Recommendation for a COUNCIL RECOMMENDATION on the 2019 National Reform Programme of Germany and delivering a Council opinion on the 2019 Stability Programme of Germany
Date: 2019-06-05
Institutions: European Commission, Secretariat-General
Subjects: Germany, economic policy, economic reform, euro area, investment, labour market, pay policy, pension scheme, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 5.6.2019  COM(2019) 505 final  Recommendation for a COUNCIL RECOMMENDATION on the 2019 National Reform Programme of Germany and delivering a Council opinion on the 2019 Stability Programme of Germany    
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2019 National Reform Programme of Germany and delivering a Council opinion 
on the 2019 Stability Programme of Germany 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof,  

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

On 21 November 2018, the Commission adopted the Annual Growth Survey, marking 
the start of the 2019 European Semester for economic policy coordination. It took due 
account  of  the  European  Pillar  of  Social  Rights,  proclaimed  by  the  European 
Parliament, the Council and the Commission on 17 November 2017. The priorities of 
the  Annual  Growth  Survey  were  endorsed  by  the  European  Council  on  21  March 
2019.  On  21  November  2018,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission also adopted the Alert Mechanism Report, in which it identified Germany 
as one of the Member States for which an in-depth review would be carried out. On 
the  same  date,  the  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation on the economic policy of the euro area, which was endorsed by the 
European  Council  on  21  March  2019.  On  9  April  2019,  the  Council  adopted  the 

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OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 

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(2) 

(3) 

(4) 

(5) 

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recommendation  on  the  economic  policy  of  the  euro  area  (‘Recommendation  for  the 
euro area’).  

As a Member State whose currency is the euro and in view of the close interlinkages 
between the economies in the economic and monetary union, Germany should ensure 
the  full  and  timely  implementation  of  the  Recommendation  for  the  euro  area,  as 
reflected  in  recommendations  (1)  and  (2)  below.  In  particular,  investment  measures 
and supporting wage growth will help address the first euro area recommendation as 
regards euro area rebalancing, and shifting taxes away from labour will help address 
the  third  euro  area  recommendation  for  what  concerns  the  functioning  of  the  labour 
market.  
The 2019 country report for Germany3 was published on 27 February 2019. It assessed 
Germany’s  progress  in  addressing  the  country-specific  recommendations  adopted  by 
the Council on 13 July 2018, the follow-up given to the recommendations adopted in 
previous  years  and  Germany's  progress  towards  its  national  Europe  2020  targets.  It 
also  included  an  in-depth  review  under  Article  5  of  Regulation  (EU)  No  1176/2011, 
the  results  of  which  were  also  published  on  27  February  20194.  The  Commission’s 
analysis led it to conclude that Germany is experiencing macroeconomic imbalances. 
In particular, the slowly declining current account surplus remains high and has cross-
border relevance. The surplus slightly narrowed in 2018 in the context of a pick-up in 
domestic demand and is expected to continue to decline gradually in the coming years, 
while remaining above the threshold set in the Macroeconomic Imbalance Procedure. 
The surplus reflects a subdued level of domestic investment relative to savings in both 
the private and public sectors. Measures have been taken to boost private and public 
investment, which has increased substantially. This has contributed to a growth more 
driven  by  domestic  demand.  Nevertheless,  as  a  share  of  GDP,  investment  and 
consumption could have been expected to  grow more given the favourable financing 
conditions,  the  public  investment  backlog,  especially  at  municipal  level,  and  the 
available  fiscal  space.  Wage  growth  increased  somewhat  with  the  tightening  labour 
market, yet real wage growth remains modest.  

On 16 April 2019, Germany submitted its 2019 National Reform Programme and, on 
17  April  2019,  its  2019  Stability  Programme.  In  order  to  take  account  of  their 
interlinkages, the two programmes have been assessed at the same time. 

