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No C 98 / 32 Official Journal of the European Communities 21 . 4 . 92

required to demonstrate their representativeness and the contracts and the rules which such organizations
may exercise their right to request blanket extension of may draw up .

Done at Brussels, 26 February 1992 .

The Chairman

of the Economic and Social Committee

Michael GEUENICH

Opinion on the proposal for a Council Decision adopting the Annual Economic Report 1991 /

1992 on the economic situation in the Community and determining the economic policy

orientation for the Community in 1992 — Annual Economic Report 1991 / 1992

( 92 / C 98 / 15 )

On 23 December 1991 the Council decided to consult the Economic and Social Committee,
in accordance with Council Decision 90 / 141 / EEC of 12 March 1990 on the attainment of
progressive convergence of economic policies and performance during Stage One of Economic
and Monetary Union ( EMU ), on the abovementioned proposal .

At its 293rd Plenary Session ( meeting of 29 January 1992 ) the Economic and Social Committee
adopted its Opinion on this report ( doc . ESC 92 / 92 ).

On 26 November 1991 and 17 December the Committee Bureau decided to draw up an
Additional Opinion on the subject .

The Section for Economic, Financial and Monetary Questions, which was responsible for
preparing the Committee 's work on the subject, adopted its Opinion on 13 February 1992 .
The Rapporteur was Mr Pompen .

At its 294th Plenary Session ( meeting of 27 February 1992 ), the Economic and Social
Committee adopted the following Additional Opinion by a majority vote, with 5 abstentions .

1 . The Commission 's analysis and forecasts 1.1.1 . The major reasons are as follows :

1.1 . World economic growth has practically ground
to a halt ( 0,2 % ). Growth in world trade has slumped
from 7% in 1987 to 2% in 1991 .

the decline in economic activity affecting, in particu ­
lar, a number of major industrialized nations, such
as the US, the UK and Canada,

21 . 4 . 92 Official Journal of the European Communities No C 98 / 33

— the switch from command to market economies in

Central and Eastern Europe, resulting in at least a
temporary fall in production,

— the uncertainty produced by the Gulf War and

the consequent reticence of both consumers and
investors .

1.1.2 . The world economy is expected to recover
somewhat in 1992 when economic growth should reach
2% .

1.2 . The EC has also clearly suffered from the down ­
turn in economic growth . It has, however, withstood
this situation better than other regions in the world,
and is expected to achieve economic growth of 1,25%
in 1991 .

1.2.1 . The explanation for this relatively better situ ­
ation lies in the fundamental improvement in the Com ­
munity 's economic structure which took place in the

1980s . There has been strong growth since 1984 ; invest ­
ment in 1990 was about 50% higher than in 1984 . The
stimulus provided by German unification has also had
a positive effect .

1.2.2 . A 2,25% growth rate is expected in 1992 .

1.3 . The Commission 's main factual observations in

connection with its analysis of the economic situation
are as follows :

— the level of unemployment has increased and is set

to rise still further, reversing the downward trend
since 1986,

— the scope for operating an independent structural

adjustment policy is decreasing ; it will, for example,
be more difficult to put government finances on a
sound footing where this is necessary,

— those countries whose standard of living still clearly

falls below the EC average will have less scope for
bridging the gap,

— the convergence of social and economic policies,

which is necessary for the attainment of economic
and monetary union, is showing signs of flagging,

— social resistance to necessary adjustments may

increase if the results cannot be seen in the short ­

term and if there is no faith in the measures in the

longer term .

1.4 . The main conclusions which the Commission
draws from these developments are as follows :

— although the structural adjustments of the 1980s

were a positive step forward in themselves, they
were not adequately implemented and not carried
through to a successful conclusion,

— in particular, wage moderation in the 80s had a

positive impact on firms ' profitability, but faltered
before profitability and employment had recovered
their 60s level,

— not enough measures had been introduced to pro ­

mote flexibility as a means of easing labour short ­
ages in a number of sectors,

— the opportunities provided by economic growth,

especially after 1986, for effectively tackling
national budgetary deficits and weak balance of
payments situations had not been fully exploited .

