EurWORK European Observatory of Working Life

European Commission pushes social dimension of EMU

About

Country: 
EU Level
Author: 
Andrea Broughton
Institution: 
Institute for Employment Studies

Ensuring that employment and social challenges are tackled in a timely and effective manner requires collective action, says the European Commission in a report published on 2 October 2013. The European Commission calls for better monitoring of employment and social development, action to tackle unemployment and better social dialogue. Employers have expressed their support for renewing the social partners’ roles in the EU’s economic governance.

Background

In its report to the European Parliament and Council, ‘Strengthening the Social Dimension of the Economic and Monetary Union’ (188KB PDF), the European Commission makes a further contribution to the debate on deepening Economic and Monetary Union (EMU), stating that the general social agenda is relevant to all 28 EU Member States.

The report states that without collective action to ensure that employment and social challenges are tackled in a timely and effective manner, long-lasting disparities may develop between Member States. Therefore, strengthening the social dimension of the EMU should help all Member States achieve their growth and employment potential, improve social cohesion and prevent increasing disparities. In particular, it states that progress is needed in the following areas.

  • Monitoring employment and social developments in the EMU to better coordinate a timely and adequate policy response.
  • Action and funding from the EU to tackle unemployment (including youth unemployment) and social distress in an effective and sustainable way.
  • Combining the steps taken on responsibility and economic discipline with more solidarity and financial support.
  • Reducing existing barriers to cross-border labour mobility in the EU.
  • The role of social dialogue in developing European-wide and national strategies, through appropriate involvement of the social partners.

Social challenges and policy coordination

The EU policy response to the crisis involved strengthening EMU’s economic governance and multilateral surveillance, within the framework of the European Semester process of economic policy coordination. It adds that it is also important to detect major adverse employment and social developments at an early stage, and to enhance coordination and monitoring of employment and social policies.

Social considerations should feature in the implementation of the macroeconomic imbalances procedure, which was introduced in 2011. This would foster better understanding of the effects of such imbalances on unemployment and poverty and their wider social consequences. It suggests adding a number of indicators to the annual Alert Mechanism Report, such as participation rate, long-term unemployment ratio, youth unemployment rate and ‘at risk of poverty and social exclusion’ rate.

The European Commission proposes developing a scoreboard of key indicators to follow employment and social developments. The scoreboard would consist of a limited number of key indicators focusing on employment and social trends that can severely undermine employment, social cohesion and human capital, and that have negative effects on the growth and competitiveness of a Member State. The headline indicators would be the unemployment level and changes, the NEET rate (those not in employment or education), the youth unemployment rate, the real gross disposable income of households, the ‘at risk of poverty’ rate of the working age population, and data relating to inequalities.

Responsibility, solidarity and enhanced action

According to the European Commission, the scope of the EU budget must be fully exploited to develop a truly social dimension for EMU. Therefore, for the period 2014–2020, resources and programmes will be boosted and there will be greater targeting of EU funds to well-grounded employment and social policies.

Tackling youth unemployment is a key issue – in this area the European Commission refers to the initiative obliging all Member States to put into place a Youth Guarantee scheme, funded via the Youth Employment Initiative (EU1212011I).

Cross-border mobility in the EU remains low. Only 2.6% of the EU population have moved to a different Member State and fewer than 4% of the working-age population are nationals of a different Member State. Work is being done to address barriers to mobility through, for example, the recognition of professional qualifications and social security benefit coordination. Proposals will also be made in 2014 to review the unemployment chapter of Regulations (EC) No. 883/2004 and No. 987/2009.

Strengthening social dialogue

The European Commission states that ‘when strengthening economic governance, it is critical to involve the social partners in policy debates and decision-making processes’. There is scope here for enhancing the involvement of the social partners in the coordination of economic and employment policies at the EU level. The Commission feels that it would be possible to involve the social partners even more in EU and EMU governance, while fully respecting their autonomy.

In particular, more could be done to develop the cooperation between different fora, such as the macroeconomic dialogue and the tripartite social summit. National social dialogue will also be encouraged within the framework of the European Semester process. The European Commission will also meet the EU social partners before it adopts the Annual Growth Survey and, following its adoption, there will be a debate on the Annual Growth Survey and the Joint Employment Report with the EU social partners and their national affiliates. Monitoring of social dialogue developments throughout the EU will be promoted, building on the work of the European Industrial Relations Observatory within Eurofound.

Commentary

In a press release, the European Trade Union Confederation (ETUC) stated that it welcomed the introduction of key social indicators in the European Semester process, but ‘deplores the powerlessness of these indicators to change economic governance rules’.

Bernadette Ségol, ETUC General Secretary, said:

A recent European poll reveals that about 60% of citizens believe that there are better ways of solving the economic crisis than austerity. Only 5% said that austerity cuts delivered results. This is further evidence that austerity has failed. European leaders must change course. They could do it by seriously deepening the European social dimension, notably by allowing these social indicators to have a real and binding impact on economic policies. Unfortunately, the way suggested by the Commission is too little.

On behalf of EU-level employers, BusinessEurope, The European Centre of Enterprises with Public Participation (CEEP) and the European Association of Craft, Small and Medium-sized Enterprises (UEAPME) issued a joint statement (274KB PDF) in June 2013, expressing their support for renewing the social partners’ roles in the EU’s economic governance. It is particularly important, the statement noted, to involve employers in discussions on policies affecting employment and the labour markets at the different stages of the European Semester; that is, the Annual Growth Survey, the National Reform Programmes and Country Specific Recommendations. However, this must be timely and meaningful, must not delay the semester process, and should take place in the context of existing structures.

Andrea Broughton, Institute for Employment Studies