Opinion of the European Economic and Social Committee – Reform and investment proposals and their implementation in the Member States – what is the opinion of organised civil society? (2023-2024 European Semester cycle) (own-initiative opinion)
Date: 2024-04-25
Institutions: European Economic and Social Committee
Subjects: European Semester, civil society, economic governance (EU), economic policy, economic recovery, economic reform, fiscal policy, investment, public consultation, social dialogue (EU)








C_202404054EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2024/4054


12.7.2024







Opinion of the European Economic and Social Committee


Reform and investment proposals and their implementation in the Member States – what is the opinion of organised civil society?


(2023-2024 European Semester cycle)


(own-initiative opinion)

(C/2024/4054)


Rapporteurs: 
                  Gonçalo LOBO XAVIER


Javier DOZ ORRIT


Luca JAHIER







Advisor


Olivier VAUZELLE




Plenary Assembly decision


21.9.2023




Legal basis


Rule 52(2) of the Rules of Procedure




 


Own-initiative opinion




Section responsible


Economic and Monetary Union and Economic and Social Cohesion




Adopted in section


10.4.2024




Adopted at plenary session


25.4.2024




Plenary session No


587




Outcome of vote
(for/against/abstentions)


166/1/1




1.   Conclusions and recommendations









1.1.


The extent and the richness of this annual exercise of consultations, carried out this year in 26 of the 27 Member States and based on the active involvement of 77 EESC members and, through them, a large number of national civil society organisations (CSOs), social partners, institutions and bodies, plus the involvement of youth representatives and EU organised civil society (OCS) (1), confirm that the effectiveness of a structured and permanent involvement of social partners, CSOs and other relevant stakeholders in the European Semester is key to ensuring ownership as well as transparent and inclusive policy-making.












1.2.


Moreover, it proves that there is growing improvement in the capacities of organisations at national level and that an effort to provide support through measures and appropriate procedures is especially needed, and would be useful. In that respect, the European Economic and Social Committee (EESC) undertakes to further invest in this effort and calls upon the European Commission and national governments to provide more consistent and appropriate support for its consolidation at EU and Member State (MS) level.












1.3.


The importance of an effective agenda of reforms and investments is largely recognised as a key driver for the stability and growth agenda of our MS, addressing the current and future priorities of the Union. The implementation of financing instruments such as cohesion policy funds, NGEU or SURE, could provide lessons for improving the effectiveness and efficiency of investments and employment policies. It could also provide insight into improving any Union investment instrument that addresses the EU’s common priorities, in order to achieve the four dimensions of solid competitive sustainability, based on environmental sustainability, productivity, fairness and macroeconomic stability. The effectiveness of the proposed instruments also has a direct effect on the positive perception and support of the Union by European citizens.












1.4.


The EESC affirms that the incorporation of the Country-Specific Recommendations (CSRs) in the Recovery and Resilience Plans (RRPs) has increased the awareness of the CSRs and improved their implementation ratio, although a lot remains to be done to fully achieve the plans. The double lessons learned (in the logic of such RRPs based on performances and of reinforced national ownership) should become a key element for the implementation of the new economic governance rules and the future European Semester.












1.5.


The new flexibility introduced in the economic governance review and the medium-long term perspective of the scheduled national fiscal-structural plans, could be more effective in encouraging needed reforms and investments. This would have three conditions: (i) having enough fiscal space at national level – allowing for a sufficient level of investment, including social investment – (ii) a maximum degree of spending of all existing EU funds, and (iii) a more solid process, realising the potential of the planned national ownership.












1.6.


Nevertheless, the EESC believes that strengthening the national ownership by a closer involvement of national parliaments, regional and local authorities, social partners and civil society, needs clearer provisions in EU and national formal proceeding of implementing the new economic governance framework. As recalled by the EU co-legislator, and, on several occasions, by the EESC, we need a formal, permanent and structured consultation process in which national governments work closely with authorities at all levels and in partnership with trade unions, employers, CSOs and other responsible bodies throughout the whole cycle of preparation, implementation, monitoring and evaluation of the political process. The same improvement is called for, for the remaining time of the implementation of the RRPs in order to accelerate the execution ratio of investments and reforms.












1.7.


Ensuring an appropriate level of public investment is necessary in order to achieve the main objectives of the reform of the economic governance framework, as laid down in the Regulation review, and in order to address the current and future priorities of the Union. The flexibility introduced in the new economic governance framework should be used in the most appropriate way in that respect, and the expected reforms should also facilitate and promote more smart private investment at national level. However, this will not be sufficient to support the massive transformational and strategic investment needed in the years to come, and the consistent EU industrial policy that is also required. The ‘Antwerp Declaration’ from February 2024 is a good example of what the Union needs to recover. The EESC stands for a vision of the future with better and more industry, with high quality jobs and with the least possible damage to the environment and the planet.












1.8.


The EESC calls first for clear criteria on what should be included in green and social investments in the years to come, to guide MS in the formulations of their fiscal-structural plans.












1.9.


At the same time, the EESC reiterates its call that, in due course and by 2026 at the latest, the European Commission and co-legislators define new financial instruments needed at EU level to support the financing of strategic common goods, namely the newly announced EU sovereign funds, new own resources, own fiscal (financial) capacity, the next Multiannual Financial Framework (MFF), etc. In this context, a reinforced role of the EIB in leveraging private investments and improving private-public partnership will be also crucial.




2.   Introduction









2.1.


The purpose of this opinion is to encourage the reflection and formulation of recommendations by European organised civil society (OCS) on the reform and investment proposals and their implementation in the MS. Its aim is also to make the EU’s economic governance more transparent, democratic and effective, resilent to further crises, and to involve OCS more closely.












2.2.


Our analysis and proposals take into account the European Commission’s legislative proposals to implement a comprehensive reform of the EU’s economic governance rules, as well as the EESC opinion on these proposals (2), the Committee resolutions on the involvement of OCS in the development and implementation of the national RRPs (2021 and 2022) (3) and the Committee’s opinion on a solid reform of the European Semester (4).