1.5 . The Commission sees new prospects opening up
in the medium-term . At present it is expecting economic
growth to reach 2,5% in 1993 . But if this and even
stronger rates of growth are to be achieved, a number
of conditions have to be met .

1.5.1 . The Commission highlights, inter alia, the fol ­
lowing points :

— policies geared to the establishment of the internal

market and the attainment of economic and monet ­
ary union and social and economic cohesion must
be vigorously pursued . The recent decision to estab ­
lish a ' European Economic Area ' adds a further
dimension to the abovementioned policy,

— measures must be taken to promote flexibility in

the economy, in particular the ability of workers
and employers to adapt to structural changes . Par ­
ticular attention must be paid in this respect to the
potential role of training and wage determination
in promoting flexibility,

— the shortfall in savings is a problem which needs to

be addressed . Current levels of interest on the capi ­
tal markets are already very high because of the
inadequate supply of capital and an increasing
demand for investment capital is expected from the
countries of Central and Eastern Europe . Particular
attention needs to be paid in this respect to capital
needed for financing national budgetary deficits and
to encouraging saving,

— with the reduced scope for Member States to

implement their own economic and monetary poli ­
cies, it is more necessary than ever to focus attention
on cooperation between the Member States and
on improving supply-side factors such as sound
infrastructure, less rigid labour markets, and tax ­
ation systems of benefit to enterprises in market

sectors,

— the success of the Uruguay Round . This will make

markets more accessible and provide new outlets
for products which are also of considerable signifi ­
cance to the EC, such as services and intellectual
property . Such opportunities are also of particular
importance for supporting the strategy being pur ­
sued by the countries of Central and Eastern Europe
as they gear themselves to new markets .

No C 98 / 34 Official Journal of the European Communities 21 . 4 . 92

1.5.2 . Table 1 sets out the key indicators :

Table 1 : Key International Indicators 1989-1993

1989 1990 1991 f 1 ) 1992 (>) 1993 ( x )

GDP ( volume changes )

USA 2,8 0,9 0,4 2 2,25
Japan 4,9 5,6 4,6 3,5 3,5
EC 3,3 2,8 1,3 2,25 2,5

Domestic demand (% changes )

USA 2,2 0,5 " 1,0 2 2
Japan 5,7 5,8 3,4 3,75 3,75
EC 3,7 2,9 1,1 2,25 2,5

Inflation
(% changes in household consumption )

USA 4,5 5,0 4,4 4,75 5
Japan 1,7 2,4 2,8 2,5 2,5
EC 4,9 5,2 5,0 4,5 4,25

Unemployment (% level )

USA 5,3 5,5 6,7 7 6,75
Japan 2,3 2,1 2,2 2,25 2,25
EC 8,9 8,4 8,6 9 9,25

Government budget balance (% level )

USA      - 1,7      - 2,4      - 2,3 -2      - 1,5
Japan 2,5 2,2 1,8 2 2
EC      - 2,9      - 4,1      - 4,4      - 4,5      - 4,25

Balance of current transactions I

(% level )

USA      - 1,9      - 1,6      - 0,1      - 0,75      - 0,75
Japan 2,1 1,2 1,5 1,5 1,75
EC      - 0,1      - 0,2      - 0,8 -1      - 0,75

Long-term interest rate (% level )

USA 8,5 8,6 8,2
Japan 5,2 7,5 6,8
EC 9,9 11,1 10,4

Source : EC Commission .

(M Forecasts .

\

2 . Compliance with socio-economic objectives

2.1 . The Committee stresses that the Commission 's
forecasts are too optimistic . Economic recovery in the
Community is slower than anticipated, the economic
situation in the US is falling short of expectations,
world-trade liberalization is still uncertain, stability has
not yet been achieved in the CIS and major risks persist
in the financial sphere .

2.1.1 . In its Opinion of 26 September 1991 ( J ) the
Committee set out a number of key objectives which
could serve as a reference framework for the conver ­
gence of social and economic policy .

2.1.2 . These objectives included :

— sustained and balanced economic growth,

— full employment,

( ] ) OJ No C 339, 31 . 12 . 1991, p. 64 .

