NoC332/58 OfficialJournaloftheEuropeanCommunities 16.12.92
proposaltoascertaintherelevanceofthedistortionof
competitionargumentinvokedinfavourofabolishing
variousderogations .Thisreviewisparticularly
importantincaseswheretheresultwouldbetopush
upthecostofaproduct,itemofgoodsorserviceby
introducingtaxeswhichpreviouslydidnotexist,there­
byunderminingtheconsumer'spurchasingpowerandthegeneralcompetitiveness oftheeconomy.Inthis
case,itwouldbebettertogiveageneralexemptionor
atanyrategranttheMemberStatesarightofoption
sothattheycanretainorabolishderogationsinthe
lightoftheirsocialorspecificbudgetarycircumstances ,
insomecasestaxingexemptedtransactionsandin
others,exemptingtaxabletransactions .
DoneatBrussels,22October1992.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN
OpinionontheEconomicSituationintheCommunityinmid-1992
(92/C332/18)
On28April1992theEconomicandSocialCommittee,actingunderthethirdparagraphof
Article20oftheRulesofProcedure,decidedtodrawupanOpinionontheEconomic
SituationintheCommunityinmid-1992.
TheSectionforEconomic,FinancialandMonetaryQuestions,whichwasresponsiblefor
preparingtheCommittee'sworkonthesubject,adopteditsOpinionon8October1992.
TheRapporteurwasMrAbejonResa.
Atits300thPlenarySession(meetingof22October1992),theEconomicandSocialCommittee
adoptedthefollowingOpinionunanimously .
0.ObjectivesoftheOpinion
0.1.ThisOwn-initiative Opinionisbeingdrawnup
atatimeofcrucialimportanceforthefuturedevelop­
mentoftheCommunity .TheCommitteetherefore
thinksthatitshouldpursuethreetypesofobjective:
0.2.Firstly,itmustbrieflyanalyzetheeconomic
situationbothwithinandoutsidetheCommunity ;this
willserveasabasisforadiscussionofthepresentstate
oftheeconomyanditsprospects .0.4.Thirdly,theCommitteeconsidereditadvisableto
analyzeaspecifictopicthisyear,ofparticularconcern
toeveryone,namelytheemploymentsituationinthe
Community .
1.Economicsituationandprospects
1.0.1.Theinternationaleconomyisgoingthrougha
veryuncertainphase.AccordingtotheCommission's
forecasts,1992wasgoingtobeaslightimprovement
on1991.Thishasnothappened,however,andthe
latesttrendsindicatethatitwillprobablynothappen
in1993either.
1.0.2.Consequently ,thedataandarguments
advancedinthisOpinionarebasedonCommission
forecastswhich,eveniftheyhavenotyetbeenofficially
amended,willhavetobereviseddownwardsaccording
tomostexpertsandtheCommissionitself.Hencethe
situationwhichistakingshapeisworsethanthat
reflectedintheofficialdatausedtodrawupthe
Opinion.0.3.Secondly,itisclearthatthisOpinionwillbe
stronglyinfluencedbytheresultsoftheMaastricht
SummitandmorespecificallybytheEMUcriteria.
Withthisinmind,afurtherobjectiveoftheOpinionis
toevaluatethepresentsituationinthelightofnominal
convergenceandofothereconomicconvergenceindi­
cators.

16.12.92 OfficialJournaloftheEuropeanCommunities NoC332/59
—6,5%in1991backtopositivegrowthin1992,and
onastrongerexportperformance .1.0.3.TheCommitteefeelsthatitcannotavoidcom­
mentingbriefly,andasamatterofurgency,onthe
seriousmonetaryproblemsbesettingtheCommunity
atthepresenttime.Theseupheavalsanddistortions
havetemporarilydismemberedtheEuropeanMonetary
System.1.1.4.Nevertheless ,notallthesignsarepositivefor
thehealthoftheUSeconomy.Thecombinationofhigh
unemployment andlowconsumerconfidencemeanthat
thisrecoverycouldbetheweakestsincetheSecond
WorldWar.Itisworthnotingthatthefeeblegrowth
ratefor1992iswaybelowtheaverageof5,5%recorded
duringthefirstyearofpreviousrecoveries,thereby
raisingseriousdoubtsastowhethertherecoverycan
besustainedinthelongterm.Furthermore ,withthe
economydraggingitsfeet,anewwaveofredundancies
coulddrivetheUSbackintorecession.1.0.4.ItistheCommittee'swishthatthosecurrenci­
eswhichhavehadtoleavetheEMSrejoinitassoon
aspossible,thoughitrealizesthattheproblemswhich
ledtosuchasituationwillhavetoberesolved.
1.0.5.Nevertheless ,theCommitteenotesthatthe
presentdiscrepanciesbetweenthemonetarypoliciesof
themainEuropeancountriesandthemonetarypolicy
pursuedintheUnitedStatesmaycontinuetoprovoke
strainsintheEuropeanMonetarySystem.Inaddition
tothis,thepersistenceofahighdegreeofnominaland
realdivergencebetweentheeconomiesoftheEMS
memberscoulddestabilizetheSystem.1.1.5.Thereare,however,afewsignspointingto
recovery,suchaslowerinterestratesandinflation
undercontrolwithaprivateconsumptiondeflatorof
around3%in1992.
1.1.6.Inshort,onlytimewilltellwhetherthehesi­
tantsymptomsofrecoveryintheUSwillbeconsoli­
dated. 1.0.6.TheCommitteeconsidersthatthissubject
shouldbetackledassoonaspossible;ananalysisshould
becarriedoutoftheultimatecausesofthebreakdown
andastudymadeofthemeasuresneededtostrengthen
thenormaloperationoftheEMSandmoveonto
EconomicandMonetaryUnion,aspartoftheproject
ofre-establishing acohesive,harmoniousEuropean
Community .1.1.7.ForJapantheCommissionconsidersthatthe
slowdownwhichbeganinthesecondhalfof1991will
continue.Morespecifically,thegrowthforecastsfor
1992and1993havebeenreviseddownwardsto1,7%
and2,6%respectively,farbelowthe4,4%of1991.
