Resolution on broad guidelines of the economic policies (Growth, Competitiveness and Employment) (94/C 271/10)

Preamble

One year ago, the Economic and Social Committee of the EC and the EFTA Consultative Committee, representing employers, workers and other socio-economic groups of the 19 EC and EFTA Member States, approved a joint statement on growth and employment.

This statement was addressed to the Economic and Finance Ministers attending the Joint EC/EFTA Ministerial meeting held in Luxembourg on 19 April 1993.

In the statement, the two Committees expressed the view that the economic and social costs of high unemployment were unacceptable. They considered that the measures taken hitherto were insufficient, and called for immediate action in the areas of economic growth, budgetary and monetary policy, investment promotion and social Europe.

Maintaining that higher, more durable economic growth was a key factor for boosting employment and reducing unemployment, the two Committees also advocated a stronger role for the social partners, who are ready to take their share of responsibility.

BROAD GUIDELINES OF THE ECONOMIC POLICIES

1. Introduction

1.1. The Oporto Agreement establishing the European Economic Area (EEA) entered into force on 1 January 1994. It provides for close cooperation between the social partners, and a new Consultative Committee has been created.

1.2. Unemployment in Europe has climbed to new heights. It concerns all European countries. It should be put formally at the top of the list of priorities, and be reflected in the broad guidelines of the economic policies as provided for by Article 103 of the EC Treaty. It should lead to the widest possible cooperation between EEA countries both at national government level, and at EEA institutional level.

1.3. All the economic and social partners are ready to contribute, within their own field of responsibility, to economic growth, competitiveness and employment in Europe.

2. Present situation

2.1. A number of factors sadly confirm the concerns voiced one year ago. It is estimated that in 1993 gross domestic product (GDP) fell by 0,5 % in the European Union and by 1,1 % in EFTA. A record number of 2,4 million jobs have been lost, and officially registered unemployment in the Community has risen to nearly 20 million, or around 11 % of the workforce; in EFTA the unemployment rate is 7,7 %. The real convergence of living standards has stalled, too. The rise in unemployment is closely linked to the phenomena of social exclusion and poverty.

2.2. There are also other aspects: low inflation (3,8 % - a level not achieved since the 1960s); wage moderation, which in some cases has even meant a drop in real wages; higher returns on investment in the EC, which are back at the levels last experienced in 1971 to 1973 before the first oil shock (approximately 90 % of the 1961 to 1973 average); and the steady fall in interest rates.

2.3. But despite all this, there are only weak signs of economic recovery. The forecasts for combined GDP growth of EU countries for 1994 and 1995 are - in real terms - 1,6 % and 2,5 % respectively. These growth rates will not prevent unemployment in the EU from rising still further in 1994 and 1995 thereby reaching a new all-time high.

2.4. The EEA Consultative Committee notes that employment and economic growth have been a key concern of the European Council over the last year. On the positive side, various programmes and measures have been announced, i.e. by the EU December 1993 Summit and related Council meetings, while additional work has begun in different fora with a view to boosting growth and job-creation.

2.5. The EFTA States have contributed to the preparation of the White Paper and undertaken to pursue resolute action and to bring about conditions for lasting, stronger and more job-creating growth.

Economic upturn and job creation affect all countries in the European Economic Area (EEA). The Joint EFTA and EU Finance Ministers meeting in December 1993 agreed to intensify contacts between EU and EFTA States and concluded that the widest possible cooperation is necessary to put the European economy back on a job generating growth path. The Consultative Committee urges all concerned parties to follow-up with actions based on this agreement.

3. Proposals for economic policies

3.1. The EEA Consultative Committee backs the White Paper's objective of creating at least 15 million new jobs by the year 2000. This ambitious objective must be taken into account by economic, budgetary, monetary and structural policy and in cutting the red tape which surrounds the establishment and operation of small and medium-sized firms.

