No C 348/10 Official Journal of the European Communities 31. 12. 81 
Opinion on the Commission's Annual Economic Report (1981-82) 
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 
On 26 October 1981 the Council referred the abovementioned Report to the Economic 
and Social Committee in accordance with Article 198 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 
192nd plenary session held in Brussels on 25 and 26 November 1981. 
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 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 Commission's Annual 
Economic Report 1981-82, 
Having regard to the request made by the Council of 
the European Communities on 26 October 1981 for 
an opinion on the Commission's Annual Economic 
Report 1981-82, 
Having regard to the decision taken by the Bureau of 
the Economic and Social Committee on 27 October 
1981 instructing the Section for Economic and 
Financial Questions to draw up an opinion on the 
Commission's Annual Economic Report 1981-82, 
Having regard to the Economic and Social 
Committee's opinion on the Economic Situation 
in the Community (mid-1981) (l) and the 
accompanying report of the Section for Economic 
and Financial Questions, 
(i) OJ No C230, 10.9. 1981. Having regard to the Report, including its Appendix 
on the Economic Situation in the United Kingdom, 
submitted by the rapporteur, Mr Zinkin, 
Having regard to the discussions of the Section for 
Economic and Financial Questions at its 68th 
meeting held on 13 November 1981, 
Having regard to the discussions on 25 November 
1981 during the 192nd plenary session held on 25 and 
26 November 1981, 
HAS ADOPTED THE FOLLOWING OPINION 
by 75 votes in favour to 0 against with 41 
abstentions : 
1. Uncertainty 
1.1. Forecasting is at this moment particularly 
difficult. All economic forecasting rests on the 
assumptions that past relationships continue in the 
future and that the system will not be subject to any 
sudden shocks. These have been dubious 
assumptions ever since 1973 and they are now more 
dubious than ever. As the Commission has pointed 
out, the system has been subject to three severe 
shocks over the last eight years: the first oil shock, the 
second oil shock and then the appreciation of the 
dollar — the worsening of the terms of trade resulting 
from the rise of the dollar and the increase in rates of 
interest which has accompanied that rise. 
1.2. It would be foolish to assume that 1982 will be 
immune from the possibility of such shocks. The 
Middle East situation grows more delicate all the 
time. What the effects of American policy will be on 
the dollar exchange rate and on rates of interest over 
the next year is highly uncertain. Even the policies of 
the Member States of the Community may suffer 
considerable changes as the recession develops. 
31. 12. 81 Official Journal of the European Communities NoC 348/11 
1.3. As the Commission itself has pointed out, the 
Community's economy is subject not only to servere 
external pressures; it is also suffering from a gradual 
loss of competitiveness over the last decade and from 
a measure of inflexibility and incapacity to adapt 
rapidly to the shocks from outside to which it has 
been subject. Even with the present rise in the value 
of the dollar, US industry is more competitive in 
relation to Community industry than it was 10 years 
ago and the Japanese have shown considerably 
greater flexibility in the adaptation of their economy 
to the increased price of energy. 
1.4. The Community and the Member States are 
therefore faced with the double problem of 
responding at the same time to a certain diminution 
of the ability to adapt internally and of finding 
measures to cushion the impact of what is happening 
externally. 
1.5. There are a great many policies on offer and it 
is not easy to choose the right ones. The Commission 
report itself recognizes that dogmatism would be 
inappropriate. Some of their suggestions have a 
certain hesitancy about them. Within the Council of 
Ministers there are some serious disagreements of 
view. The Goverments of the Member States are 
faced with even less consensus amongst their people. 
This in itself produces doubt and makes the adoption 
of any course of action which involves sacrifices by 
particular sections of the public (whether workers, 
tax payers, shareholders or farmers) harder to 
enforce. 
1.6. The Committee no more has a miracle solution 
than anybody else. However, Chapter 8 of its own-
initiative opinion on the Economic Situation in the 
Community (mid-1981) (•) adopted in July 1981, sets 
out a certain number of measures which it thought 
would help. 
