Opinion of the Economic and Social Committee on the '1999 Annual Economic Report: The EU economy at the arrival of the euro: promoting growth, employment and stability'
Date: 1999-05-27
Institutions: European Economic and Social Committee
Subjects: European Union, development policy, economic policy, economic stabilisation, employment policy, monetary union

22.7.1999

EN

Official Journal of the European Communities

C 209/53

Opinion of the Economic and Social Committee on the ‘1999 Annual Economic Report: The EU
economy at the arrival of the euro: promoting growth, employment and stability’

(1999/C 209/13)

On 22 January 1999 the European Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the ‘1999 Annual Economic
Report: The EU economy at the arrival of the euro: promoting growth, employment and stability’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 5 May 1999. The
rapporteur was Mr Vasco Cal.

At its 364th plenary session of 26 and 27 May 1999 (meeting of 27 May) the Economic and Social
Committee adopted the following opinion by 86 votes in favour with six abstentions.

1.

Introduction

1.1.
First and foremost, the Economic and Social Com-
mittee stresses the importance of the Annual Economic Report
under consideration: it is the first one to set out the ‘broad
guidelines of the economic policies of the Member States and
of the Community’ (provided for under Article 103 of the EC
Treaty) in the third stage of economic and monetary union.
The Committee is pleased that a large number of countries
have qualified for monetary union, and hopes that Greece, and
the countries which preferred to remain for the moment
outside that union, will be able to join it soon.

1.2.
The 11 countries’ transition to a single currency —
decided formally in early May 1998 — took place smoothly
on 1 January 1999 and marks the opening of a period of
stability in the euro zone and beyond. The enthusiasm with
which the financial markets reacted initially to the birth of the
euro is very significant. (1)

Between the publication of

the Annual Economic
1.3.
Report and the completion of
the Committee’s work,
important changes in trends have emerged with regard to the
economic forecasts for 1999 and 2000, the Commission has
presented its recommendation on the Broad guidelines of the
economic policies, on 8 April 1999 the European Central
Bank took an important monetary policy decision, and the
German presidency has tabled a proposal on the European
employment pact. All these factors have been taken into
account in drawing up this opinion.

2. Economic situation and prospects

2.1. The 1999 Annual Economic Report

2.1.1.
The Commission points out that at the end of 1998
the countries of the European Union, including those which

have not (yet) joined the economic and monetary union, had
achieved a very high degree of convergence:

— inflation is at its lowest for 30 years;

— the budget deficit has fallen below 3 % of GDP (it has fallen

from 6,1 % in 1993 to less than 2 % in 1998);

— on the whole, the public debt is falling significantly,
particularly in the countries where it is highest, such as
Belgium and Italy;

— exchange rate turbulence — at least between the countries
participating in EMU — is a thing of the past thanks to the
creation of the single currency;

— long-term interest rates are converging towards a level
around 4 %; the real interest rate — around 2 % — is the
lowest for twenty years;

— in macroeconomic terms, company profitability has
exceeded the levels of the period of full employment of the
1960s.

2.1.2.
Although 1.7 million new jobs were created in 1998,
the reduction in unemployment remains clearly insufficient (2)
in the European Union.

2.1.3.
Taken together, these are the fundamentals which
— the international environment, economic policies and
consumer confidence permitting — should make it possible to
work towards a situation of stability and growth conducive to
reducing unemployment substantially in ten years or so.

2.1.4.
That said, the Asian crisis, which has extended to the
countries of eastern Europe and is affecting Latin America,
involves risks for the European Union. According to the 1999
Economic Report, this international situation compromises
the European Union’s growth prospects. This is accompanied
by an increasing sense of insecurity on the part of consumers
and economic operators.

(1) The Committee is currently preparing an own-initiative opinion
on the single European currency’s first months of existence.

(2) Although this varies considerably from one country to another

and from one region to another.

C 209/54

EN

Official Journal of the European Communities

22.7.1999

2.1.5.
In 1998 higher than expected growth of domestic
demand more than compensated for the effects of the Asian
crisis and the EU finished the year with growth of about
3 %. In 1999, however, the Commission forecasts that the
slowdown in exports will also affect stockbuilding and invest-
ment by companies, with a significant impact on growth
prospects. Whilst it is true that the policy mix has been relaxed
in reaction to slowing demand, it remains too passive vis-à-vis
external shocks.

