ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(82)800
Vol.1982/0243

Disclaimer
Conformément aurèglement(CEE,Euratom)n°354/83duConseildu1erfévrier1983
concernantl'ouvertureaupublicdesarchiveshistoriquesdelaCommunauté économique
européenneetdelaCommunautéeuropéennedel'énergieatomique(JOL43du15.2.1983,
p.1),telquemodifiéparlerèglement(CE,Euratom)n°1700/2003du22septembre2003
(JOL243du27.9.2003,p.1),cedossierestouvertaupublic.Lecaséchéant,lesdocuments
classifiésprésentsdanscedossierontétédéclassifiésconformément àl'article5dudit
règlement.
InaccordancewithCouncilRegulation(EEC,Euratom)No354/83of1February1983
concerningtheopeningtothepublicofthehistoricalarchivesoftheEuropeanEconomic
CommunityandtheEuropeanAtomicEnergyCommunity(OJL43,15.2.1983,p.1),as
amendedbyRegulation(EC,Euratom)No1700/2003of22September2003(OJL243,
27.9.2003,p.1),thisfileisopentothepublic.Wherenecessary,classifieddocumentsinthis
filehavebeendeclassified inconformitywithArticle5oftheaforementioned regulation.
InÜbereinstimmung mitderVerordnung(EWG,Euratom)Nr.354/83desRatesvom1.
Februar1983überdieFreigabederhistorischen ArchivederEuropäischen
Wirtschaftsgemeinschaft undderEuropäischen Atomgemeinschaft (ABI.L43vom15.2.1983,
S.1),geändertdurchdieVerordnung(EG,Euratom)Nr.1700/2003vom22.September2003
(ABI.L243vom27.9.2003,S.1),istdieseDateiderÖffentlichkeitzugänglich.Soweit
erforderlich,wurdendieVerschlusssachen indieserDateiinÜbereinstimmung mitArtikel5
dergenanntenVerordnungfreigegeben.

COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)800final
Brussels.24november1982
THEECONOMIC ANDSOCIALSITUATION INTHECOMMUNITY
(Communication bytheCommissiontothe
EuropeanCouncilmeetingof3-4December1982)
A\-7'*. Vtr "^ -t\r\!/
y/. f
yîplnrr

TheEconomicandSocialSituationintheCommunity
(Communication bytheCommissiontothe
EuropeanCouncilmeetingof3-4December1982)
Contents
1.Introduction
2.Economictrendsandprospects
3.Fourprioritiesforcyclicaland
structuralrecovery.
Table1.Maineconomieaggregates1980-83

2.
1. Introduction
Thepresent note summarises theCommission 'sappreciation ofthe
present economic andemployment outlook and ofthe main economic policy
issues that areoutstanding .Theproblem ofinvestment istreated ina
separate paper which should beconsidered inconjunction with thepresent
one .Inaddition the joint meeting ofministers ofFinance andEconomic
Affairs and Employment and Social Affairs on16th November has reached
conclusions on (i)strengthening oftheeconomic environment ,(ii)reor­
ganisation ofworking time and (iii )increase ofemployment opportunities
foryoung people .TheEuropean Council will have available theconclu­
sions ofthis meeting .

3.-
2.Economictrendsandprospects
Thetrendinproduction andemployment in1982hasbeenveryunfa­
vourable.Ayearagoexportsweregrowingfast.Therewerehopesthat,
asaresultofanimprovement inthebalanceofpayments,compensating
theeffectsofthesecondoilshock,astrengthening ofinternaland
worlddemandwouldoccur.However,thefirsthalfofthisyearinfact
sawaweakeninginseveraloftheEC'sexportmarkets-theOPECcoun­
tries,thenon-oildeveloping countries andtheUnitedStates.These
influences weresufficient tocanceloutthemodestincreaseindomestic
demandintheCommunity .Overallgrossdomesticproductisexpectedto
increase amere0,3%in1982involumeterms.
Thesedifficulties havebeenreflected inareneweddeterioration in
businessconfidence sincemid-year.Moreoverthelatestindustrial pro­
ductionstatistics showevidenceofareneweddropinactivitysince
June.
Ifthistendencywastobeconfirmed,themodest1,1%growthprojections
for1983intheCommission'sAnnualEconomicReportarelikelytoprove
over-optimistic .
Unemployment hascontinuedtorise,andisnowover10%,i.e.almost
doublethelevelof5,4%reachedduringthe1978-79businessrecovery
beforethesecondoilshock.Onpresenttrendsunemployment islikelyto
risesubstantially inthecomingyear.Over40%ofthosecurrently unem­
ployedareunder25yearsold.
Inflation hasbeendecelerating intheECasawhole,althoughnotas
fastasintheUnitedStatesandJapan.FortheECasawholeconsumer
pricesincreased10,7%overthelasttwelvemonths(rangingfrom5/*in
Germanyto22%inGreece),comparedto14,1%in1980.IntheUK
theslow-downininflation hasbeenasstrikingasintheUnitedStates.
Furtherprogressisexpectedinreducinginflationintheyearahead,with
a1983averageof8,8%expectedfortheECasawhole(rangingfrom
31/2%inGermanyto21%inGreece).
ThebalanceofpaymentscurrentaccountdeficithasfortheECasa
wholebeenreducing,withatotaldeficit^in1982ofECU15billion,
representing 0,7%ofGDPcomparedtotwiceaslargeafigurein1980.Some

