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Economic policies of the euro area

2017/2114(INI)

The Committee on Economic and Monetary Affairs adopted an own-initiative report by Gunnar HÖKMARK (EPP, SE) on the economic policies of the euro area.

The Committee on Employment and Social Affairs, exercising its prerogative as an associated committee in accordance with Article 54 of the Rules of Procedure, also gave its opinion on the report.

Members recalled that according to the Commission’s forecasts, the GDP growth rate for the euro area was 1.8 % in 2016 and is set to remain steady at 1.7 % in 2017 and at 1.9 % in the EU overall, surpassing pre-crisis levels while still being insufficient to boost job creation in the Member States.

The euro area and EU28 unemployment rates were 9.3 % and 7.8 % respectively in April 2017. Significant differences in unemployment rates remain across the EU ranging between 3.2 % and 23.2 %. In addition, the general government debt-to-GDP ratio in the euro area is forecast to stand at 90.3 % in 2017 and 89 % in 2018.

Structural policies: Members considered that the uneven growth and employment situation in the euro area requires better coordination of economic policies, in particular through improved and consistent national ownership and sound implementation of the country-specific recommendations (CSR) in the framework of the European Semester.

In this context, they called for the implementation of sustainable structural reforms to tackle as a priority long-term unemployment, employment not making full use of skills and abilities, and ageing societies to high levels of private and public debt.

They called on the Member States to reduce excessive levels of indebtedness. Members also expressed concern at the persistently high level of non-performing loans (NPLs) in some Member States could present a risk to financial stability in Europe.

The report stressed the need:

  • to agree on additional efforts to boost access of SMEs to finance;
  • to maintain the high employment rates where they have already been achieved;
  • to take account of responsible and growth-friendly wage developments;
  • to introduce tax reforms with a view to improving tax collection, preventing tax avoidance, tax evasion, as well as tackling the high tax burden on labour in Europe.

Investments: Members called for action to address the 'investment gap' accumulated since the outbreak of the crisis.

Investments in education, innovation and research and development would allow to better adopt to the knowledge economy. Completing the Capital Markets Union is also crucial for attracting and increasing investment, and improving the financing for growth and job creation.

Budgetary policies: Members considered that prudent and foresighted fiscal policies play a fundamental role for the stability of the euro area and the Union as a whole. They underlined that strong coordination of fiscal policies, the proper implementation and compliance with the Union rules, including the full respect of its existing flexibility clauses, in this area are a legal requirement and key to the proper functioning of Economic and Monetary Union (EMU).

Given that public debt remains high in some Member States, the report stressed the need to make public finances sustainable while promoting economic growth and jobs.

Country-specific recommendations (CSRs): Members expect a greater commitment from Member States to take the necessary policy actions based on agreed country-specific recommendations.

While recognising that Member States have made progress in the implementation of CSRs in the area of fiscal policy and active labour market policies, not enough progress was made in areas such as competition in services and the business environment.

All Member States should take steps to correct macro-economic imbalances, in particular high levels of indebtedness, current account surpluses and competitiveness imbalances.

Employment and social policies: Members called for continued efforts to strike a balance between the economic and social dimensions of the European Semester process and to promote socially and economically balanced structural reforms that reduce inequalities and promote decent jobs leading to quality employment, sustainable growth and social investment.

Increased attention should be paid to structural imbalances in the labour market in country-specific recommendations. In addition, the social impact of European policies should be evaluated.

The Commission is invited, inter alia, to:

  • secure adequate funding to combating youth unemployment, which remains unacceptably high in the Union, and to continue the Youth Employment Initiative (YEI) beyond the end of the current multiannual financial framework (MFF);
  • give greater recognition and visibility to social economy enterprises;
  • put forward ambitious proposals for a European Pillar of Social Rights;
  • explore ways of defining what a decent living wage might entail and how to measure it;
  • put in place all suitable mechanisms for greater youth mobility, including apprenticeships.

The report called for an integrated anti-poverty strategy to achieve the Europe 2020 poverty target, and called for Member States to work towards the gradual establishment of minimum income schemes.

Lastly, Members called for the European Structural and Investment Funds (ESI Funds) to be used more effectively to promote investment in quality social, health, education and employment services, and to tackle energy poverty, increasing living costs, social exclusion, housing deprivation, and the insufficient quality of housing stock.