2.3.


This opinion is based on a broad consultation of OCS representatives in the MS, through 27 national delegations of the European Semester Group (composed of three members from each country – one per group). This consultation took the form of a questionnaire and ten country visits (5) (‘round tables’). The results of the consultation are set out in the annex and are summarised in point 5 of the opinion.




3.   Background









3.1.


This opinion focuses on the reform and investment measures in the MS, in particular those based on the CSRs 2023 (6), and their implementation, in order to assess the effectiveness of these measures and the possibilities available to better target proposals, improve implementation and monitor and involve OCS in the procedures. The combination of reforms and investment is seen as crucial in obtaining sustainable competitiveness.












3.2.


The opinion also looks at issues concerning the ongoing reform of the EU’s economic governance rules (7), the central objective of which is to strengthen public debt sustainability while promoting sustainable and inclusive growth in all MS through reforms and investment. Moreover, the opinion continues the previous consultation exercises by examining the state of the implementation of the reforms and investments provided for in the national recovery and resilience plans, which are financially supported by RRF funds (8).












3.3.


With this opinion, the EESC therefore aims to continue its work to promote a more effective participatory European Semester, with greater ownership at national level and closer involvement of OCS, and an appropriate accompanying economic governance framework.




4.   Methodology used for this consultation









4.1.


The data and information required for this report were collected between December 2023 and March 2024. In total, 26 national contributions (responses to the questionnaire and/or the holding of a round table) were received (9). Consultations were based on members’ own knowledge, and involved social partners and CSOs. In some countries, national economic and social councils or equivalent bodies (10) were involved, and in others, government representatives were also consulted.












4.2.


In addition, this opinion was selected to implement the EESC EU Youth Test (11). This means that, firstly, representatives of national youth organisations were invited to take part in the round tables organised in their countries (12), and secondly, two representatives of member organisations (13) of the European Youth Forum (14) were invited to take part in the two meetings of the study group. Three members of the EESC Liaison Group (15) also replied to the questionnaire.




5.   Observations on the results of the consultation

The full summary of national contributions to the questions can be found at the beginning of the appendix to this opinion (16).

Section I: The reform and investment measures in the Member States, in particular those based on the country-specific recommendations 2023, and their implementation.
5.1.   Question 1 – What is your opinion on the priorities identified by the Commission in the country-specific recommendations for your country in 2023? Are they sufficiently in line with your organisation’s interests and do they address the challenges facing your country?









5.1.1.


In general, the CSRs are seen as relevant and appropriate, although they do not sufficiently address social issues, prioritising financial aspects. However, their implementation at national level is judged more critically.












5.1.2.


In most Member States, OCS underlined its support for the strong emphasis in the country-specific recommendations on green and digital transitions and on the use of the substantial EU funds channelled to Member States’ economies to stimulate a just transition. According to OCS in Austria, Belgium, Denmark, Estonia, Italy, Latvia, Spain, Sweden and the Netherlands, and according to representatives of the Liaison Group members, in general, the CSRs are appropriate and/or have improved over the years. The priorities are generally in line with the interests of CSOs and social partners, with some reservations as to how to approach the recommendations according to each country’s specific situation. In Croatia, Cyprus, Czechia, Germany, Greece, Hungary, Ireland, Lithuania, Luxembourg and Slovakia, organised civil society has a rather mixed view of the priorities identified in the CSRs. OCS indicates that the CSRs do not take sufficient account of the socio-economic characteristics and realities of the country. This is demonstrated by the fact that some countries have identical solutions proposed for very different situations. In Ireland and Luxembourg, for example, it was deplored that there were no recommendations to address the housing crisis. It was also pointed out that the CSRs are very general – they are not targeted and are not monitored. The priorities seem to be short-sighted. In Germany, OCS also pointed out that the CSRs do not address a number of underlying and structural issues. OCS gave a rather negative assessment of the situation in Finland, Poland, Portugal and Slovenia. For example, in Finland, Portugal and Slovenia, it was deplored that there was no CSR to encourage the improvement of Member States’ tax systems. In addition, in Poland it was noted that some recommendations are too complex, and that the proposed reforms are not ambitious enough given the complexity of the social, economic, environmental and global challenges.












5.1.3.


Moreover, OCS in Croatia, Denmark, Poland, Portugal and Slovenia in particular, pointed out that too much emphasis is placed on economic reforms and not enough on social needs. The focus is on fiscal sustainability, ignoring the social aspect of these systems.




5.2.   Question 2 – How would you assess the effectiveness of the reform and investment measures proposed by the Commission in these recommendations?









5.2.1.


With regard to the effectiveness of the reform and investment measures proposed by the Commission to the Member States, OCS considers, particularly in Belgium, Czechia, Hungary, Luxembourg and Poland, that the process of implementing reforms is rather slow and that the government does not go far enough in implementing them, which reduces their effectiveness. In Denmark, the proposed measures are considered adequate in themselves, but their implementation and redistributive effects remain uncertain. In Hungary and in Poland, it was stressed that the recommendations are often repeated from one cycle of the European Semester to the next, which shows how slowly or unevenly they are implemented. In Germany, OCS points out that the measures are either ignored or impossible to implement, as they do not respect the existing conditions and constraints in the concerned countries. Furthermore, the measures often seem short-sighted and linked to objectives that are easily achievable and, from a quantitative point of view, easily attainable. Several recommendations are repeated year after year, which shows the lack of appropriate follow-up and of meaningful, relevant and effective tools to encourage countries to actually implement the recommendations. No measures have been put in place to ensure that reforms are systemic and not reversed after the Commission’s assessment. National Reform Programmes and Stability/Convergence Programmes created by Member States often propose unpopular reforms which are then blamed on the EU. Furthermore, in Latvia for example, OCS believes that these recommendations would be more effective if they were linked to broader EU financial support (e.g. EU own resources, or similar) and better coordinated.












5.2.2.