2. The Commission's forecasts 
2.1. Last year the Commission took a moderately 
optimistic view of 1981. In particular it forecast an 
increase in volume of output of 0 • 6 %. This increase 
has not happened, largely because the appreciation 
of the US dollar against the ECU (34% in the 12 
months to September 1981) was much greater than it 
had anticipated. The Commission concludes that 
import prices are likely to rise by 16•5 % in the course 
of 1981 and the terms of trade look like worsening by 
(') OJ No C230, 10.9. 1981. 4% (1981 as against 1980). Inflation was therefore 
1 • 5 % higher than expected and real private 
consumption was 2 % lower. The only consolation 
was that some appreciation in the dollar has been 
largely responsible for a somewhat greater increase 
in Community exports than was expected. 
2.2. The Commission now believes that in 1982 the 
Community economy will do even better than it 
orginally expected for 1981. It sees a growth in GDP 
of 2%, inflation at 10-5%, and a 6% growth in 
exports (2). Its forecast of return to growth in GDP is 
indeed crucially dependent upon this export growth, 
and that in turn is heavily dependent on the value of 
the dollar not falling back again. However, should 
the dollar fall, there would be some countervailing 
favourable effects if it were accompanied by a fall in 
interest rates in America and, in consequence, in the 
Community. It would also be necessary for the rate of 
exchange of the yen to follow a path more in keeping 
with the economic realities. 
2.3. The Commission points out that far from 
converging as had been hoped, the economies of the 
Community have diverged further. Inflation in 1980 
was 24 % in Greece and 5 • 5 % in The Federal 
Republic of Germany. Growth was 4 % in Italy and 
- 3 % in the UK. The Federal Republic of Germany 
had a current balance of payments deficit of 10 
billion ECU, and the UK had a surplus of 4-6 billion 
ECU. The Committee believes that these extreme 
differences may narrow in 1982. They will, however, 
still be sufficiently wide in most cases to require 
different policies in the different Member States, if 
they are to succeed in converging on a satisfactory 
rate of growth with a low level of inflation and 
balances of payments in not too serious deficit. 
Moreover, in certain cases Member States have 
deliberately made different policy choices. 
2.4. In the present state of uncertainty, the 
Committee does not wish to challenge the 
Commission's figures in detail, but it feels that they 
may well turn out to be optimistic. There is sufficient 
possibility that the dollar will fall back for there to be 
a considerable chance that the contribution of 
exports to growth will be lower than the Commission 
expected. It has fallen against the deutschmark by 
some 7 °/o over the last few weeks. The reduction in 
(2) Individually, of course, Member States' performance 
will deviate from these averages: 1982 forecasts indicate 
a change in GDP of + 3 • 6 % in Ireland and -0-3 % in 
Luxembourg; a 4-5% inflation rate in the Federal 
Republic of Germany' 22-5 % in Greece and 16-9 % in 
Italy (see the Commission's Annual Economic Review 
1981-82). 
No C 348/12 Official Journal of the European Communities 31. 12. 81 
the rate of inflation in the Community and the fall in 
interest rates which might well accompany such an 
improvement in exchange rates against the dollar 
would probably only partially counteract the effect 
on exports. 
Secondly, in the present state of the world it is 
probable that the set of unpredictable unfavourable 
events that will occur will bring down growth by 
more than the set of unpredictable favourable events 
will increase it. 
Thirdly, the restocking on which the Commission 
places some reliance in its growth estimate may be 
delayed if American interest rates, and with them 
Community interest rates, stay high. 
2.5. If growth is slower than the Commission 
forecasts, it is likely that budget deficits will be 
greater, if only because of the need to pay for more 
unemployed, and that inflation too will be higher. It 
is certain that unemployment will be higher. Even on 
the assumption of 2 % growth, the Commission 
forecasts an increase from 7 • 8 % to 8-5 % 
unemployed; at any lower rate of growth the figures 
would be correspondingly worse. 
3. Unemployment 
3.1. The Committee considers that these appalling 
figures make the reduction of unemployment, 
especially amongst young people, the predominant 
preoccupation for policy. 
What is done to reduce unemployment must take 
account of the long term as well as the short term. 
Openness to the world, the reduction of inflation, 
competitiveness, for instance, are important in 
creating jobs in the long run. 