— price stability,

— balance of payments equilibrium,

— economic and social cohesion .

2.1.3 . In the following paragraphs the Committee
will examine the findings of the Commission report in
the light of these objectives . It will concentrate on
Community trends ; trends in individual Member States
are considered in connection with the national reports,
for which the Committee has devised a special pro ­
cedure . As part of this procedure the Committee holds
an exchange of views with representatives of the social
interest groups in the country on which the Commission
has issued a report . The results of this exchange of views
are forwarded to the Commission and the Council .

2.2 . Sustained, and balanced economic growth

2.2.1 . Viewed over the longer term, the rate of econ ­
omic growth has been falling . Average growth in the

21 . 4 . 92 Official Journal of the European Communities No C 98 / 35

present 12 Member States was 4,8 % over the period

1961-1970, 3,0% over the period 1971-1980 and 2,3%
over the period 1981-1990 . It was even weaker in 1991

( 1,3 % ). Some recovery (2 to 2,5 % ) is expected in 1992 /
1993 . The trend in the US and Japan has been similar .

2.2.2 . The Committee supports the Commission 's
objective of increasing growth . Higher growth is needed
to boost employment and create scope for, inter alia :

— more investment, including research and develop ­

ment (R & D ),

— infrastructure improvements,

— preserving an environment fit to live in,

— paying for social security in an ageing society,

— financing aid to third countries .

2.2.3 . The Commission 's recipe for attaining such
growth includes pushing ahead with the major pro ­
grammes, i.e. the internal market and EMU, a structural
adjustment policy, a strict competition policy and the
strengthening of international trade . The Committee
endorses these main lines of action . In this connection
the Committee would once again draw attention to its
Opinions on Industrial Policy in an Open and Competi ­
tive Environment ( ! ) and the Twentieth Report on Com ­
petition Policy ( 2 ).

2.2.3.1 . The Commission 's report numbers environ ­
mental protection among the priorities of economic
policy . In this connection the Commission mentions
the strategy of introducing a C0 2 / energy tax . The
Committee calls for a broad strategy designed to bring
about the structural adjustment of production and con ­
sumption needed to protect the environment ; this strat ­
egy should have a strong underpinning and be arrived
at after consultations with representatives of the social
groups . The proposed C0 2 / energy tax could form part
of such a strategy .

2.2.4 . To make sustained and balanced economic
growth throughout the Community compatible with
the other objectives listed in point 2.1.2 above, the
Committee considers that a plan should be drawn up
for coordinating national economic policies ; for each
of these objectives the principle should be to guarantee
that those countries furthest from the Community aver ­
age are brought into line . The Commission should give
this principle priority in its recommendations .

2.3 . Full employment

unacceptably high level of unemployment . Unemploy ­
ment in the Twelve averaged 2,3% in the period

1964-1970, 4,1 % in the period 1971-1980 and 9,6% in
the period 1981-1990 . Unemployment began to fall in

1986, but this trend was reversed in 1991 and a further
rise is forecast for 1992 . A ± 0,7% rise in unemploy ­
ment in the Community, including the five new German
Lander, is forecast for 1991, 1992 and 1993 . In view of
the scale and seriousness of this problem, the Com ­
mittee calls for a more thorough analysis of unemploy ­
ment and for attention to be paid to other factors
besides the operation of the labour market . The Com ­
mittee 's view is that unemployment should be no higher
than the frictional unemployment which is an inevitable
consequence of the continual switch to new products
and markets .

2.3.1.1 . Increased economic growth is a sine qua non
for higher employment, as stated in point 2.2 . For this,
increased investment in the public and market sectors
is needed ; labour market and competition policy should
also be improved . For employment prospects in the
longer term, it is very important that any rise in wage
costs be matched by improvements in productivity . A
deterioration in profitability should be avoided, bearing
in mind that an improvement in investment levels is
desirable . Expanding investment and reinforcing the
Community 's competitiveness compared with that of
other industrialized third countries could give a much ­
needed boost to employment . It has to be said that the
current high level of interest rates acts as a brake on
investment at a time of recession . This threatens to
delay economic recovery . From this perspective a
reduction in interest rates is desirable .