4.-
ofthe largest country deficits asashare ofGDP,such asthose seen in
Belgium andIreland ,arereducing .Butsevere balance ofpayments con­
straints remain inseveral countries .
Twobasic phenomena seem tobeoverlapping inthepresent European
economic situation .First ,deep structural economic weaknesses have accu­
mulated inmany European countries .These weaknesses aremanifest inan
excessive share ofgeneral government expenditure ingross national pro­
duct aswell asinanunbalanced distribution ofincome between wages and
profits and ofexpenditure between consumption and investment .Overall
these have resulted inalowpropensity oftheproductive sector toin­
crease employment .Secondly ,there have been ,and still are,serious
problems ofpolicy management inthe world 'sprincipal economic regions ,
problems related tothesequence ofoil shocks ,toerratic exchange rate
and interest rate fluctuations and totheexternal indebtedness crises ;
this hasalso ledtodefensive reactions intrade policies .Together these
problems have been interacting with theeffect ofextending anddeepening
the recession inworld tracje andayyravating theproblems ofmanaging
internal structural change within Europe .
/

3.Policyissues:fourprioritiesforcyclicalandstructuralrecovery
Thiscombination ofstructural andcyclicalcriseshasnowreacheda
pointofexceptionalgravity.Torestoregrowthandcreatemoreemployment,
strongremedies,coherentlyrelatedtoeachotheracrosstheEuropeanCommunity
and'thenconcertedwithitsmainpartnersintheworldeconomy,arerequired.
Inconsistent andcompetitive reactionbetweencountries andregionswouldbe
dangerous.
TheCommission believesthatacomprehensive strategyisrequired
comprising abroadrangeofeconomicandsocialpolicies.Fourpriorities
shouldguideacoordinated movementleadingthroughacyclicalrecovery
intoasoundermedium-term economicperformance .
(i)strengthen andconsolidate actionsofmacroeconomic stabilisation and
structural improvement wherethesearenecessary;
(ii)takeappropriate actiontosupportactivityandtopreparethere­
coverywherethiscannowbedonewithoutprejudicing stabilisation
andstructuralpolicyobjectives ;
(iii)reinforceinternational concertation toreducetherisksofdestabi­
lisingdevelopments indifferentcountriesorregions;
(iv)supportandstrengthentheemployment-creating effectsofthesepoli­
ciesthroughspecificactionsinthelabourmarket,especially where
unemployment isinequitably concentrated .
(i)Inthefirstcategoryeffortsshouldbeaimedattwocomplementary
objectives :macroeconomic stabilisation andstructural improvement .
Withrespecttomacroeconomic stabilisation importanteffortsare
currentlybeingmadeinseveralEuropeanCommunitycountries.Itisimpor­
tanttosupporttheseactions,whichconcernpublicfinanceandincomes,
includingissuesofindexationinbothfields.Inactioninthefaceof
excessiveincreasesofpublicexpenditure andbudgetdeficitshasledseveraL
countriestoexcessiveexternalindebtedness orhascausedtoohighin­
flationorboth.During1982importantchangesinpolicyhaveemerged:
Belgiumearlyintheyear,withnewdevelopments nowinDenmark,Ireland,and