2.1.6.
In principle, again according to the Commission, the
EU must react to any threats by applying an appropriate policy
mix, and particularly by macroeconomic measures. Efforts
must be continued with regard to the labour market and
structural policies, in the goods and services markets but also
in the field of innovation at enterprise level.

2.2. The spring 1999 forecasts for 1999-2000 (1)

The table reproduced below clearly shows the
2.2.1.
deterioration in economic prospects since the autumn 1998
forecasts, although this deterioration is in the final analysis
very limited and largely anticipated.

After the growth forecast for 1999 was reduced from
2.2.2.
2,7 % to 2,4 % in the autumn 1998 forecasts (included in the
1999 Economic Report), the spring 1999 forecasts lower this
forecast further to 2,1 %. However, the most recent forecasts
for 2000 still predict 2,7 % growth.

(1) The European Economy — Supplement A — Economic trends —

No. 4 — April 1999.

Main features of spring 1999 forecasts — EU-15(a)

GDP growth

Investment in equipment

Employment

Unemployment (c)

Inflation (d)

Government deficit (% GDP)

Government debt (% GDP)

Current account balance (% GDP)

p.m. GDP growth EUR-11

Spring
1999

Difference
with Autumn 1998 (b)

1996

1997

1998

1999

2000

1999

2000

1,8

3,9

0,3

10,9

2,7

− 4,1

72,8

0,9

1,6

2,7

5,0

0,5

10,6

2,1

− 2,3

71,7

1,5

2,5

2,9

8,4

1,1

10,0

1,5

− 1,5

69,7

1,2

3,0

2,1

3,8

0,8

9,6

1,3

− 1,5

68,6

0,9

2,2

2,7

5,3

0,8

9,2

1,6

− 1,3

67,0

0,9

2,7

− 0,3

− 1,4

− 0,1

0,1

− 0,4

0,1

− 0,3

− 0,5

− 0,4

− 0,1

− 0,8

− 0,1

0,2

− 0,2

0,1

− 0,2

− 0,5

− 0,2

(a) real annual percentage change unless otherwise stated.
(b) A ‘+’ (‘-’) sign means a higher (lower) positive figure or a lower (higher) negative one compared with Spring 1999.
(c) percentage of the labour force.
(d) private consumption deflator.
Source: European Commission.

2.2.3.
The Commission is a little less pessimistic about the
international situation than in the past: the Brazilian financial
crisis does not seem to be spreading through the region, the
south-east Asian countries are beginning to see the end of their
economic nightmare and some of their national currencies are
recovering, a recovery seems likely in Japan from the second
half of this year onwards, and above all growth in the United
States has not yet begun its soft landing and continues to rise
(see point 3.4 below).

whose trends had been largely expected for some months —
calls upon:

— the Member States to pursue a policy of fiscal consolidation

in accordance with the stability and growth pact;

2.3. The Commission recommendation of 30 March 1999 on the

’Broad Guidelines of the Economic Policies’ (2)

2.3.1.
The Commission — basing itself on the 1999 Annual
Economic Report and the Spring 1999 economic forecasts,

— the social partners to negotiate wage increases which are
not so high as to threaten price stability or the profitability
of firms, but which are sufficiently high to raise real wages
enough to boost consumer demand, within the context of
increasing productivity;

(2) COM(1999) 143 final.

so as to enable the European Central Bank to contribute under
Article 105 of the EC Treaty to growth and job creation
without threatening price stability.

22.7.1999

EN

Official Journal of the European Communities

C 209/55

2.3.2.
The Commission therefore calls on all the players,
including the social partners, to engage in a wide-ranging
dialogue at all levels, so as to do everything possible to create
jobs and reduce unemployment.

3.2.
The Committee broadly shares the Commission’s views
on responsibility for the conduct of economic policy in the
European Union. The ESC takes the view that the main players
in the fiscal, wage and monetary policy areas must make a
combined effort to put into practice a dynamic strategy to
achieve growth and job creation:

2.3.3.
The coordination of macroeconomic policies must
go hand in hand with structural measures in the markets for
goods and services, capital and labour, in accordance with the
European employment pact launched in Vienna.

