The country reports on socio-economic policies for 2020, which the European Commission published on Wednesday 26 February as part of the budgetary process for the ‘European Semester’, now include a significant environmental component and another linked to compliance with the UN sustainable development goals.
“We’re delivering a new message with the ‘EU Semester’ package. We’re greening the EU Semester and having SDGs as a new pillar”, said the European Commissioner for the Economy, Paolo Gentiloni. And the annexes to the country reports on the UN targets tell us that “climate action must be strengthened” (Goal 13), he added.
The country reports continue to advocate macroeconomic policies conducive to the following triptych: investment stimulus, fiscal responsibility and continued structural reforms. They now contain a new section on environmental sustainability, which focuses on the challenges and opportunities that the ecological transition poses and offers to the economies of States.
The example of Denmark
This Member State has set itself the target of a 70% reduction in CO2 emissions by 2030 in order to achieve climate neutrality by 2050, according to the environmental sustainability section of the report. The Commission believes that substantial investment (0.4% of GDP each year) and reform efforts are needed to achieve the targets since, in the Commission's view, with unchanged policies, the reduction in emissions will be 46% by 2030.
The report analyses the measures taken or to be taken to reduce the share of agriculture and transport in the CO2 emissions of non-ETS sectors. It notes that Denmark has set a binding target of a 55% share of renewables in its energy mix and has set an indicative target that 50% of public procurement procedures should be considered environmentally sustainable. Finally, the Just Transition Fund could intervene in the north of the country to complement the Danish government’s action to reconvert the cement industry in North Jutland.
See the ‘hat’ communication: http://bit.ly/2PqGzRk
See the 28 country reports (including the United Kingdom): http://bit.ly/3c79mUR
Satisfied with the Greek economic situation
The 5th Greek post-bail out monitoring report confirms that Greece is meeting its budgetary commitments, with the primary surplus (excluding debt servicing) estimated at 4% of GDP for 2019, against a target of 3.5%.
Athens has made progress in implementing the agreed reforms, although the Greek government is nevertheless invited to continue this effort, in particular as regards financial sector consolidation.
Commission Vice-President Valdis Dombrovskis believes that a discussion between Greece and its institutional creditors could start in order to allow the Greek authorities to use part of the profits (€644.42 million) made by the European System of Central Banks in the acquisition of Greek debt securities (SMP/ANFA transactions) for investment purposes.
See the 5th report: http://bit.ly/385IzVD
Macroeconomic imbalances are tending to narrow
On Wednesday, the Commission also presented a new report on the macroeconomic imbalances identified in thirteen Member States.
It finds that a number of imbalances have been corrected, such as large current account deficits, excessive credit growth fuelling housing prices and high unit labour costs leading to losses in cost competitiveness. However, despite real progress, debt levels, both private and public, remain high and take longer to correct.
“We propose that three countries – Greece, Cyprus and Italy – be kept in the category of countries with excessive imbalances”, Mr Dombrovskis said. Nine other countries – Germany, Ireland, Spain, the Netherlands, France, Croatia, Portugal, Romania and Sweden – are still subject to imbalances, while Bulgaria is no longer being monitored.
Asked how to put pressure on Member States to comply with the Commission’s recommendations in the climate and environmental field, Mr Gentiloni said that the procedure for macroeconomic imbalances, which could potentially lead to financial sanctions, could eventually be activated.
Updating the EU Employment Guidelines
The Commissioner for Employment and Social Rights, Nicolas Schmit, for his part, painted a rather nuanced picture of the social situation. The employment rate in Europe has never been so high, he said, but Member States are suffering to varying degrees from youth and long-term unemployment, unequal pay between women and men and precarious working conditions, in particular due to the emergence of digital platforms.
In general, the Commissioner, drawing on figures from the Social Scoreboard published in December (see EUROPE 12397/13), re-emphasised the situation of low-paid workers, which “has not really improved”. He noted that “inequalities remain a major issue socially, but also economically”. And to further emphasise the point: “I can say that our economy is not yet working for all the people as it should”.
In this context, the Commission has updated the EU guidelines on Member States’ employment policies to align them with the general objectives, in particular in relation to the European pillar of social rights.
The main changes, Mr Schmit detailed, include, among others, the following: – monitoring and re-qualification of workers’ skills in the face of digital and green transitions; – transparency of working conditions and setting remuneration; – monitoring the health of workers and the issue of long-term care.
This revision of the guidelines will be discussed in the EU Council, with a view to adoption at the Employment and Social Policy Council in June or after the summer. The Croatian Presidency of the EU Council could first await the opinion of the European Parliament.
These announcements are part of the European Commission’s recent announcements to tackle the issue of low wages through the launch of a consultation of the social partners on the establishment of a European instrument for minimum wages and a consultation on the action plan to implement the European pillar of social rights (see EUROPE 12403/5).
The Commission will also present a review of its skills agenda on Wednesday 18 March.
Interestingly, the Commissioner insisted that there should be a reform of tax systems so as to shift “the tax burden from labour to other resources, which could also stimulate economic growth”. This recommendation is included in Guideline Number 5 of the Appendix to the revised Employment Guidelines.
See the updated guidelines: http://bit.ly/32rKRNG
On Wednesday, the Commission also unveiled the geographical breakdown it advocates for the allocation of the future Just Transition Fund (see EUROPE 12434/5). (Original version in French by Mathieu Bion and Pascal Hansens)