Opinion of the European Economic and Social Committee on ‘Recommendation for a Council recommendation on the economic policy of the euro area’ (COM(2022) 782 final)
Date: 2023-01-24
Institutions: European Economic and Social Committee
Subjects: economic growth, economic reform, energy crisis, euro area, fiscal policy, investment promotion, macroeconomics, stability pact, structural adjustment, sustainable development








C_2023140EN.01005801.xml










21.4.2023   


EN


Official Journal of the European Union


C 140/58






Opinion of the European Economic and Social Committee on ‘Recommendation for a Council recommendation on the economic policy of the euro area’
(COM(2022) 782 final)
(2023/C 140/10)






Rapporteur:



Petru Sorin DANDEA











Referral


European Commission, 19.12.2022




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




Section responsible


Economic and Monetary Union and Economic and Social Cohesion




Adopted in section


21.12.2022




Adopted at plenary


24.1.2023




Plenary session No


575




Outcome of vote
(for/against/abstentions)


169/0/3




1.   Conclusions and recommendations









1.1.


The EESC supports the Commission’s recommendations and puts forward a number of additional proposals.












1.2.


The EESC reiterates the conclusions of its previous opinion (1), approved by a large majority at its October 2022 plenary session.












1.3.


The EESC recommends that the two bands of consumption be set in such a way that all households facing major problems in paying their energy bills are protected. The EESC believes that the two-tier policy should cover both people below the poverty line and those belonging to the lower middle class who, due to low incomes, will not be able to pay their energy bills at market prices.












1.4.


The EESC supports the Commission’s proposal that Member States make use of the State Aid Temporary Crisis Framework and recommends that Member States use all possible means to help businesses in general and small and medium-sized enterprises in particular.












1.5.


The EESC recommends that monetary policy be used prudently, since, as long as inflation is being driven by exogenous factors, monetary policy in this complex context can have a cyclical effect.












1.6.


The EESC supports the Commission’s proposal for euro area countries to coordinate their fiscal policy with the monetary policy of the European Central Bank. This is important for the success of monetary policy in curbing inflation.












1.7.


The EESC believes that the completion of the Capital Markets Union and the Banking Union will be important steps in deepening economic and monetary union and recommends that Member States make efforts to speed up the process.












1.8.


The EESC recommends that Member States swiftly implement the Minimum Wage Directive at national level. This could improve the level of the minimum wage and create a safety net for low-wage earners, preserving the purchasing power of wages at this time of high inflation.












1.9.


The Commission recommends that Member States use the opportunity of social dialogue to involve the social partners in the design and implementation of the policies needed to mitigate the effects of the crisis. The EESC firmly backs this Commission proposal.




2.   Background









2.1.


The resumption of economic growth in the euro area and in the wider European Union in 2021 was suddenly interrupted by Russia’s war against Ukraine. The euro area’s significant dependence on fossil fuel imports from Russia, in the context of EU sanctions, created uncertainty, with major effects on supply chains. These were the factors that sparked the energy crisis and, subsequently, the high inflation currently being faced by the euro area and wider EU.












2.2.


Although inflation fell slightly in November, to 10 %, from 10,6 % in October, the arrival of the cold weather, fuel supply problems and the ensuing energy crisis may see inflation rise again in the coming period.












2.3.


The European Central Bank has used monetary policy to seek to bring inflation back to sustainable parameters (a target of 2 % over the medium term), but its efforts may prove insufficient in view of the exogenous factors that led to the crisis, as well as the difficulty involved in dovetailing monetary policy with fragmented fiscal policy across the Member States.












2.4.


This multifaceted crisis has come on top of the climate crisis that the EU is facing. There has also been a significant slowdown in convergence, and even fragmentation and divergence, across some sectors, as well as across the economies of the euro area Member States.












2.5.


The energy crisis has led to a loss of competitiveness for many sectors and companies operating in the single market.












2.6.


The Recovery and Resilience Facility, as well as cohesion policy, have contributed significantly to helping euro area Member States to maintain the level of investment needed to achieve the Green Deal objectives, but further efforts are needed to speed up the transition towards net-zero emissions and significantly reduced energy dependency.












