No C 283/6 Official Journal of the European Communities 27. 11. 78 
ANNEX 
to the opinion of the Economic and Social Committee 
The following part of the opinion of the Section was amended. 
Page 11, the last two subparagraphs of paragraph 5.1.5 
'In the longer-term future, credits would be granted by the EMCF by a qualified majority vote, in the 
light of the economic situation in the applicant Member States. The latter should give the EMCF 
every guarantee as to the policy they intend to pursue in accordance with the Council decisions on 
the convergence of economic policies. The EMCF board would make an annual review of the 
applicant's economic and financial situations, paying due regard to the code of conduct laid 
down by the Council of Ministers. 
Thus, the EMCF could act as a kind of IMF at Community level.' 
Opinion on the present 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 the attainment of a high degree of con­
vergence 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 160th 
plenary session held in Brussels on 20 and 21 June 1978. 
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 Com­
munity, 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 27 October 1977 on the 
annual report on the economic situation in the Com­
munity in 1977 0), 
(!) OJ No C 18, 23. 1. 1978, p. 1. 
27. 11. 78 Official Journal of the European Communities No C 283/7 
Having regard to the decision taken by its Bureau on 
22 November 1977 instructing the Section for 
Economic and Financial Questions to draw up an ad­
ditional opinion and report on the same topic, 
Having regard to the report submitted by the rap­
porteur, Mr Clark, to the Section for Economic and 
Financial Questions at its meeting on 6 June 1978, 
Having regard to the discussions at its 160th plenary 
session held on 20 and 21 June 1978 (meeting of 
20 June 1978), 
HAS ADOPTED THE FOLLOWING OPINION 
by 47 votes to nil with 28 abstentions: 
1. General economic considerations 
1.1. As clearly emerges from the analysis of the current 
situation (economic indicators) and the economic out­
look for the remainder of 1978, given in the report 
(Doc. R/CES 235/78) accompanying this opinion, it is 
evident that even the modest target for economic 
growth this year, accepted in the November 1977 
Council resolution on the annual report on the 
economic situation in the Community in 1977 (4 to 
4-5% increase over 1977), will not be reached. Under 
these circumstances unemployment will remain at a 
level which is economically wasteful and socially 
demoralizing. This prompts the question whether macro-
economic policy in the Community should be of a 
more expansionist character. 
1.2. The Committee is aware of the difficulties in judg­
ing whether the expansionist measures already taken in 
certain Member States will be sufficient to produce 
acceptable results. There are inevitable time-lags before 
such measures take effect and the classical measures of 
demand-stimulation are now more uncertain in their 
effects than they used to be. The Committee therefore 
recognizes that a judgement on whether measures al­
ready taken will bring about the right degree of stimu­
lation must be to some extent a matter of opinion. It 
notes, however, that the European Council at its meet­
ing in Copenhagen on 7 and 8 April 1978, in taking the 
view that it is essential that the Community will have 
achieved an annual economic growth rate of 4-5% by 
the middle of 1979, appears to have accepted that the 
target of 4 to 4-5% growth in 1978 will not be achieved 
on present policies. 
1.3. The Committee is also aware that the problem of 
unemployment in the Community cannot be solved entirely by macro-economic measures which provide 
general stimuli to demand. There are very important 
structural aspects of the problem which must be dealt 
with as a matter of urgency. The Committee welcomes 
the greater emphasis on structural unemployment in the 
Commission's recent assessments of the economic situ­
ation and it draws attention to recent opinions prepared 
by the Committee on industrial policy and other aspects 
of structural change (x). However, the problems of 
structural change will in most cases be easier to solve 
under conditions of general prosperity than they are at 
present and this reinforces the case for more expan­
sionist policies. 
1.4. Furthermore, the Committee is fully aware of the 
constant danger, that if expansionist measures are im­
plemented on too large a scale, the progress already 
made in bringing inflation and the balances of payments 
of Member States under control will be jeopardized. But 
even after allowing for the time-lag in seeing the full 
effects of such expansionist measures as have been 
implemented in Member States, the Committee judges 
on balance, that there is scope for further action to 
stimulate demand, activity and employment without 
jeopardizing the achievement of targets for the re­
duction of inflation. 