There is little relevant experience in what works best 
in reducing large-scale unemployment. This makes it 
more difficult to find agreed solutions. Until the mid-
1970s, serious unemployment was confined to a few 
regions of the Community and there it was structural 
rather than cyclical. An average for the Community 
of 8 • 5 % or 9 %, which means that in very many 
regions there may be rates of 12 % or 15 %, is a new 
phenomenon. Governments and the social partners, 
therefore, are often feeling their way in trying to think of methods to cope with the disaster which has 
overcome them. 
4. Interactions 
4.1. The Commission insists on the interactions 
between inflation, rate of interest, balance of 
payments, investment, competitiveness and 
unemployment. The Committee would make the 
point even more strongly. The problems interact, and 
interact in a way which is sometimes unpredictable 
and is nearly always likely to be different from 
Member State to Member State. If inflation is 
reduced, this will normally reduce rates of interest 
and will therefore, in the long term, create jobs. But if 
the method of reduction is to have a tight monetary 
policy and low budget deficits, this may in the short 
run mean higher rates of interest and fewer jobs. If 
inflation is brought down to a low and stable level, 
confidence will be increased, borrowing will be safer 
and jobs will be created. But if this does not last and 
there is quite quickly a return to higher levels of 
inflation, confidence will be damaged, borrowing 
will again appear relatively dangerous and jobs will 
be lost. If budget deficits are increased in order to 
stimulate the economy, in the short run this will 
create jobs; in the long term it may increase rates of 
interest and reduce jobs. If real rates of interest 
become negative this will, in the short run, encourage 
investment and create jobs; but if it then results in a 
reduction in saving, it may in the long run lead to a 
rise in the rate of interest above what it would 
otherwise have been and to a reduction in jobs; 
though the extent to which this happens will depend 
on how far the jobs created pay for themselves, both 
directly and through their multiplier, in increased tax 
revenue and reduction in unemployment benefits. 
If labour-saving investments are made they may in 
the short run lead to a loss of jobs, but if they are not 
made, the enterprise may cease to be viable and in the 
long run even more jobs will be lost. 
4.2. What is appropriate, therefore, depends on the 
set of circumstances prevailing at the moment when 
policy changes are undertaken. The Committee 
recognizes that it is easy to define the circumstances 
in which tight monetary control or stimulation of 
demand are appropriate, but the application of these 
definitions to the detailed circumstances of time and 
place, and, still more, the working out of the best 
combination of different measures, is extremely 
complicated. Even models depend on the assumption 
that the relationships they assume will remain stable. 
The problem of finding satisfactory policies in 
today's world is that relationships keep altering. 
31. 12.81 Official Journal of the European Communities No C 348/13 
4.3. Despite the difficulties, governments have to 
act. The Committee would, however, emphasize the 
caution with which action should be undertaken 
when the consequences of any policy which may be 
adopted are so doubtful. What is desirable is clear: 
all Member States would like to have stable prices, 
stable exchange rates, high rates of growth, and a 
minimum of unemployment. There is no dispute 
about ends; the arguments are over means, both over 
which means would be most effective and which 
means society can tolerate without losing its cohesion 
in the process. 
4.4. In the democratic societies of the Community, 
these arguments over means are settled by 
governments who are subject to shifts in public 
opinion and to the hazards of elections. The means 
adopted are always, therefore, subject to the 
constraints of what public opinion will tolerate and 
this varies from Member State to Member State. 
There is also the chance that elections will produce in 
the different Member States governments with 
clearly different ideas of the best means to use. 
5. The Committee's previous proposals 
5.1. The Committee is pleased to note that despite 
this uncertainty there is a great deal in common 
between the views it expressed in its own-initiative 
opinion in July and those now put forward by the 
Commission. The Commission too, sees, for 
instance, a need for more vocational training, for a 
return to profitability, for higher investment, for a 
more vigorous energy policy, for finding effective 
investment incentive and for a generally better 
investment climate. It does not place the same 
emphasis on the need to protect the worst off from 
the consequences of the present crisis but that may be 
because the Commission saw this as a mainly 
economic document. The Committee reiterates its 
regret that there is no Community document which 
looks at economic and social policy together. It 
welcomes the small beginning which has been made 
in the document on the economic and social situation 
which the Commission produced for the European 
Council in June. 
