Europe 2020 and the European Economic Governance: The Remains of Labour Law

Silvia BorelliUniversity of Ferrara

Europe 2020

» 3 priorities - The Europe 2020 strategy is about delivering growth that is: smart, through more effective investments in education, research and innovation; sustainable, thanks to a decisive move towards a low-carbon economy; and inclusive, with a strong emphasis on job creation and poverty reduction.

» 5 targets1. Employment : 75% of the 20-64 year-olds to be employed2. R&D : 3% of the EU's GDP to be invested in R&D3. Climate change and energy sustainability : greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990; 20% of energy from renewables ; 20% increase in energy efficiency 4. Education : Reducing the rates of early school leaving below 10%; at least 40% of 30-34–year-olds completing third level education 5. Fighting poverty and social exclusion : at least 20 million fewer people in or at risk of poverty and social exclusion

Europe 2020

» 7 Flagship InitiativesDigital agenda for Europe Innovation Union Youth on the move aims … to facilitate the entry of young people into the labour marketResource efficient Europe An industrial policy for the globalisation era An agenda for new skills and jobs aims to modernise labour markets and empower people by developing their skills and improving flexibility and security in the working environment; to help workers seek employment across the EU more easily in order to better match labour supply and demand.European platform against poverty aims to ensure social and territorial cohesion by helping the poor and socially excluded to get access to the labour market and become active members of society.

European Economic Governance

» “Six-Pack"

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances Council Regulation (EU) No 1177/2011 of 8 November 2011 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States

European Economic Governance

Six PackEntered into force on 13 December 2011.It applies to 27 MS with some specific rules for euro-zone Member States.It strengthens the Stability and Growth Pact (SGP), reinforcing both the preventive and the corrective arm of the Pact, i.e. the Excessive Deficit Procedure (EDP).It introduces reverse qualified majority voting (RQMV) for most sanctions (RQMV implies that a recommendation or a proposal of the Commission is considered adopted in the Council unless a qualified majority of Member States votes against it).

European Economic Governance

Reg. 1174 and 1176 set up the Macroeconomic Imbalance Procedure

http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm

European Economic Governance

Macroeconomic Imbalance Procedure:» aims to identify imbalances in Member States’

economies much earlier than before. » monitors national economies in detail and alerts the

EU institutions to potential problems ahead.» uses a scoreboard that tracks changes in 11 economic

indicators, such as labour costs. » Where imbalances are detected — for example, wage

rises that are not in line with productivity increases — recommendations are made to the Member State in question, and a clear roadmap with milestones to ‘rebalance’ the economy can be required.

European Economic Governance

» The Monti ClauseArt. 1 § 3 Reg. 1176/2011 - The application of this Regulation shall fully observe Article 152 TFEU, and the recommendations issued under this Regulation shall respect national practices and institutions for wage formation. This Regulation takes into account Article 28 of the Charter of Fundamental Rights of the European Union, and accordingly does not affect the right to negotiate, conclude or enforce collective agreements or to take collective action in accordance with national law and practices.

European Economic Governance

» Treaty on Stability, Coordination and Governance Entered into force on 1 January 2013.Intergovernmental agreement (no involvement of European Parliament) signed by 25 EU Member States (all but UK and Czech Republic).TSCG is binding for all euro-zone Member States, while other contracting parties will be bound once they adopt the euro or earlier if they wish. It requires contracting parties to respect/ensure convergence towards the country-specific medium-term objective (MTO), as defined in the SGP. Correction mechanisms should ensure automatic action to be undertaken in case of deviation from the MTO or the adjustment path towards it, with escape clauses for exceptional circumstances. These budget rules shall be implemented in national law through provisions of "binding force and permanent character, preferably constitutional“ (in Italy: L. Cost. 1/2012). European Court of Justice may impose financial sanction (0.1% of GDP) if a country does not properly implement the new budget rules in national law.

Art. 81 Italian Constitution

The State shall balance revenue and expenditure in its budget, taking account of the adverse and favourable phases of the economic cycle. No recourse shall be made to borrowing except for the purpose of taking account of the effects of the economic cycle or, subject to authorisation by the two Houses approved by an absolute majority vote of their Members, in exceptional circumstances.

European Economic Governance

» “Two-Pack"Regulation on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area.Regulation on the strengthening of economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability in the euro area.Applicable to euro-area Member States only.Euro-area Member States shall submit their draft budgetary plan for the following year to the Commission and the Eurogroup before 15 October, along with the independent macro-economic forecast on which they are based.If the Commission assesses that the draft budgetary plan shows serious non-compliance with the SGP, the Commission can require a revised draft budgetary plan.

European Economic Governance

23 Member States, including six outside the euro-area (Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania), signed the Euro Plus Pact in March 2011. The Pact commits signatories to stronger economic coordination for competitiveness and convergence, also in areas of national competence, with concrete goals agreed on and reviewed on a yearly basis by Heads of State or Government.

European Economic Governance

The 2012 Fiscal Sustainability Report analyses the sustainability of public finances in the Member States, against the background of the impact of the financial, economic and fiscal crisis and the demographic ageing projected in the 2012 Ageing Report.

For further information:http://ec.europa.eu/economy_finance/economic_governance/index_en.htm

TOWARDS A GENUINE ECONOMIC AND MONETARY UNION - Van Rompuy (President of the European Council) in close collaboration with: Barroso (President of the European Commission); Juncker (President of the Eurogroup); Draghi (President of the European Central Bank):http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/134069.pdf

The European Semester

ECOFIN – Conclusion (4 March 2013)

» The 2013 Annual Growth Survey (AGS), together with the Joint Employment Report and the Integrated Guidelines, provides the basis for guidance by the European Council to Member States on the comprehensive strategies to be set out in National Reform Programmes (NRPs) and Stability and Convergence Programmes (SCPs).