1.5. In the light of this judgement, the Committee feels 
some disappointment that the Commission's recent 
communication to the Council concerning the adjust­
ment of the economic policy guidelines for 1978 pro­
posed no changes in the general policy guidelines laid 
down in the annual report. It notes with satisfaction, 
however, that the European Council, meeting in 
Copenhagen, declared that the Community will in the 
coming months assess the effects of present national 
economic policies and, on this basis, define the need for 
coordinated additional measures designed to achieve the 
necessary growth within the Community. 
1.6. The scale and precise nature of expansionary 
measures will of necessity vary from one Member 
country to another, and must take account of the 
economic and social situation in the country concerned. 
In general, however, there seems likely to be scope in 
most countries for expansion in both the public and 
private sectors and for measures aimed particularly at 
stimulating investment. The latter especially important 
because of the backlog of investment in new plant and 
equipment, etc. More investment is necessary to moder­
nize European industry and to raise its efficiency in 
order that the Corrynunity may maintain its competitive 
position in world trade. 
(!) OJ No C 97, 16. 8. 1974. 
OJ No C 62, 15. 3. 1975, p. 23. 
OJNoC 131, 12.6. 1976, p. 8. 
OJ No C 292, 3. 12. 1977, p. 16. 
No C 283/8 Official Journal of the European Communities 27. 11. 78 
1.7. It must be noted, however, that the level of in­
vestment by enterprises is strongly influenced by the 
level of demand for the end-products of new factories, 
machinery and equipment, and by the prospects of 
achieving an adequate level of profitability. This is in 
part dependent on measures of general stimulus, such as 
tax reductions or increases in public expenditure. In 
judging the appropriateness of any such measures, re­
gard must be paid to questions of social as well as 
economic policy. For example, in its opinion (*) on the 
annual report the Committee emphasized that tax re­
ductions should be distributed fairly with due regard to 
those who have suffered most from the effects of unem­
ployment and inflation: due regard must also be paid to 
the interests of consumers. It is also necessary to achieve 
a fair balance between the needs of the lower paid and 
to maintaining sufficient incentives for effort and re­
sponsibility. 
2. Labour market policy measures 
2.1. The Committee agrees with the Commission's 
view expressed in its 1977 annual report that the rate of 
economic growth which is likely to occur in 1978 will 
not bring about a significant improvement in the em­
ployment situation. This is likely to remain true even if 
the scale of expansionist measures is stepped up as the 
Committee suggests. There is, therefore a strong case 
for special measures to improve the employment situ­
ation. 
2.2. There are a number of measures of this kind 
which may be appropriate, depending on the situation 
in individual Member States, for example: 
— training and retraining schemes to meet future 
needs, 
— job-creating investment, 
— employment subsidies, 
— work-sharing, including shorter working hours, 
earlier retirement, etc. 
2.3. As regards work-sharing, the Committee notes 
with interest the conclusions of the Commission and the 
Standing Committee on Employment. It supports the 
Commission's recommendation that the two sides of 
industry and governments should examine together, at 
national and Community level, the possibility of imple­
menting a work-sharing policy as part of an overall 
strategy for a return to full employment, bearing in mind the cost of work-sharing as compared to the pre­
sent cost of unemployment, both to public finance and 
in terms of the social consequences and taking account 
of regional imbalances. The Committee also agrees with 
the conclusions of the March 1978 meeting of the 
Standing Committee on Employment (2) and in particu­
lar with the view: 
— that the best way of dealing with unemployment is 
to create new jobs through active economic, em­
ployment and investment policies, but 
— that in the present economic situation it would at 
least in the short term be unrealistic to expect such 
policies to absorb existing levels of unemployment, 
and therefore that work-sharing measures have an 
important role to play in alleviating grave employ­
ment problems. 
The Committee further agrees with the conclusion of 
the Standing Committee that it is important to over­
come the difficulties both of principle and of implemen­
tation, especially as regards the costs involved, which 
would arise in developing work-sharing measures 
acceptable to all the parties concerned. The Committee 
would also emphasize that due regard should also be 
paid to longer term as well as short term considerations. 
2.4. The Committee re-emphasizes the importance of 
expanding training and retraining schemes in order to 
improve occupational mobility. There is some evidence 
that, even with the present high level of unemployment, 
the number of unfilled vacancies is increasing, either 
because of a shortage of the skills required or because 
the jobs to be filled are in areas where the level of 
unemployment is below average. An increase in and 
better use of training facilities, both existing and new, is 
of particular importance in relation to the problem of 
youth unemployment where the danger of demoraliz­
ation is very serious. 
