2 Economic and Monetary Union
| (35370)
14102/13
COM(13) 690
| Commission Communication: Strengthening the social dimension of the Economic and Monetary Union
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| Legal base | —
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| Document originated
| 2 October 2013 |
| Deposited in Parliament
| 11 October 2013 |
| Department | Work and Pensions
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| Basis of consideration
| EM of 27 October 2013 |
| Previous Committee Report
| None |
| Discussion in Council
| Employment and Social Affairs Council 15 October 2013 and European Council 24 October 2013
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| Committee's assessment
| Politically important |
| Committee's decision
| For debate in European Committee B before the December European Council
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Background
2.1 In recent years there has been increasing consideration,
and sometimes adoption, of policies aimed at increasing economic
coordination, convergence and governance in the EU.
2.2 An early element was the adoption by the European
Council, in June 2010, of the Europe 2020 Strategy, concerning
"jobs and smart, sustainable and inclusive growth".[3]
The strategy frames discussion of much of the EU's policies for
the period until 2020, including in the context of the Multiannual
Financial Framework for the period 2014-20.
2.3 Another element of this has been consideration
and adoption, also in 2010, by the European Council of measures
to increase coordination of EU economic governance, including
strengthening the Stability and Growth Pact and introducing an
annual "European Semester". The European Semester is
an EU-level framework for coordinating and assessing Member States'
structural reforms and fiscal/budgetary policy and for monitoring
and addressing macroeconomic imbalances. It attempts to exploit
the synergies between these policy areas by aligning their reporting
cycles, which would tie together consideration of National Reform
Programmes (reports on progress and plans on structural reforms,
under the Europe 2020 Strategy) and Stability and Convergence
Programmes (reports on fiscal policy, under the Stability and
Growth Pact).
2.4 A further element is the presentation by the
Commission, in November 2012, of a Communication, A blueprint
for a deep and genuine EMU — Launching a European debate,
as a contribution to consideration by the European Council of
development of the Economic and Monetary Union (EMU). Although
the Communication was primarily concerned with measures related
to the financial and economic crisis, especially for the eurozone,
it touched on the social dimension, saying in particular:
"Coordination and surveillance
of employment and social policies should be reinforced within
EMU governance, and convergence promoted in these areas."[4]
2.5 The European Council has considered development
of the EMU on a number of occasions. In June it concluded, inter
alia, that:
"the social dimension
of the EMU should be strengthened. As a first step, it is important
to better monitor and take into account the social and labour
market situation within EMU, notably by using appropriate social
and employment indicators within the European semester. It is
also important to ensure better coordination of employment and
social policies, while fully respecting national competences.
The role of the social partners and social dialogue, including
at national level, is also key.
"Following close consultations
with the Member States, the European Council will return to all
these issues. In October 2013, it will look in particular at indicators
and policy areas to be taken into account in the framework of
a strengthened economic policy coordination and at the social
dimension of EMU. The discussion will be continued in December
2013, with the objective of taking decisions on these issues,
in particular on the main features of contractual arrangements
and of associated solidarity mechanisms. Any such measures would
be voluntary for those outside the single currency and be fully
compatible with the Single Market in all aspects."[5]
The document
2.6 With this Communication, presented as a contribution
to debate on deepening EMU, the Commission proposes strengthening
the social dimension of the EMU by initiatives in three areas:
- reinforced surveillance and policy coordination
on employment and social policies;
- enhanced solidarity and action on employment
and labour mobility; and
- strengthened social dialogue.
2.7 Before setting out its specific ideas, the Commission
discusses the social dimension of the Europe 2020 Strategy and
rehearses the rationale for a social dimension. In essence this
is that, notwithstanding Member States' competence for employment
and social policies, for EMU to function well it must be able
to take account of the social implications of the reforms needed
to boost jobs, growth and enhance competitiveness. Furthermore,
it says that there is a need to detect and tackle in good time
the worst employment and social problems as these might lead to
negative effects in other Member States or cause persistent disparities
between them.
