GUIDELINE ADOPTED BY THE COUNCIL LAST YEAR . ALTHOUGH LOWER INFLATION HELPED TO INCREASE THE ROOM FOR MANOEUVRE WITH REGARD TO ECONOMIC POLICY , THE EMPLOYMENT SITUATION DID NOT IMPROVE . THE SLOW INCREASE IN ECONOMIC ACTIVITY INHIBITED THE DEMAND FOR LABOUR FROM THE PRIVATE SECTOR AND CONSEQUENTLY THE REALLOCATION OF RESOURCES ENVISAGED AS BETWEEN THE PUBLIC AND THE PRIVATE SECTOR .
THE OUTLOOK FOR 1984 POINTS TO RATHER SLOW GROWTH ACCOMPANIED BY A MODERATE INCREASE IN NOMINAL WAGES AND PRICES . REAL DOMESTIC DEMAND IS LIKELY TO LEVEL OFF , REFLECTING A STAGNATION OF PRIVATE CONSUMPTION , A FALL IN PUBLIC CONSUMPTION AND A MODERATE PICK UP IN PRIVATE INVESTMENT . DESPITE GROWING NET INTEREST PAYMENTS ABROAD , THE CURRENT BALANCE OF PAYMENTS SHOULD IMPROVE , PARTICULARLY SINCE DOMESTIC SUBSTITUTION OF IMPORTED ENERGY BECOMES MORE AND MORE IMPORTANT .
THE ECONOMIC POLICY PURSUED DURING 1983 AND ENVISAGED FOR 1984 AIMS PRIMARILY AT REINFORCING THE COMPETITIVE PARTS OF THE ECONOMY AND AT IMPROVING RESOURCE ALLOCATION , AND THUS THE OVERALL PERFORMANCE IN THE LONGER TERM , EVEN THOUGH THERE WILL BE SOME DAMPENING EFFECTS ON ECONOMIC ACTIVITY IN THE SHORT RUN .
THE GOVERNMENT PLANS TO REDUCE THE NET CENTRAL GOVERNMENT BORROWING REQUIREMENT IN 1984 TO 11 % OF GDP . IN VIEW OF THIS , A NUMBER OF MEASURES WERE ADOPTED BY PARLIAMENT AIMING TO SLOW DOWN THE INCREASE IN VARIOUS COMPULSORY AND NON-COMPULSORY EXPENDITURE , TO INCREASE THE APPLICATION OF USER CONTRIBUTIONS AND TO RAISE CERTAIN PUBLIC SERVICE CHARGES . THE PLANNED REDUCTION OF THE BUDGET DEFICIT IS FULLY IN ACCORDANCE WITH A STRATEGY DESIGNED TO ACHIEVE BETTER ECONOMIC CONVERGENCE WITHIN THE COMMUNITY . THE COST OF SERVICING THE GROWING PUBLIC SECTOR DEBT REPRESENTS A MAJOR CONSTRAINT , SO THAT IT IS UNAVOIDABLE , IF THE CENTRAL GOVERNMENT NET BORROWING REQUIREMENT IS TO BE REDUCED , TO CUT OTHER PUBLIC EXPENDITURE , ALTHOUGH THIS SHOULD NOT LEAD TO A REDUCTION OF ITEMS NEEDED TO DEVELOP PRODUCTIVE ACTIVITIES . A SUBSTANTIALLY LOWER GOVERNMENT DEFICIT WILL NO DOUBT HAVE A FAVOURABLE EFFECT ON INFLATIONARY EXPECTATIONS AND ON INTEREST RATES AND THUS BECOME A MAJOR INCENTIVE FOR ENTERPRISES TO INVEST AND ACCELERATE THE NECESSARY STRUCTURAL CHANGE IN THE ECONOMY .
THE BIENNIAL WAGE SETTLEMENTS AGREED IN THE SPRING OF 1983 CONFORM TO THE GOVERNMENT GUIDELINE OF A 4 % NOMINAL INCREASE IN 1983 AND 1984 AND IMPLY A RISE IN UNIT LABOUR COSTS BELOW THE COMMUNITY AVERAGE . THE APPLICATION OF THIS GUIDELINE SHOULD ALLOW FOR SUFFICIENT FLEXIBILITY IN THE LABOUR MARKET TO PROMOTE A BETTER ALLOCATION OF RESOURCES . THIS SHOULD HELP TO AVOID BOTTLENECKS IN PARTS OF THE LABOUR MARKET AND , TOGETHER WITH THE IMPLEMENTATION OF VARIOUS TRAINING SCHEMES , FACILITATE THE REDEPLOYMENT OF THE LABOUR FORCE .
THE GOVERNMENT'S STRUCTURAL POLICY , INCORPORATED IN ITS OVERALL STRATEGY , IS MAINLY EMBODIED IN THE INVESTMENT PROGRAMME LAUNCHED IN THE AUTUMN OF 1982 AND THE PROGRAMME FOR GROWTH AND MODERNIZATION ANNOUNCED BY THE GOVERNMENT IN OCTOBER 1983 . THESE