6. Growth 
6.1. The primary way to cure unemployment is to 
have a rate of growth sufficient to provide enough 
jobs to make up for increases in productivity and in 
the number of people seeking work, and still leave a 
margin for the reduction of unemployment. Over the 
next few years the labour force is likely to increase by 1 % per annum and a reasonable guess at the rate of 
improvement in productivity might be 2 to 3 % per 
annum. A growth rate of at least 4 % per annum is 
therefore required to make any dent in 
unemployment at all, and in the more hard-hit 
regions even 4 % per annum would take a long time 
to bring levels of unemployment down to tolerable 
levels. 
6.2. There are obvious problems in the way of 
attaining a growth rate even of 4% per annum in the 
immediate future. The Committee considers that this 
makes it more important to place growth in the 
forefront of policy whilst recognizing that there will 
be considerable unemployment for some time to 
come and that therefore measures must be taken to 
make the life of the unemployed as tolerable as 
possible, even if this means sacrifices for the rest of 
the population. The Committee also recognizes that 
growth cannot be the only objective of policy. 
7. Supply side and demand side 
7.1. The Committee believes that adequate growth 
will require improvements on both the supply side 
and on the demand side of the economy. It observes 
that although the Commission places more emphasis 
on the supply side it too considers both sides to be 
important. 
7.2. The Committee would agree with the 
Commission that the greatest need on the supply side 
is to get back to some reasonable stability: to lower 
inflation, lower rates of interest and more stable 
exchange rates. It would also consider that there may 
be some room in some Member States for demand 
stimulation through an increased budget deficit, 
provided this is not primarily financed by monetary 
means and provided that the necessary borrowing 
neither crowds out private industry nor produces a 
burden for the future which will act as a brake on the 
private sector. 
7.3. Beyond these generalities the Committee finds 
even more difficulty than the Commission has 
obviously done in making concrete recom­
mendations of policy which might be equally 
applicable to all the Member States. The measures 
which have recently been taken in France would be 
quite inappropriate for Italy, and the major attempt 
to cut the budget deficit which has just been 
undertaken in Ireland would be quite inappropriate 
for Germany. The present situation in the different 
Member States is so different that any convergence 
on some desirable Community norm would involve 
No C 348/14 Official Journal of the European Communities 31. 12. 81 
policies which would usually be different and might 
sometimes be opposite. It is, however, important that 
all the policies adopted should be compatible or the 
Community will be placed under great strain. The 
Committee would, however, like to emphasize the 
importance of not placing any undue weight on any 
single policy. 
8. Competitiveness 
8.1. The Commission attaches central importance 
to the improvement of the Community's 
competitiveness and draws hope from the 
considerable improvement which has occurred over 
the last year as against both the US and Japan as a 
result of the appreciation of the dollar and the yen. 
The Committee would emphasize that com­
petitiveness is not only a matter of labour costs, 
though labour costs are obviously crucial. There is 
also economy in the use of capital through the 
effective use of machinery and buildings; there is the 
cost of capital which is affected largely by the rate of 
interest, and there is the better use of energy and raw 
materials both through new investment and through 
more careful control. 
9. Investment 
9.1. The Commission places great emphasis upon 
investment as the major engine of growth and thus 
the major provider of employment. The Committee 
agrees as a general proposition, but believes that 
some provisos must be added. In a time of high 
unemployment care must be taken to see that 
government measures do not make it more profitable 
than it would otherwise be to substitute capital or 
energy for labour. Investment which is not profitable, 
far from benefiting the economy, burdens it. 
Investment in such items as schools or hospitals or 
housing for the worse off, quite apart from the social 
effects, also has an economic effect in stimulating 
demand. Investment in infrastructure should 
normally be judged on its economic value but there 
will be occasions when the criteria are partly social, 
as in some forms of public transport, and at an 
appropriate time it may be an effective way of 
stimulating growth. 