» The Commission will present a joint social protection and inclusion report in 2014 as part of the 2014 AGS

Annual Growth Survey

» It starts the European Semester» It should feed into national economic and budgetary decisions, which

Member States will set out in Stability and Convergence Programmes (under the Stability and Growth Pact) and National Reform Programmes (under the Europe 2020 strategy) in April. These programmes will form the basis for the European Commission's proposals for country-specific recommendations in May.

» In 2012 and 2013, 5 priorities has been established : I - Pursuing differentiated, growth-friendly fiscal consolidationII - Restoring normal lending to the economyIII - Promoting growth and competitiveness for today and tomorrowIV - Tackling unemployment and the social consequences of the crisisV - Modernising public administration

2013 AGS (COM(2012)750 final)

The Commission recommends…to continue modernising labour markets by simplifying employment legislation and developing flexible working arrangements, including short-time working arrangements and work environments conducive to longer working lives.to monitor the effect of wage-setting systems, and if necessary to amend them, in order to better reflect productivity developments and support job creation.

Employment Package

» Communication: Towards a job-rich recovery » Commission staff working document: Quality framework for traineeships (2012) » Commission

staff working document on exploiting the employment potential of the personal and household services (2012)

» Commission staff working document: Reforming EURES to meet the goals of Europe 2020 (2012)

» Commission staff working document: Implementing the Youth Opportunities Initiative - First steps taken (2012)

» Commission staff working document on labour market trends and challenges (2012) » Commission staff working document: Open, dynamic and inclusive labour markets (2012) » Commission staff working document: Exploiting the employment potential of ICTs (2012) » Commission

staff working document on an action plan for the EU healthcare workforce (2012) » Commission

staff working document: Exploiting the employment potential of green growth (2012)

Employment Package

» 3 main axes:1. Supporting job creation: Focus more on demand-

side (Exploit job creation in 3 new sectors: green economy, health & social services, ICT); Reduce tax on labour (but also reduce employer social security contributions); Tackle undeclared work; Modernise wage-setting systems to align wages with productivity developments.

Employment Package

2. Restoring dynamics of labour markets: Reform labour markets by encouraging companies' internal flexibility, and reducing the labour market segmentation between those in precarious employment and those on more stable employment; Invest in skills; Moving towards a European labour market.3. Improving EU governance: Reinforcing coordination and multilateral surveillance in employment policy by publishing a benchmarking system with selected employment indicators together with the draft Joint employment report and developing a reform tracking device to keep track of progress implementing national reform programmes; Effectively involving the social partners in the European semester by setting up an EU tripartite format for monitoring and exchanging views on wage developments; strengthening the link between employment policies and relevant financial instruments.

Youth Employment Package

» Youth Employment Package includes: A recommendation on introducing a Youth Guarantee in each Member State to ensure that all young people up to age 25 receive a quality offer of a job, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed – adopted by the Employment and Social Policy Council (EPSCO) in February 2013.Second-stage consultation of EU social partners on a quality framework for traineeships.The announcement of a European Alliance for Apprenticeships and ways to reduce obstacles to mobility for young people.A Youth Employment Initiative proposed by the 7-8 February 2013 European Council with a budget of €6 billion for the period 2014-20.

Social Investment Package

Communication from the Commission: Towards Social Investment for Growth and Cohesion – including implementing the European Social Fund 2014-2020 (2013)

Commission Recommendation: Investing in Children – breaking the cycle of disadvantage (2013)

Staff working document: Evidence on Demographic and Social Trends – Social Policies' Contribution to Inclusion, Employment and the Economy (Part 1) (2013)

Staff working document: Evidence on Demographic and Social Trends – Social Policies' Contribution to Inclusion, Employment and the Economy (Part 2) (2013)

Staff working document: Follow-up on the implementation by the Member States of the 2008 European Commission recommendation on active inclusion of people excluded from the labour market -– Towards a social investment approach (2013)

Staff working document: 3rd Biennial Report on Social Services of General Interest (2013)

Staff working document: Long-term care in ageing societies – Challenges and policy options (2013)

Staff working document: Confronting Homelessness in the European Union (2013)

Staff working document: Investing in Health (2013)

Staff working document: Social investment through the European Social Fund (2013)

Social Investment Package

» It focuses on:Ensuring that social protection systems respond to people's needs at critical moments throughout their lives.Simplified and better targeted social policies, to provide adequate and sustainable social protection systems.Upgrading active inclusion strategies in the Member States. Affordable quality childcare and education, prevention of early school leaving, training and job-search assistance, housing support and accessible health care are all policy areas with a strong social investment dimension.

Tripartite Social Summit, 14 March 2013

Commissioner for Employment, Social Affairs and Inclusion László Andor underlined: “Deepening Economic and Monetary Union also means building up its social dimension. Ensuring that workers' and employers' representatives are fully involved and participate in policy processes is key for ownership of policy, and for good policy coordination. This is particularly important for the social dimension of genuine EMU".

Thank you for your attention!

Further information:http://ec.europa.eu/social/main.jsp?catId=1044&langId=en&moreDocuments=yes

European Economic and Social Committee, Step up for a Stronger Europe. 30 Proposals for stepping-up Europe 2020:http://www.eesc.europa.eu/resources/docs/step-up-for-astronger-europe---30-conclusions---eesc.pdf

Caritas Europa Report, The Impact of European Crisis:http://www.caritas-europa.org/code/EN/inte.asp?Page=1505

EuroMemoGroup, L’Europa alternativa:http://www.sbilanciamoci.org/2013/03/euromemorandum-ci-salvera-leuropa/