2.5. The use of special schemes for job-creating in­
vestment and for temporary employment subsidies in­
volves a selective approach to the employment problem. 
The Committee repeats the view it has previously 
expressed that where such measures are used they must 
be forward-looking and must not impede necessary 
structural change and must not lead to distortions of 
competition between Member States. 
3. The role of Community institutions 
3.1. The role of Community institutions may conve­
niently be considered under three headings. Firstly, they 
H OJ No C 18, 23. 1. 1978. (2) Council press release 397/78 (Presse 35) of 21 March 
1978. 
2.7. 11. 78 Official Journal of the European Communities No C 283/9 
are responsible for the coordination of national policies. 
The volume of inter-Community trade -is now so 
great that the prosperity of each Member State 
depends very closely on the prosperity of others. In 
framing its own economic strategy each country must 
make assumptions about the level of demand for its 
products from its trading partners in the Community. 
Community institutions should propose and seek 
agreement on broad guidelines for economic and monet­
ary policies. Although some progress has been made, 
much more needs to be done, and the pace at which this 
can happen depends on the willingness of Member 
States themselves. A concerted effort to achieve ex­
pansion of activity and employment is also vital as an 
element in progress towards economic and monetary 
union. The Committee notes with considerable interest 
the chapter of the Commission's 1978 action pro­
gramme within the context of the five year plan for 
relaunching economic and monetary union promising 
measures to strengthen the coordination of short-term 
economic policies, and in particular its plans for coor­
dinating budgetary and monetary policies. It urges 
Member States to give strong support to the concer-
tation of economic policies which will improve the 
economic situation throughout the Community and 
therefore be to the benefit of them all. The active sup­
port and cooperation of the social partners through 
appropriate institutions is vital for the achievement of 
this concertation. 
3.2. Secondly, the Community, as the largest trading 
entity in the world, can exercise a very powerful influ­
ence on international trade and the international 
monetary system provided that member countries act on 
a coordinated basis. The present monetary disorders are 
inevitably having a serious adverse effect on the revival 
of world trade and therefore on the pace of economic 
recovery in member countries. The Committee has 
issued its opinion on the Community's approach to the 
present international monetary disorder (Doc. CES 
767/78). There is also the ever-present danger of a lapse 
into protectionism. In relation to both these problems 
the Community, if it follows common policies and acts 
on a coordinated basis, can make a decisive contri­
bution. 
3.3. One of the important achievements of the Com­
munity in the international field has been the relation­
ships it has established with the developing countries 
through the Lome Convention, etc. The Committee 
believes that further development of these relationships 
can make a major contribution to the expansion of 
world trade and therefore provide a much needed 
stimulus to demand for the products and services of 
member countries. It therefore urges that a major effort 
should be made to convince member countries of the 
need to make more resources available to the develop­ing countries, by way of official aid and private invest­
ment, in their own interest ,as well as in the interest of 
the developing countries. 
3.4. The third role of the Community institutions is 
the direct provision of own resources through the Social 
Fund, Regional Fund, EIB, etc., to help in stimulating 
economic progress and reducing unemployment. The 
Committee, in its April opinion, strongly supported the 
spirit that inspired ,the Commission's proposal for a 
Council Decision.empowering the Commission to issue 
loans for the purpose of promoting investment within 
the Community. The resources at present available for 
these purposes are quite inadequate. A substantial in­
crease in the scale on which these measures of assistance 
are provided would also have the important advantage 
of helping to establish the 'human face' of the Com­
munity by making its activities known at local levels. 
4. Case study: Denmark 
4.1. Believing that its opinion would carry greater 
weight if it took more account of the economic prob­
lems and policies being applied in individual Member 
States of the Community, the Committee undertook for 
the first time, as a case study, an examination of the 
Danish economic situation. It was helped in its task by 
the willing cooperation of the Danish organizations, 
including those representing the social partners. All of 
these provided information and views on policies which 
should be pursued in the future. 