On a positive note, however, in Austria, Croatia, Estonia, Italy, Sweden, Slovakia and the Netherlands, OCS generally gave a positive assessment of the effectiveness of the reform and investment measures proposed by the European Commission in the CSRs, while stressing the importance of ongoing dialogue between the Commission, the government and the social partners and civil society in order to speed up the implementation of reforms.




5.3.   Question 3 – How is organised civil society involved in the dialogue with your government and the Commission? What are the positive and negative points?









5.3.1.


With regard to the way in which OCS is involved in the dialogue with the governments and the Commission, OCS, particularly in Austria, Croatia, Denmark, France, Ireland, Italy, Lithuania, Luxembourg, Sweden and the Netherlands, has raised a number of positive points. In France and Luxembourg, there is formal involvement via a structured dialogue with the government, through which civil society can express its point of view. In Italy, a substantial improvement in dialogue has been observed, with formalised and structured moments of dialogue with the social partners. In Austria and in Latvia, formal involvement takes place at various levels, with varying degrees of quality. In Denmark, there is a formal and established dialogue, as well as a series of meetings in which OCS participates. In Czechia, there are formal and informal links between OCS and the government, particularly with employers’ representatives.












5.3.2.


In Member States, such as Austria, Belgium, Croatia, Czechia, Estonia, Greece, Ireland, Bulgaria, Germany, Hungary, Ireland, Italy, Finland, France, Latvia, Lithuania, Portugal, Romania, Slovakia, Slovenia, Sweden and Spain, organised civil society has raised the following criticisms:






—


the involvement has been reduced over the last few years;










—


the involvement was not formal, structured or permanent, varied in quality, with an imbalance in the implications of the organisations of OCS;










—


the dialogue with OCS was considered weak, ineffective, last-minute and pro forma, with no apparent follow-up to discussions;










—


the time allowed for giving an opinion is very short and does not allow for optimal consultation;










—


the awareness of the European Semester was insufficient in the public arena and that, as a result, OCS interest in the subject was low;










—


the lack of involvement of OCS in the European Semester process during the adoption of documents was deplored.
















5.3.3.


In a majority of countries, the lack of involvement of regional and local authorities was also highlighted. Finally, according to the members of the Liaison Group, there is little room for engagement in the consultations for the European Semester. The process remains opaque and the imprecision of certain national reports or the CSRs of certain countries clearly shows that insufficient data has been collected, which can be correlated with insufficient consultation space for civil society.












5.3.4.


There is potential for improving the consultation processes. Therefore, organised civil society recommends:






—


multiplying the channels for discussion, even the most formal ones, through working groups scheduled over time, which can facilitate dialogue between the social partners, civil society organisations, local and regional authorities, the government and the European Commission;










—


consultations to take place at least twice during each annual six-month process, with the last meeting taking place just before the government adopts the final document;










—


that business associations and NGOs that are not social partners be included in the consultations;










—


that the national government conduct full dialogues on all European Semester documents, not solely in the context of the creation of the National Reform Programme, and that the ministries develop the planned measures in more detail in the initial phase and listen to the points and suggestions of the social partners and civil society organisations;










—


the creation of a European Semester Group within the national Economic and Social Council;










—


promoting the participation of citizens and young people in various forms of non-formal education, particularly those linked to specific skills in the areas in which they are professionally engaged;










—


establishing clear guidelines on how this participation works and for transparent communication to the public;










—


the length of the public consultation must be appropriate, depending on the importance of the legislation being processed and that the legal deadlines (30 or 21 days) for the consultation be respected;










—


all draft laws should be subject to mandatory public consultation. Amendments tabled in the course of the legislative process should include a statement of reasons and an impact assessment;










—


consultations should be conducted with as broad a group as possible and take various forms, both open public consultations in which documents are discussed and in the consultative and advisory bodies that have been set up;










—


every year, all Member States should publish regular reports on the consultation process, transmit them to the European Commission and national parliaments and make them publicly available.









Section II: The reform of the EU's economic governance rules.
5.4.   Question 4 – Based in particular on what is explained in the annex concerning the reform of the EU economic governance framework, do you generally agree or disagree with this reform proposal (17)
? What are the main advantages and/or disadvantages that you see? Please explain why.








5.4.1.


Organised civil society in the Member States was divided on the advantages and disadvantages of this review of the EU economic governance framework. The different positions are available in the first part of the appendix. In addition, the representatives interviewed also wished to add the following recommendations to ensure the proper implementation of the new rules:






—


that the proposal's greater flexibility be matched by stricter enforcement to ensure the sustainability of public finances;










—


that a balance be struck in fiscal policy between reducing debt while preserving public investment and growth, which will be the main challenge for over-indebted countries;










—


that the dimension of national ownership be strengthened by a closer involvement of national parliaments, regional and local authorities, social partners and civil society, and that this be even more clearly mentioned (in a binding manner) than in the legislation of the Recovery and Resilience Facility;










—


that the involvement of OCS constitutes a long-term social agreement or social pact, through the establishment of a standard at European level for the involvement of OCS in the European Semester process/the European economic governance framework;










—


that the application of the rules and the stimulation of investment and consumption be addressed if the reform is to succeed;










—


stronger solidarity between surplus and indebted Member States;










—


that a RFF 2.0 be created for pan-European investments and long-term and strategic ones for Member States that need it;










—


that Member States should be given more room for manoeuvre to adapt to unforeseen circumstances;










—


that objectives be defined in a strategic direction through clear rules, rather than in the form of constraints;










—


that investment expenditure with a high social and economic impact should not be included in the calculation of the deficit, which is decisive for increasing and strengthening the Union's competitiveness;










—


to determine what kind of expenditure should not be cut to reduce deficit and debt levels - this should include areas important to the public or military, which should not be counted in the EU's calculation of debt and deficit levels;










—


that the formalism that permeates the European approach to economic governance be discarded in favour of a NextGenerationEU-type model;










—


to exclude spending on defence, ecological transition and digitisation from debt/deficit calculations;










—


there must be established an independent, reliable and transparent mechanism in order to ensure that Member States fulfil the commitments made in their medium-term fiscal-structural plans.








