No C 201/8 Official Journal of the European Communities 7. 8. 89 
Opinion on the economic situation in the Community—mid 1989 
(89/C 201/04) 
On 25 October 1988, the Economic and Social Committee, acting under the fourth paragraph 
of Article 20 of its Rules of Procedure, decided to draw up an Opinion on the economic 
situation in the Community (mid-1989). 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 13 June 1989. The 
rapporteur was Mr Geuenich. 
At its 267th plenary session (meeting of 22 June 1989) the Committee adopted the following 
Opinion by 76 votes to 44 with nine abstentions (vote recorded). 
Preliminary comments 
This own-initiative Opinion focuses on a number of 
priority economic policy measures which the Commit­
tee thinks will contribute towards a balanced develop­
ment of the economy in the run-up to 1992. It is the 
Member States above all which will have the task of 
implementing the measures needed to complete the 
Internal Market on schedule. All the factors relating to 
the social aspects have been dealt with in the Opinion 
on social developments, the Committee considering—as 
always—that economic and social policies go hand-in-
hand. 
1. The Commission's economic forecasts for 1989 
1.1. The main features of the economic situation 
1.1.1. The Commission is comparatively optimistic 
in its economic forecasts for the Community and the 
world in general. The economy was unexpectedly 
buyoant in 1988, and the Commission thinks that fur­
ther strong growth is likely in 1989, despite a slight 
deterioration in the economic climate worldwide. There 
will be an increase in employment, and unemployment 
—while remaining far too high—will probably fall 
somewhat. It is also thought that prices will rise slightly 
on average. This indicates that growth and inflation 
rates will still be favourable. 
1.1.2. There are a number of encouraging develop­
ments in the Community. The dynamism of a number 
of Member States' economies is spreading to their part­
ners, growth is increasingly investment-led and inflation 
rates are quite stable and close together. However, 
there is concern that inflation may be rekindled, that 
budgetary deficits are too high in some Member States, that national balances on current account are increas­
ingly out of kilter and that unemployment still averages 
more than 10%. 
1.2. The economic situation outside the Community 
1.2.1. The restructuring that most industrialized 
countries have undergone in recent years has made 
their economies more resilient. Thus, despite numerous 
upheavals, economies of the Organization for Economic 
Cooperation and Development (OECD) will probably 
grow for the seventh successive year, albeit at a lower 
rate than in 1988. The US economy is likely to lose 
momentum on account of a slightly lower rise in dom­
estic demand and exports. In Japan, growth will be 
strong but slightly down on 1988, mainly as a result of 
a reduced rise in domestic demand. The expansion of 
the world economy will give Community exports a 
boost, but with imports increasing even faster, external 
trade's net contribution to growth of the Community 
gross domestic product (GDP) is likely to remain nega­
tive. 
1.2.2. The reduction of current account imbalances 
worldwide is progressing slowly, but the fall in the 
Community's overall surplus with the rest of the world 
indicates that the current accounts of all Member States, 
apart from the Federal Republic of Germany, are rap­
idly deteriorating. The Federal Republic is also register­
ing growing surpluses within the Community, and at 
the same time some Member States' trade deficits with 
the Federal Republic are mounting. Because interest 
rates are rising, the problem of developing countries' 
debts—the second major imbalance in the world econ­
omy—is unlikely to diminish, and will probably remain 
a major constraint on their economies. 
1.2.3. US policy on interest rates has been focused 
for some time now on the fight against inflation and 
the stabilization of the US dollar. Short-term interest 
7. 8. 89 Official Journal of the European Communities No C 201/9 
rates have risen much more sharply than long-term 
rates. This indicates that inflationary expectations have 
levelled out. Further increases in US interest rates 
would, however, be a burden on US growth and the 
development of the world economy, especially as rates 
worldwide are interlinked and a general increase would 
inevitably follow. 
1.3. The Community economy 
1.3.1. The prospects for economic growth in the 
Community remain generally good, and suggest that 
the extremely long period of sustained but moderate 
expansion is to continue. 
It should be borne in mind, however, that the Com­
munity economy depends, to a high degree, on the 
world economy. Although the latter is still going 
through a period of fundamentally sound growth, a 
number of unsolved problems have made it vulnerable. 