4.2. The case of Denmark illustrates very clearly the 
problems of those Member States for which balance of 
payments considerations exercise a powerful constraint 
on policies to expand demand and improve the em­
ployment situation. Any such policies, in whatever sec­
tors they are applied, must have an effect on the 
demand for imports. If this is not accompanied by in­
creased exports the trade deficit will increase, possibly 
to unmanageable proportions. In planning an overall 
economic strategy the future trend of exports is there­
fore a key assumption. 
4.3. Denmark is, by tradition, an,open economy and 
the Committee is impressed by its determination to 
avoid protectionist measures. A very substantial propor­
tion of its trade is with other Community countries and 
if Denmark could be assured of a high level of demand 
in those countries it could plan a more expansionist 
strategy. This underlines the great importance of the 
observations in the Committee's,opinion on the urgent 
need for much closer coordination of economic policies 
at Community level and illustrates the way in which 
No C 283/10 Official Journal of the European Communities 27. 11. 78 
membership of the Community would be of direct assis­
tance to a member country in solving its economic 
problems. It also underlines the importance of the con­
tribution which the Community should make to the 
revival of world trade and the avoidance of protec­
tionism. 
4.4. The case of Denmark also emphasizes strongly the 
problem of structural change in the Community to 
which the Committee has again drawn attention in its 
opinion. Denmark faces a severe problem of structural 
readjustment but, as in other member countries, the 
way to achieve it is far from clear. As in the case of 
macro-economic policy, there is an urgent need to grap­
ple with the problem of structural change throughout 
the Community and to coordinate policies at Com­
munity level. 4.5. The Committee's attention was drawn to other 
problems which underlie future economic strategy in 
Denmark. These problems include: 
— the future of incomes policy, 
— the problem of 'economic democracy', 
— the importance of exchange rates in the balance of 
payments, 
— long-term changes to taxation and housing policies. 
These are very complex matters which the Committee 
could not discuss in depth in the Danish context and 
therefore does not feel competent to pronounce upon. 
Done at Brussels, 20 June 1978. 
The Chairman 
of the Economic and Social Committee 
Basil de FERRANTI 
ANNEX 
to the opinion of the Economic and Social Committee 
The following amendments were rejected during the discussions. 
Page 4 
Add a new paragraph 1.8, as follows: 
'In relation to demand, the Committee regrets that the lines of action suggested by the Commission 
are still those which have not proved effective; in particular, private investment will not increase, 
and training will find no outlet, unless consumer demand from the mass of population is increased. 
The Committee draws particular attention to the continual rise in consumer prices (EEC 9-6%) 
which would halve the purchasing power of money within less than 10 years. As a result, large areas 
of grave poverty continue to exist within the Community among consumers who cannot afford the 
prices, let alone afford to employ labour. 
Reasons 
It is considered that the proposed new paragraph complements paragraph 1.7 in several points of detail. 
Voting 
For: 15, against: 31, abstentions: 11. 
27. 11. 78 Official Journal of the European Communities No C 283/11 
Page 6 
Add, after the second indent in 2.3 (ending ' grave employment problems'): 
'Therefore in view of the likely trend in unemployment caused inter alia by numerous young people 
seeking jobs, it is vital for the Commission to draft an outline Community instrument on the reduc­
tion of working hours but without detracting from free negotiation between the two sides of 
industry. 
This instrument's provisions should make it compulsory for negotiations to be held in each Member 
State on the various possibilities for reducing working hours, viz.: 
— shorter working week, 
— lower age of retirement, 
— longer paid leave, 
— raising of the school-leaving age. 
These negotiations should also cover the ways and means of ensuring that the instrument's pro­
visions really help to create jobs. 
This instrument, with its immediate short-term, effect, should be backed up by the revival of an 
active industrial policy. The absence of such a policy at Community level is a structural handicap 
which prevents an economic policy designed to restore full employment from being put into effect. 
Reason 
The reason for the amendment is contained within the text itself. 
Voting 
For: 37, against: 39, abstentions: 3 
Opinion on the development of the social situation in 1977 
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 18 April 1978 the Commission referred the abovementioned proposal to Economic 
and Social Committee in accordance with Article 198 of the Treaty establishing the Euro­
pean Economic Community. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 160th 
plenary session held in Brussels on 20 and 21 June 1978. 
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 request made by the Commission 
of the European Communities on 18 April 1978 for an 
opinion, 
Having regard to the decision taken by its Bureau on 25 
April 1978 instructing the Section for Social Questions 
to draw up an opinion on the subject,