2.3.2 . In its report the Commission focuses attention
on the shortcomings of the labour market . It points out
that in some sectors vacancies are difficult to fill despite
the large numbers of unemployed, particularly among
the unskilled . The Commission calls for an improve ­
ment in vocational training and an adjustment of wage
costs where inappropriate skills and / or excessive wage
costs in relation to productivity are keeping a large
number of people out of work . In this connection the
Commission advises the Member States to make their
policy objectives more visible so that macro-economic
prospects can be better taken into consideration in wage
negotiations .

2.3.1 . In the Committee 's view the greatest weakness 2.3.2.1 . The Committee takes this to mean that the
in the economic situation in the Community is the Commission recommends the development of reference

frameworks which — with due regard for the Com ­
munity convergence policy as agreed by the member
( 1 ) OJ No C 40, 17 . 2 . 1992, p . 31 . States — highlight the national macro-economic oppor ­
( 2 ) OJ No C 49, 24 . 2 . 1992, p . 9 . tunities . The Committee thinks that such reference

No C 98 / 36 Official Journal of the European Communities 21 . 4 . 92

frameworks are a good idea and calls for appropriate
action at Member State level .

2.3.3 . The Committee would make the following
observations on such an approach :

a ) The Committee stresses that it is the responsibility

of employers ' and workers ' organizations to freely
negotiate collective wage agreements .

b ) The Committee recognizes that unit labour costs

will become increasingly important in determining
relative costs between Member States once the
exchange rate instrument disappears with the cre ­
ation of EMU .

c ) The Committee notes the importance of a reduction
in taxes and social security contributions levied on
earned income .

The Committee would point out that further oppor ­
tunities for such reductions must exist, as average
public expenditure in the Community is a little over
48% of the Gross Domestic Product ( GDP ). The

Committee is thinking in particular of the possibility
— with due regard for the provisions of the Treaty
— of reducing State subsidies to firms in a number
of countries where this can be justified, taking into
account particular circumstances and social inter ­
ests . Expressed as a percentage of government
spending, such subsidies vary from ± 2% to ± 7%
in the Member States .

d ) In the report the Commission announces a Com ­

munity strategy to introduce a CO^ / energy tax . If,
after consultations with industry, this is shown to
be justifiable and feasible, the proceeds from such
a tax could be used to reduce taxes on labour as
advocated in paragraph c ). This would make the
price of labour more attractive in comparison with
other factors of production .

e ) The Committee shares the Commission 's view that
in a constantly changing market further training
and retraining are an essential means of keeping
people in employment . Firms should allocate part
of their financial resources to such training and
retraining .

f ) The Committee would stress that both Community
and national authorities should evolve a policy
aimed at promoting employment by supporting
R&D, improving infrastructure and upgrading
training .

g ) The Committee stresses the great importance which

it attaches to the further development of the social
dimension in the Community . A policy of growth,
as proposed by the Commission and enlarged upon
by the Committee, is only attainable if the social

policy accepted by the ( overwhelming majority of )
Member States in the Social Charter for workers,
in the Treaty of February 1992 and in the agreement
on the interpretation of the Social Charter is
implemented .

2.4 . Price stability

2.4.1 . Inflation, which had been rising slightly in the
Community since 1987, seems to have started falling
again in 1991 . An appropriate monetary policy in each
country is, however, still necessary to bring inflation
under control and further reduce it . The Committee
recognizes that monetary policy creates tensions within
and between Member States . In Germany, monetary
policy acts as a constraint during a time of major
economic change for this Member State and as a
response to rising inflation ( 2,6 % in 1990 and 4,25 %
in 1992 ), a mounting government deficit ( — 1,9% in
1990, — 3,2% in 1991 ) and a deteriorating balance of
payments ( 3,2% in 1990, 1,4% in 1991 ). It must be
pointed out that this restrictive policy, which — through
the European Monetary System ( EMS ) — influences
trends in other Member States, acts as a brake on
renewed growth in the Community . Therefore it is very
important to create opportunities for a reduction in
interest rates, including through increased savings ( see
4.1 ), and to exploit them to the full .