9.2. The Commission considers various possibilities 
of special incentives for investment. The Committee 
would here make three points. First, a general 
incentive should only be given to meet a general problem; for instance, there is a general problem of 
the level of depreciation allowance to be given under 
circumstances of inflation, and this needs to be met 
by a generally applicable rule. Where the objective is 
more specific (particular forms of energy-saving 
investment for example, or help with the 
development and application of new technologies) 
the assistance should be specific, possibly dependent 
upon undertakings from the firm to whom the help is 
given to perform certain actions or achieve certain 
objectives within a given period of time, as is often 
done in France. Thirdly, the extent of such incentives 
must depend on the budgetary position. 
9.3. The Committee would, however, agree with 
what it regards as a necessary implication of the 
Commission's discussion of investment: that the 
most important of all incentives is a stable and 
reasonably predictable environment. What inhibits 
investment above all is volatility in all the relevant 
variables. If the exchange rate is constantly changing 
it is very difficult to estimate how competitive with 
foreign products one's product will be when it comes 
on stream, either in the home market or for export. If 
the rate of inflation goes sharply up and down it is 
very difficult to forecast what the real cost of any 
long-term fixed interest borrowing will be. If a high 
rate of inflation is reflected in a high nominal rate of 
interest, the result may well be severe liquidity 
problems in the period while the project is brought to 
fruition and its products begin to pay off. Moreover, 
borrowings at high fixed rates or at variable rates 
which will bei high in years of high inflation, run the 
risk that in some years profits will not be adequate to 
provide cover for the interest due, which the lender 
expects. In stable conditions when interest rates do 
not have to include an element for the loss of capital 
through inflation, this risk is much smaller. That is a 
major reason why a lower rate of inflation 
encourages a higher rate of growth. 
9.4. The Committee would emphasize that the 
stability to be aimed for is not merely stability in the 
medium term; this is probably adequate for firms 
with a long planning horizon and large financial 
resources. Stability is also needed in the shorter term, 
to foster firms with limited resources and to create 
the right climate for all firms. 
9.5. The Committee would like to see any 
incentives, apart from those given for restructuring, 
directed largely to industries where risks are 
exceptionally high, either for technological reasons 
or because the gestation period is long and 
development can be expected to boost employment 
and the development is of importance to the 
Community's economy. 
31. 12. 81 Official Journal of the European Communities No C 348/15 
10. Rates of interest 
10.1. The Committee believes that nothing would 
be more valuable in stimulating a return to 
satisfactory rates of growth and in creating jobs than 
a reduction in nominal rates of interest. 
When rates of nominal interest are low: 
— it is worth holding more stock than would 
otherwise be held; 
— house building goes up because mortgage interest 
takes a smaller percentage of income and it is less 
expensive for builders to hold land and to pay for 
their work in progress; 
— entrepreneurs have more confidence in their 
judgment of whether any given project is likely to 
provide an adequate rate of return and this is as 
true for the commercial enterprises of the state as 
for private enterprises: 
— any borrowing for social needs places a less heavy 
burden on future budgets (this may not be true in 
real terms in the event, but it must be assumed to 
be true by any government that believes it is going 
to be successful in reducing inflation); 
— the purchase of consumer durables on credit 
becomes sensible at a much lower level of saving 
as a result of the ownership of the durable, e.g. 
buying a washing machine as against going to the 
launderette. 
10.2. The Committee, however, like the 
Commission, finds it difficult to see what measures 
would be effective in bringing down the rate of 
interest without drying up savings, which would be 
counter-productive, or increasing inflation, 
especially so long as American rates remain high and 
the capital markets of the Community and of the US 
are as inter-connected as they are. Where 
circumstances push towards high interest rates to the 
extent to which they are doing at present, obtaining 
lower interest rates all round may not be immediately 
possible. The Committee would therefore confine 
itself to repeating the suggestion it made last year that 
consideration might be given to interest rate 
subsidies for objectives of special economic 
importance such as energy saving, or so long as high 
unemployment lasts, where the number of jobs 
created in relation to the expenditure would be 
large. 
10.3. The Committee would urge a united 
Community approach to mitigate the effects of American policy on Community interest rates and to 
make clear to the US the seriousness of these 
effects. 
