Press

Europolitics, October 03, 2013

The European Commission proposes to reinforce the annual cycle of coordination of economic policies by building into it a scoreboard of social and employment indicators. In its communication on the social dimension of Economic and Monetary Union (EMU), presented on 2 October, it pledges to give greater account to five key indicators “to prevent disparities within and between member states that can threaten the stability of EMU”. It will therefore keep track in all member states of: 1. the unemployment rate and how it evolves; 2. the number of young people not in employment, education or training (NEET), and the rate of youth unemployment; 3. the rate of the risk of poverty of the working age population; 4. inequalities; and 5. the real gross disposable income of households.

Economic coordination and social coordination are the key pillars of the process of strengthening EMU, launched in November 2012. In February 2013, the Commission agreed to publish a scoreboard as a means of detecting phenomena that might endanger the stability of the EMU and to strengthen the role of the social partners and of social dialogue in the governance process. A text, drafted in April, also suggested the introduction of thresholds (below which the situation would be considered as cause for concern), conditionality and the launch of a consultation on a European unemployment insurance mechanism.

The final document has been watered down: it still contains the idea of the five social indicators (the one on household income was widely called into question the last few days by the directorates-general involved) but does not mention thresholds. “The possibility is there. Now we have to let the European Council and Council of Ministers do their work,” the Commissioner for Employment and Social Affairs, László Andor, told Europolitics. In terms of a European unemployment insurance scheme, the communication simply refers to what is already included in the communication of November 2012, namely the long-term relevance of an autonomous eurozone budget providing it with a fiscal capacity to help member states absorb shocks. It mentions the American example of a federal fund covering 50% of unemployment benefits under certain conditions.

According to one observer, this retreat results from opposition by Chancellor Angela Merkel. “Germany considers that a system to absorb asymmetric shocks would require at least €500 billion. But Berlin is not prepared to pay more than a few billion for a possible eurozone budget,” he explained.

Stakeholders regret this lack of ambition. “The communication, although well-meaning, is not ambitious enough. It is largely based on Commission reviews of member state policies, without the direct involvement of the European Parliament. […] The inclusion of indicators on young people and the long-term unemployment rate and on poverty levels is a strict minimum,” declared European Parliament President Martin Schulz, supported by the European Anti-Poverty Network (EAPN) and the Social Platform.

Unions particularly regret the absence of binding indicators: “The ETUC shares the objective of better coordination in the field of social and employment policies within the EMU, but deplores that the benchmark indicators – as they are proposed – would not result in a binding sanction mechanism similar to the ones existing for the excessive imbalances macroeconomic procedure,” explained the organisation’s General Secretary, Bernadette Ségol. Employers reacted positively to the communication.

The communication is available at www.europolitics.info > Search = 342918

“The possibility is there. Now we have to let the European Council and Council of Ministers do their work,” said Commissioner Andor