For example, the enormous indebtedness of developing 
countries, the US budgetary and current-account defi­
cits and the fluctuations in the US dollar continue to 
spell danger. 
The more unfavourable world economic situation, 
together with the slower increase in private consump­
tion and restrictive monetary and/or budgetary policies 
in some Member States, probably mean that the Com­
munity growth rate will be around 3,25 %. At the same 
time a further supply-side improvement is likely. In 
some Member States, such as Italy, Spain, Portugal and 
the UK, economic growth is likely to drop below its 
current high levels. The impetus received by other part­
ners will probably result in them playing a more expan­
sionary role. 
1.3.2. In 1988 the upturn in investment was the most 
important growth factor in almost all Community 
countries. Given the considerable improvement in 
returns on capital and the fact that industry is now 
working to full capacity, capital formation is likely to 
increase and there is likely to be a shift from labour-
saving investments to investments in new plant. In 
addition, investment will probably benefit from indus­
try's preparations for the advent of the Single European 
Market. 
1.3.3. Although the growth in employment has gath­
ered a little momentum in recent years, more than 10% 
of the active population are still out of work, i.e. there 
are approximately 15 million registered unemployed. 
Long-term joblessness is still rising and already 
accounts for more than one half of total unemployment. 
Youth unemployment still averages more than 20% 
throughout the Community. The growth in the 
employed labour force is not reflected in a correspond­
ing fall in joblessness, since some of the vacancies are 
filled by non-registered unemployed and the partici­
pation rate is on the increase. Furthermore, it is forecast that the growth in employment will fall slightly to just 
over 1 % in 1989. Another point to bear in mind is that 
a considerable number of the new jobs are part-time. 
If the slight fall in unemployment cannot be speeded 
up, the unemployment r; "e in the Community in 1992 
will be not much less than 10 % of the active population. 
1.3.4. Inflation in the Community will, on average, 
rise only slightly above the present rate and thus remain 
in check (a 4,8% increase in the private-consumption 
deflator is forecast for 1989). However, the individual 
Member States must be extremely vigilant (some more 
so than others), since the factors which hold down 
prices are losing some of their force. Thus, for instance, 
a further improvement in the terms of trade is unlikely. 
Furthermore, prices are under pressure from domestic 
demand and costs, especially in Member States where 
there has been a high utilization of capacity for some 
time (e.g. UK, Italy and Spain). However, it is forecast 
that average unit labour costs in the Community will 
rise by a moderate 3,3 % in 1989 (compared with 4,5 % 
in the USA and 1,6 % in Japan). On the monetary front, 
the growth in money supply is likely to slow down. 
1.3.5. The strengthening and stabilization of monet­
ary cohesion within the Community has been helped 
by the convergence of inflation rates, especially between 
countries of the European Monetary System (EMS). 
However, there are still great differences between Mem­
ber States' budgetary situations and their external bal­
ances are also beginning to diverge. This may destabil­
ize the pattern of exchange rates. 
2. Present need for economic action 
2.1. Coordination of economic policy in the EC 
The coordination of economic policy in the Community 
is a matter which must be attended to continually on 
account of the high and growing level of economic 
interdependence. It has also been made more pressing 
by recent events. Firstly, current account discrepancies 
threaten the present pattern of exchange rates; secondly, 
the impending further liberalization of capital move­
ments requires the closer convergence of monetary and 
budgetary policies in a coordination process which 
takes account of the interests of all parties. Member 
States with high current-account surpluses and very 
stable prices must make efforts to expand their econom­
ies. So, too, should the rest, albeit to a lesser degree. 
It is, however, acceptable for the less industrialized 
No C 201/10 Official Journal of the European Communities 7. 8. 89 
Member States to import capital to finance their devel­
opment, and build up current account deficits in the 
process. All in all, the purpose of coordinating econ­
omic policy is to keep the economy and employment 
expanding at a steady pace to a point where unemploy­
ment can be cut. 
2.2. Exchange-rate and monetary policy 
2.2.1. Ever since the 1987 stockmarket crash there 
has been successful cooperation in monetary matters; 
close cooperation should continue, in order to stabilize 
the dollar further. Personal savings in the USA have 
risen, but are still too low and should therefore be 
encouraged and it is against this background that the 
Commission and the Council of Ministers should press 
for a reduction in the US budget deficit, especially as 
this would take some of the pressure off interest rates 
worldwide. The requisite reduction in the US current 
account deficit can be underpinned by expansionary 
moves in Europe {cf. 2.1), insofar as these are possible. 