1.1.Externaleconomicsituation1.1.8.Nevertheless ,thereareseveralpositivefactors
intheJapaneseeconomy.Thegrowthinemployment
isexpectedtocontinuein1992,thusmaintainingthe
lowJapanesejoblessrateofaround2%.Inaddition,
Japancouldexpectinflationof1,8%in1992anda
balance-of-trade surplusof3,5%ofGDPin1992and
1993.1.1.1.Worldoutputisexpectedtoremainsluggish
in1992,growingbyabout1%,whichwouldbean
improvement onthe0,3%in1991.Suchgrowthis,
however,veryfarfromthelevelsof1988and1989,
namely4,5%and3,3%respectively .Itisalsoalong
wayfromtheearlierCommissionforecastofa2%
growthinworldoutputin1992.1.1.9.Despitethelowunemployment rateandgen­
eralgoodhealthofitseconomy,Japanissoconcerned
overtheslowdownineconomicgrowththatthegovern­
mentisconsideringamajorprogrammeofpublic
expenditurewiththeexplicitsupportofJapanese
industry.
1.1.2.Worldtrade(excludingtheEC),asmeasured
byimportvolumes,wasforecasttogrowby4,7%and
5,8%in1992and1993respectively,whichisconsider­
ablybetterthanthe2,2%of1991.Inshort,theCom­
missionexpectedtheinternationaleconomicclimate
toimprovegraduallyin1992andfacilitateeconomic
recoveryintheCommunity .Theseexpectationsnow
seemhighlydoubtful.1.1.10.Thisinitiativeshouldbewelcomednotonly
becauseitcouldheraldanupturnintheJapaneseecon­
omy,butbecausethegrowthininternaldemandin
Japancouldpartiallyoffsettheslowdownineconomic
growthinotherareascurrentlysufferingfromvarying
degreesofrecessioninducedbyadjustmentpro­
grammes .
1.1.3.FortheUnitedStatestheCommission fore­
castsrealGDPgrowthoflessthan2%in1992and
slightlyabovethisfigurefor1993,followingthefallof
0,7%in1991.Thispossibleimprovement isbasedlarge­
lyonapick-upininvestment,whichcouldjumpfrom1.1.11.TheCommissionpredictsthatintheCentral
andEasternEuropeancountriesproductionwillcon­
tinuetofall—andsubstantiallyso—in1992.Never­
theless,theCommissionconsidersthatthereforms

NoC332/60 OfficialJournaloftheEuropeanCommunities 16.12.92
undertakenmaybegintoshowresultsandbringabout
agradualstabilizationofproduction .
1.1.12.Ontheotherhand,thecontinuingdelaysin
reachinganagreementonGATTintheUruguayRound
negotiationsactasabrakeonanygrowthinworld
trade,maintainingtheauraofuncertaintywhichsur­
roundstheirultimateoutcome.head,from7,1%in1991to5,6%in1992and5,2%
in1993,dueundoubtedlytofirmerexpectationsofa
reductionininflation.Thecombinedeffectofthese
twofactorsisexpectedtoleadtoadropofmorethan
twopercentagepointsintheriseinunitlabourcosts
forthewholeeconomy,from5,8%in1991to3,7%in
1992and3,2%in1993.
1.2.8.Theseestimates,togetherwiththeinflation
forecasts,pointtoafallinrealunitlabourcostsin
1992and1993.
1.2.9.TheCommissionforecastisforthepublic
deficittoincreasefrom4,3%ofGDPin1991to4.8%
thisyearandto4,7%nextyear.Thecurrentaccount
isexpectedtoremainindeficitof0,75%ofGDPin
1992/1993.
2.TheprocessofconvergenceintheCommunity1.2.TheCommunityeconomy
1.2.1.ClearlytheeconomicsituationoftheCom­
munityisaffectedbythisuncertaintyhangingoverthe
internationaleconomy.
1.2.2.TheCommission estimatesthatin1992the
Communitywillexperienceasecondsuccessiveyearof
weakeconomicactivity,witharealgrowthinGDPof
justover1%.Itshouldbepointedoutthatthisnew
Commissionforecastislowerthanthatofafewmonths
agowhen2,25%growthin1992waspredictedforthe
Communityasawhole.
1.2.3.TheCommissionbaseditsexpectationsof
recoveryonamoderateincreaseinprivateconsumption
andinvestment,especiallyintheconstructionindustry.
1.2.4.Oneimportantpointwhichneedshighlighting
isthatthedifferencesingrowthratesbetweenthe
MemberStatesaretendingtonarrow;furthermore,we
areseeingadegreeofsynchronization intheeconomic
cycle,dueinparticulartothereducedinfluenceof
exceptionalfactorssuchasGermanreunificationand
thebottomingoutoftherecessionintheUnited
Kingdom;thissynchronization isoccurring,however,
atverylowlevelsofgrowth.
1.2.5.AtalleventstheCommitteeconsidersthatthe
anticipatedgrowthratefortheCommunityistotally
inadequatetomeetitsemploymentneeds.Infactafall
inemploymentispredictedforthisyearandasmall
increasefor1993.Sincethepresentforecastsarebased
onanincreaseinthelabourforceof0,5%in1992and
0,9%in1993,unemployment willriseintheCom­
munityfrom8,9%ofthelabourforcein1991to9,5%
in1992andabout10%in1993.Itshouldalsobe
notedthattheCommissionexpectsemployment in
manufacturing industriestofallbysomewhatmore
than1%in1992.