5.5.   Question 5 – Has your organisation been consulted or is it currently being consulted in defining the position of your government on the Commission legislative proposal currently under discussion within the European Parliament and the Council of Ministers? If so: how, and do you feel that the views of your organisations and civil society at large had been or are being taken into consideration? If not, how would you like to have been involved in the process?









5.5.1.


With regard to the consultation of organised civil society carried out by national governments to define their position on the Commission’s legislative proposal, the majority of representatives of OCS in the Member States mentioned and regretted that they had not been consulted. For this reason, they explained that:






—


a formal consultation process should be put in place to allow the social partners and civil society to feed their views into the government's position;










—


the Commission's European Semester officers could take part as observers in consultations between OCS and the government;










—


direct engagement by means of one-to-one meetings with relevant State's department and with the European Commission's European Semester officers;










—


the consultation on this issue could have taken place in the context of the social dialogue meetings on the European Semester (if any) with the government, and that it should have been discussed in the context of formal procedures, with the Economic and Social Council;










—


there is an urgent need to strengthen the involvement and consideration of civil society perspectives. This crucial issue for economic policy needs to be developed and implemented in a more democratic way. The social partners and civil society should be formally consulted and given the opportunity to present their proposals as part of a comprehensive dialogue process with the national government;










—


if consultative forums have already been set up, it is essential to optimise consultation with OCS;










—


this would also help to dispel the pervasive misunderstanding that European legislation is made without the Member States in Brussels.








5.6.   Question 6 – According to the proposal, each Member State would draw up a national medium-term fiscal-structural plan. Furthermore, it would be possible to extend the fiscal adjustment period if underpinned by specific reforms and investments. Do you think that such plans would be effective to encourage specific reforms and investments?









5.6.1.


Organised civil society has raised a number of positive and negative aspects concerning these plans and their potential effectiveness in encouraging reforms and investments. The various positions are available in the first part of the appendix. In most of the Member States, it has been stressed that it is essential for the governments of the Member States to consult OCS on an ongoing and permanent basis within the framework of these plans in order to define the priorities of the reforms and the investments targeted and then to ensure their effective implementation by ensuring the real and democratic support of the citizens. The degree of involvement of national political and social partners and civil society organisations in the development of plans will be decisive for their effectiveness. OCS is also calling for:






—


the plans to take into account the specific situation of Member States, support long-term stability and development and contribute to regional balance and environmental sustainability;










—


attention to be paid to the effectiveness and efficiency of public investment, the risk of crowding out and the need to strike a balance between control and overly strict management;










—


the plans to be realistic in terms of assessing the success of the reforms and investments envisaged;










—


the plans to be based on a wide multi-faceted consultation, in particular with OCS, and consensus;










—


the plans to be constantly monitored by the European authorities, the Parliament, the social partners and civil society organisations;










—


in order to monitor the implementation of the plan, an annual report analysing deviations, including relating to social aspects, and proposals for corrections to be drawn up;










—


the plans to be supported in their implementation by a subsidiary relationship between public and private parties;










—


the plans to be accompanied by the creation of new instruments that respond to a vision of a unitary European industrial policy;










—


the plans should be aligned with social and environmental goals;










—


for awareness to be raised through a strong communication campaign to ensure that citizens understand and support the national plan;










—


this dialogue to contribute to Member States taking greater ownership of their recovery, and provide tangible actions that can not only encourage reforms and investments to ensure fiscal stability, but also find ways to effectively implement overdue reforms and investments;










—


the possible effects of implementing the plan to address social tensions to be widely discussed and in the event of emergencies.








5.7.   Question 7 – The new rules propose to strengthen the capacity of Member States to undertake reforms and investments to support common priorities (such as the twin transitions), thus reinforcing the ‘growth’ leg rather than the ‘stability’ leg, compared with the old rules. Do you think Member States will have sufficient flexibility within their medium-term fiscal-structural plans to promote such reforms and investments, while also needing to adhere to the 3 % deficit and 60 % debt-to-GDP rules?









5.7.1.


In general, OCS welcomes this additional flexibility provided, but mentions several aspects that need to be taken into account if the new rules are to be successful, such as:






—


a decision to exclude social investment from the calculation of the deficit;










—


capital account and current expenditure investments based on CSRs should not be included in the calculation of the deficit;










—


investments made directly by companies for the ongoing training of employees be excluded from the State aid map;










—


we need dynamic rules that can adapt to economic situations, that do not harm growth and that also reduce public debt by freeing up resources, services and the potential of the State in favour of the market and the social economy;










—


we are a long way from an urgent realignment towards socio-ecological progress, and that it is therefore necessary to strengthen the growth aspect without neglecting the stability rules;










—


it would be a good idea to include what are known as ‘denominator effects’: GDP increases only if there is sufficient investment; as a result, the debt ratio falls;










—


measures to promote the green transition must take account of the economic component and the burdens shared by all stakeholders;










—


that there is a clear and rigorous taxonomy of what is included in green/social investments and that it is followed to the letter by the Member States;










—


adapting to each Member State and encouraging investments that lead to sustainable growth and employment;










—


the need to provide for the possibility of making adjustments and deviating from the strict conditions for Member States which follow the CSRs formulated within the framework of the European Semester, but for which the investments required to implement them lead to non-compliance with the 3 % deficit rule.
















5.7.2.


Finally, in Bulgaria, Czechia, Germany and Sweden, OCS believes that the revised rules will not provide sufficient flexibility and that certain Member States will still be unable to finance the necessary reforms and investments, that taxation remains inadequate and that Member States lack the administrative capacity, combined with national constraints, to implement these reforms and investments effectively. This revision of the economic governance framework and these envisaged plans will not provide sufficient fiscal room for manoeuvre to achieve the green transition. In addition, OCS in Latvia is of the opinion that Member States should make greater efforts not to deviate from reasonable and necessary stability rules, exceptions should only be made to follow country-specific recommendations made in the European Semester. In Hungary, OCS fears that the room for manoeuvre for deficit economies will be minimal or negligible. In times of crisis and recession, urgent reforms and resources are needed, hence the need for more flexible excessive deficit rules to allow rapid intervention.