6.-
theNetherlands .Inaddition strong measures onthede-indexation of
incomes are atpresent being discussed inFrance andItaly ,which would
make anessential contribution tothe realisation ofstabilisation ob­
jectives inthese countries .When theforegoing policy initiatives are
implemented they will constitute major factors promoting convergence
between theMember States along the lines that theCommunity institutions
have been consistently advocating .
With respect tostructural improvements itisnecessary tocontinue
and intensify actions aiming atpromotion ofinvestment and industrial
change onthenational aswell asontheCommunity level .This issue ,
isthesubject ofaseparate communication ,ial»re only mentioned .
However ,itsdirect relationship toemployment policy should beunder­
lined .Theexpansion ofproductive activity ,theestablishment ofmodern
andcompetitive manufacturing andservice industries within asound eco­
nomic framework ,are the best weapons inthe fight against unemployment .
(ii) Inthesecond category ,ofaction tosupport abusiness recovery ,
the most important variable for the time being isthe rate ofthe interest .
For thepresent ,interest rates arebeing reduced ,and care should be
taken toconsolidate this trend inthe United States and Europe .With evi­
dence offurther deceleration ininflation and weak economic activity ,
especially inGermany ,theUnited Kingdom and theNetherlands ,these coun­
tries canafford toimplement continuing interest rate reductions in
Europe .Other countries intheCommunity face substantial balance ofpay­
ments constraints .Such countries are not inaposition toundertake auto­
nomous interest rate reductions butmay follow ,inpart atleast ,ageneral
downward movement ofrates .
Asregards budgetary policy ,iftheeconomic situation worsened ,coun­
tries experiencing asatisfactory reduction ininflation should avoid action
tooffset theincreases inbudget-deficits that would result from the
loss ofactivity .Inother countries ,until andunless interest rates have
been brought down inconditions ofsound policy management ,there isunlikely
tobeacase forbudget policy relaxation .
Interest rate reductions should still inthepresent phase bethemain
agent ofcounter-cyclical policy .Butasandwhen thescope forinterest rate
reductions isexhausted and onthecondition that both thepace ofinfla -
/

tionhasbeensubstantially reducedandpublicfinancesare
Suff1ciontLyur.J*;rCO:"*"rol,nnliryinitist'vP1,tocrnnnrtp-nnn-if
*• II•.• • . |III ,•l| •.|
....- ...II. .,, ■ ,
policyobjectives .Suchbudgetaryactioncouldtypicallyincludetax-cuts
orchangesintaxandexpenditure structures designedtohavemaximum
supply-side andemployment benefits.
(iii)Thethirdcategoryofactionsconcernsparticularly thefieldof
international finance,exchangeratesandtradepolicies.
First,withintheCommunity,theEuropeanMonetarySystemmustcon­
tinuetobecarefully managedandexploited asavaluablesafeguardagainst
destabilising influencesthatarelatentintheinternational economy.
Inparticular theEMSservesasaguaranteeagainstexaggerated exchange
ratemovements,contributes significantly totheconvergence ofeconomic
policiesandconstitutes thenecessary baseforabetterorganisation of
monetarycooperation betweenEuropeanditspartners.TheCommunitycannot
butbenefitfromasimultaneous strengthening ofthemechanisms oftheEMS
andoftheconvergenceitbringsabout.
Withrespecttointernational monetaryquestioristheCommunityshouldaim
atpersuading theUnitedStatesandJapantoimplementmonetarypolicies
adequately adaptedtothesecountries 1effectiveresponsibilities forthe
stabilityoftheworldfinancialandtradingsystem.Thismeansnotably
thattheEC,JapanandtheUnitedStatesreachanagreement onthe
necessityofahigherdegreeofstabilityofinterestratesandofexchange
ratesandtaketheappropriate measurestothisend.
Anearlyandsubstantial agreementonthereplenishment ofthefinan­
cialresourcesoftheIMFmustbereached.
Trendstowardstradeprotectionism mustbestronglyresistedandthe
Communityshouldparticipatetoallefforts,includingthoseinvolvinginternaL
adjustmentmeasures,aimingatensuringasufficientexpansionoftradewith
developing countries.