Relevant country-specific recommendations have been addressed in the programming 
of  the  European  Structural  and  Investment  Funds  ('ESI  Funds')  for  the  2014-2020 
period.  As  provided  for  in  Article  23  of  Regulation  (EU)  No  1303/2013  of  the 
European  Parliament  and  of  the  Council5,  where  it  is  necessary  to  support  the 
implementation of relevant Council recommendations, the Commission may request a 
Member  State  to  review  and  propose  amendments  to  its  Partnership  Agreement  and 
relevant programmes. The Commission has provided further  details on how it would 

SWD(2019) 1004 final. 
COM(2019) 150 final. 
Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 
laying  down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social 
Fund,  the  Cohesion  Fund,  the  European  Agricultural  Fund  for  Rural  Development  and  the  European 
Maritime  and  Fisheries  Fund  and  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund,  the  Cohesion  Fund  and  the  European  Maritime  and 
Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320). 

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(6) 

(7) 

(8) 

make use of that provision in guidelines on the application of the measures linking the 
effectiveness of the ESI Funds to sound economic governance6.  

Germany  is  currently  in  the  preventive  arm  of  the  Stability  and  Growth  Pact.  In  its 
2019 Stability Programme, the government plans a budget surplus of between ½ and 
¾%  of  GDP  over  2019-2023.  Based  on  the  recalculated  structural  balance7,  the 
medium-term budgetary objective — a structural deficit of 0.5% of GDP — continues 
to be overachieved throughout the programme period. According to the 2019 Stability 
Programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  fall  below  the 
60%  of  GDP  Treaty  reference  value  in  2019  and  to  gradually  decline  to  51¼%  in 
2023.  The  macroeconomic  scenario  underpinning  those  budgetary  projections  is 
favourable.  Based  on  the  Commission  2019  spring  forecast,  the  structural  balance  is 
forecast to register a surplus of 1.1% of GDP in 2019 and 0.8% of GDP in 2020, above 
the medium-term budgetary objective. General government debt is forecast to remain 
on  a  firm  downward  path.  Overall,  the  Council  is  of  the  opinion  that  Germany  is 
projected to comply with the provisions of the Stability and Growth Pact in 2019 and 
2020.  At  the  same  time,  while  respecting  the  medium-term  budgetary  objective,  it 
would be important to use fiscal and structural policies to achieve a sustained upward 
trend in private and public investment, notably at regional and municipal levels.  

Public  and  private  investment  increased  robustly  in  2018,  but  the  investment  ratio 
remains  below  the  euro  area  average.  Public  investment  in  2018  grew  by  7.7% 
nominally and 3.8% in real terms, but more efforts are still needed to clear the large 
investment  backlog,  particularly  for  investment  in  infrastructure  and  education.  Real 
public  investment  growth  has  been  positive  for  the  last  3  years,  after  a  period  of 
negative growth rates. This reflects government efforts to boost investment. However, 
investment  at  municipal  level  remained  lower  than  depreciation  and  the  investment 
backlog  accumulated  by  2018  rose  to  5%  of  GDP.  Together  with  the  favourable 
budgetary position, this indicates that there is scope to increase investment at all levels 
of  government,  in  particular  at  regional  and  municipal  levels.  Investment  in  public 
infrastructure is still held back by capacity and planning constraints at municipal level. 
Measures  to  overcome  these  constraints  have  been  introduced,  but  have  yet  to  show 
sustained tangible results. Moreover, there is scope to improve digital public services 
and public procurement. Private investment has increased noticeably, but not across all 
asset  types.  Equipment  investment  has  grown  robustly  in  response  to  record-high 
capacity utilisation. Housing investment continues to boom. However, the construction 
sector  now  reports  capacity  constraints  and  price 
increases.  Non-residential 
construction  has  been  increasing  sluggishly  in  real  terms,  suggesting  that  essential 
infrastructure may not have kept up with the economy’s needs. 

Public expenditure on education, at 4.1% of GDP in 2017, remained below the Union 
average  of  4.6%.  Out  of  overall  government  expenditure,  9.3%  was  spent  on 
education, which is also below the EU average of 10.2%. Spending on education and 
research remained at 9% of GDP in 2017, falling short of the national target of 10%. 
Even  if  education  expenditure  increased  in  real  terms,  the  large  investment  backlog 
grew  further  due  to  demographic  developments.  Legislative  changes  allowing  direct 
investment by the federal government in digital education in addition to the resources 
allocated  by  the  Länder  (Digitalpakt)  are  promising,  but  have  yet  to  show  results. 
Challenges  such  as  growing  student  numbers,  teacher  shortages,  digitalisation  and 

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COM(2014) 494 final. 
Cyclically-adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission 
using the commonly agreed methodology. 