2.4.1.1 . The Committee has no desire to usurp the
responsibilities of the monetary authorities . In the light
of the EMU and its criteria for accession, the Committee
is aware of the importance of such a monetary policy
and would draw attention to those factors which help
to determine monetary conditions, in particular pro ­
duction cost increases, tax rises, etc . ( see also 3.2.1 and
4.1.1 ).

2.5 . Balance of payments equilibrium

2.5.1 . Exports to non-Community countries
amounted to approximately 8,5 % of EC Gross
National Product ( GNP ) in 1990 . Imports from non ­
Community countries were around 9,5% of GNP .
Apart from some slight fluctuations this percentage has
remained broadly unchanged since 1958 .

2.5.2 . In the 1980s imports from non-Community
countries grew more strongly in volume percentage
terms than intra-EC imports . It would therefore be
scarcely accurate to speak of a ' Fortress Europe '. On
the other hand, exports to non-Community countries
have lagged behind intra-EC exports in volume percent ­
age terms . This trend could point to a weakening com ­
petitive position on the part of the EC . This hypothesis
is confirmed by the deterioration of the balance of
payments on current account from + 1,4% in 1986
to — 1 % in 1992 . The Committee agrees with the
Commission that the Community must continue to pay
close attention to its ability to compete with the major
industrialized third countries .

21 . 4 . 92 Official Journal of the European Communities No C 98 / 37

2.6 . Economic and social cohesion 3 . Compliance with EMU criteria

2.6.1 . In its Opinion of 26 September 1991 the Com ­
mittee defined economic and social cohesion as :

— narrowing the gap between regions,

— integration of the social dimension ( see 2.3.3 ),

— development of the social dialogue .

2.6.2 . Narrowing the gap between regions

2.6.2.1 . According to Article 130 A of the Treaty,
one of the Community 's aims is to reduce disparities
between the regions . The Annual Report provides no
figures on trends in the separate regions of the Com ­
munity, only in the Member States . The Committee is
issuing an Own-initiative Opinion on economic and
social cohesion ( doc . ESC 226 / 92 of 27 February 1992 ).

2.6.2.2 . We are concerned here with regions situated
in Member States ( Greece, Ireland, Portugal and Spain )
whose per capital GNP is lower than the Community
average . With the exception of Greece, annual GNP
growth in these countries was higher than that of the
Community as a whole ( 2,8% ). Thus over the period

1986-1991 Spain averaged 4,25 % annual growth, Portu ­
gal 4,1 %, Ireland 3,5 %, but Greece only 1,3% . Per
capita GNP, as measured against the Community aver ­
age ( 100 ), has risen to about 80 % in the case of Spain,
70 % for Ireland and 56 % for Portugal . Greece 's rela ­
tive prosperity has declined slightly, however, to
52,5% .

2.6.3 . The European Council recently decided, whilst
retaining the structural funds, to set up a cohesion
fund to concentrate on the co-financing of transport
infrastructure and environmental projects in those
countries which have a per capita GNP of less than
90 % of the Community average and have a programme
designed to achieve compliance with the economic con ­
vergence conditions set out in Article 104 C of the
Treaty .

2.6.4 . The Committee agrees with the Commission
that the best way of bridging the gulf between these
four and the other Member States is for the countries
themselves to pursue healthy macroeconomic policies
with a view to improving their internal growth poten ­
tial . Support should also be provided at Community
level, through the structural and cohesion funds .

3.1 . The Committee would urge the Commission
and the Council periodically to chart, on the basis
of experience or reliable forecasts, what impact the
application of the EMU criteria are having on the socio ­
economic objectives listed in 2.3 .

3.1.1 . The European Council adopted, in a draft
protocol attached to Article 109 J of the Treaty of
February 1992, a number of eligibility criteria for par ­
ticipation in EMU .

3.2 . An inflation rate no more than 1,5% above the
average of the three most stable countries

3.2.1 . Five countries were more than 1,5% above
the unweighted average ( 2,8 % for the three most stable
countries in 1991 — DK, F, IRL ). Although there has
been some convergence and reduction in recent years,
the gap has to be further narrowed and the general
level of inflation further reduced . The Committee is
optimistic about eventual compliance with this cri ­
terion . The countries which are still well above the
average will, however, have to make considerable
additional efforts . The Commission regards an average
inflation rate of 2-3 % as desirable, and the Committee
endorses this . The Committee points out that since

1960 a percentage of this order has been achieved in
two years only ( 1961 : 2,8% and 1967 : 2,9% ).