Section III: Implementation of the reforms and investments provided for in the national recovery and resilience plans.
5.8.   Question 8 – In your opinion, have the recovery and resilience plans (18)
improved the implementation of the reforms and investments proposed in the country-specific recommendations or made it more complicated? Why?









5.8.1.


With regard to OCS’s views on the correlation between the RRF, this performance-based financing instrument and the implementation of the reforms and investments proposed in the CSRs, it has been assessed, in particular in Austria, Croatia, Czechia, Estonia, Italy, Latvia and Spain, that the interplay between the commitments of the RRPs and the CSRs has created a more rigorous implementation mechanism. The incorporation of the CSRs into the RRPs has increased the transparency of the CSRs. As a result, the implementation of recommendations has improved. However, Liaison Group members also pointed out that the timetable for providing feedback on CSRs and national RRPs has actually limited the number of opportunities for civil society organisations to provide meaningful input. In Belgium, Bulgaria, Germany, Denmark, Hungary, Ireland, Luxembourg, Sweden and the Netherlands, OCS explained that the RRP alone has not brought clear improvements in the implementation of reforms and investments proposed in the CSRs. In Denmark and in Germany, the improvement in the implementation of the reforms proposed by the CSRs as a result of the RRP was considered to be moderate, given that most of the proposed reforms were already under way and would have been carried out anyway. In Ireland, the RRP is also considered not to have proposed any significant new initiative.












5.8.2.


The following recommendations were highlighted:






—


economic and fiscal policies should always take into account the implementation of the social agenda, such as the EPSR and the action plan for the social economy;










—


the European Commission should continue to push Member States to simplify administrative procedures and complete the legislative framework on the green transition, which will ultimately simplify implementation;










—


the transparency of the RRPs should be improved by providing updated data at least every quarter on the implementation of projects and the use of resources, the respect of the commitment to give 40 % of resources to the regions of the South and the continuous monitoring of the application of the 30 % clause concerning the hiring of young people, women and disabled people in public procurement;










—


it is necessary to strengthen the role of central and local public administrations in implementing the RRPs;










—


the National Reform Programme (NRP) (which takes into account the CSRs) should complement and be linked to the RRP, and cohesion policy should also be linked to the NRP, as complementarity and synergies between cohesion policy and the RRP are very important for strategic development and strengthening the country's economic and social resilience.








5.9.   Question 9 – In your opinion, what main action(s) should be taken to increase the role of social partners, civil society organisations and local and regional authorities in the implementation and monitoring of the RRPs?









5.9.1.


OCS ranked the following actions, in order of priority support, as the main ones needed to increase their role in the implementation and monitoring of the RRPs:






—


a formal, permanent and structured consultation process in which national government works closely with authorities at all levels and in partnership with trade unions, employers, non-governmental organisations and other responsible bodies throughout the whole measure cycle consisting of preparation, implementation, monitoring and evaluation;










—


for each measure, Member States will identify the relevant partners among local and regional authorities, trade unions, employers, non-governmental organisations and other responsible bodies, and consult them on the process and timetable of the preparation of that measure;










—


regular reports on the consultation process should be published annually, transmitted to the European Commission and the national parliaments and made available to OCS and the general public in each Member State;










—


the procedure should take place in a specific body, or in a pre-existing one to which such functions are legally attributed. Existing national economic and social councils should also play a relevant role in this process;










—


the meetings will be convened in due time and form, and the necessary documents and information will be sent to the convened local and regional authorities, social partners and civil society representatives, allowing sufficient time for them to be studied. Minutes will be taken at the meetings and will include the proposals made by these representatives;










—


the consultation process should be commonly defined in an EU regulation.
















5.9.2.


Organised civil society underlined that:






—


a common EU regulation should address the basic rights and characteristics of the participation process;










—


such a regulation could also provide for appropriate consequences, including potential penalties, in the event of non-compliance with the relevant provisions;










—


there must be increased participation in a regular and transparent dialogue during the assessment phase of the RRPs;










—


national regulations should structure the consultative process of representative organisations and bodies, within a specific body or a pre-existing body to which these functions are legally attributed (existing national economic and social councils should also play an important role in this process);










—


it is important for structured dialogue/confrontation to take place before actions and projects are implemented;










—


the involvement of the social partners and CSOs in this process should be formalised. The European Commission should request a separate opinion from civil society and the social partners on the reforms adopted. The government needs to strike a balance between civil dialogue and social dialogue because we need to work together on the roadmap, the reports and the results for citizens;










—


all generations, including young people should be part of the civil dialogue in the RRPs;










—


formal, continuous and structured consultations, timely and targeted meetings and information sharing, as well as the involvement of relevant partners throughout the action cycle, are considered important to strengthen the role of social partners and civil society;










—


the involvement of the social partners and other civil society organisations should be more binding throughout the process. A formal, permanent and structured process would ensure adequate and meaningful participation. It will strengthen transparency and accountability.








5.10.   Question 10 – Have there been delays in implementing the planned investments and reforms in your country? If so, what negative effects has this had and how can this situation be remedied?









5.10.1.


There have been numerous delays in implementing the investments and reforms set out in the RRPs in most of the Member States. Among other things, OCS is reporting delays:






—


in payments by the European Commission and in the implementation of investments, particularly for regional and local governments and for businesses;










—


due to bureaucracy and bottlenecks at various levels;










—


due to the novelty of the mechanism;










—


due to external shocks;










—


due to a change of government;










—


due to the poor planning capacity of the public administration system;










—


due to the low elasticity of the country's economic fabric to adapt to the absorption and implementation of substantial amounts of money in a short space of time;










—


due to regulatory uncertainty and the complications of a protracted planning process;










—


due to changes to the RRF plan to achieve investments in line with the RePowerEU plan, which are relatively slow;










—


due to conflict of interest rules that restrict parties' involvement in various major projects, which are too stringent.
















5.10.2.


