Recently, the European Semester process - the EU’s governance tool that coordinates Member States’ economic, fiscal, employment and social policies – entered its next stage: the publication of the 2023 Spring Package.
As the cost-of-living crisis continues impacting people’s lives, Member States need to be able to continue moving forward with speed and ambition to protect people from falling into poverty. Sadly, this is not fully reflected in this year’s Package.
Although many of the priorities included in the Spring Package communication are positive, we are concerned that not enough space is given to the urgently needed reforms and investments in the green and digital transition, while making sure that they are done in a socially just way: areas where we cannot afford any delays.
So, what has the European Commission proposed? In a nutshell, country-specific recommendations contain:
- recommendations to move to more prudent fiscal policies in 2024;
- a recommendation to continue or accelerate implementation of National Recovery and Resilience Plans (NRRPs) and cohesion programmes;
- updated recommendations on clean energy transition in line with RePowerEU;
- recommendations to Member States aiming to fill gaps in their NRRPs.
Keep reading for our more in-depth views on what the Spring Package means for social rights.
Fiscal recommendations: an obstacle to just transitions?
The Commission recommends Member States to ensure sound or prudent fiscal policy in 2023 and 2024. While it acknowledges the need to keep the momentum for necessary reforms and investments and calls on Member States to preserve national public investment, we worry that returning to prudent fiscal policy, in line with the recently proposed reform of the EU fiscal rules, will hinder them in doing so. This would be especially the case, after the RRF runs its course in 2026, if no successor instrument for just transitions is adopted.
We are very concerned that these rules would force countries, especially those with high deficit ratios, to implement significant and fast budget cuts. This would be incompatible with the huge social and green investment needs we face and could, in a worst-case scenario, mean a return to austerity in some Member States (for more information, read our analysis of the proposal in this blog).
Cost-of-living crisis
To return to more prudent fiscal policies, the Package recommends winding down energy-related support measures, adopted last year amid spiking energy prices, by the end of 2023. However, while it is true that energy prices have been sinking, this does not mean that the cost-of-living crisis is over.
Inflation is still high and food prices especially are still accelerating. This continues to negatively impact especially lower-income households, leading to higher risks of poverty and social exclusion. The Commission acknowledges this and rightly calls for well-targeted social policy measures as well as closing gaps in the access to adequate and sustainable social protection systems, including adjustments of social benefits to high inflation. However, in 2022, Member States were not successful in targeting their energy-related support measures to low-income households, as the Commission recommended, adopting expensive broad support measures instead. Therefore, we are concerned that they might not be able to implement such necessary targeted measures now either.
Low and middle-income households have already suffered from years of shrinking real wages, job and income losses with the pandemic, rising food, energy and housing prices, making them even less resilient to face the next crisis. We need to continue reducing the effects of crises on people, especially those in vulnerable situations, and accompany them through the twin transitions, allowing them not just to survive, but thrive.
Next steps
The Council will endorse the Spring Package documents in the coming weeks and Member States will then need to start turning the recommendations into reality.
Another step towards a stronger social focus in the European Semester process was the last EPSCO Council meeting of employment and social affairs ministers in June. During this meeting, a qualified majority of EU countries supported the integration of a social convergence framework into the European Semester process. The objective of this framework is to strengthen the existing social monitoring to help detect and address risks to social convergence in the EU. Our letter to EU Member States ahead of the last EPSCO Council meeting, including our analysis of the proposal, is available here.
Social Platform will continue engaging with decision-makers in the coming months, including Member States who remain skeptical about the proposal, to discuss our views on the proposed framework and to support its integration into the 2024 Semester cycle.
