expenditure, i.e. research and development, essential infrastructure expenditure and social welfare payments. Hence, a rebalancing of budgets may mean that budget deficit reductions may not always be achieved by expenditure restraints except in countries where public expenditure has not been reduced and where taxes have been increased;

17. Considers that the Commission should launch a new initiative, addressed to the 15 Member States, to update the proposals put forward in the White Paper presented by Jacques Delors, focusing in particular on major works of European interest;

18. States that the overall level, and indeed the amount, of taxation is a matter for democratic decision in each Member State, having regard to the principle of subsidiarity;

Wage developments

19. Recalls the provisions of the abovementioned Amsterdam Resolution on 'Growth and Employment' which underlined the role of the social partners in achieving wage settlement while bearing in mind the need to reconcile wage settlement with high levels and rates of growth of employment, by ensuring that profitability is sufficient to facilitate investment, other necessary conditions having been achieved;

20. Encourages the social partners to agree wage policies which take into account the objective of price stability, the need to increase returns on investment and purchasing power, and with differentials reflecting differentials in productivity levels according to qualifications and skills, and sectors (particularly as between the services and manufacturing sectors);

21. Strongly supports the view that to achieve these objectives it is essential to construct and maintain a strong social dialogue at all appropriate levels, but particularly at Community and at national levels; such dialogue is an essential condition to ensure the success of the strengthened framework of economic policy coordination - including monetary and budgetary policies - at Council, Commission, European Parliament and ECB levels;

Structural policies for growth and employment

22. Agrees with the need to give priority to achieving structural reform in areas such as product and labour markets, social protection systems and taxation, and the benefits which will follow from a programme of mutually reinforcing structural measures - stimulated also by the advent of a properly functioning EMU - for both market efficiency and social cohesion;

23. Calls on the Member States urgently to implement the national employment plans and the measures contained in them; expects this implementation to mark a truly new start towards a European employment policy, using innovative strategies and measures, based inter alia on benchmarking and diffusion of best practices, and promoted at European, national and local levels; asks the Member States in particular to define the budgetary resources required to fulfil the objectives indicated in the plans;

24. Stresses the critical importance of active labour market measures combining vocational training, retraining or education with work experience or an apprenticeship, which could be financed partly through the activation of unemployment benefits and the development of local partnerships;

25. Calls on the Member States to put the four pillars of the employment guidelines on an equal footing, and to coordinate the policy objectives required to fulfil them; calls on both sides of industry to improve social dialogue and to find common ground on issues related in particular to the 'adaptability¨ pillar, such as labour market reforms and management;

26. Agrees with the emphasis placed in the ECOFIN statement of 1 May 1998 on increasing productivity and investing in education and research and development;

Product, services and capital markets

27. Supports the need for reforms to improve the functioning of the Single Market in order to create a genuine European home market, and believes that these reforms need to address in particular the failure of the majority of Member States to implement Single Market directives;

28. Advocates wide publicity for the Single Market Action Plan and the six-monthly Single Market Scoreboard;

29. Agrees that in two areas, public procurement and mutual recognition, there is an urgent need to make faster progress;

30. Stresses that, following the conclusions of the Luxembourg European Council, policy coordination should strike a balance between Member States' fiscal sovereignty and the clear need for progress in the coordination of tax systems and rates to ensure the removal of all distortions of competition;

31. Argues that it is important in relation to supporting the Single Market, and also in relation to the challenges of globalization, to provide sufficient public and public/private investment in trans-European networks and national infrastructure projects, and to provide increased funding for research and development activities;

32. Supports the decentralization of anti-trust enforcement in the Community, on condition that national competition authorities harmonise their law and their enforcement practices to ensure the effective and equitable application of anti-trust rules throughout the Community; calls, in addition to the Community policies in the areas of anti-trust and competition, for measures to contribute to the development of similar policies at international level;

33. Supports the call for Member States to exert rigorous self-discipline in the provision of state aids, while recognizing the need to support restructuring efforts and for the provision of incentives for more efficient investment, particularly for environment-friendly technologies;

34. Supports the programmes at Community, national and regional level which are aimed at fostering the development of SMEs - in particular through favouring a culture of entrepreneurship - including the reduction of regulatory burdens and support programmes in the areas of seed, start and risk capital;

35. Welcomes the intention of financial institutions, corporation and Member State governments to use the new Euro speedily and actively in interbank markets, foreign exchange and capital markets, and urges that the national authorities take all the necessary measures to remove legal and financial obstacles to market integration;

Labour markets and investment in knowledge

36. Stresses that full emphasis should be placed on the employment union, outlined in the Amsterdam Treaty, as the essential partner of the economic and monetary union of the EU Treaty;

37. Urges that each of the four pillars of the Luxembourg employment guidelines - improving employability, developing entrepreneurship, encouraging the adaptability of businesses, and promoting equal opportunities - should be given equal emphasis;

38. Recognizes the emphasis in the broad guidelines on the need for simultaneous and comprehensive improvements in the structure and functioning of the Community's labour markets to accompany the capacity-enhancing, investment-led economic growth and fiscal stabilisation policies at macro-level;

39. Strongly supports the adoption of active labour market policies in all Member States, building on successful examples from within the Community;

40. Supports the Commission's call for the reduction of non-wage labour costs, which could be compensated by other fiscal reforms;

41. Agrees that current welfare systems should not act as disincentives to employment while continuing to ensure an appropriate level of social protection, in particular to low-income working households;

42. Agrees with the need to avoid the 'double safety net' approach which in some countries not only protects employees by generous benefit systems, but at the same time goes beyond an adequate level of employment protection;

43. Calls on the ECOFIN Council to accept the Commission's recommendation for the Broad Economic Guidelines, as supported by this resolution;

44. Instructs its President to forward this resolution to the Council and Commission and the parliaments of the Member States.