The Commission calls for an increase in investment,
2.3.4.
including investment at Community level
(trans-European
networks), and through partnerships between governments
and private enterprise, as advocated by the Economic and
Social Committee.

2.3.5.
For the first time the Commission makes special
recommendations to all the Member States. Those belonging
to the euro zone are called upon to continue their consoli-
dation efforts in the spirit of the stability and growth pact and
the others are called upon to persevere with convergence with
a view to early membership of the economic and monetary
union. Depending on their starting point, all must continue to
implement measures to restructure their economies in the
direction called for by the Luxembourg and Cardiff processes.

2.4. ECB action of 8 April 1999

2.4.1.
On 8 April the European Central Bank lowered its
interest base rate by half a percentage point, from 3 to 2,5 %.
The Economic and Social Committee had been sending signals
for such a change for several months, and is pleased with the
ECB decision. The ECB has given no monetary policy reason,
but has determinedly shouldered its responsibility under
Article 105 of the EC Treaty, referring to the current prospects
for growth and job creation in the Community. It is entirely
clear that the ECB took its decision quite independently.

3. The Economic and Social Committee’s comments

Unemployment, which still affects almost 10 % of the
3.1.
active population and remains higher in the case of certain
categories such as women and young people and certain
regions such as those undergoing agricultural or industrial
restructuring, remains at an unacceptable level (1), despite
declarations of principle on the priority to be accorded to jobs.

(1) The Committee is currently preparing an own-initiative opinion
on the single European currency’s first months of existence.

— fiscal policy, pursued by the Member States and monitored
through the procedures laid down in Article 104a, b
and c, has not yet, despite considerable progress on
consolidation, achieved the stable state called for by the
stability and growth pact. As a result, the governments can
allow the automatic stabilisers to come into play in
those countries which have achieved (or almost achieved)
balanced budgets, but in the others (the three largest
countries) they have more limited scope for manoeuvre;

— wage policy, essentially a matter for management and
labour (although the Member States remain important
players, first as employers and then as joint managers
of the labour market), has made a major constructive
contribution to the policy mix, and thus assisted the ECB
in its efforts to ensure monetary stability and the Member
States in fiscal consolidation. It has made it possible to
boost companies’ profitability to a higher level than that
experienced in the period 1961-1973, although differences
between regions and between sectors are considerable.
Insofar as the rise in productivity allows, wage trends
should continue to contribute to supporting private-sector
consumption and boosting consumer confidence;

— the monetary policy followed by the European Central
Bank (ECB) aims first and foremost at price stability.
Insofar as it is possible without endangering price stability,
the ECB can however make a continuing, simultaneous,
contribution to growth and job creation, in accordance
with Article 105 which refers back to Article 2 of the
Treaty.

3.3.
Among the three main players in Community macro-
economic policy — the ECB for monetary policy, the Member
States for fiscal policy and the social partners for wage policy
— only the ECB can react quickly to an external threat. Its
decision to lower the interest rate (by 0,5 % on 8 April) has an
immediate effect on the cost of money but will not have its
full impact on growth (0.2 to 0,3 %) until the end of the year.
Even though disturbances in the international environment
were absorbed with relative ease in 1998, their impact on
growth and employment is being felt in 1999, and new threats
cannot be excluded since the Commission could not take the
effects of the Kosovo war into account in the economic
forecasts published on 30 March.

3.3.1.
The Economic and Social Committee appreciates the
Commission’s efforts to define a policy mix appropriate to the
current situation, but regrets that the Commission does not
develop in greater detail the risks which may arise and ways of
dealing with them.