2.2.2. Exchange-rate policy in the Community 
should focus on increasing the number of EMS 
countries and reducing intervention margins. This, too, 
will make the closer economic coordination outlined in 
2.1 indispensable. In addition, greater economic inte­
gration would probably help to improve the stability of 
exchange rates in the Community. Changes in exchange 
rates and EMS parity adjustments are, however, not to 
be ruled out. 
2.2.3. As long as the US dollar exchange rate does 
not start to fluctuate sharply once again, monetary 
policy in Europe can focus more on domestic economic 
objectives. It is important for the pursuit of economic 
growth and higher employment levels to ensure that 
prices remain stable. The main aim as far as monetary 
policy is concerned is to stifle inflationary expectations. 
To achieve this, money supply may have to be increased 
less than in recent years since otherwise the central 
banks' desire for stability might be called into question. 
Current price trends give cause for concern in only a 
few countries; however, general care should be taken 
to ensure that trends are not jeopardized by cost devel­
opments. As long as this situation persists, there is no 
reason to apply the monetary brakes in order to do 
anything more than stabilize inflationary expectations. 
Instead, since unemployment is still far too high in the 
Community, monetary policy should promote econ­
omic growth as far as possible. In this respect, the 
German Bundesbank, which has a leading role to play 
in the EMS, should not behave too cautiously. It should 
bear in mind, for example, that the recent steeper rise 
in consumer prices in the Federal Republic has been 
mainly due to increases in taxes on consumption, which 
have only a once-and-for-all effect on prices. With due 
regard to the need for solidarity within the EMS, the 
Bundesbank should therefore not get involved in any international escalation of interest rates or even step up 
the pressures in that direction. 
2.3. Budgetary policy 
The reduction of budgetary deficits in a number of 
Member States is vital for a coordinated cooperative 
strategy for economic growth in the Community, for it 
will help to stabilize prices, interest rates, current-
account balances and exchange rates. However, the 
consolidation process must always take account of the 
quality aspect, too, i.e. it must aim for continuity and 
not cause productive public investment to suffer, so as 
not to endanger job creation or qualitative economic 
growth. At the same time, the state of the West German 
economy in particular gives that country financial room 
for manoeuvre and this it should use for the benefit of 
the Community, too. 
2.4. Wages policy 
2.4.1. Because of the increases in growth rates, pro­
ductivity and returns from investments, which have 
been largely due to the moderation shown in wage 
agreements, there is a case for appropriate wage 
increases in real terms (which may also increase private 
consumption). 
2.4.2. Wages policy must continue to contribute 
towards improving the employment situation. Accord­
ing to the Committee this also includes the further 
shortening and restructuring of working time, bearing 
in mind the sharper rise in productivity. If collective 
agreements which deal in particular with working time 
are longer-term and are designed to take effect in stages, 
it will be much easier for firms to plan their financing 
and restructuring. The improved utilization of firms' 
productive capacity which often results therefrom, 
helps to (a) hold down the cost of shorter working 
hours, (b) maintain the Community's ability to compete 
with the rest of the world, and (c) increase the effect 
thereof on employment. 
3. The Internal Market and the requisite policies 
3.1. Present situation 
3.1.1. If the current stronger growth in the Com­
munity can be maintained, it will form a solid platform 
for the completion of the Internal Market, since high 
growth will soften the impact of the requisite restructur­
ing and make it easier to accept. Insofar as the prospect 
of the Internal Market stimulates growth, the two pro­
cesses will reinforce each other. Thus, the Internal 
Market programme's main objectives—more prosperity 
7. 8. 89 Official Journal of the European Communities No C 201/11 
in the Community, less unemployment and greater 
economic and social cohesion—have a considerably 
better chance of being attained. 
3.1.2. Although the Hanover European Council con­
cluded that the Internal Market programme is beyond 
the point of no return, the Committee would point to 
the need for steady progress to continue since any halt 
in the programme might cause a setback. Businessmen 
and workers should not be let down by the politicians. 