1.2.6.TheCommissionpredictsthatinflation
(measuredbytheprivateconsumptiondeflator)will
fallfrom5,2%lastyearto4,6%in1992and4%in
1993.
1.2.7.TheCommissionforecastsincreasesinpro­
ductivityin1992and1993abovethe1,2%of1991.The
Commissionalsoforecastsasubstantialdecelerationin
therateofincreaseinremunerationofemployeesper2.0.1.TheconvergenceoftheMemberStateecon­
omiesis,intheCommittee'sopinion,aprocesswhich
mustbeseeninthegeneraleconomiccontextinwhich
theCommunityfindsitself.
2.0.2.Thisisbecausethisprocesswillbeeither
easierormoredifficultaccordingtowhetherthegeneral
economicclimatewithinandoutsidetheCommunity
isfavourableorcontinuingtograduallyweaken.
2.0.3.Furthermore ,theprocessofconvergenceclear­
lydependsonthedifferentpointsofdepartureofeach
oftheMemberStates—andtheCommunityasawhole
—inrelationtoboththeconvergenceparametersset
andotherunquestionably importantmacro-economic
factors,giventhattheydeterminetheroomfor
manoeuvreofnationaleconomicpolicy.
2.0.4.Inshort,itisatpresentdoublyimportantto
studytheeconomicsituationintheCommunitybecause
itwillshownotonlywhatkindofeconomicresults
canbeachieved,butalsohowdifficulttheconvergence
processwillbe.
2.0.5.Inaddition,thehighdegreeofsimilarityin
convergence-policy objectivesischangingsomewhatas
aresultofthesituationcreatedbytherecentmonetary
eventsinSeptember,thetemporaryabandonment of
theEMSbysomecurrenciesandthechangesinthe
short-termobjectivesofUKeconomicpolicy.
2.1.Presenteconomicsituationandprospectsfornom­
inalconvergence :theMaastrichtindicators
2.1.1.Theparametersusedasconvergenceindi­
catorsseemtohavedeterioratedslightlyduring1991

16.12.92 OfficialJournaloftheEuropeanCommunities NoC332/61
thatamoresubstantialreductionisconditionalupon
arelaxationofGermanmonetarypolicy.
2.1.10.Despitetheimprovementininflationandthe
closingofthegapbetweentheMemberStatesinrespect
ofbudgetdeficits,theCommitteeviewswithconsider­
ableconcerncertainaspectsoftheeconomicsituation
intheCommunity .Growthcontinuestolanguishto
thepointofnearstagnation .Investment,especiallyin
capitalgoods,isverysluggishandtheprospectsfor
revivalarenotimproving .
2.1.11.Consequently itisrapidlybecomingever
moreprobablethatemploymentwillfallintheCom­
munityasawholein1992and,conversely,thatthe
joblesstotalwillrisebymorethanhalfapoint.
2.2.Othereconomicconvergenceindicatorsandthefirstfewmonthsof1992takingtheCommunity
asawhole;nonetheless,theMemberStateshavedrawn
closertogetheronmostoftheseindicators,i.e.thereis
agreaterdegreeofconvergencebutwithslightlyhigher
imbalances .
2.1.2.AccordingtotheCommissiondata,thebudget
deficitrosebyabouthalfapointin1991,althoughthe
numberofcountrieswithinthe3,0%ofGDPlimitrose
fromfivetosix.
2.1.3.TheCommission'sforecastsfor1992pointto
anewincreaseinpublicdebtofthesameorderaslast
year,alongwithafallinthenumberofcountries
meetingthecriterion.Thosecountrieswiththelargest
publicdebtsare,however,expectedtoachievesome
reductions .
2.1.4.Itshouldbestressedthatthehighlevelof
publicdebtinsomecountriesisstillamajorproblem
asitincreasinglylimitstheroomformanoeuvrewith
regardtopublicspending;agrowingproportionof
publicexpenditureistakenupwithfinancingthisdebt
tothedetrimentofspendingonsocialpriorities.
2.1.5.Inthisconnection itisessentialthatthe
measurestakentocontrolbudgetdeficitsandreduce
debtarebasedonanadequatesocialconsensus,as
arrivedatbythesocialpartnersinthesocialdialogue
agreementoflastJuly.
2.1.6.Inflationseemstobedriftingdownwardsin
theCommunityasawhole;atthemid-pointoftheyear
itwasaround4,5%fortheTwelveandnearly2,5%
forthethreemoststablecountries.Thenumberof
countriesmeetingthecriterionestablishedinMaas­
trichtisstillseven,althoughthereisaprospectofthis
increasingtonine,possiblyinlessthanayear.Atthe
sametimethecountrieswiththehighestinflationrates
havenotchedupdrasticimprovements inrecent
months.Thedevaluationsofthelastfewweeks,how­
ever,maypresageadamagingincreaseininflationin
thosecountriesobligedtotakesuchmeasures.
2.1.7.Theprospectsforinflationaregood,more­
over,bearinginmindtherapiddecelerationinthe
growthofnominalwageswhichistakingplacein
virtuallyallcountries.Thismoderation,logically
greaterintermsofunitlabourcosts,looksasifitwill
beoneofthemainfactorsinreducinginflationin1992.
2.1.8.Ingeneralterms,therefore,theprocessofcon­
vergenceseemstobeimprovingasregardsinflation
rates,inthattheyaremoderatingandthedifferences
betweentheMemberStatesarenarrowing .Asregards
budgetdeficits,thetrendislessfavourable,although
therehasbeengreaterimprovementinmostofthose
countrieswiththehighestimbalances .
2.1.9.Interestratesremainhighforthemoment,
althoughtherehavebeenslightfallsinmostcountries
overthelasttwelvemonths.Nonetheless ,itisclear2.2.1.Besidestheconvergenceindicatorsestablished
inMaastricht,thereisanothergroupofvariableswhich
shedconsiderablelightontheeconomicsituationin
theCommunityandtheprospectsforconvergence .