C 209/56

EN

Official Journal of the European Communities

22.7.1999

3.4.
The fact that economic forecasts have often been
adjusted downwards in recent months makes the situation all
the more serious. The Committee feels that the pessimism of
certain research institutes, which has been widely reported and
commented on in the media, is not likely to spur business
leaders and consumers to invest and consume more. Moreover,
the analysis of threats to growth prospects and job creation in
the EU set out in the Commission’s 1999 annual economic
report is too strongly influenced by the Commission’s concerns
about the international environment. The Commission rec-
ommendation of 30 March 1999 is more subtly phrased, since
— while admitting that the problems in Russia and Latin
America have not been solved — it recognises signs of
recovery in Japan and South-east Asia and the continuing
growth in the United States which remains the most important
export market for the European Union. Not only has the USA
resisted international economic turbulence, thanks to dynamic
is also now calling for a European
internal demand;
contribution to stimulate the international economy.

it

including investment in human capital to develop the ‘learning
society’, in order to improve conditions for growth and job
creation. At Community level, an acceleration of the funding
of trans-European network programmes could greatly aid this
process.

3.5.1.
This responsible fiscal policy, in conjunction with
appropriate wage trends as described in point 3.2 above,
creates the conditions to ensure that the ECB’s monetary policy
can make use of all the scope at its disposal — in the
absence of inflationary pressures — to support growth and
employment, as required by Articles 2 and 105 of the Treaty.
By its decision of 8 April to lower its interest rates, the ECB
has taken a step in the right direction, but it should perhaps
do more to anticipate economic trends in order to send
markets the right signals to boost confidence.

In fact,

3.4.1.
trade with non-Community countries
accounts for less than 10 % of EU GDP. As in 1998 the EU
more than compensated for the problems resulting from its
relations with the Asian countries, for example by boosting
domestic demand, everything possible should be done to
stimulate internal demand and investment this year too (1). The
birth of the euro and the establishment of a growth and
employment strategy oblige the EU to take all the measures
which, without endangering stability, would ensure the
efficient operation of capital markets, so that capital inflows
are translated into productive investment.

3.4.2.
The flight of capital from non-Community countries
in difficulty is matched by capital inflows into the United
States and the European Union in search of greater security;
this is likely to stimulate investment. Europe’s economic
weight, reinforced by the advent of
the euro, makes it
impossible to go on using external excuses to justify poor
internal performance. As an economic entity, Europe has great
growth potential, and the Broad Economic Policy Guidelines
should propose the measures necessary to realise this potential.

3.5.
The Committee realises that in fiscal policy terms the
reduction of the Member States’ structural deficits does not yet
entirely fulfil the requirements of the stability and growth
pact, which reduces fiscal policy scope. Moreover, public
expenditure should be redirected more towards investment,

(1) See Opinion of the Economic and Social Committee of 2.7.1998
entitled ‘Europe as an economic entity — a political challenge’,
OJ C 284, 14.9.1998.

In 1998 industrial producer prices fell by 2,2 % in
3.5.2.
the EU as a whole. In some countries the trend in consumer
prices raises fears of deflationary tendencies. There are there-
fore calls in those countries for a less rigid policy to stimulate
demand and avert a recession.

3.5.3.
In other countries where inflationary trends are
gathering strength, stricter policies are being demanded. It
goes without saying that the ECB must follow a monetary
policy which takes the interests of all the EMU member states
into account.

3.6.
The Committee calls upon the Commission to present
in its annual report medium-term scenarios designed to assist
the macroeconomic decision-making process.

3.7.
The Committee feels that the European Union must
have a medium-term growth objective of at least 3,5 % in
order to create enough jobs to reduce, in about 10 years, the
current level of unemployment to 3 or 4 % and to raise the
employment level to approaching 70 %, as proposed by the
Commission in the autumn of 1997 in its first draft employ-
ment policy guidelines.

3.7.1.
This growth rate must be supported by a sustained
increase in investment (by about 7 % per annum to move from
the current 19 % to 22-23 % of GDP) in order to generate the
jobs needed and to prevent the emergence of inflationary
pressures as a result of lack of productive capacity. Long-term
interest rates and the profitability of enterprises are currently
favourable conditions. Still
to be developed is a macro-
economic policy which would allow sustainable growth and
appropriate development of demand. This policy must be
supported by economic reforms in accordance with the
process initiated by the Cardiff Summit — reforms which seek
to improve the competitiveness and operation of the markets
in goods, services and capital.