The Council of Ministers and governments can fulfil 
expectations 
— by adopting other major outstanding proposals in 
the Internal Market programme in the twelve 
months ahead, e.g. the opening-up of public pro­
curement, further harmonization in the field of 
transport and the closer alignment of taxes, 
— by adopting back-up measures in the structural, 
social and foreign-trade policy areas, 
— by supporting a macroeconomic policy geared to 
greater qualitative growth. 
3.2. The economic openings offered by the Internal 
Market 
3.2.1. The Cecchini report concludes that the four 
main pillars and effects of the Internal Market pro­
gramme, viz.: 
— the abolition of frontier controls, including the 
mutual recognition of technical standards (abolition 
of physical, technical and tax-related barriers to 
trade), 
— the liberalization of public procurement, 
— the liberalization of financial services, and 
— the effects of the 'supply-side shock' on firms (econ­
omies of scale and fiercer competition) 
might, depending on the nature and size of the 
accompanying policies, boost growth in real terms by 
4,5-7,5% and create 1,8-5,7 million extra jobs. These 
highly empirical calculations are not reliable, as the 
authors of the report themselves point out, and have 
already been questioned, but the Committee is not in 
a position to investigate them more closely. However, 
the report supports the Committee's expectation that 
the completion of the internal market should on balance 
benefit the Community economically. 
3.2.2. A critical eye must be cast on the way the 
Cecchini report states that lower costs will lead—al­
most automatically it seems—to a rise in growth and 
employment. The report overemphasizes the micro-economic angle. Therefore the scale and duration of 
the adverse effects which the Internal Market pro­
gramme may have on employment and regional devel­
opment are underestimated. The Committee thinks it 
is important to bear in mind that, particularly in the 
early stages, cost savings will result from a loss of 
revenue elsewhere in the Community. As this might 
also lead to a fall in demand there, the real overall level 
of demand will only be maintainable if the cost savings 
will result from a loss of revenue elsewhere in the 
Community. As this might also lead to a fall in demand 
there, the real overall level of demand will only be 
maintainable if the cost savings lead directly to more 
corporate demand, to price cuts or to wage increases. 
However, in oligopolistic markets, where prices are 
highly inflexible, this course of events is not at all 
certain. Furthermore, the increases in turnover which 
firms hope to achieve are by no means automatic, but 
depend on demand increases (in volume terms) being 
disproportionate to the falls in costs and prices. 
3.3. General employment policy 
3.3.1. Instead of waiting for price cuts, reductions 
in public deficits or improvements in current account 
balances, the process of reducing industry's costs should 
be accompanied from the outset by demand manage­
ment measures—especially as the completion of the 
Internal Market will lead in general to an improvement 
in supply-side conditions. In this way the Internal Mar­
ket programme can be prevented from having a negative 
effect on employment from the outset, and the process 
of creating extra jobs can start earlier. 
3.3.2. The Committee would suggest in this connec­
tion that the measures chosen to underpin demand 
should steer the Internal Marker programme towards 
key aspects of qualitative growth such as better environ­
mental and consumer protection and greater economic 
and social cohesion in the Community. 
3.4. Regional policy 
3.4.1. The prime aim of Community regional policy 
must be to close the gaps between countries and regions 
with a relatively low per capita GDP and the rest of 
the Community much more rapidly. This task mostly 
revolves around the fight against the disproportionately 
high unemployment in these countries and regions. 
Integrated rural development also plays a role in closing 
the gaps between countries and regions. 
3.4.2. The budgetary appropriations for the structur­
al funds are to be doubled between 1987 and 1993, and 
there are also new outline Regulations about the funds' 
tasks and the coordination of their measures with those 
of the European Investment Bank (EIB). The Com­
mission's ability to provide effective assistance, with 
No C 201/12 Official Journal of the European Communities 7. 8. 89 
the support of the Member States, has thus improved 
considerably. The Committee would refer to its Opin­
ion on this matter (!). 
3.4.3. The Committee agrees with the Commission 
that in order to close the gaps there must be more 
public and private investment in infrastructure (e.g. 
roads) and in the modernization of industry. Wage 
restraint in the relevant countries and regions would 
only delay this modernization process, insofar as out­
dated technology would continue to be profitable. In 
order to ensure that investments can be financed more 
easily there, access to funds on reasonable terms, 
especially for small and medium-sized enterprises 
(SME) (including cooperatives), must be generally 
improved. 