3.3 . A budget deficit of no more than 3 % and govern ­
ment debt no more than 60 % of GDP

3.3.1 . In 1991 eight countries had a deficit of more
than 3% . In the period 1981-1990 there was one year
in which an average deficit of 3 % or less was achieved .
In 1961-1970 and 1971-1980 an average deficit of 3%
or less was attainable by the then Community of Nine .

3.3.1.1 . The Committee considers that in principle
all Member States should be able to comply, by the end
of the 90s, with the requirement of maximum 3%
deficit .

3.3.2 . In 1991 there were seven countries which failed
to meet the criterion of a government debt of no more
than 60 % of GDP, four of them by a wide margin . It
would not seem possible for these countries to comply
with this reference value even in the medium to long

term .

3.3.2.1 . According to the provisions of the Treaty
( Art . 104 B ), the question of whether this reference
value has been exceeded by an excessive amount is
assessed on the basis of specific criteria, with particular
attention to whether the government debt ratio is dim ­
inishing and how quickly . The Committee acknowl ­

No C 98 / 38 Official Journal of the European Communities 21 . 4 . 92

edges the correctness of this approach in that it does
justice to the particular situation in wich each Member
State may find itself ; the most important thing is that
the government debt ratio of those countries which
wish to enter the third stage of EMU move sufficiently
rapidly towards the 60 % .

3.4 . National currency to have participated in the nar ­
row band of the EMS for two years without
devaluation

3.4.1 . Since 1987 there have been no realignments of
note within the narrow band of the EMS . This provides
grounds for optimism . Two countries ( Greece and Por ­
tugal ) still do not participate in the EMS exchange
rate mechanism, while another two countries ( UK and
Spain ) participate, but in a broader band .

3.5 . Long-term interest rates no more than 2 % higher

than the average of the three most stable countries

3.5.1 . Four contries were more than 2% about the
unweighted average ( 8,6% ) of the three most stable
countries in 1991 ( D, L, NL ).

4 . Specific questions

4.1 . Savings and budgetary policy

4.1.1 . For equilibrium in the balance of payments on
current account, savings in the EC should be on a par
with investment . Bearing in mind the need for the
export of capital ( including transfer payments ) from
the EC to developing countries and Central and Eastern
Europe, a structural balance of payments surplus and
hence a savings surplus is in fact desirable . Seen in this
light, the turnaround in the current account balance
# from 0,7% in 1983-1987 to - 0,8% in 1991 and - 1 %

in 1992 is a matter for concern . The twin objectives of
restored balance of payments equilibrium and higher
investment ratio can only be achieved through a sub ­
stantial increase in savings in the Community . This is
also the only way of bringing down real interest rates
permanently . The Committee agrees with the Com ­
mission that the single most important contribution
to increased national saving would be a significant
reduction in public deficits in most countries . The Com ­
mittee would also draw attention to the need to encour ­
age savings by households and, in view of the demo ­
graphic trends ( ageing population / declining birth rate ),
to put pension funding on a sound footing .

trading bloc — a major responsibility for the success of
the Uruguay Round . Disagreement on one or more
points must not be allowed to stand in the way of
further trade liberalization . In this connection the Com ­
mittee would also point out that easier market access
could help to reinforce the adaptability and efficiency
of the Community economies and vice versa . Seen in
this light some ' concessions ' are in fact blessings in
disguise . Nor must those countries in the throes of
transition from a command to a market economy be
faced with all sorts of barriers to their access to other
markets, including the EC .