22.7.1999

EN

Official Journal of the European Communities

C 209/57

3.7.2.
In a number of Member States, public investment
has suffered as a result of those countries’ efforts to meet the
convergence criteria for entry into the third stage of EMU. The
Committee therefore urges that fiscal policy should provide
more incentive for investment. In particular, governments
should encourage a partnership between public and private
sectors as regards investment.

3.7.3.
The Committee feels that everything possible should
be done to support internal demand. Bearing in mind fiscal
constraints and the redistributive role of
the budget, a
reduction of the tax burden on companies and also households
could stimulate investment and boost
the confidence of
entrepreneurs and consumers. The Committee has for several
years been calling for the authorisation, under certain con-
ditions, in the Member States which so wish, of a reduction in
VAT rates on products and services with a high labour content.
The Committee is pleased that the Commission has presented
a draft directive to this end, on which the Committee has
issued a largely favourable opinion. (1)

3.7.3.1.
The Committee hopes that, after the rise in tax
pressure (taxes and social security contributions as a percentage
of GDP (2)) in the 1970s (about 36 % to 46 % of the GDP,
mainly due to the fall in the number of contributors to the
social security system and the rise in social expenditure), and
after the stagnation in the tax pressure up to the middle of the
1990s, the opposite trend now prevails. According to the
Commission’s forecasts, the tax pressure for the whole EU,
which was 46,7 % in 1996, and 46,3 % in 1998, would be
45,7 % of the GDP in 2000, although the tax pressure in some
Member States has not yet started to fall. The Committee
hopes that the fall in revenue will not result in a reduction in
social security payments, which are an essential part of the
European social model. (3)

3.8.
The Economic and Social Committee still believes that
economic growth is essential for job creation, but also takes
the view that structural and labour market measures are
important and necessary if
there is to be a significant
improvement in the employment situation. There must there-
fore be an integrated approach to implementation of the
Broad Economic Policy Guidelines and the Guidelines for
employment policies (4). The Committee is glad that structural
policies, which have hitherto been the exclusive preserve of
the Member States, are now increasingly becoming a common
concern, requiring coordination.

involving:

improvement of

3.8.1.
The Committee takes the view that national action
plans on employment should be based on the process begun
in Luxembourg in 1997,
the
integration (through training etc.),
capacity for vocational
development of the spirit of enterprise, and strengthening
equal opportunity policies; the Vienna meeting in December
1998 supplemented this with: re-examining systems of tax
and allowance advantages in order to encourage non-active
people to take a job and employers to create jobs, encouraging
older workers to take more part in the world of work, and
encouraging social integration and equality of opportunity for
disadvantaged groups.

3.8.2. Moreover, structural policy must ensure that growth
also respects ecological imperatives.

In some circumstances greater flexibility in working
3.8.3.
conditions can make it easier to employ people. The Com-
mittee feels that greater differentiation of wage costs could
increase the employment-generating impact of growth. To
avoid cutting the lowest wages even further and to counter the
phenomenon of ‘working poor’, but also to stimulate demand
and thus growth, the Committee supports the use of a measure,
already advocated in Mr Delors’ White Paper,
to reduce
non-wage labour costs at the lower end of the wage scale to
encourage firms to take on young and low-skilled workers.
The Committee notes that the Commission returns to this
question in its recommendation of 30 March 1999 on the
Broad guidelines of the economic policies.

3.8.4.
However, education, vocational training and lifelong
training are vital weapons in the struggle against unemploy-
ment. Bearing in mind that 20 % of unemployment is essen-
tially cyclical, half of the remaining 80 % could be eliminated
given a workforce willing and (with the benefit of some
short-term training) able to take up jobs. For the other half,
the long-term unemployed, training is very important. This
does not alter the fact however that, in order to deal with
the non-cyclical component of unemployment for which a
short-term and medium-term solution can be found, jobs have
to be created, and for this more growth is needed. (5)

3.9.
The Commission rightly stresses the danger arising
for newly industrialised countries from excessively rapid
liberalisation of their financial markets (absence of appropriate
prudential safeguards). Indeed, banking and exchange control

(1) Opinion of 26 May 1999 on the Proposal for a Council Directive
amending Directive 77/388/EEC as regards the possibility of
applying on an experimental basis a reduced VAT rate on
labour-intensive services.