3.5. Sectoral policy 
3.5.1. The Community has already moved a long 
way towards integration and in many sectors where the 
non-tariff barriers to trade are low to average, the 
exchange of goods has reached a high level. In other 
sectors cross-frontier trade has remained low, although 
there are hardly any barriers to greater market interpen-
etration. In all of these sectors the Internal Market 
programme will have a manageable and acceptable 
effect. 
3.5.2. However, there are still a number of important 
sectors (e.g. construction of power stations, loco­
motives, telephone equipment and mainframe com­
puters) where the abolition of physical, technical and 
tax-related trade barriers and the liberalization of pub­
lic procurement will be the cause of considerable 
restructuring. It is important to indicate clearly at an 
early stage what changes are going to take place and 
to make them economically and socially acceptable to 
industry, workers and local and regional authorities. It 
may be necessary to employ the Structural Funds for 
this purpose. The Committee proposes the establish­
ment of sectoral committees in order to draw up restruc­
turing plans. As an extension of the social dialogue, the 
sectoral committees should consist of representatives of 
socio-economic interests and the Commission. 
3.6. European infrastructure policy 
Market integration in Europe and hence the develop­
ment of the Internal Market can be strengthened by 
making improvements to the Community's infrastruc­
ture. Rail and long-distance road systems and telecom­
munications are in considerable need of improvement, 
and it is particularly important to improve communi­
cations with the Community's peripheral regions. The 
(') OJ No C 337, 31. 12. 1988, pp. 39 et seq. Committee thinks that feasibility studies should precede 
the work and that private sources of finance should be 
used. It would also refer to its recent detailed Opinions 
on the matter (2). 
3.7. Competition policy 
3.7.1. Genuine competition needs to be preserved in 
the Community in order to ensure that all citizens gain 
from the Internal Market's cost benefits, that compe­
tition between firms is stepped up, and that industry's 
efficiency and ability to innovate improve as hoped. 
This means above all that mergers of importance to the 
Community as a whole must be vetted at Community 
level. The powers to vet these mergers and the powers 
laid down by national legislation must be clearly demar­
cated. It would be worth considering transferring these 
powers from the Commission to an independent body. 
The Committee would refer to the Opinion it adopted 
on this matter in June 1988 (3). Once barriers to trade 
have been abolished, market structures and the changes 
brought about by mergers will also have to be judged 
in a Community-wide context. This would appear 
necessary where markets are open in principle to the 
rest of the world, if Community industry is to be 
capable of competing with the USA, Japan and the 
highly-efficient Newly Industrializing Countries. 
3.7.2. Community and national authorities should 
pay particular attention to small and medium-sized 
enterprises which are worse off than large firms with 
regard to information and planning. Public information 
and advisory services can help to offset these disadvan­
tages. The Committee welcomes the steps taken by the 
Commission in helping to set up EC information and 
advice services in all Member States. In addition, the 
support of cooperation between firms is important for 
the reduction of small and medium-sized enterprises' 
competitive disadvantages. 
3.8. Consumer policy 
3.8.1. The abolition of barriers to trade, and 
especially the approximation and mutual recognition 
of technical regulations and standards, will confront 
consumers with new problems. 
3.8.2. There are many goods where even in-depth 
information and advice does not provide sufficient con­
sumer protection. Foodstuffs, domestic appliances, haz­
ardous consumer goods and high-risk financial services 
are cases in point. Here regulations and standards 
should be aligned at a high level as a preventive 
measure. 
(2) OJ No C 23, 30. 1. 1989, pp. 8 et seq. and OJ No C 347, 
22. 12. 1987, pp. Wet seq. 
(?) OJ No C 208, 8. 8. 1988, pp. 11 et seq. 
7. 8. 89 Official Journal of the European Communities No C 201/13 
3.8.3. In addition, consumer information and advice 
should be extended (cf. the relevant Opinion). The 
Committee would like to emphasize at this point that 
appropriate school education should be regarded as a 
vital part of consumer policy. 