4.2.2 . A successful conclusion to the Uruguay Round
is also important if new rules and agreements of the
General Agreement on Tariffs and Trade ( GATT ) are
to be drawn up with a view to achieving lasting growth .
It is to be hoped that the forthcoming UN Conference
on Environment and Development ( UNCED 1992 ) will
provide a new impetus for strengthening international
environmental policy . An environmentally friendly
adjustment of the GATT rules is important in at least
two respects . Firstly, for the incorporation of environ ­
mental costs in the price of the product . The ideal
situation would not, however, be for the extra costs
arising from environmental measures to be equally high
in all countries, but for uniform international environ ­
mental quality objectives to be used and, on the basis
of this, for the social costs to be passed on fully in the
cost and price structure in each country . In this way
the structural element ' environment ' works through
into the pattern of a country 's comparative advantages
and disadvantages .

4.2.3 . Another important aspect of the international
trade / environment relationship is the imposition of
environmental requirements when goods are imported .
In the context of GATT it is verry important to cover
such a possibility and to prevent its abuse ( protec ­
tionism ).

5 . Conclusions and recommendations

5.1 . Conclusions

mittee would also draw attention to the need to encour ­ 5.1.1 . Of the socio-economic objectives, the desired
age savings by households and, in view of the demo ­ growth rate is not being achieved, the rise in prices is
graphic trends ( ageing population / declining birth rate ), too high, unemployment remains unacceptably high,
to put pension funding on a sound footing . the competitive position remains a cause for concern

and the cohesion objective has not been achieved . Not
enough has been done to map out a comprehensive
4.2 . International trade and the environment environment policy .

4.2.1 . The economic development of the EC is heavi ­
ly dependent on world economic trends . The EC has
an especially large stake in and — as the world 's largest

5.1.2 . Of the EMU criteria, a number of Member
States will have to work on their budget deficits, govern ­
ment debt and long-term interest rates .

21 . 4 . 92 Official Journal of the European Communities No C 98 / 39

5.2 . Recommendations

5.2.1 . Cooperation between the Member States is a
precondition for maintaining the Community econ ­
omy 's strengths and remedying its shortcomings . Whilst
monetary policy will in future be determined at Com ­
munity level, the Member States will retain control
of socio-economic policy . A strategy will however be
developed at Community level for the convergence of
socio-economic policy, culminating in a Council rec ­
ommendation setting out the broad guidelines of the
economic policies of the Member States .

5.2.2 . The Committee maintains that the Member
States should continue to be given as much responsi ­
bility as possible for socio-economic policy in their own
countries, but also in the Community . By Member
States the Committee here means not only governments
but also the various social interest groups .

5.2.3 . A policy of systematic coordination and coop ­
eration, based on common medium-term objectives, is
part and parcel of this approach . In its Opinion (!) of
25 September 1991 the Committee formulated a number
of general objectives as a reference framework for a
convergence strategy, and indicated how it intended to
contribute to the covergence process in the follow-up
to the national reports . In its Opinion on EMU ( 2 ) of

27 February 1991 the Committee argued that it should
be consulted on the periodic multiannual economic
policy guidelines .

5.2.4 . The Committee very much regrets that the
Treaty of February 1992 makes no mention whatsoever
of the involvement of the Committee in formulating
the economic policy guidelines within the framework
of EMU . On the other hand, the Committee is to be
consulted on industrial policy in general [ Art . 130(3 )].
To be able to give a proper opinion, however, it needs
to be consulted on economic policy too . The Committee
therefore reiterates its call for :

— ( non-mandatory ) consultation of the Committee by

the Commission on the draft for the broad guide ­
lines of economic policies as referred to in
Article 103(2 ), first paragraph . If, despite this
request, the Commission does not wish to consult
the Committee, the latter would like to receive the
draft guidelines well before their submission to the
Council so that it can put forward its views on its
own initiative,

— submission to the Committee of the rules for ' multi ­

lateral surveillance ' to be drawn up by the Com ­
mission [ Art . 103(5 )],
— recognition by the Council of the social and econ ­

omic objectives described in its Opinion of
25 September 1991 (*),
— the Council to take a position on the procedure

(») OJ No C 339, 31 . 12 . 1991, p . 64 . followed by the Committee in connection with the
( 2 ) OJ No C 102, 18 . 4 . 1991, p . 34 . national reports .

Done at Brussels, 27 February 1992 .

The Chairman

of the Economic and Social Committee

Michael GEUENICH