2.8 In relation to reinforcing surveillance of employment
and social challenges and strengthening policy coordination, the
Commission expands on its belief that social and employment indicators
should be integrated into the eurozone's Macroeconomic Imbalances
Procedure (MIP — an element of the strengthened Stability
and Growth Pact). The Commission:
- · suggests that
social and employment indicators could be used within the Alert
Mechanism Report mechanism of the MIP — the indicators proposed
cover labour market participation, long-term unemployment, youth
unemployment and the risk of poverty and social exclusion;
- · urges strengthened
surveillance of employment and social policies, in particular
through an employment and social scoreboard — the planned
scoreboard, already announced at working level, draws on existing
measures which are benchmarked and the suggested five scoreboard
indicators cover unemployment, youth unemployment, household disposable
income, working age risk of poverty and a measure of inequality;
and
- · considers, with
the aim of stronger coordination of employment and social policies
within the European Semester, development of policy benchmarks
based on best performance, which could take the form of non-binding
guidelines or Council Recommendations in order to reinforce spreading
of best practice — the areas proposed for benchmarking include
active labour market policies, tackling labour market segmentation
and development of human capital.
2.9 Under the rubric of responsibility, solidarity
and enhanced action on employment and labour mobility the Commission:
- · suggests that
in developing a social dimension of EMU full use should be made
of the EU budget;
- · draws attention
to its Social Investment Package;
- · lists some existing
and announced spending initiatives that could help support the
work on the social dimension — the Structural Funds, the
European Social Fund, the Programme for Employment and Social
Innovation, the Fund for European Aid to the Most Deprived, the
European Globalisation Adjustment Fund and the Youth Employment
Initiative — but does not propose any changes;
- · emphasises the
importance for the social dimension of EMU of the right employment
policies and urges Member States to implement their National Job
Plans (part of the National Reform Programmes) swiftly and to
take account of any Country Specific Recommendations made under
the European Semester;
- · tightens focus
onto cross-border mobility as a means of improving labour supply,
emphasising the need to make full use of existing rules;
- · recalls the draft
Directive on Mobile Workers, a proposed review of the unemployment
chapter of the Social Security Coordination Regulations and present
moves to strengthen the European Employment Service (EURES), but
proposes no new measures;
- · restates the ultimate
aim of its Communication, A blueprint for a deep and genuine
EMU — Launching a European debate, of full fiscal and
economic union, with pooling of sovereignty, which foresees an
autonomous eurozone budget with its own fiscal capacity and the
means to impose budgetary and economic decisions on its members
and help resist the effects of economic shocks, including impacts
in the employment and social domains;
- · makes clear that
this would require "substantial Treaty change"; and
- · envisages, as
a short-term solution, a separate instrument which would be "within
the EU economic governance framework and the EU budget, separate
from the Multiannual Financial Framework".
2.10 In the context of strengthened social dialogue
the Commission considers the scope for improving involvement of
the social partners in EU and EMU governance, while respecting
their autonomy. Ideas include helping the existing fora work together
better with more transparency, less duplication and more synergy,
and in particular with upgraded representation in the Commission-run
Social Dialogue Committee (SOC). The value of high level dialogue
through the Macroeconomic Dialogue (high level exchanges of views
the Council, the Commission the European Central Bank and EU level
representatives of the social partners) and the Tripartite Social
Summit (TSS) is recognised. The Commission says that it:
- · will ensure that
consultation with the SOC better fits the European Semester cycle,
taking the SOC view on past events and future priorities before
it adopts its Annual Growth Survey (the first stage of a semester)
each autumn; and
- · intends to propose
changes to the regime for the TSS to enable alignment with the
European Semester machinery, which it preceded.
2.11 Annexed to the Communication are an indicative
table for the proposed scoreboard of key employment and social
indicators, an indicative table of the proposed additional auxiliary
employment and social indicators in Alert Mechanism Reports and
an organogram illustrating the proposals for strengthening monitoring
and surveillance of employment and social challenges within the
European Semester.
The Government's view
2.12 The Minister for Employment, Department for
Work and Pensions (Esther McVey), first comments that:
- · the Government
recognises that eurozone Member States face specific challenges
by virtue of sharing a currency and supports the emphasis that
the Commission places on labour market flexibility; and
- · it has made clear
during EU-level negotiations that participation in enhanced surveillance
mechanisms, including the social dimension of EMU, should be voluntary
for Member States which are not members of the eurozone, as underlined
by the European Council in its June 2013 Conclusions.