3.9. Active environmental protection for an efficient 
economy 
3.9.1. The Committee thinks that the key to qualitat­
ive economic growth lies in doing more to protect the 
environment. So far national environment policies, eg. 
for clean air and water, have been possible and effective 
only to a limited extent. The Community's growing 
economic interdependence and the creation of the Inter­
nal Market make it even more important to coordinate 
environment policy and make it bunding. 
3.9.2. Firstly, damage caused by environmental 
neglect should be redressed, e.g. old dumps and polluted 
land should be cleaned up and old plant should be 
adapted to the state of the art. Common regulations 
and standards should also be continually updated and 
applied to new plant and new products. Research 
should focus on the development of technology which 
is as non-polluting as possible, in order as far as possible 
to stop damage from being caused in the first place. 
3.9.3. Environmental protection creates jobs (invest­
ments, development of new environmentally-friendly 
goods which are particularly suitable for export). In 
addition, environmental protection is often a require­
ment for the restructuring of industry and the creation 
of new jobs, e.g. in traditional industrial areas where 
the presence of old dumps and polluted land hampers 
restructuring. Firms which switch over to new processes 
or products at an early stage also gain a competitive 
advantage over others which do not adapt promptly to 
environmental requirements (e.g. motor vehicles equip­
ped with catalytic converters). 
3.9.4. The 'polluter pays' principle should apply to 
the cost of environmental protection. This means that 
the brunt of the costs have to be borne by industry and 
consumers. The risk of having to bear these costs and 
face possible punishment must be such as to effectively 
deter people from infringing pollution limits laid down 
by the authorities. 
3.9.5. Finally, the Committee considers that it cannot 
remain indifferent to the enormous problems which 
will be caused if the greenhouse effect materializes. 
Since the economic activities of developed and develop­
ing countries are bound to undergo unprecedented 
changes and the counter-measures will have to be 
extremely extensive and far-reaching, these measures 
should be researched and initiated now even if the greenhouse effect does not pose a threat for a long time 
yet. The Committee thinks that the Commission and 
all governments worldwide should give urgent priority 
to making a joint assessment of the risks and requisite 
measures. 
3.10. Employment and labour market policy 
3.10.1. The Community has large untapped man­
power resources, since unemployment is persistently 
high and the participation rate is rising from a relatively 
low base. The basic macroeconomic strategies set out 
in the cooperative growth strategy must be pursued, so 
as to maintain a growth rate of around 3,5% and 
the associated rise in employment. However, the vital 
importance of skills training has already been made 
clear by emergent shortages of skilled manpower. Firms 
and state agencies have a special responsibility to bear 
here. 
3.10.2. The importance of training will increase in 
the run-up to 1992. The upward alignment of living 
and working conditions and social security entitlements 
will require workers to become more highly skilled or 
retrain. The Committee, bearing in mind the special 
problems of small firms, thinks that for this purpose it 
will be necessary, inter alia, to introduce a general 
entitlement to paid leave for further training. Failure 
to do so will hamper the introduction of new technol­
ogies. In addition, the Internal Market programme itself 
will generate structural changes and it will have to be 
made easier for the persons affected to adapt (employ­
ment, educational and social measures). Finally, the 
Committee would emphasize that the Commission's 
action programme to assist the long-term unemployed 
should be given special priority. Here, too, skill-acqui­
sition measures are needed, and jobs must be created 
with the help of the Structural Funds so that skills are 
not wasted. 
3.10.3. Youth unemployment continues to vary in 
severity from one Member State to another. The Com­
mission is asked to increase the structural fund 
measures targeted at this group of the population. 
3.10.4. The rise in employment in the last few years 
can primarily be attributed to the creation of more 
part-time and temporary jobs in the services sector. 
This poses particular problems for wages policy. The 
main problem is to ensure that part-time and temporary 
staff in service industries have adequate social security 
cover while they are working and adequate pensions 
when their working life is over. 
No C 201/14 Official Journal of the European Communities 7. 8. 89 
3.11. Fiscal policy 
3.11.1. The differentiated budget consolidation pol­
icy to be introduced shortly {cf. 2.3) alongside the 
promotion of public and private investment remains a 
task for the medium term. The Committee believes 
that, for the purpose of coordinating fiscal policy more 
effectively, member governments should introduce and 
adopt their budgets simultaneously and EC finance 
ministers should draw up a medium-term Community-
wide finance plan. 