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(9) 

further expansion of early childhood education and care will require appropriate public 
financing. Additional spending on education and on research and innovation is crucial 
for increasing Germany’s potential growth and adapting to technological change.  

Germany has made progress in recent years in increasing its research and development 
intensity, mainly  as a result of an increase in  research and development  spending by 
large  companies,  especially  in  medium-high  tech  manufacturing  sectors  and  in 
particular the automotive sector. The research and development intensity of small and 
medium sized businesses is significantly below the EU average and continues to fall 
behind. Small and medium-sized businesses tend to benefit less from cooperation with 
public  research  institutes  than  large  companies.  These  two  factors  harm  business 
innovation,  which  are  on  a  long-term  downward  trend.  Additional  investment  in 
research and development are essential not only to increase innovation capacity across 
the economy and boost productivity, but also to facilitate the transition to a low-carbon 
and  circular  economy,  notably  in  relation  to  sustainable  transport,  green  energy 
technologies, eco-innovation and recycling, and to further increase the performance of 
the public research sector and its contribution to these goals.  

(10)  Digitalisation of the German economy is  progressing slowly and small and medium-
sized  businesses  remain  slow  adopters  of  digital  technologies.  Germany  is  lagging 
behind  in  deploying  very  high-capacity  broadband  (gigabit  speeds)  at  national  level, 
and particularly in rural areas, where stronger investment could improve productivity 
growth. Only 9% German households (in mid-2018) is covered by high-performance 
fibre-based  access  networks,  compared  with  the  EU  average  of  30%.  Instead, 
upgrading existing copper cable networks (vectoring) continued to be the incumbent’s 
preferred  technological  solution.  While  many  services  rely  on  very  high  speed 
connectivity, 23 700 business parks were not connected to a fibre network in 2017 and 
28%  of  all  companies  lacked  access  to  networks  of  at  least  50  megabits.  A  lack  of 
such  connectivity  holds  back  investment,  especially  by  small  and  medium-sized 
businesses,  many  of  which  are  located  in  rural  and  semi-rural  areas.  Public 
intervention  in  the  deployment  of  ultrafast  (≥100  Mbps)  broadband  infrastructure  in 
rural  areas  remains  crucial,  and  different  options  going  beyond  subsidies  could  be 
explored.  Performance  in  digital  public  services  and  in  e-health  is  far  below  the  EU 
average.  Only  43%  of  German  internet  users  used  e-government  services  in  2018 
(compared to an EU average of 64%). Regarding e-health, 7% of Germans have used 
health  and  care  services  provided  online  (compared  to  an  EU  average  of  18%).  E-
Prescription  is  used  by  19%  of  general  practitioners  (compared  to  an  EU  average  of 
50%). 

(11)  More investment in transport infrastructure and clean mobility solutions is needed in 
Germany  to  tackle  mobility  and  air  quality  challenges,  as  well  as  to  support  climate 
change mitigation and adaptation. Greenhouse gas emissions from road transport have 
increased  over  the  last  5  years.  Air  quality  in  Germany  gives  serious  cause  for 
concern,  especially  in  urban  areas  where  traffic  accounts  for  about  60%  of  harmful 
NOx  emissions.  Freight  transport  could  benefit  from  more  developed  inter-modality 
solutions.  Cars  remain  by  far  the  most  commonly  used  means  of  transport  for  daily 
commuting  and  the  average  time  spent  in  traffic  jams  is  about  30  hours  per  year. 
Congestion and looking for parking spaces has been estimated to cost EUR 110 billion 
per  year,  or  about  4%  of  Germany’s  GDP.  Although  vehicles  running  on  alternative 
fuels have seen the steepest increase in new registrations, the numbers remain low. Car 
sharing  and  ridesharing  are  still  heavily  underexploited.  Considerable  public  and 

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private investment will also be needed in view of new supply chains for batteries and 
critical raw materials. 