2.13 In relation to reinforcing surveillance and
strengthening policy coordination, the Minister says that:
- · the Government
believes that the European Semester, and any Country Specific
Recommendations made under it, must be based on robust economic
evidence;
- · there are already,
however, sufficient monitoring tools for this purpose, including
the Employment Performance Monitor and the Social Protection Performance
Monitor;
- · the Government
is not convinced that further value would be added by establishing
a scoreboard on top of these existing instruments nor how this
could add value to wider coordination of policy beyond the existing
monitoring and peer review processes under the European Semester;
- · social and employment
policy are Member State competences — therefore any further
detailed benchmarks or targets of the kind suggested should be
applied on a voluntary basis, especially for Member States which
are not members of the eurozone;
- · the Government
recalls the heterogeneous nature of Member States' labour markets
and the attendant difficulties in benchmarking performance;
- · it believes that
for the idea of spreading best practice by policy benchmarks based
on best performance to be credible there would need to be a suitably
robust process to determine what best practice is; and
- · of the areas suggested
for benchmarking, active labour market policies and tackling labour
market segmentation are good choices.
2.14 On action on employment and labour mobility
the Minister comments that:
- · the Commission
speaks of a need to increase cross-border labour mobility across
the EU;
- · the Government
believes that labour mobility can be useful in the right cases,
for example targeted mobility to fill specific shortages of skilled
labour but, as is widely recognised, mobility cannot be a panacea
for high unemployment or a panacea for necessary reforms;
- · it is happy see
that Member States are encouraged to make progress with reforms
contained in their National Job Plans; and
- · it is also content
that there are no new proposals for labour mobility or for new
spending commitments and that it is clearly stated that the kind
of euro budget and pooling of fiscal and political powers about
which it speculates cannot be possible without substantial Treaty
change.
2.15 As for solidarity mechanisms the Minister tells
us that:
- · the Government
takes note of the Commission's proposal to create a solidarity
mechanism to support the social dimension of EMU;
- · it considers that
the EU Budget is an instrument for all 28 Member States and will
not support any new instrument to which the UK may contribute,
including through the EU budget; and
- · it takes note
of the Commission's intention to issue further proposals.
2.16 Finally, in relation to strengthened social
dialogue the Minister says that:
- · the Government
acknowledges there can be value in engaging the social partners
both nationally and at EU level in the debate about the effects
of EMU;
- · for this kind
of social dialogue to have maximum impact the process needs to
be transparent, relevant and truly representative;
- · it is important
that Member States' competence to set national social dialogue
processes is respected because these can only be effective if
they fit with the domestic, cultural and legislative traditions
of the Member State; and
- · the Government
is glad that the Commission acknowledges that any new forms of
dialogue should only be considered after a shared assessment of
the need for them.
Conclusion
2.17 The Minister tells us that the Communication
was presented to the Employment and Social Affairs Council on
15 October prior to consideration by the European Council on 24
October, with further discussion by the European Council expected
in December. The October European Council concluded on the Communication,
inter alia, that:
"The European Council
welcomes the European Commission's Communication on the social
dimension of the EMU as a positive step and restates the importance
of employment and social developments within the European Semester.
"The coordination
of economic, employment and social policies will be further enhanced
in line with existing procedures while fully respecting national
competences.
"The strengthened
economic policy coordination and further measures to enhance the
social dimension in the Euro area are voluntary for those outside
the single currency and will be fully compatible with the Single
Market in all aspects.
"Finally, the European
Council underscores the importance of enhancing the social dialogue
involving the social partners both at Member State and European
level, in particular in the context of the European Semester,
with the objective of enhancing the ownership of its conclusions
and recommendations across the Union."[6]
2.18 This Communication canvasses ideas which
may have significant implications for Member States, especially
for those, like the UK, outside the eurozone. So we recommend
that the document be debated in European Committee B, when Members
might wish to explore particularly:
- · any risk in
the Commission's ideas to Member State competence in relation
to social and employment policy; and
- · the Commission's
aim of a eurozone fiscal capacity in support of enhancing the
EMU.
Clearly this debate must take place before the
December European Council returns to the issues raised by the
Communication.
2.19 Finally, on a procedural point, the Minister
wrote of the forthcoming 24 October European Council in the Explanatory
Memorandum she signed on 27 October. We urge her to ensure that
for the future her department's Explanatory Memoranda eschew this
sort of carelessness.
3 See http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/115346.pdf. Back
4
See (34452) 16988/1/12: HC 86-xxiv (2012-13) 12 December 2012,
HC 86-xxvii (2012-13) 16 January 2013 and HC Debs, 18 June
2013, cols 787-817. Back
5
See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/137634.pdf. Back
6
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/139197.pdf. Back
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