3.2. As the Brussels Summit discussion of the White Paper showed, the relevant policies go well beyond the realm of budgetary and monetary policy: they cover both cyclical measures (incomes and prices policy, fiscal policy) and structural measures (operation of the markets, capacity to innovate, and policy of agreement through consultation between the State, employers and unions). In this context, the problem of adjustment of arrangements for funding social security, work organization and working conditions as well as the implementation of active job-creation policies should be addressed. The goals of growth, competitiveness and job creation require just such a wide approach.

3.3. Taking budgetary difficulties and inflation into account which weigh heavily on decision-taking, the Consultative Committee urgently underlines its view that EU authorities and EEA Member Governments should follow economic policies which create a framework of business and consumer confidence and are in line with the growth and job creation initiatives announced at the Edinburgh and Copenhagen Councils.

A return to sustained economic growth, expansion of the productive base of the economy and increased competitiveness of European economies are all necessary to pull Europe out of the structural and cyclical crisis which is threatening economic and social equilibrium.

Consumer and business confidence - crucial for overcoming the recession - depends among other things to a large extent on employment/unemployment prospects. At present these prospects are having a dramatic effect on consumer expectations and on domestic demand in general.

3.4. Increased private investment is the key to sustainable economic growth, employment and higher real incomes. It requires plentiful capital at real interest rates which provide scope for profitable investments. Wage developments, inflation and budgetary outcomes forecast for this year have created the right conditions for interest rates to continue their downward trend.

3.5. In order to achieve a non-inflationary expansion of aggregate demand in the European economy, advantage should be taken of the existing room for manoeuvre to adopt suitable macro-economic and monetary measures, in particular measures to promote the present downward trend in real interest rates.

3.6. As there are limits to government spending, the main focus should be on the quality of public spending. It should be selectively channelled into more productive investments, thereby promoting economic development and creating employment. Within the framework of action to consolidate public budgets, relatively larger expenditures should be allocated to investments, particularly in infrastructure and in education. There is scope for cooperation between European countries, especially in the field of trans-European networks.

3.7. The Consultative Committee calls on the European Council to provide a decisive political impetus to speed up work on trans-European networks and to strengthen public and private investment so as to raise the average investment rate from the current 19 % of GDP to 23 %, as indicated in the White Paper. The Committee asks the relevant fora of EEA and governments of Member States of the EU and EFTA to cooperate and find innovative solutions in this respect.

3.8. One objective of budgetary policy should remain the gradual reduction of public sector deficits. This will lessen upward pressure on interest rates, create favourable conditions for their further substantial decline and thus improve business confidence.

Increased growth also implies greater real economic convergence between the Member States, thereby creating better conditions for reaching, in the medium term, the objectives set for economic and monetary union.

Coordination of economic policies in Europe must promote a stable investment climate by avoiding inconsistencies which could generate financial market volatility.

3.9. International coordination with other OECD countries, particularly with the G7 nations, is also vital. Europe should speak with a single voice. An upturn in Europe will be even more difficult and slower without a favourable international climate.

4. The role of the social partners and economic agents

4.1. A more propitious and sound macro-economic climate will enable the social partners to play a more decisive part in the adjustments to be made at labourmarket level, in order to increase the employment component of economic growth.

The social partners have repeatedly demonstrated their commitment to boosting the factors for making stronger and healthier economic growth.

4.2. All the economic and social partners of EU and EFTA are ready to accept new tasks in addition to their traditional ones, to advise governments and European institutions on growth - and employment - promoting policies and to assume a joint responsibility with them in a wide range of economic and social policy fields.

4.3. The Consultative Committee firmly supports the European economic and social model described by the White Paper. This model is a part of the European identity and should be preserved and strengthened. It can only be maintained in an increasingly interdependent world by reconciling high productivity, a high level of social protection, sustainable development and involvement of socio- economic interest groups, who are ready for adjustments to improve efficiency and equity.

5. Conclusion

Structural unemployment poses an enormous problem for society; no one can remain impervious to its human, social, economic and cultural implications. The European Institutions, the national governments and all the social partners, economic agents and citizens must contribute to a solution.

The future of our societies and cultures is at stake. This is the underlying message of the present resolution addressed to the European Council and the EFTA Ministerial Council.