(2) See Appendix I.
(3) The Committee will return to the taxation question in a separate

opinion.

(4) At

the same session the Committee issued an Opinion on

implementation of the 1999 employment guidelines.

(5) Of the 11 % unemployment level, it is estimated that 4,5 % has
structural causes and calls for vocational training measures etc.
The other unemployed people would be in a position to accept a
job if one were created, some of them (2 %) immediately, and the
others after a short period of training.

C 209/58

EN

Official Journal of the European Communities

22.7.1999

infrastructure is often inadequate to support export and import
of capital in the extremely globalised world of finance. Without
wishing to challenge what has been achieved with regard to
the deregulation of capital movements, the Committee thinks
that the Commission should examine the extent to which
some of the inadequacies noted in third countries might also
exist in the European Union. Finally, consideration should also
be given to the question of international arrangements and the
coordination of financial institutions.

4.2.
Like the Commission in its recommendation, the
Committee hopes that all the players involved in macro-
economic policy — governments, the ECB and the social
partners — will be able to work together for a dynamic
employment pact which is sustainable in the medium term.
The Committee broadly shares the concerns expressed by the
Commission in this recommendation, but would point out
that the practical success of economic policy coordination and
the European employment pact will depend above all on the
aforementioned players.

The recent report drawn up at the request of the G7
3.9.1.
finance ministers and central bank governors (1) proposes the
creation of a Forum for financial stability at G7 level and a
number of international institutions. The Committee hopes
that the European Union and the EMU will play an active role
in this context.

4.2.1.
The recommendations by country on fiscal policy
largely reflect the approach of the stability and convergence
programmes, which do not take into account the deterioration
in the economic situation or the war in the Balkans. The role
which fiscal policy can play through public investment does
not appear in the recommendations by country.

3.10.
The Commission reports on economic and structural
reforms (‘Cardiff I’ and ‘Cardiff II’) (2), on which the Committee
has also given its views (3), analyse progress in achieving the
internal market and the effect of the euro’s introduction. They
stress the importance of a fiscal reform which would seek to
alleviate labour costs while taking account of the need to
continue with fiscal consolidation.

For the markets in products and capital, the Com-
4.2.2.
mission reiterates the conclusions of the Cardiff II Report and
the examination of the situation in each country, and its
recommendations therefore do not take account of the flanking
measures needed to ensure that the single market contributes
to greater social cohesion and job creation in all regions.

4. Conclusions

for

The Committee thinks that the Broad economic policy
4.1.
guidelines (4) should be used as an instrument
the
implementation of the employment pact. The Committee is
pleased that the Commission, in its recommendation on the
Broad guidelines, shares this view. The employment pact,
which was designed as a process of cooperation between the
various economic and social players, should be based on the
coordination of economic policies both at macroeconomic
and at structural level. The labour market policy measures
advocated in Luxembourg, as supplemented by the structural
programme launched in Cardiff, should accompany the appro-
priate macroeconomic policy mix, embracing fiscal, monetary
and wages policy, in order to create a climate of confidence to
stimulate consumption and investment and thus to boost
employment in a durable way.

(1) ‘International cooperation and coordination in the area of finan-
cial market supervision and surveillance’, report by Hans Tiet-
meyer, president of the Deutsche Bundesbank.

(2) Economic Reform: Report on the functioning of Community
product and capital markets (COM(1999) 10 final, 20.1.1999)
and Economic and Structural Reform in the EU (COM(1999) 61
final, 17.2.1999).

(3) Opinion of 26 May 1999.
(4) It should be noted that a resolution adopted by the EP on
11 February 1999 takes up the idea — suggested in earlier ESC
opinions — that the Commission should make proposals for the
Broad Guidelines, to be adopted by the Council by qualified
majority after the EP’s approval and an ESC opinion.

the

the

For

labour market,

recommendations
4.2.3.
addressed to certain countries concern delicate questions such
as the consolidation of social security and the flexibility of the
labour market. In all Member States, these questions depend
on the autonomy of the social partners and/or the dialogue
between them and the government, and they are currently the
subject of collective bargaining, or legal provisions in most of
the Member States.