Withoutclaimingtobeexhaustive,theincorporation
ofsomeparametersontheexternaltradesituation,
theCommunity'stechnologyinputandlevel,andthe
provisionofcapitalandinfrastructure ,couldhelpto
shedmorelightonthegeneralpicture.
2.2.2.Theexternaltradesituationisagoodretro­
spectiveindicatoroftheeconomy'sreallevelofcom­
petitivenessandmustbetakenintoaccountindetermin­
ingthedifficultiesentailedinconvergenceagainstthe
backgroundofasinglemarket.
2.2.3.Broadlyspeaking,thesituationwouldseemto
varyintheCommunityasfarasexternaltradein
industrialgoodsisconcerned .Therearesomecountries
withstructuralorrecurrentexternaldeficits.Other
countriesseemtohaveresolvedorareclearlyinthe
processofresolvingtheproblem.Finally,thereisa
smallgroupofcountrieswithgoodexternalcompeti­
tivenessandwithlong-termstableorpositivetrade
balances.
2.2.4.FortheCommunityasawhole,thesituation
seemstobegraduallydeterioratingeventhoughthe
externaldeficitisstillnotsohigh(asapercentageof
CommunityGDP)astoconstituteashort-termimpedi­
menttoeconomicgrowth,atleastnotwhileitremains
aroundthelevelscurrentlyforecast.
2.2.5.Thereisnomovement,however,towardsa
narrowingofthedifferencesbetweencountries.Rather
thecontrary:nationalexternaldeficitsaremovingover
timeindifferentdirectionsandinsomecasesthiscould
constituteamajorobstacletorelaunchingandmain­
tainingeconomicgrowth.Atthesametimethesedefi­

NoC332/62 OfficialJournaloftheEuropeanCommunities 16.12.92
2.3.5.However,theotherfactordetermininginvest­
ment,thelevelofdemand,hasbeenveryinadequate
since1991.Theexperienceofthelasttwentyyears
wouldseemtoindicatethatagrowthindemandofless
than2,3%isnotabletosustainapositiveinvestment
rate,andatbelow2%investmentstartstodeclinein
theCommunity .citsdemonstratethedifficultiesinvolvedinachieving
realconvergenceoftheeconomiesoftheTwelveand
boostingcompetitiveness .
2.2.6.Anotherimportantaspectisthetechnology
leveloftheMemberStatesanditsundoubtedinfluence
oncompetitiveness andtheprospectsforeconomic
development .AstheCommissionpointsout,spending
onR&Dishigherwheretheindustrialsectorismore
developed,thereisgreatercompetitionbetweencom­
panies,amorepressingneedforinnovation,improved
productquality,etc.2.3.6.MaintainingdemandthroughouttheCom­
munityatalevelsufficienttosustaininvestment
becomesdifficultsinceaconsiderable numberof
countriesarestillhavingtocontendwithmajorimbal­
ances;asaresultthesecountriesareobligedtopursue
adjustmentpolicieswhichdonotpromotegrowthand
arouseexpectationsofaneconomicdownturn,andthis
affectsinvestment .2.2.7.Thedifferencesbetweenthecountriesinthis
respectareenormousandreflectagulfbetweenlevels
ofcompetitiveness ,especiallyinindustry,intheCom­
munity.
2.2.8.Totheabove-mentioned aspectsshouldbe
addedthedifferencesinrelativelevelsofproductive
capitalizationandinfrastructureprovisionbetweenthe
MemberStates.2.3.7.Infacttheveryexistenceoftheimbalances
referredtointheprecedingparagraphs (excessivepublic
debtorhighbudgetdeficit,highinflationratesor
balanceoftradedeficits)obligesalargenumberof
MemberStatestoimplementadjustmentpolicies
requiringgreatereconomicstringency .Accordingly ,the
officialmacroeconomic scenariosanticipatelessgrowth
andemployment ,and,insomecases,ariseinunem­
ployment.Theshort-terminfluenceofsuchscenarios
ontheprospectsforproduction,integrationplansand
job-creationdecisionsareinevitablynegative.2.3.Policiesfornominalconvergence
2.3.1.Theachievementofahighdegreeofnominal
convergenceoftheeconomiesoftheTwelveisthe
agreedsinequanonforEMU.Nevertheless ,asthe
Commissionitselfacknowledges andtheCommittee
wouldstress,thepresentparlouseconomicsituation
andtheriseinunemployment makeitverydifficult
toachievenominalconvergence,withtheresultthat
adjustmentpoliciesarebecomingeconomically and
sociallymorecostly.2.3.8.ConsequentlymostMemberStatesarepursu­
ingexpenditure-curbing policies,eitherwiththeinten­
tionofreducingtheimbalancesandattainingahigher
degreeofnominalconvergence ,orsothattheycan
continuetokeepsuchvariablesundercontrol.This
meansinfactthatrestrictivepoliciesarebeingpursued
toagreaterorlesserdegreesimultaneously throughout
theCommunity ,whichobviouslybringsinitswakea
furtherslowdownineconomicactivity. 2.3.2.Forallthesereasons,arevivalineconomic
growth,withincreasedproduction,investmentand
employment ,isofcrucialimportancetoturnroundthe
economiesoftheMemberStatesandrectifynominal
imbalances .2.3.9.Thepracticalupshotofthisisthateconomic
policiesarecoordinatedwiththeexpressobjectiveof
achievingahighdegreeofconvergenceofthenominal
imbalancesoftheMemberStateeconomies .Suchan
approachtocontrollinginflationandreducingbudget
deficitsisaimedatcreatingastableenvironmentin
whicheconomicactivityandproductiveinvestment
haveabetterchancetodevelop.2.3.3.Theexperienceofthelasttwodecades,as
clearlypointedoutbytheCommission ,showsthatthe
twomainfactorsdetermininginvestmentarethelevelof
demandandthereturnoncapital.Thelatterrecovered
duringthe1980s,virtuallyregainingitspre-firstoil
crisislevel.Theslightfallofthelasttwoyearscould
soonbeathingofthepast,bearinginmindthefavour­
abletrendinrealunitlabourcostsforecastbythe
Commission for1992and1993. 2.3.10.Aclimateofconfidenceinthestabilization
oftheEuropeaneconomiesmaybethesinequanon
forpromotingsustainedeconomicgrowth,butthereis
noguaranteethatitisasufficientcondition.Such
uncertaintymayinitselfretardeconomicrecovery.