3.11.2. The removal of tax barriers is an important 
but difficult step towards free movement of goods and 
services in a Single Internal Market. The Committee 
has expended much effort(*), particularly in 1988, on 
tackling the manifold problems associated with the 
approximation of indirect taxes and their passing on 
to the final consumer. In the meantime the Commission 
has published new proposals for the harmonization of 
indirect taxes. The Committee assumes that these will 
be submitted to it straightaway for due consideration. 
3.11.3. One more question which remains to be 
answered is whether the removal of trade barriers and 
the liberalization of capital movements necessitate the 
approximation of direct taxation. It is not out of the 
question that the competition for jobs will put pressure 
on Member States to align their taxes on investment. 
The information available about company taxation in 
the Community is quite unclear. The Committee would 
therefore urge the Commission to complete its White 
Paper on the matter as soon as possible. 
3.12. Exchange-rate and monetary policy 
3.12.1. -Monetary union will not be a direct feature 
on the Single Internal Market due for completion by 
the end of 1992. The Commission considers instead 
that the single market will be the foundation for other 
Community policies, including the achievement of 
economic and monetary union. The Committee believes 
that the single market planned for 1992 will be carried 
(') OJ No C 237, 12. 9. 1988, pp. 14 et seq. 
Done at Brussels, 22 June 1989. a decisive step forward by economic and monetary 
union. Bu further reducing trade risks and the costs 
of transactions, economic and monetary union will 
facilitate the free movement of goods, services, capital 
and labour beyond the stage reached in 1992. 
3.12.2. If monetary union—with a single Com­
munity currency as its centrepiece—is to be achieved, 
there must be a high level of consensus about basic 
exchange-rate and monetary policy objectives and 
about the measures and policies to be adopted by the 
institution managing the Community currency. In prin­
ciple, this means agreeing on the content of the statutes 
of a European Central Bank. Without this consensus, 
individual Member States will be reluctant to give mon­
etary powers to Community bodies. 
3.12.3. Looking at the EMS today, it is clear that 
there are still major differences of opinion in the Com­
munity on exchange-rate and monetary policies, even 
if Member States have already moved much closer 
together in key policy areas. The impending liberaliza­
tion of the capital market (from mid-1990) and banking 
(by the end of 1992) necessitates an even greater conver­
gence of monetary, fiscal, tax and wages policies to 
preclude sudden movements of capital within the Com­
munity. The liberalization of capital markets is thus an 
important initial step towards monetary union. The 
alignment of policies will make it possible, for example, 
to narrow intervention margins in the EMS and even 
establish fixed exchange rates. Once monetary policy 
integration of this level has been achieved, it should be 
that much easier to move on to full monetary union. It 
is also important that institutional and economic-policy 
measures should be complementary. This would be 
easier if all Member States were to join the EMS. 
3.12.4. The Committee welcomes the report of the 
Delors Committee on economic and monetary union in 
the European Community. It considers this report to 
be a highly important document, for it shows that 
economic and monetary union can be achieved. How­
ever, the Member States' economies will not be able to 
merge unless the other processes involved in European 
integration make headway. Since the report offers a 
highly suitable basis for further discussion and the 
gradual solving of the problems still remaining, the 
Committee will prepare a detailed Opinion thereon. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE 
7. 8. 89 Official Journal of the European Communities No C 201/15 
APPENDIX 1 
to the Opinion of the Economic and Social Committee 
The following members, present or represented, voted for the Opinion: 
Mr/Mrs/Miss: Amato, Bento Goncalves, Beretta, Berns, Berton, Bleser, Boddy, Bordes-Pages, Breyiannis, 
Cal, Calvet Chambon, Carroll, Cavazzuti, Christie, Conde, Cortois, Delia Croce, De Tavernier, Dos Santos, 
Drilleaud, van Eekert, Etty, Eulen, Flum, Frandi, Freeman, Gayetot, Germozzi, Geuenich, Glesener, Gomez 
Martinez, Gredal, Haas, Hagen, Hilkens, Houthuys, Horsken, Jaschick, Jenkins, Laka Martin, Lappas, 
Larsen, Liverani, Luchetti, Maddocks, Margalef Masia, Mayayo Bello, Mercier, Morselli, Mourgues, Muhr, 
Muniz Guardado, Murphy, Nielsen P., Nierhaus, Nieuwenhuize, Orsi, Proenca, Pronk, Ramaekers, Rangoni-
Machiavelli, Roseingrave, Rouzier, Santillan Cabeza, Schmitz, Schoepges, Silva, Smith A., Smith L., Spijkers, 
Staedelin, Vallejo Calderon, Vanden Broucke, Velasco Mancebo, Vercellino, Vidal. 