(12)  Germany's  electricity  networks  are  slowly  adapting  to  renewable  production  and 
significant  investment  in  transmission  and  distribution  grids  remains  necessary. 
Substantial  delays  in  carrying  out  many  projects  have  entailed  considerable  costs  to 
German and European electricity networks and electricity markets. Of the 1800 km of 
the grid projects  identified in  the 2009 Energy  Network Expansion Act,  only  around 
800 km had been implemented by the second quarter of 2018, in part because of public 
opposition. Delays in extending the grid will lead to higher congestion costs and result 
in  more  distortions  in  market  functioning,  both  inside  Germany  and  across  borders. 
Investments  in  energy  networks  that  promote  sector  coupling,  diversification  and  an 
appropriate grid infrastructure are crucial for the flexibility of the energy system and 
for  better  integration  across  different  sectors  of  the  economy  in  view  of  the 
achievement of energy and climate targets.  

(13)  Housing  in  Germany  has  become  less  affordable.  Since  2015,  both  rents  and  house 
prices have grown faster than their long-term averages, in particular in large cities. In 
2017,  20%  of  the  people  aged  65  and  over  in  Germany  faced  an  excessive  housing 
cost burden (i.e., the total housing cost represented more than 40% of their disposable 
income),  compared  to  10%  of  Europeans  aged  65  and  over.  For  the  population  with 
the lowest income, the housing cost overburden rate was 10  percentage points above 
the EU average of 35.3%. The government reacted with certain measures, including a 
‘price  brake’  restricting  rent  increases  (Mietpreisbremse),  a  support  scheme  to  buy 
new property (Baukindergeld), as well as a change of basic law to enable the federal 
level  to  financially  support  the  construction  of  social  housing.  Nevertheless,  the 
completion of new dwellings remains considerably below demand and well below the 
government  target  of 375 000 per  year. Further  measures  may be necessary, such as 
accelerating the construction of social housing, improving transport options, as well as 
reforming land-use and building regulation. 

(14)  Germany has particularly benefited from integration in the Single Market and plays an 
important  role  in  its  further  development.  However,  barriers  to  competition  in  the 
business services sector in Germany remain high in comparison to other EU Member 
States.  This  concerns  various  areas,  including  regulated  professions  such  as 
architecture,  engineering,  and  legal  services,  where  regulatory  restrictions,  such  as 
reserve  of  activities  and  regulation  on  prices  and  fees,  stifle  competition.  However, 
also  unregulated  business  services  face  more  restrictions  to  the  general  business 
environment compared to other Member States. Changes in the regulation of business 
services  to  increase  competition  would  boost  the  efficiency  and  effectiveness  of 
investment and economic activity.  

(15)  After some improvements in previous years, there has been little progress over the past 
year  to  reform  Germany’s  tax  system  to  foster  domestic  private  investment  and 
growth.  The  tax  system  remains  complex,  distorts  decision-making,  e.g.  on  labour 
market  participation,  investment  and  financing,  and  could  provide  more  effective 
incentives  for  investment  and  consumption.  Most  progress  was  recorded  with  labour 
taxation,  but  this  is  not  yet  visible  in  the  data.  There  is  still  potential  to  reduce 
distortive  taxation  on  labour  through  a  tax  shift  away  from  labour  to  sources  of 
revenue more supportive to inclusive and sustainable growth. The taxation of earnings 
from labour in 2018 (the tax wedge) remained among the highest in the EU, both for 
average  and  low-wage  earners.  Social  security  contributions  of  employees  are 
particularly  high  in  an  international  comparison,  and  social  security  contributions 