10.4. The Committee believes that a necessary pre­
condition of any considerable fall in nominal rates of 
interest is a reduction in inflation which everybody 
believes will be lasting. It would agree with the 
Commission that both because of its effect on the rate 
of interest and, more generally, because of its effect 
on confidence and the investor's sense of stability, a 
lasting reduction in the rate of inflation would have a 
major effect in creating jobs. It believes, however, 
that the Commission's proposals make insufficient 
allowance for those occasions where in some 
Member States it may be possible for governments to 
stimulate demand at the expense of some minimum 
increase in inflation which will be cancelled as 
the multiplier effects of the stimulus reduce 
unemployment benefits, increase tax revenues, place 
more output on the market and, conceivably, lower 
unit costs. The Committee recognizes that such 
measures are only likely to be successful if the initial 
increase in inflation is small and that experience of 
the last ten years has made everybody so inflation-
sensitive that this is harder to achieve than it used 
to be. 
11. Concern for the poorest 
11.1. All the three shocks to which the Commission 
attaches so much importance (the two oil shocks and 
the dollar shock), have involved a worsening of the 
terms of trade and have thus made the Community as 
a whole poorer. The effects of the first shock have 
worn themselves out but the Committee would agree 
with the Commission that the effects of the second 
and third shocks have not yet fully done so. This can 
be made up for in due course by growth or by the 
terms of trade improving once more — as they are 
likely to do in a small way in 1982, especially if oil 
prices stabilize or fall slightly as seems probable, 
expecially if OPEC keeps to its decision to keep the 
dollar oil prices stable until the end of 1982 and thus 
produces some fall in oil prices in real terms. 
11.2. Meanwhile, the Committee would reiterate 
what it has said before: that the adjustments which 
have to be made to take account of this 
impoverishment should not be allowed to fall on the 
poorest members of society whcwmust be adequately 
protected by social security, even though that will 
mean sacrifices for the rest of the society. (See 
Chapter 7 of the Committee's Opinion on the 
Economic Situation in the Community, mid-1981 — 
OJ No C 230 of 10 September 1981.) 
No C 348/16 Official Journal of the European Communities 31. 12. 81 
12. Commercial policy 
12.1. The Commission believes it is very important 
that the recession should not lead to a recrudescence 
of protectionism. The Community is the world's 
largest trading entity and it is in the interest of the 
Community to have as free a flow of trade as 
possible. The Committee would, however, reiterate 
what it said in July(l) about the need for trade to be 
fair as well as free. The Committee observes that in 
the Community's trade outside its own borders, 
which for a common market is the only true foreign 
trade, it is running three large deficits: with the US, 
with Japan and with the oil-producing countries. The 
Committee believes that this is an unstable position. 
The Community cannot permanently meet these 
deficits by surpluses elsewhere or be borrowing. It 
will, therefore, both have to improve its sales in these 
markets through greater competitiveness and object 
forcefully to any barriers which make it more 
difficult for it to export to them (2). 
12.2. The time has come for the Commission to 
analyse the effect on trade of the protective measures 
and the distortions in the terms of competition in 
which some of its partners indulge. 
13. Exchange rates 
13.1. Inflation, interest rates and exchange rates are 
interdependent. After the latest realignment of 
Community currencies within the EMS and the 
movements in the dollar and the yen, most exchange 
rates are more in accord with the underlying 
economic realities than they have been for some time, 
though the yen may still be undervalued. If these 
realities again diverge, the Committee would 
consider it important that corrective action be taken 
in good time and by agreement, as in the recent 
realignment. The Committee would further urge an 
(') Opinion of the Economic Situation in the Community 
(mid-1981), OJ No C 230, 10. 9. 1981. 
(2) See, for instance, the Committee's opinion on Economic 
and Commercial Relations between the European 
Community and Japan, adopted in July 1981 (OJ No C 
230, 10.9. 1981). attempt to concert exchange rate policy with the 
United States and Japan. 
14. Developing countries 
14.1. The Committee considers that there should be 
no reduction in aid to the developing countries, and 
that special sympathy should be shown in the harsh 
climate brought about by high oil prices for the 
development needs of the least-developed countries. 
It also hopes that in any review of Community aid 
policies which may be carried out, greater attention 
will be paid to assessing the economic and social 
policies of individual recipient governments, 
particularly as regards import restrictions, protection 
for infant industries, agricultural prices, and the 
observance of international labour standards, before 
aid allocations are made. It would draw attention to 
the suggestions which it has made for improving the 
generalized scheme of preferences in its recent 
opinion (3). 