2.7.


Against this particularly difficult and complex backdrop, on 22 November, the European Commission presented its proposal for a Council Recommendation (2) on the economic policy of the euro area for 2023.




3.   General and specific comments









3.1.


The EESC endorses the Commission’s recommendations, but also considers the following proposals to be necessary:












3.2.


The EESC reiterates the conclusions of opinion ECO/590 (3), adopted by a large majority at its October 2022 plenary session.












3.3.


In the context of the energy crisis, the winter of 2022-2023 is set to create major problems for households and businesses in the EU. The European Commission is proposing a two-tier policy for protecting the most vulnerable. This means that up to a certain level of energy consumption, vulnerable consumers will pay a price that is lower than the market price. The two-tier policy proposed by the Commission to protect vulnerable households during the energy crisis should be deployed by the Member States in an inclusive manner. The EESC recommends that the two bands of consumption be set in such a way that all households facing major problems in paying their energy bills are protected.
The EESC believes that the two-tier policy should cover both people below the poverty line and those belonging to the lower middle class who, due to low incomes, will not be able to pay their energy bills at market prices.












3.4.


When it comes to businesses, the Commission considers that Member States should provide support to prevent the shutdown of activities, including through the use of the State Aid Temporary Crisis Framework. The EESC supports the Commission’s proposal and recommends that Member States use all possible means to help businesses in general and small and medium-sized enterprises in particular.












3.5.


The inflation generated by natural gas prices and the energy crisis reached its highest level in October 2022 since the introduction of the euro, i.e. 10,6 %. The European Central Bank has taken action in a timely manner, using monetary policy to contain the rise in inflation and pave the way for a return to below 2 % (the medium-term target). The EESC recommends that monetary policy be used prudently, since as long as inflation is being driven by exogenous factors, monetary policy in this complex context can have a cyclical effect.












3.6.


Wages in the euro area increased slightly in 2022, but well below the level of inflation. The EESC agrees with the European Commission when it recommends that Member States, in accordance with their national practices and models of collective bargaining, take action to preserve the purchasing power of wage earners, especially in the case of vulnerable low-income workers. The EESC recommends that Member States swiftly implement the Minimum Wage Directive at national level. This could improve the level of the minimum wage and create a safety net for low-wage earners, preserving the purchasing power of wages.












3.7.


The EESC supports the Commission’s proposal for euro area countries to coordinate their fiscal policy with the monetary policy of the European Central Bank. This is important for the success of monetary policy in curbing inflation. The Committee believes that the Member States and the Commission should step up their efforts to implement the proposed ‘Pillar 1’ under the OECD Inclusive Framework. This could generate significant revenues for Member States which, after the efforts made during the COVID-19 pandemic, face high levels of public debt and, consequently, less room for fiscal policy manoeuvre in times of crisis.












3.8.


The EESC supports the Commission’s proposal to continue efforts to complete the Capital Markets Union and the Banking Union. The EESC believes that the completion of these two political projects will be important steps in deepening economic and monetary union.












3.9.


At this time of multiple crises, Member States must take action to reduce the fallout for households and businesses. The Commission recommends that Member States use the opportunity of social dialogue to involve the social partners in the design and implementation of the policies needed to mitigate the effects of the crisis. The EESC firmly backs this Commission proposal.





Brussels, 24 January 2023.


The President of the European Economic and Social Committee

Christa SCHWENG




(1)  Opinion of the European Economic and Social Committee — Additional considerations on Recommendation for a Council recommendation on the economic policy of the euro area (COM(2021) 742 final) (own-initiative opinion) (OJ C 75, 28.2.2023, p. 43).

(2)  Recommendation for a Council Recommendation on the economic policy of the euro area (COM(2022) 782 final).

(3)  Opinion of the European Economic and Social Committee — Additional considerations on Recommendation for a Council recommendation on the economic policy of the euro area (COM(2021) 742 final) (own-initiative opinion) (OJ C 75, 28.2.2023, p. 43).