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overall account for about two thirds of the tax wedge, while income tax accounts for 
one third. In turn, revenues from environmental taxes as a share of GDP are among the 
lowest  in  the  EU.  The  cost  of  capital  and  the  effective  average  corporate  tax  rate, 
which  differ  across  regions,  are  among  the  highest  in  the  EU.  The  effective  average 
tax rate amounted to 28.8% (national aggregate) as compared with an EU average of 
20%.  Due  to  the  interplay  of  the  corporate  income  tax,  the  local  trade  tax  and  the 
solidarity  surcharge,  the  corporate  tax  system  is  complex,  involves  high  tax 
administration costs and distorts the level and location of investments. In addition, the 
corporate income tax distorts financing decisions, with a bias towards debt financing, 
estimated  to  be  the  third  highest  in  the  EU,  according  to  2017  data.  Lowering  the 
capital costs on equity could increase private investment and strengthen the relatively 
under-developed venture capital market.  

(16)  The labour market remains strong, while the labour market potential of certain groups 
is underused. The employment rate for ages 20-64 reached 79.9% in the fourth quarter 
in 2018, one of the highest in the EU. Unemployment sank to a record low of 3.2% by 
the  beginning  of  2019.  High  job  vacancy  rate  and  labour  shortages  are  becoming 
increasingly apparent and are restraining production significantly in some regions and 
sectors.  Still,  the  labour  market  potential  of  certain  groups,  like  women  and  people 
with a migrant background, is underused. At 46.7%, Germany’s percentage of female 
part-time  work  is  very  high.  Taxes  on  labour  in  Germany  remain  relatively  high, 
including for lower wage earners. The particular rules governing joint income taxation 
for  married  couples  (Ehegattensplitting)  mute  the  incentives  for  second  earners  to 
work  notably  longer  hours.  People  with  a  migrant  background  have  a  considerably 
lower employment rate than people with a native background, with a particularly high 
gap for women. Measures have been taken to support the integration of refugees in the 
labour  market,  but  challenges  remain,  including  their  lack  of  proficiency  in  the 
German  language,  missing  or  non-transferable  qualifications,  caring  responsibilities 
towards  children  and  relatives,  and  lack  of  experience  with  informal  rules  on  the 
German labour market.  

(17)  The retirement of the baby boomer  generation is  affecting Germany more than other 
EU  countries.  In  the  long-run,  this  demographic  change  will  strain  German  public 
finances,  could  challenge  the  adequacy  of  pensions,  and  could  degrade  the  currently 
limited  share  of  the  older  population  (aged  65  and  above)  at  risk  poverty  or  social 
inclusion. By 2040, the country is expected to be facing one of the largest increases in 
spending in relation to GDP on public pensions in the EU (up by 1.9 percentage points 
of GDP), while the public pension benefit ratio is  expected to  fall by 4.4 percentage 
points,  to  37.6%,  according  to  the  2018  Ageing  Report  (European  Commission, 
2018d). Recent pension reforms increased benefit levels for certain groups, yet it is not 
clear  that  the  achieved  social  benefits  are  commensurate  to  their  considerable  fiscal 
cost.  The  government  also  set  two  ‘stop  lines’  (doppelte  Haltelinie):  a  maximum 
pension contribution rate of 20% and minimum income replacement rates of 48% up 
to  2025.  Retaining  these  limits  is  expected  to  require  significant  fiscal  transfers, 
increasing further the burden on younger generations. In addition, the adequacy of the 
retirement income of low-income workers remains an issue. 

(18)  Despite increasing labour shortages, real wage growth remains modest, while nominal 
earnings rose by 3.1% in 2018. In addition, a concentration of employment growth in 
better  paid  full-time  jobs  and  a  reduction  of  the share  of  marginal  part-time  work  in 
total  employment contributed to  overall wage  growth in  2018, also  slightly ahead of 
productivity  growth.  Collective  bargaining  coverage  continued  to  decline  (by 

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2 percentage points from 2016 to 2017), to 49% in the west and 34% in the east. There 
are significant differences in terms of coverage across sectors, with better coverage in 
the public sector and industry, while services have a much lower coverage. Low-paid 
workers  have  generally  benefited  from  the  minimum  wage  that  has  been  introduced 
since 2015. Hourly wages at the very bottom of the wage distribution, notably the two 
lowest wage deciles, increased substantially. However, the share of low-paid workers, 
at 22.5% in 2017, remains considerably above the EU average. The number of people 
employed only in mini-jobs fell by 6.8% over 2010-2018 and employment subject to 
social  insurance  rose  by  around  18.1%  in  the  same  period.  Strengthening  the 
conditions to promote wage growth would support domestic demand and contribute to 
euro area rebalancing. 