8.-
(iv)Inadditiontotheseactions,further,morespecificinitiatives
needtobetakeninordertocreatemoreemploymentopportunities .
Youngpeoplecontinuetobeamongthemainvictimsofthe
recession,experiencing increasingly longspellsofunemployment before
andbetweenjobs.Theunemployment rateforyoungpeopleisnowover20%.
Furtherprogressneedstobemadeintheimplementation ofthe
Community-wide guaranteeoftrainingandworkexperienceforyoung
peopleasagreedinprinciplebytheEuropeanCouncilon29/30March,
andasfurtherdefinedbytheCommissioninitscommunication tothe-
CouncilonVocationalTrainingin1980s,supportedbyitsOpinionon
theReviewoftheEuropeanSocialFund.
Howevergreattheeffortontraining,theresultsfortheyoung
unemployedwilldependlargelyonthesuccessofoveralleconomic
policiesandtheavailability ofemploymentopportunities .
Urgentconsideration needstobegivenbypublicauthorities
andsocialpartnersaliketothefurtherdevelopment ofspecial
recruitment programmesforyoungpeoplelinkedwhenappropriateto
reductionsinworkingtime.Differentkindsofdirectorindirectemploy­
mentsubsidiescouldbeusedtostimulatethiskindofarrangement and
tohelpdisadvantaged youngpeopleobtainstableemploymenteitherin
commercialorindustrialfirmsorinnon-traditional formsofenterprise
oractivities.Inanycase,ratherthananewanalysisofthiswell-known
problem,itisvigorousandquick-acting measureswhichareneedednow.
TheCommunityhasaroletoplay,inparticularthroughits
financialinstruments,insupportingtheexpansionofspecialemploy­
mentprovisionsforyoungpeopleandotherdisadvantaged groupssuch
asthelong-termunemployed.TheJointCouncilwelcomedthe
Commission'sintentionofpresentingproposalsforspecificmeasuresto
promotetherecruitmentofyoungpeopleandtoincreasethevolumeof
employmentopportunities availabletothem.

9.
Onthereorganisation ofworkingtime,theJointCouncilon
16NovemberendorsedtheCommission'sviewthatareorganisation of
workingtime,possiblyincombination withareductioninworkinghours,
canleadtoanincreaseinemploymentprovidedthatthecompetitive
positionoffirmsisnotimpaired,thatthereissufficientflexibility
inlabourmarketstopreventlabourbottlenecks,andthatconstraints
resultingfromdifferences inproductionmethodsand/orscale"of
operationareaccepted.Moreover,reductionsinworkingtimemustnot
besystematically offsetbyincreasesinovertimeworking.Thedetails
ofanyattempttoreorganiseworktimeshouldbedesignedandnegotiated
atthemostappropriate level.Indeed,jobcreationandjobmaintenance
throughworkingtimereductionsarealreadybecomingafeatureof
collectivenegotiations .
Governments couldconsidertowhatextenttheymightsharein
thecostsoflaunchingnewworkingtimearrangements andshouldseekto
removelegalorotherobstaclestoamoreflexibleorganisation of
workingtime.
Inordertostimulatepolicyconvergence,theCommissionwill
continuetoworktowardstheformulation ofaCommunityapproachwhere
appropriate,onthereorganisation ofworkingtime.TheCommissionhas
alreadytabledproposalsonflexibleretirement andvoluntarypart-time
work,onwhichithopesforearlyagreementintheCouncil.Itintends
topresentamemorandum onthereorganisation ofworkingtimebefore
theendoftheyear.
TheCommissionwillcontinuetoplayitspartinemploymentaffairsand
attachesaparticularimportancetothecloseandcontinuingassociationof
thesocialpartnersinthedevelopmentofCommunitypolicies.
χ
χ Χ