The following members, present or represented, voted against the Opinion: 
Mr/Mrs/Miss: Arena, Arets, Bagliano, Bredima Savopoulou, Broicher, Ceyrac, Clavel, Collas, Corell Ayora, 
van Dam, Donck, Fresi, Giacomelli, Green, Hancock, Kaaris, Kazazis, Low, Lustenhouwer, Machado von 
Tschusi, Mainetti, Meyer-Horn, Muller, Neto da Silva, Noordwal, de Normann, Pardon, Pearson, Pelletier, 
Perrin-Pelletier, Petersen, Proumens, Ribiere, Riera Marsa, Robinson, Romoli, Schade-Poulsen, Schnieders, 
Tamlin, Telles, Termes Carrero, Tukker, Wagner, Wick. 
The following members, present or represented, abstained: 
Mr/Mrs/Miss: Aspinall, Decaillon, Droulin, Flather, Margot, Matteoli, Morales, Tixier, Vassilaras. 
APPENDIX 2 
to the Opinion of the Economic and Social Committee 
Point 2.4.2. 
Amend point 2.4.2 to read as follows: 
'Wages policy must continue to contribute towards improving the employment situation. The general trend 
towards higher utilization of firm's productive capacity helps to (a) hold down the cost of shorter working 
hours and wage increases negotiated in particular within the framework of collective agreements, (b) maintain 
the Community's ability to compete with the rest of the world and (c) increase the effect thereof on 
employment.' 
The members of the employers' group voiced their opposition to the wording of 2.4.2 at the study group 
meeting in Madrid. Mr Giiacomelli therefore proposed the above amendment as a compromise solution and 
this was accepted by the workers' group's members present and the rapporteur's expert (the rapporteur 
himself being absent at the time at a press conference). The purpose of the amendment is therefore to revert 
to the solution adopted on 23 May. 
Voting 
For: 48, against: 64, abstentions: 4. 
^oC^ona^ C^thcr^l]ournalotrric^uroncanC^ornrnunnic^ ^^^ 
to the OOpinior^ of the economic ar^d social committee 
At the end of the vote by name on the complete Opinion,the members of the employers'group listed below 
who voted against the Opinion made the following statement 
a^he members of the employers'group who voted against the Opinion on the economic situation were unable 
to vote in favour, even though most of this te^t was acceptable. 
These members feel that, in approving previous Opinions, they reached the limit of the concessions possible 
with respect toworking hours and cannot nowaccept the new wording of point 2.4.2,especially as regards 
longer-term agreements. 
tnaddition,t^iey regret thatconsiderations whose normalplacewouldbeinanOpimononsocial matters 
should persistently be included in an Opinion on economic issues. 
The group would also point out that there isacontradiction in the Opinion between, on the one hand, the 
recommendations which would involveanse in wage costs and,on the other hand,the fact that the Opinion 
refers to the environmental and unemployment problems facingtheeommunity, whichcannot besolved 
unless considerable financial efforts are made. 
finally these members are of the view that the Opinion is proposing excessive reliance on demandside policy, 
and wish toe^presstheirdisagreement with this pointB 
members of t^ieemployers'group who voted against the Opinions 
^tr^mrs^tiss^ Arena, Arets,8aghano,8redima ^avopoulou,8roicher,Ceyrac,eollas,eorell Ayora, van 
Oam,nonck,^resi,e^iacomelli,(^reen, Hancock, Kaans, t^a^a^is,Low,^vtachado vonTschusi,^tametti, 
meyerelorn, duller, ^Cetoda^ilva, e^oordwal, de ^ormann, pardon, Pearson, t^elletier, ^errin^Belletier, 
Petersen, l^roumens, mbiere, l^iera ^tarsa, l^omoli, ^chadel^oulsen, ^chmeders, Tamhn, Telles, Termes 
earrero,Tukker,^agner,^ick.