Eveniftheeconomicoperatorsandmarketsbecome
convincedthatthewillexiststorectifythemonetary
imbalances,theremaystillbenoanswertothefre­2.3.4.Thelevelofreturnoncapitalmaybesufficient
tosustainpositiveinvestmentrateswhichcouldgoas
high,ifthedownwardtrendisreversed,asinthe1986­
1989period,especiallyifaccompaniedbytheaforemen­
tionedmoderationofunitlabourcosts.

16.12.92 OfficialJournaloftheEuropeanCommunities NoC332/63
improvecompetitiveness cannotbebasedsolelyon
trendsinlabourcosts.quentlyraisedquestionastowhowilltaketheleadin
theeconomicrecoveryandwhatmethodsandmechan­
ismswilltheyuse.
2.4.4.Inreality,sincethebeginningofthe1980sand
uptothepresenttime,thetrendinECrealunitlabour
costshas,overall,beenverysimilartothatofthe
Japaneseeconomyandmuchmorefavourablethanthat
oftheAmericaneconomy.Apartfrominflationrates
—higherfortheTwelvethantheirtwomaincompeti­
tors—theriseinECrealwageshasbeensimilartoor
lessthantheincreaseinlabourproductivity .This
shouldhavemadeforlowerinflationandhas,atall
events,boostedprofitmargins.Hencethereisnodoubt
thattherehasbeenrealwagemoderationoverthelast
tenyears;competitiveness ,however,hasnotprogressed
aspositively.2.3.11.Inthisconnectionthesocialpartners,the
employersandtradeunions,atCommunitylevel,
arrivedlastJulyatacommonpositionon'thecrucial
problemofweakgrowthin1992and1993'.They
stressedthat'whateverthelimitsofpurelynational
action,Community-level cooperationwouldgiveevery­
onemoreroomformanoeuvre'.Thismacroeconomic
strategyforeconomicrecoveryshouldcomprisethe
followingelements:arapidreductionininterestrates
throughsoundeconomicpolicies;responsiblewage
negotiationsbasedoncredibleandsociallyacceptable
economicpolicies;thismacroeconomic policytooffset
anytemporaryadverseeffectsondemandsoasto
reestablishconsumerandbusinessconfidence .
2.4.5.Productivityperemployeeisactuallymuch
lowerintheCommunitythanintheUSandthetech­
nologylevelissignificantlylowerthanthatofJapan.
Thislowerproductivity isattributabletothelesser
degreeofcapitalizationoftheCommunityeconomyas
awhole,andcertainlynottotheCommunityworkfor­
ce,whiletheEC'sleveloftechnologyislowerbecause
yearafteryearitspendslessonR&DthantheUS
andJapan.2.3.12.IntheCommittee'sopinion,theCommission
andtheCouncilshouldincludetheabove-mentioned
conclusionsofthesocialpartners,asexpressedinthe
documentof3July1992,intheireconomicdiscussions
assoonaspossible,withaviewtorapidlydevisinga
cooperativemacroeconomic strategyatCommunity
levelwhichwillprovideareferenceframeworkto
guaranteegrowthandemployment .
2.4.6.Forallthesereasonsitisvitallyimportantthat
monetaryconvergencepoliciesarenotonlyconsistent
withrealconvergencebutincorporatepoliciesto
enhanceit.Thisispossibleonlyifastableandstrong
growthininvestmentcanbeensuredandifR&TD
spendingintheCommunityasawholecanbestimu­
latedbysuitablepolicies.Obviouslythisisallincompat­
iblewitheconomiesinrecessionandpurelyrestrictive
policies.2.4.Nominalandrealconvergence
2.4.1.Nominalconvergenceisanecessarycondition
forprogressonEMU,butitisnotsufficientifaccount
istakenoftheneedtomaintainbalanced,convergent,
levelsofcompetitiveness inthecontextoftheinternal
market.Thismustallbesetagainstthebackgroundof
thegeneralobjectiveofimprovingtheCommunity's
competitiveness atworldlevel.2.4.7.Investmentisthekeytoguaranteeinghigher
productivity ,employmentandrealwages.Technologi­
calprogressisthefactorwhichpreventsadeclinein
thereturnoncapital,andhenceadropininvestment,
atthesametimeasthecapitalizationoftheeconomy
isincreasing .
2.4.8.Inthiswaybothfactorsguaranteesustained
growth,anincreaseinproductivity ,realwagesand
employment ;inshort,theyarethepreconditionforreal
convergence .2.4.2.Monetaryconvergencepoliciesmustnotclash
withrealconvergence .Intheory,lowerlevelsof
inflationwillimprovecompetitiveness ,butthelatter
dependslessandlessonprices;thereforeitisstillthe
technologyemployedandtheproductivecapitalization
(whichdeterminesthelevelsoflabourproductivity
andrealwagesinparticular)whichareofgreater
importanceforthelong-termtrendincosts.