(19)  Upward  social  mobility  in  education  is  low  in  Germany.  National  sources  confirm 
little progress in reducing the influence of socio-economic background on educational 
outcomes.  Germany  has  a  good  track  record  of  integrating  recently  arrived  migrants 
and refugees into education and training. However, people with a migrant background 
typically  face  bigger  challenges  than  students  with  a  native  background  (e.g.,  early 
school  living  rates  and  difficulty  in  finding  apprenticeship  places).  Increasingly 
heterogeneous classrooms calls for strong efforts to reinforce the teaching profession, 
at a time of already considerable teacher shortage. The participation of employees in 
adult  learning  is  a  concern  for  future  labour  market  performance  of  workers,  in 
particular for the 7.5 million people who lack basic reading and writing skills. 

(20)  Though the number of people at risk of poverty or social exclusion has fallen since its 
peak in 2014, challenges in equality of opportunities remain. In particular, the risk of 
poverty or social exclusion was, in 2017, 67 percentage points greater for the children 
of  low-skilled  parents  than  for  the  children  of  highly  skilled  parents.  This  gap  is 
substantially higher than the average gap (53.9 percentage points) in the EU.  

(21)  The programming of EU funds for the period 2021-2027 could help address some of 
the  gaps  identified  in  the  recommendations,  in  particular  in  the  areas  covered  by 
Annex D to  the  country  report8. This  would allow Germany to  make the best  use of 
those funds in respect of the identified sectors, taking into account regional disparities. 

(22) 

(23) 

(24) 

In  the  context  of  the  2019  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Germany’s  economic  policy  and  published  it  in  the  2019 
country  report.  It  has  also  assessed  the  2019  Stability  Programme  and  the  2019 
National  Reform  Programme  and  the  follow-up  given  to  the  recommendations 
addressed  to  Germany  in  previous  years.  It  has  taken  into  account  not  only  their 
relevance for sustainable fiscal  and socioeconomic policy in  Germany, but  also  their 
compliance with Union rules and guidance, given the need to strengthen the Union’s 
overall  economic  governance  by  providing  Union-level  input  into  future  national 
decisions.  

In  the  light  of  this  assessment,  the  Council  has  examined  the  2019  Stability 
Programme  and  is  of  the  opinion  that  Germany  is  expected  to  comply  with  the 
Stability and Growth Pact. 

In the light of the Commission’s in-depth review and this assessment, the Council has 
examined  the  2019  National  Reform  Programme  and  the  2019  Stability  Programme. 
Its recommendations under Article 6 of Regulation (EU) No 1176/2011  are reflected 
in recommendations (1) and (2) below. 

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HEREBY RECOMMENDS that Germany take action in 2019 and 2020 to: 

1. 

2. 

While  respecting  the  medium-term  budgetary  objective,  use  fiscal  and  structural 
policies  to  achieve  a  sustained  upward  trend  in  private  and  public  investment, 
notably  at  regional  and  municipal  level.  Focus  investment-related  economic  policy 
on  education;  research  and  innovation;  digitalisation  and  very-high  capacity 
broadband; sustainable transport as well as energy networks and affordable housing, 
taking into account regional disparities. Shift taxes away from labour to sources more 
supportive for inclusive and sustainable growth.  Strengthen competition in business 
services and regulated professions.  

Reduce disincentives to work more hours, including the high tax wedge, in particular 
for  low-wage  and  second  earners.  Take  measures  to  safeguard  the  long-term 
sustainability  of  the  pension  system,  while  preserving  adequacy.  Strengthen  the 
conditions  that  support  higher  wage  growth,  while  respecting  the  role  of  the  social 
partners. Improve educational outcomes and skills levels of disadvantaged groups. 

Done at Brussels, 

For the Council 
The President 

EN 

8 

  EN