These delays particularly affect reforms. The postponement or cancellation of investment and a general lack of certainty have hampered growth and innovation for small businesses, including the agricultural sector. Finally, the location of major infrastructure projects remains a problem and OCS, for example in Slovenia, has suggested multi-year calls for investment aid.












5.10.3.


Organised civil society therefore proposes:






—


that more flexible investment periods be granted;










—


counter-cyclical public investment to support jobs and growth in times of recession;










—


a greater role for public-private partnerships, co-programming and co-planning to overcome implementation delays;










—


better communication of information on projects and tenders, the need for more targeted assistance and the need for a more appropriate mechanism for monitoring and the proper flow of information;










—


that the European Commission should consider the possibility of implementing national RRP projects in the longer term.








5.11.   Question 11 – As we reach the mid-term implementation of the recovery and resilience plans (ending in 2026) and the ongoing review of the EU’s economic governance framework, what lessons have been learned that should be applied to the design, implementation and monitoring of the future medium-term fiscal-structural plans that have been proposed by the Commission?









5.11.1.


With regard to the lessons learned by OCS midway through the implementation of the RRP (which will end in 2026) and the ongoing review of the EU’s economic governance framework, which should be applied to the design, implementation and monitoring of the future medium-term fiscal-structural plans proposed by the Commission, it was highlighted for the design of the plans that:






—


binding social criteria must be included;










—


a longer programming period should be foreseen in order to increase the scope of OCS consultation;










—


additional measures be included in the plans to encourage reform;










—


additional measures should be included in the plans to ensure that the green and digital transitions are linked to lifelong learning, given their impact on the labour market;










—


social partners and civil society should be involved at all stages of the process;










—


national parliaments and regional and local authorities be included;










—


disbursement rules should be simplified and made more flexible;










—


coordination between the RRPs and the Structural and Cohesion Funds and the CAP must be promoted from the planning stage onwards;










—


the ability to react and adapt quickly to crises must be increased in the drafting and amendment of plans;










—


clear traceability of processes and funding must be ensured;










—


investment must be directed towards areas that support long-term growth and social well-being;










—


cooperation between Member States must be ensured from the outset (and also through a permanent EU solidarity mechanism);










—


we must continue to support sustainable and innovative solutions. We need to use the same performance-based logic as the RRPs, and make funding conditional on the implementation of recommendations;










—


CSRs must be better calibrated to take account of the realities of different countries.
















5.11.2.


To implement the plans, it has been argued that:






—


the citizens and OCS should be sufficiently informed of the objectives of the measures included;










—


implementation rules should be simplified and made more flexible;










—


urgent technical training is needed for public administration staff responsible for implementing RRPs;










—


business associations could contribute to the implementation of the funds by helping companies to manage the administrative complexities while at the same time being familiar with the local economic sector;










—


pragmatism and realism should rule;










—


technical training must be provided to SMEs for the implementation of green and digital transition investments;










—


there is a need to build the capacity of public administrations, particularly in the most disadvantaged territories;










—


flexibility, effective consultation and adaptability to changing conditions to optimise the implementation of plans is crucial.
















5.11.3.


To monitor the plans, it has been argued that:






—


stricter application rules need to be established;










—


better auditing and reporting systems are crucial;










—


random, selective and representative ex ante control systems must be established;










—


the economic and social impact of projects must be assessed;










—


the participation of the social partners and civil society organisations must be increased;










—


effective measures and indicators must be developed to monitor progress towards the objectives;










—


a permanent and continuously updated open data system must be put in place to analyse projects, the timetable for their implementation and their geolocation;










—


the involvement of stakeholders should also be guaranteed in the monitoring of plans, and more rigorous rules should be implemented and monitored.








5.12.   Question 12 – Implementation of the reforms set out in the RRPs is lagging significantly behind, particularly in comparison with investment. How can we achieve a better balance between investment and the emphasis on reforms?









5.12.1.


In the majority of Member States, OCS stressed that some of the planned reforms have raised serious concerns in the political debate and public opinion, as they were planned with very little (or no) proper consultation. The implementation of the reforms has encountered difficulties, has been delayed and has become more complex because of the current economic and social context due to the war in Ukraine, the energy crisis and inflation.












5.12.2.


OCS, for example in Austria and Bulgaria, suggests the following actions to achieve a better balance between investment and a focus on reform:






—


the EU fiscal board must be strengthened;










—


independent national tax institutions or authorities should be strengthened;










—


there should be a better balance between investment and reform through greater stakeholder involvement, adaptation to the current economic and social context and clear communication of the objectives and benefits of reform;










—


the strengthening of interinstitutional dialogue at European level to be adopted as an objective for the coming years (in particular, national and European authorities should be obliged to respond to proposals from consultative bodies).








6.   General comments

6.1.   The reform and investment measures in the Member States, in particular those based on the country-specific recommendations 2023, and their implementation









6.1.1.


The EESC has defended the concept of ‘competitive sustainability’ (19) in several opinions. This concept, proposed in the Commission’s three latest Annual Sustainable Growth Surveys (ASGS), includes environmental sustainability, productivity, fairness and macroeconomic stability, as necessary pillars needed for competitive sustainability. Moreover, as stressed in the ASGS 2024 (20), the implementation of RRPs, and complementarity with other EU funding instruments, will frame the European Semester in 2024. Country reports and in-depth reviews will also identify structural and emerging challenges to unlock the competitiveness potential in each Member State. This year’s CSRs focus on a limited selection of challenges and will detail key investment needs for the mid-term review of the 2021-2027 cohesion policy programmes. The EESC welcomes the Commission’s call for Member States to actively engage with stakeholders, including social partners, local and regional authorities, as well as relevant civil society organisations. What is essential for the reforms are the CSRs and the dialogue surrounding them, because the responsibility for reforms lies essentially with the Member States. There are three main dimensions to investment: the first dimension is in the hands of the Member States, the second dimension is in the hands of the EU, if it manages to dispose of its fiscal space (an EU sovereignty funds, European Public Goods, etc.) and the third dimension comprises the two together (the EU and the Member States) that must facilitate and promote, in a long term perspective, smart private investment.