3.Convergenceandemployment
2.4.3.Ontheotherhand,thereisanexcessivetend­
encytoseelabourcostsasthedeterminantfactorin
improvingcompetitiveness ,wheninrealitycheyhave
onlyarelative,short-terminfluence,viaprices,onthe
trendincompetitiveness .Along-termstrategyto3.0.1.EconomicandsocialcohesionisakeyCom­
munityobjectivewhichhastobemaintainedand

NoC332/64 OfficialJournaloftheEuropeanCommunities 16.12.92
reinforced.Itisthereforeimportantthattheprocessof
integrationshouldnotonlyimproveoverallperform­
ancebutalsohelptoreducethedifferencesinpro­
ductioncapacityand,therefore,inrealincomeand
employmentopportunitiesbetweenthevariouspartsof
theCommunityandbetweenthedifferentsocialgroups.ed,unemployment willnotbegintocomedownuntil
1994.However,thereisstilltheriskthatthepresent
economicsituation,insteadofbeingatemporary
obstacletoanacceptablerateofgrowth,willturninto
anotherprolongedperiodofslowgrowthorstagnation,
possiblywithafallinemploymentintheCommunity .
3.1.EmploymentsituationintheCommunity
3.2.TheparticipationrateintheCommunity
3.1.1.Between1985and1990employmentinthe
Communityincreasedatanaverageannualrateof
1,5%,resultinginanetincreaseofmorethannine
millionintheworkingpopulation .However,only30%
ofthejobscreatedweretakenbypersonspreviously
classedasunemployed ,therestgoingtoschool-leavers
ornewentrantsinthelabourforce.3.2.1.TheparticipationrateintheCommunity ,ie
theratioofactivepopulationtopopulationofworking
age(15to64),reached60%in1990.Thisratio,despite
increasingcontinuouslyintheCommunitysince1984,
isstillwellbelowthelevelofmanyWesterncountries
andJapanwheretheactivepopulationrepresents72­
75%oftheworkingagepopulation .
3.1.2.Anotherimportantfacetofthe1985-1990per­
iodwasthehighrateofjobcreationcomparedwiththe
rateofeconomicgrowth,inparallelwithanapparent
reductioninproductivitygrowth.3.2.2.Thisundoubtedlyconstitutesaconsiderable
structuralimbalancefortheCommunity,sincethevol­
umeofemploymentwhichitseconomyhasbeenable
toprovideforitscitizensisrelativesmall.
3.1.3.Thishas,perhaps,somethingtodowiththe
typeofjobscreated.Practicallyalltheadditionaljobs
createdbetween1985and1990wereintheservices
sector.Employmentinagriculturecontinuedtodrop;
itincreasedverylittleinindustryandthenonlyin
construction .3.2.3.Therelativelyhigheconomicinactivityratio
intheCommunitymayexplainwhyunemployment has
remainedhighdespitethehighratesofjobcreation.
Theexpansionofjobopportunitiesonlypartiallybrings
downtheunemployment figures,sincealargepro­
portionofthenewjobsaretakenbynewentrantson
thelabourmarket.Thisshouldnot,however,belooked
uponasanegativefactorasitistheconsequenceof
normaldemographicandsocialtrendswherebythe
economicstructuresofthelessdevelopedregionsand
countries,especiallytheSouth,modernizeandmore
womenjointhelabourforce.3.1.4.Furthermore ,asubstantialproportionofthe
jobscreatedweretemporaryorpart-time.Thistrend
towardstemporaryorpart-timeworkingisnot,how­
ever,commontoalltheMemberStatesandthegeneral
leveloftemporaryandpart-timeworkvariessignifi­
cantly;part-timeworkismorenormalintheNorthof
theCommunityandtemporaryworkhasincreased
considerably intheSouth.Infact,insomecountries
temporarycontractsmakeupthewholenewjobstotal,
withtheeffectthatpermanentworkhasbeenreplaced
bytemporarywork.3.3.Theproblemofrisingunemployment
3.1.5.Thetypeofjobscreated(inservicesandcon­
struction,temporaryandpart-time)hasturnedemploy­
mentintoavariablewhichishighlysensitivetoswings
intheeconomiccycle.Employmentwillsufferseverely
ifthepresenteconomicweaknesspersistsandhigher
levelsofeconomicgrowtharenotachieved.3.3.1.Afterfiveyearsofalmostcontinuousdecline,
unemployment begantoriseintheCommunitytowards
theendof1990asadelayedreactiontotheslowdown
ineconomicgrowth.TheCommissionpredictsthatin
theCommunityasawholeunemployment couldrise
from8,3%in1990to9,7%in1993.Ifpresentlevelsof
activityaremaintained,thismeansroughlyfourteen
millionjoblessnextyearandanextratwomillion
joblessinthreeyears.3.1.6.Sincethebeginningof1990economicgrowth
hassloweddownconsiderablyintheCommunity,put­
tinganendtotheperiodofrapidjobcreation.In1991
employmentgrewbyonly0,2%.Theprospectsareno
better;theforecastisforareductionorscantincrease
inemploymentandmountingunemployment .The
Commissionitselfconsidersthat,eveniftheeconomic
situationbrightensanditsgrowthforecastsareachiev­3.3.2.TheCommunityfacesagraveproblemthere­
fore.Butanyattempttogettotheheartoftheunem­
ploymentproblemmustdomorethansimplyfollow
thefluctuationsinthefigures.Asalreadymentioned
previously,theCommunitynotonlyhasahighrateof

16.12.92 OfficialJournaloftheEuropeanCommunities NoC332/65
unemployment butalsoalowparticipationrate.The
differencesbetweentheunemployment ratesaccount
forlessthanhalfofthisloweremployment ;thediscrep­
anciesbetweenthelevelsoffemaleactivityarethemore
tellingreasonforthisdifference.participationrateis75%inDenmarkandSouth-East
Englandand70%inSouthGermany,whileitisless
than50%throughoutSpainandIrelandandmostof
SouthernItaly.Thisisnotahard-and-fast rule,how­
ever:therateislessthan55%throughoutmuchof
theNetherlands,Belgiumandthecentralregionsof
Germany,whileitisover60%inNorthernPortugal
andover55%inGreece.