15. Community initiatives 
15.1. Given the differences in the circumstances of 
the individual Member States already referred to 
above, though objectives are the same, policy 
inevitably varies a great deal from state to state. 
These variations are often necessary. They 
nevertheless involve dangers for the Community. 
Thus, the Member States may begin to compete over 
incentives; their economies may diverge in a way that 
tempts them to erect non-tariff barriers; some may be 
faced with worse difficulties than others with the 
result that gaps in income and employment between 
regions widen in a way which produces resentments 
in the less-favoured areas. An election may always 
produce a change of policy which has consequences 
at the Community level as well as in the Member 
State itself. 
15.2. The Committee has in the past, on various 
occasions, insisted on the importance of Community 
initiatives which might avoid these dangers. These 
are now more important than ever. It is necessary to 
facilitate the convergence of the economies of the 
Member States and to help cure the productive, 
technological and social imbalance between the 
Community's regions. 
(3) Opinion on the Scheme of Generalized Tariff 
Preference (GSP) for the period 1982-1985 (OJ No 
C343, 31. 12. 1981). 
31. 12.81 Official Journal of the European Communities No C 348/17 
15.3. The Commission itself places its first priority 
on the completion of the common market, the 
removal of the still considerable remaining barriers 
at national frontiers, the equalization of conditions 
of competition and the avoidance of the creation of 
new non-tariff barriers. The Committee accepts a 
high priority for the completion of the common 
market. It considers that the Commission should 
speed up its programme of harmonization Directives 
intended to do away with non-tariff barriers and it 
believes that, so far as possible, any measures taken 
to protect health and safety should be taken at 
Community level. The Committee supports, too, the 
Commission's view that the Social and Regional 
Funds should be used in a more dynamic way and on 
a bigger scale to train people for the jobs of the future 
and to create employment. The Committee would 
like to welcome the measures the Commission is 
taking in favour of vocational training. 15.4. Finally, it believes that it might be possible to 
use the Community's borrowing power to stimulate 
growth without increasing budget deficits of the 
Member States, some of whom are at the limit of their 
individual borrowing power. Action at Community 
level to help individual Member States, for instance 
through an expansion of the Ortoli Facility, also 
helps the others, through the leakages which occur 
because of the high level of transactions between 
Member States; full advantage is thus obtained from 
the multiplier effects of any stimulus. Whatever is 
done, however, the Community dimension should be 
kept in mind and the projects assisted should either 
be viable in themselves or have a particularly large 
multiplier effect on employment. There is also a 
strong case for increasing the European Investment 
Bank's loans to industry, expecially to small and 
medium enterprises or to those which are innovative 
of whatever size, this in the perspective of the priority 
given to the fight against unemployment. 
Done at Brussels, 25 November 1981. 
The Chairman 
of the Economic and Social Committee 
Tomas ROSEINGRAVE 
APPENDIX 
to the Opinion of the Economic and Social Committee 
I. The following amendment was rejected during the discussions: 
Page 6, paragraph 2.5 
after 'It is certain that unemployment will be higher' add the following: 
'unless the Community radically revises its policy.' 
Reason 
The amendment speaks for itself. 
Voting on the Amendment 
For: 39, Against: 65, Abstentions: 6 
II. The following passages were deleted during the discussions 
Page 11, paragraph 6.2 
last two sentences: 
'In some Member States many jobs could be created by a programme for the building of 
nuclear power stations, but some groups of the population consider that there are good 
No C 348/18 Official Journal of the European Communities 31. 12.81 
reasons for objecting to such power stations. Equally, there are sometimes ecological reasons 
which public opinion may consider justify the vetoing of certain projects, however job-
creating they may be.' 
The Deletion was approved unanimously. 
Page 20, paragraph 14.1 
first part of the second sentence: 
'However, the Section would also emphasize that there is no case for providing aid to build up 
uneconomic industries or industries that will compete with Community industries ...'. 
Voting on the Deletion 
For: Majority, Against: 1, Abstentions: 4.