6.1.2.



The EESC believes that support for private investment and public-private partnerships should be provided through two main lines of action:













6.1.2.1.


Facilitating the financing of private investment by strengthening the EIB’s lending capacity, based on the InvestEU model, and by supporting credit for business financing in national financial policies.












6.1.2.2.


Through reforms that create a favourable environment for investment: by simplifying the formalities for setting up businesses, technical assistance programmes for the setting up and supporting of SMEs and social enterprises, the promotion of industrial and land services, and the development of infrastructure and complementary services with stability, transparent and clear regulations to promote a climate of trust for investment. The EESC believes that civil and social dialogue at national, regional and local level has an essential role to play in defining and implementing these policies. These policies must all be environmentally sustainable and any form of unfair tax or labour competition must be avoided at European level and in the Member States.












6.1.3.


The ECOFIN Council on 21 June 2024 will discuss the interplay between social investments and reforms, economic growth, macro-economic stabilisation and upward social convergence. The classification of investments for national medium-term fiscal structural plans has not changed from the method used for recovery and resilience plans. The Belgian Presidency is trying to secure the fact that this debt sustainability analysis (‘DSA’ – which will serve as an anchor in EU fiscal rules) considers social investments as part of the consideration of national plans. This is not the case today. Currently, the DSA considers the social cost as having an impact on certain elements such as the demographic curve. We must therefore, on the one hand, classify social investments and, on the other, try to focus on a common methodology for measuring the impact of social investments. As we have already argued (21), the EESC calls for further and in-depth scrutiny by the co-legislators before the adoption of the new Regulation on of the DSA methodology, to avoid any unintended automatic consequences arising from new austerity policies, in particular considering the social impact of the measures foreseen. This task has now been assumed in the provisional political agreement of the reformed EU economic governance framework, and specific work will be launched after the new rules enter into force, but with very restricted timing due to the timetable for the 2024 implementation of the reform.












6.1.4.


There are major differences between Member States in terms of the social investment they need, due to several factors (demographics, economic baseline, economic cycle, structural unemployment, etc.). The EESC believes that this should be taken into account so that the same criteria are not applied indiscriminately when analysing deficits and debt sustainability. Member States with the greatest need for investments and reforms may also find it most difficult to meet excessively rigid deficit and debt criteria.












6.1.5.


These topics should be linked to the EU’s eroding global competitiveness, as dealt with in Mario Draghi’s report on the future of European competitiveness, which he will present after the European election in June.












6.1.6.


There is an enormous need for investment in Europe. This is not possible through public funding only (European Sovereignty Fund, etc.); it also requires reforms (without large investments/costs) that promote a space for private investment and a stable environment to catalyse investment flows (internal and external to the EU). Reforms are also a fundamental lever for the absorption of existing funds, and obstacles resulting from a lack of administrative capacity to manage the funds must be overcome.












6.1.7.


The reform of the fiscal rules through the EU economic governance framework review could have also addressed the issue of private investment, but the reform only concerned national public investments. In order to tackle the investment gap and to improve the competitiveness, a cross-border perspective is needed. In addition, an EU Sovereignty Fund could have compensated the state aid rules, together with a reform of the Projects of Common European Interest. We need a specific pan-European funding instrument to move back towards investments in European infrastructures, in cross-border projects, and not solely in national projects.












6.1.8.


The EESC is conscious that additional EU-level funding is hard to generate. A serious debate should be launched regarding new EU own resources and its fiscal or financing capacity, and a EU Sovereignty Fund, separate from the next MFF negotiations (22).












6.1.9.


The financial capacity of the Member States must be counterbalanced. We must ensure a new European social contract fit for a sustainable future (23). Strategic social investment is a lever for economic development and employment, and is crucial for creating inclusive growth and for strengthening Europe’s social base. By investing in social sectors, there are economic spin-offs and growth (24). There will be significant costs of not investing in social sectors. The goal is to accelerate job creation; improve people’s well-being, health and skill set; improve housing and make it accessible, affordable and energy-efficient, addressing serious demographic challenges and growing imbalances among citizens; and support social innovations in all sectors exposed to risks associated with the green and digital transitions. The final objective is to improve Europe’s sustainable competitiveness, while also improving the lives of all people across all generations. The EESC calls for reforms and investments in key social areas (25).












6.1.10.


CSRs do not always take into account the concerns that citizens feel most strongly about. In some cases, for example, housing problems or environmental issues are not emphasised or prioritised enough, despite their importance for citizens.




6.2.   The review of the EU’s economic governance rules









6.2.1.


In order to encourage a higher level of investment, European economic governance mechanisms should take into account the fiscal effort of each Member State. The EESC therefore calls for consideration to be given to the option whereby Member States with a fiscal policy tailored to their investment needs are rewarded in the allocation of European funds, compared with countries that do not make this effort and turn solely to the EU to make up for this shortfall in national funding.












6.2.2.


The latest successive crises (financial, pandemic, invasion of Ukraine) have shown that excessive austerity can lead to an investment deficit in the more ‘virtuous’ countries, which has been socially and economically damaging and has contributed to a feeling of lack of solidarity, social rejection, which may have increased further populist and anti-European sentiments over the last decade. The EESC believes that compliance with fiscal rules must not be at the expense of investment and necessary social reforms.












6.2.3.


The reform mainly focuses on the level of public spending, and little on the evolution of public revenues in each state. Both are essential to achieve a controlled deficit and sustainable debt level, and therefore more emphasis should be placed on revenue-enhancing policies.




6.3.   The implementation of the reforms and investments provided for in the national Recovery and Resilience Plans









6.3.1.


The EESC’s evaluation report on the RRF (26) showed that OCS in the EU was largely supportive of the content of the RRF and its national RRPs. However, the report also reflected criticism of the insufficient degree of involvement of OCS in its drafting and implementation, the need for better information on concrete projects and the serious problems encountered in implementing the plans within the set deadlines.












6.3.2.