3.3.3.Thereisnodoubtastotheinfluenceofthis
labourmarketinactivity:amarkedproportionofthe
increaseinnetemployment isnottakenupbythe
unemployed,butbypersonswhowerepreviously
regardedasinactive.Thismeansthatitisnotenough
fortheCommunitytocreateenoughjobstoreducethe
unemployment rate—evenmorejobsareneeded.3.4.5.Atallevents,iftheforecastsfortheworking
agepopulationarecombinedwiththeCommission's
estimatesfortheconcealedlaboursupplyandwiththe
unemployment figures,itisclearthatthefutureneed
forjobsinthelessdevelopedareasoftheCommunity
ishuge.Asanindicationofthis,theCommissionesti­
matesthattobringdownthedifferencesinemployment
ratesbetweenthelessdevelopedregionsandtherest
oftheCommunity ,employmentinthoseregionswill
havetogrowbyatleast1%moreannuallythaninthe
restoftheCommunityforthenext25years.3.4.Disparitiesbetweenemploymentandunemploy­
ment
3.4.6.HencethechallengeconfrontingtheCom­
munityisclear:job-creatingpoliciesareneeded,even
moresoforthoseregionswithlowparticipationrates
andhighunemployment .3.4.1.Levelsofunemployment andemploymentvary
considerablyfromoneMemberStatetoanother.An
analysisofthe1991figuresshowsthattheunemploy­
mentratesinIrelandandSpainarepracticallytwicethe
Communityaverage.Anotherthreecountries(France,
Italy,UK)haveratesslightlyabovetheaverage.
Belgium,DenmarkandGreecehaveabouttheCom­
munityaverage.TheNetherlands isslightlybelow,
whileGermany,PortugalandLuxembourghaverela­
tivelylowunemployment ratescomparedwiththe
Communityaverage.3.4.7.Nevertheless ,intheCommittee'sopinionthis
challengecallsforamoredetailedstudyofthequestion
withaviewtotheformulationofpoliciesforthewhole
Communitydovetailedwithnationalpolicieswhich
shouldinturnplacetheemphasisonthoseregionswith
higherunemployment andlessemployment .
3.5.Nominalconvergenceandincreasedemployment3.4.2.Thedisparitiesbetweencountriesmaskanoth­
erequallyimportantphenomenon ,namelythedispari­
tiesbetweenregionswithineachcountry.Infactthere
aresubstantialdifferencesintheregionalunemploy­
mentratesinsomecountrieswithrelativelylowunem­
ployment.InGermanythehighestunemployment rate
isalmostfourtimeshigherthantheregionwiththe
leastunemployment .IntheUnitedKingdomtheratio
is3,5times.Ontheotherhand,inacountrysuch
asSpain,withveryhighunemployment ,theregional
unemployment differentialis2,5.3.5.1.FortheCommittee,thesearchfornominal
convergenceshouldbecompatiblewitheconomic
growthandincreasedemployment .Thepresentstate
ofeconomicweaknessisholdingupadjustmentand
greaterconvergence ,thusaddingtotheeconomicand
socialcost.
3.4.3.ConsequentlytheCommitteeconsidersthata
reductioninthedifferencesbetweenandwithinthe
MemberStatesshouldbeapriorityobjectiveforthe
Community .ECandnationalpoliciestoachievethis
objective,andimprovedcoordinationbetweenthetwo,
shouldbeencouragedwithaviewtogreatercohesion
betweenallcountriesandallregionsoftheCommunity .3.5.2.Intoomanycasestheprocessofconvergence ,
ofwhichadjustmentpoliciesareapart,involvesa
furtherboutofeconomicstringencyandhasthegeneral
tendencytodepressgrowth.Againstabackgroundof
weaknessandwidespreadinternationaluncertainty,
thiscanhaveahighlydamagingeffectonemployment .
3.4.4.Ontheemploymentfront,thepercentageof
theworkingagepopulationactuallyinworkisusually
higherinthemoreprosperousanddevelopedregions
oftheNorththaninthelessdevelopedSouth.The3.5.3.Consequently ,fortheCommittee,arevivalof
economicgrowthisessentialifnationalnominal

NoC332/66 OfficialJournaloftheEuropeanCommunities 16.12.92
imbalancesaretobereducedinconjunctionwithecon­
omicrecoveryandincreasedemployment .wassimilartothatinJapanandmuchbetterthanin
theUSwheresuchcostsactuallyroseslightlyduring
thisperiod.
3.5.4.Furthermore ,theCommitteebelievesthatit
wouldbedifficulttoperceiveofaprocessofconver­
genceinwhichtheTwelveachievedsimilarratesof
inflationandbudgetdeficits,butunemployment con­
tinuedtorangefrom3to17%.3.6.6.Competitiveness ismostlackingintheCom­
munityeconomy(comparedtoitsmajorcompetitors )
intheareaofcapitalizationandtechnology .Boosting
investment,increasingthecapitalstockandraisingthe
leveloftechnologywillpavethewayforanincreasein
labourproductivity ;inthiswayasustainedimprove­
mentincompetitiveness willbecompatiblewithan
increaseinemploymentandwages.3.6.Policiesforemploymentandcompetitiveness
3.6.1.TheCommitteeconsidersthatanadequate
levelofeconomicgrowthisthesinequanonforstimul­
atingjobcreation.Itisdifficulttoseehowjobscanbe
createdwithoutanincreaseineconomicactivity,unless
existingemploymentissharedout.3.6.7.Akeyelementinboostingproductivityand
competitiveness isacontinuousimprovement inedu­
cationandvocationaltraining.Thequalificationsof
workerswillbeevenmorecrucialthanhithertoforthe
successoffirms.Forthisreasonitisessentialto
reinforcetraining/retrainingmeasuresinsuchawayas
toimproveadaptabilityandfosterjobcreation.