MaineconomicindicatorsfortheEuropeanCommunity,UnitedStatesandJapan
TABLE 1:Grossdomesticproduct(percentagechangeatconstantprices
onprecedingyear,ECcountries,EC,USA,Japan,1970-1983)
1970
1979197819791980198119821983
Β3 3,23,22,32,5-1,7-0,50,5
DK3 2,61.33,0-0,2-0,22,01,6
IV 2,93,34,32,00,1-0,51,0
GR2 4,86,73,81,7-0,70,71,9
F2 3.63,53,01,30,3U1,0IRL' 4,46,72,41,91,12,02,4Ρ 3,22,74,94,0-0,20,81,0
L3 3.14,64,10,7-2,4-0,31,0
NL3 3,62,71,80,6-1,ι-0,5-0,3
UK3 2,23,31,4-1,4-1,90,61,7
F.C
USA
JAP3,1
2,9
6,93,2
4,4
5,03.3
2.4
5.51,4-0,2
4,4-0,6
2,0
3,00,3-1,6
2,51,1
2,0
3,3TABLE2:Deflatorofprivateconsumption (percentagechangeon
precedingyear,ECcountries,EC,USA,Japan,1970-1983)
1970
197919781979198019811982'1983'
Β 6,73,93,96,59,19,08,5
DK 9,89,89,611,510,79,97,0
D 5,12,44,05,36,05,03,6
GR 11.512,617,723,7 .24,423,021,0
F 8,68,810,913,212,511,08,9
IRL 12,87,513,418,319,618,513,0
I 13,112,916,020,419,016,615,0
L 6,33,56,87,78.111,09,0
NL 7,54,34,36,66,56,34,5
UK 12,38,914,315,510,98,86,9
EC
USA
JAP9,1
6,1
7,77,1
6,8
4,69,1
9,1
3,411.1
10.2
7,111,8
8.5
4.610,5
5,6
2,58,8
4,5
1.8
TABLE3:Numberofunemployedaspercentageofworkingpopulation^A r.nPpr(ECcountries,EC,U^ Z*BLE♦:Balanceoncurantaccount(percentofGDP,ECcountr.es,
1970
1979197819791980198119821983
Β 5,08,48,79,411,713,914,8
DK 3,36,55,36,18,49,19,2
D 2,53,93,43,44,86,98,3
GR 2,2(2,2)(2,8)(3.1)(3,8)(4,0)
F 3,35,26,06,47,38,39,3
IRL 7,18,47,48,310,312,114,0
I 5,67,17,58,08,59,910,5
L 0,20,70,70,71,01,21,3
NL 3,04,14,14.77,510,413,1
UK 4,05,75,36,910,612,212,5
EC
USA
JAP3,8
6,2
1,75,4
6,0
2,25,4
5,8
2,16.0
7.1
2,07,8
7,6
2,29,4
9,4
2,310,3
9,6
2,1EC,US,Japan,1970-1983)
19781979198019811982'1983'
Β 0,4-1,6-2,9-5,3-5,4-4,0-3.2
DK-2,9-2,7-4,5-3,8-3,2-4,1-4,0
D 0,91,5-0,6-1,8-1,10,10,3
GR-2,8-2,3-2,9-2,4-2.2-2.4-2,3
F-030,60,1-1,4-2,0-2,6-1,9
IRL-4,2-3,1-9,8-8,4-13,2-9,0-7,6
I-022,41,7-2,5-2,3-1,3-0,5
L 22523,328,122,720,319,718,8
NL 1,3-0,8-1,3-1,42,34,05,0
UK-0,90,4-0,01,42,40,80,2
FC–010,8–0,4-1,4-0,8–0,7-0,6
USA 0,1-0,6-0,1-0,20,10,3-0,2
JAP 08.1,7-0,9-1,10,40,61,0
TABLE5:Generalgovernmentlendingorborrowing(–)aspercentage TABLE6:MoneysupplyM2/M3(percentagechangeatendofyearon
ofGDP(ECcountries,EC,1970-1983) twelvemonthsearlier,ECcountries,EC,USA,Japan,1970-1983)
1970
1979197819791980198119821983.1970
1979197819791980198119821983
Β-4,2-5,5-6,9-9,4-13,4-12,8-12,1 Β 10,97,86,02,76,66,57,0 1
DK 0,0-2,2-3,1-5,9-7,1-9,5-9,6DK 11,06,79,910,99,612,011,0
D-1,5-2,8-3,0-3,5-4,0-3,9-4,1D 10,111,06,06,25,07,05,0¡
GR-4,4-5,1-4,8-5,4-10,1-9,2-8,6GR 23,339,4'18,424,734,329,123,0 1
F-0,6-2,3-0,80,5-1,5-3,0-3,0F 15,412,214,49,711,512,512,0
IRL-8,5-10,5-11,9-12,8-15,4-14,7-14,4IRL 18,228,919,016,917,416,816,5 !
I-8,6-9,7-9,5-8,4-11,9-11,6-11,0 I 19,623,020,312,016,015,816,2,
L 2,33,30,1-1,8-0,8-0,9-1,0L – – – – – –
NL-1,3-2,1-2,0-3,4-4,5-5,7-5,5NL 11.64,27,63,65,27,67,0
UK-3,2-4,0-3,3-3,5-2,1-0,9-0,5UK 13,615,012,718,614,610,210,]i
EC-2,9-4,0-3,6-3,5-4,8-5,0-4,9EC
USA
JAP13,9
9,5
16,913,9
8,3
13,111,9
8,8
9,110,5
10,1
7,210,8
9,5
8,710,810,0
Source:Commission services.
/