The references in the CSRs to the involvement of local authorities, social partners and civil society in the European Semester and in the implementation of RRPs are merely reminders or recommendations. The EESC believes that they should be binding on national governments, as already pointed out in several recent EESC opinions and in the considerations on the last provisional political agreement on the review of the EU economic governance framework.












6.3.3.


The deterioration of civil and social dialogue in certain countries makes it difficult to achieve the desired ownership of the commitments of the European semester. There is a risk that the pressure for respecting deadlines will serve as an excuse for governments to skip the consultation and involvement of organised civil society. In the new economic governance framework, social and civil dialogues must be reinforced, both at national and European levels, in line with the proposals that the EESC has formulated in previous EESC opinions (27)

.








Brussels, 25 April 2024.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  Social partners and civil society organisations.

(2)  Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (COM(2023) 240 final – 2023/0138 (COD)), the proposal for a Council Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (COM(2023) 241 final – 2023/0137 (CNS)) and the proposal for a Council Directive amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States (COM(2023) 242 final – 2023/0136 (NLE)) (OJ C, C/2023/880, 8.12.2023, ELI: http://data.europa.eu/eli/C/2023/880/oj).

(3)  Resolution of the European Economic and Social Committee on Involvement of Organised Civil Society in the National Recovery and Resilience Plans – What works and what does not?, adopted in February 2021 (
OJ C 155, 30.4.2021, p. 1) and on Involvement of Organised Civil Society in the National Recovery and Resilience Plans – How can we improve it?, adopted in May 2022 (
OJ C 323, 26.8.2022, p. 1).

(4)  Opinion of the European Economic and Social Committee on The EESC's recommendations for a solid reform of the European Semester (
OJ C 228, 29.6.2023, p. 1).

(5)  In France, Slovakia, Slovenia, Poland, Finland, Portugal, Greece, Romania, Cyprus and Lithuania.

(6)  
            2023 European Semester: Country Specific Recommendations / Commission Recommendations, European Commission.

(7)  
            New economic governance rules fit for the future, European Commission.

(8)  
            Recovery and Resilience Facility, European Commission.

(9)  All EU Member States, except Malta. The ESG delegation for Malta did not take part in this consultation.

(10)  For example, an advisory group dedicated to the European Semester.

(11)  
            EU Youth Test, European Youth Forum.

(12)  Youth organisations took part in the round tables organised in Cyprus, Greece, Finland, Portugal, Romania and Slovakia.

(13)  
            ETUC's Youth Committee and Erasmus Student Network.

(14)  
            Representing Europe's youth, European Youth Forum.

(15)  European Students' Union, Lifelong Learning Platform and Eurochild.

(16)  
            Appendix with the full summary of national contributions.

(17)  The Commission's proposal for a reform of the economic governance rules and the Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (COM(2023) 240 final – 2023/0138 (COD)), the proposal for a Council Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (COM(2023) 241 final – 2023/0137 (CNS)) and the proposal for a Council Directive amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States (COM(2023) 242 final – 2023/0136 (NLE)) (OJ C, C/2023/880, 8.12.2023, ELI: http://data.europa.eu/eli/C/2023/880/oj).

(18)  
            Recovery and resilience plans in the 2023 European Semester, European Parliamentary Research Service.

(19)  Opinions of the European Economic and Social Committee on 
Annual Sustainable Growth Survey 2024
 (OJ C, C/2024/2484, 23.4.2024, ELI: http://data.europa.eu/eli/C/2024/2484/oj), on Additional considerations on the Annual Sustainable Growth Survey 2023 (OJ C, C/2024/871, 6.2.2024, ELI: http://data.europa.eu/eli/C/2024/871/oj), on the communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank: Annual Sustainable Growth Survey 2023 (COM(2022) 780 final) (
OJ C 146, 27.4.2023, p. 59), on Additional considerations on Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Annual Sustainable Growth Survey 2022 (COM(2021) 740 final) (
OJ C 75, 28.2.2023, p. 35), and on the Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank – Annual Sustainable Growth Survey 2022 (COM(2021) 740 final) (
OJ C 275, 18.7.2022, p. 50).

(20)  
            COM(2023) 901 final.

(21)  Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (COM(2023) 240 final – 2023/0138 (COD)), the proposal for a Council Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (COM(2023) 241 final – 2023/0137 (CNS)) and the proposal for a Council Directive amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States (COM(2023) 242 final – 2023/0136 (NLE)) (points 1.7 and 4.8) (OJ C, C/2023/880, 8.12.2023, ELI: http://data.europa.eu/eli/C/2023/880/oj).

(22)  Opinion of the European Economic and Social Committee on ‘a) Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions on A Green Deal Industrial Plan for the Net-Zero Age’ (COM(2023) 62 final) and ‘b) Proposal for a Regulation of the European Parliament and of the Council on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net Zero Industry Act)’ (COM(2023) 161 final — 2023/0081 (COD)) (
OJ C 349, 29.9.2023, p. 179).

(23)  
            COM(2023) 376 final.

(24)  
            
Boosting Investment in Social Infrastructure in Europe
, Report of the High-Level Task Force on Investing in Social Infrastructure in Europe, chaired by Romano Prodi and Christian Sautter.

(25)  Opinion of the European Economic and Social Committee – Boosting long-term inclusive growth through reforms and investment (exploratory opinion – Belgian Presidency) (OJ C, C/2024/3378, 31.5.2024, ELI: http://data.europa.eu/eli/C/2024/3378/oj).

(26)  EESC evaluation report on 
Mid-term evaluation of the Recovery and Resilience Fund
.

(27)  Opinion of the European Economic and Social Committee on the EESC’s recommendations for a solid reform of the European Semester (own-initiative opinion) (
OJ C 228, 29.6.2023, p. 1) and on Strengthening civil dialogue and participatory democracy in the EU: a path forward (exploratory opinion requested by the Belgian Presidency) (OJ C, C/2024/2481, 23.4.2024, ELI: http://data.europa.eu/eli/C/2024/2481/oj).


ELI: http://data.europa.eu/eli/C/2024/4054/oj
ISSN 1977-091X (electronic edition)