3.6.2.Astablemonetarypolicyframeworkisalso
importantforgeneratingconfidenceandpromoting
job-creatinginvestment .
3.6.8.Tothisend,itwillalsobenecessaryto
improvetheCommunity'sinfrastructure ,especiallyin
themostunderdeveloped andtrouble-ridden regions.3.6.3.Moreover,industryandemploymentinindus­
tryareapillarofallmoderneconomies.Thecompeti­
tivenessoftheindustrialsectorisvital,notonlyto
safeguardthestrengthoftheeconomy,butalsoon
accountoftheactivityandemploymentwhichinvest­
mentandproductiongenerateintherestoftheecon­
omy,especiallytheservicessector.Thereforeanother
basicobjectivemustbetopromoteanindustrialpolicy
whichenhancestheefficiencyofindustryintheCom­
munityandcreatesanenvironmentwhichreinforces
theabilityofECfirmstocompetewithotherworld
producers,theUSandJapaninparticular.3.6.9.Furthermore ,althoughpricesarestilltheprin­
cipalweaponincompetition ,otherfactorsareincreas­
inglyimportant,suchasproductquality,consumer
satisfaction,design,innovativecapacity,after-salesser­
vice,distribution,marketingandproductstandardiz­
ation.Thereforeastrategybasedonimprovingthese
factorsisessentialforincreasingcompetitiveness .
3.6.4.Improvingtheglobalcompetitiveness ofthe
Communityis,withoutanydoubt,anotherkeyfactor
inboostingemployment .Inthisconnection,thetrend
inlabourcostsisundoubtedlyinfluentialintheability
tocompeteintermsofprices;forthisreasonthetwo
sidesofindustryshouldadoptaresponsibleapproach
towagenegotiations .Itshould,nevertheless,bepointed
outthattherearemanyotherfactors,besideswages,
whichaffectcompetitiveness .3.6.10.Itisalsoimportanttogoonimprovingpro­
ductiontechniques;thishasabearingonthecompeti­
tiveness,technologyandproductionmethodsoffirms
andtheirabilitytomanageresourcesefficiently.
3.6.11.Inshort,policiesareneededwhichalsoseek
toimprovelivingandworkingconditions .Anypolicy
whichledtoaworseningoftheseconditionswould
makeitdifficulttomaintainacompetitiveedgeinthe
mediumtermandisclearlynotdesirable.3.6.5.Thelevelofemploymentisalong-termprob­
lem,andthroughoutthe1980swagesintheCommunity
rose,whilerealunitlabourcostsfellbymorethan7%
intheCommunitybetween1981and1991.Thistrend

16.12.92 OfficialJournaloftheEuropeanCommunities NoC332/67
thenecessarypoliciesshouldbesetinmotionassoon
aspossible.3.6.12.IntheCommittee'sviewtheabove-men­
tionedfactorscallformeasureswhichproducevisible
resultsinthemediumandlongterm.Forthisreason
DoneatBrussels,22October1992.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN
OpinionontheCommunication fromtheCommission :NewprospectsforCommunity
culturalaction
(92/C332/19)
On7May1992theCouncildecidedtoconsulttheEconomicandSocialCommittee,
underArticle198oftheTreatyestablishingtheEuropeanEconomicCommunity,onthe
Communication fromtheCommission :NewprospectsforCommunityculturalaction.
TheSectionforSocial,Family,EducationalandCulturalAffairs,whichwasresponsiblefor
preparingtheCommittee'sworkonthesubject,adopteditsOpinionon6October1992.
TheRapporteurwasMrBurnel.
Atits300thPlenarySession(meetingof22October1992),theEconomicandSocialCommittee
adoptedthefollowingOpinionbyalargemajoritywith3abstentions .
1.GeneralComments
1.1.TheEconomicandSocialCommitteeendorses
thethinkingunderlyingtheCommissionCommuni­
cationon'NewprospectsforCommunitycultural
action'.
1.1.1.Thisthinkingisneatlysummarizedinthethree
aimstheCommission setsforculturalaction:
—topreserveawarenessofEuropeanhistory;
—togenerateanenvironmentconducivetothedevel­
opmentofcultureinEurope;
—tohelpspreadEuropeanculturalinfluencethrough­
outtheworld.
1.2.TheCommitteenotesthattheParliamenthas
beenactiveinthisareasince1974.Itcongratulatesthe
Parliamentonthisandencouragesittocontinue.1.2.1.TheCommitteeitselfhasissuedseveralOpin­
ionsstressingtheCommunityInstitutions'responsi­
bilityforculturalissuesandputtingforwardproposals
inthisconnection .
1.3.TheCommitteewouldreiterateitsrequest—
evenmoreforcefullytodayinviewoftheambitions
enshrinedintheTreatyofEuropeanUnion—thatthe
aspirationssetoutintheCommunication bebackedup
byfirmpoliticalwill,translatedinpracticaltermsbythe
robustlevelofresourcesneededtomatchthechallenges
involved.Thetangiblenatureofthe'ventures'tobe
encouragedandfostered,isnecessarilyrootedina
philosophyandpolicyforpromotinghumanity,which
isboundupwiththedemocraticandhumanisticvalues
inwhichtheMemberStates,theCommunityandour
societyarerooted.
1.3.1.ForthisreasonthecurrentCommissiondraft
willhavetobegraduallyexpandedandbackedby
financialresourcescommensurate withtheambitions
theCommunityhassetitselfandwithactionswhich
willhavetobecoveredbyotherprogrammes .