4.3.
The downward adjustment of growth forecasts because
of the international situation may have too negative an effect
on the climate of business confidence. It must however be
remembered that foreign trade accounts for only a small share
(10 %) of the European Union’s GDP. The Committee draws
the conclusion that, once again this year, everything possible
must be done to stimulate internal demand and investment.

4.4.
The Committee takes the view that in this period of
financial turbulence the Commission should do everything
possible to enable Community and EMU bodies to play a part
in the international fora which already exist or are to be set
up.

4.5.
The Economic and Social Committee is pleased that
the ECB decided on 8 April to reduce interest rates. After the
progress made by governments in reducing and controlling
budget deficits on the one hand, and the wage trend decided
upon by the social partners on the other, the European Central
Bank is thus making an active contribution to the quest for
and job
sustainable growth aimed at price

stability

22.7.1999

EN

Official Journal of the European Communities

C 209/59

creation. Indeed, the substantial reduction made by the ECB
will facilitate investment and encourage private demand.

A macroeconomic dialogue to improve coordination
4.6.
between wage trends, fiscal policy and monetary policy, in

order to encourage growth and job creation, calls for new
institutional arrangements. This macroeconomic dialogue
should involve meetings at least twice a year between the
Council, the Commission, the European Central Bank and the
social partners, at both technical and political levels.

Brussels, 27 May 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

APPENDIX

to the opinion of the Economic and Social Committee

Macro-structural features: similarity and diversity

1998

B

D

E

F

IRL

I

L

NL

A

P

FIN

Share in GDP a)
Openness b)
Interdependence d)
GFCF e)
— of which public f)
Wage/employee g)
Productivity h)
Unit labour costs i)
Tax burden j)
Unemployment k)
Employment rate l)
FT equivalent m)

3,9
25,6 c)
39,3 c)
18,2
1,5
123
116
105
48,3
8,3
57,3
53,0

33,0
12,6
10,2
19,5
1,8
109
111
98
42,2
9,7
61,8
55,7

8,6
8,7
11,5
21,1
3,0
74
71
104
36,9
18,9
48,6
46,3

22,2
10,2
10,9
17,1
2,8
110
112
99
47,6
11,7
60,1
55,4

1,3
38,7
19,6
19,3
2,5
94
106
90
32,3
8,7
57,8
53,7

18,1
10,3
9,2
16,8
2,3
90
93
98
42,9
12,0
51,3
49,8

0,3
5,9
— 24,2
— 29,9
20,0
2,5
112
116
97
44,5
4,0
66,7
53,0

22,7
5,0
127
125
102
42,5
2,4
60,6
58,1

3,3
11,4
19,0
24,1
2,0
103
110
94
46,5
4,4
69,9
65,0

1,7
9,6
19,0
25,7
4,1
43
41
105
36,5
5,7
67,5
64,6

1,9
20,5
9,9
17,5
2,7
100
106
95
46,5
11,6
63,9
60,7

Euro
zone

100
12,9
13,1
18,8
2,3
100
100
100
43,4
11,0
58,0
53,6

a) 1998 nominal GDP, ECU.
b) Average of extra-euro area goods’ exports and imports, as % of GDP.
c) Data for Belgium and Luxembourg.
d) Average of intra-euro area goods’ exports and imports, as % of GDP.
e) Gross fixed capital formation at current prices, as % of GDP.
f) General government, as % of GDP. g) Compensation per employee, in current ECU, Euro-11= 100.
g) Nominal GDP per person employed, in current ECU, Euro-11 = 100.
h) Nominal GDP per person employed, in current ECU, Euro-11 = 100.
i) Ratio of two preceding lines.
j) Sum of direct taxes, indirect taxes and social security contributions, general government, as % of GDP.
k) Eurostat definition; rate, as % of civilian labour force.
l) Employment as % of population of working age; benchmark; 1997 data.
m) Employment rate; full-time equivalent; 1997 data.
Source: Commission services.

Employment rate
Full-time equivalent, 1997

Denmark
Greece
United Kingdom
Sweden

68,5
55,4
60,2
51,6

N.B.: The Committee hopes that in future the Commission will draw up this table for all the Member States and not just for the Eleven.