Council conclusions on the 2014 Annual Growth Survey and European Semester 2014

10 March 2014

Economic forecasts confirm signs of a slow recovery, though modest and fragile. However, the legacy of the crisis will continue to weigh on growth for a considerable time, through high levels of unemployment, falling household incomes and rising poverty and inequalities.

The Council of the European Union stresses that:

• In the context of transition towards economic and jobs recovery, the continuation of the policy priorities set out in the Commission's fourth Annual Growth Survey (AGS) is welcome as it ensures stability of the overall policy framework.

• The Joint Employment Report (JER) contains for the first time a Scoreboard of key employment and social indicators. It can help to underpin the contribution of the Council to the agenda set by the European Council regarding the reinforcement of the social dimension of the EMU within the current institutional framework, and can represent a valuable additional tool within Article 148 and the European Semester. Work should now continue to improve the scoreboard and refine its operational scope in time for the 2015 European Semester.

• The Council confirms the broad political objectives for social policies as adopted in its 2013 conclusions on "The Annual Growth Survey and the Joint Employment Report in the context of the European Semester: political guidance on employment and social policies".

• On the basis of the AGS and the JER, and the strategic guidance provided by the European Council, the following orientations in the field of employment and social policies are important:

Deepening the European Semester

• Without a return to strong economic growth and the normalisation of credit flows, job creation is unlikely to improve significantly in the short-term and the context for furthering the necessary labour market reforms will become increasingly difficult. The most important factor in improving EU labour markets is to create more and better jobs. The Annual Growth Survey stresses that financial market fragmentation has led to divergent interest rates for loans to businesses and households across the EU. This also has profound implications for labour markets, as enterprises and in particular SMEs, face barriers for access to finance.

• Significant measures have been taken to reform labour markets and enhance their resilience, combat segmentation and promote labour market participation. Although the effects of such important reforms will take some time to be fully felt, some results are already visible and the extent of progress varies across policy areas and between Member States. A higher level of female labour market participation is an essential source for enhancing the EU's growth potential and to meet demographic challenges. Determined and ambitious implementation of agreed policies will support economic recovery and job creation in 2014 and 2015. Furthermore, the lessons of recent years suggest paying careful attention to the sequencing of reforms and exploiting the synergies between product and labour market reforms. Product market reform can help to bring about the full benefit of broad labour market reform. The deepening of the internal market is important in this regard.

• In a number of key areas, the implementation of the Council recommendations are positively progressing and impacting on public deficits, competitiveness and economic imbalances. However, these achievements need to translate into higher employment, better income and living conditions, with less unemployment, poverty and social exclusion. The reform momentum needs to be sustained including through robust multilateral examination of the implementation of the recommended actions. Further, full ownership of the reform process at national level and the involvement of social partners or other stake holders is crucial for the implementation of reforms.

• In the emerging recovery, social policy reforms need to be comprehensive involving both universal and targeted approaches while avoiding segmented social protection with differences in the levels of coverage, between women and men and in the quality of the protection along the life-course. While adequate social protection should be the key objective of these reforms, they should also promote activation and support the employability of young people and of older workers as well as the integration of people with disabilities in the labour market. This should generate social and economic returns through better inclusion and possible increased productivity.

Pursuing differentiated, growth-friendly fiscal consolidation and fighting the social consequences of the crisis

• The 2014 Annual Growth Survey highlighted the importance of generating growth and more and better jobs. The AGS also stresses that recent increases of poverty and social exclusion call for more measures to improve the design, composition and quality of the consolidation programmes and the influence of fiscal policy on growth, public sector effectiveness and efficiency and social equity. This, combined with the protective, preventive and stabilising role of social protection, should help Member States and the Union halt the increase of poverty and social exclusion and increase the chances for moving closer to the EU headline target for promoting social inclusion.

• Reforms in the areas of health care should be pursued with the view to improve their accessibility, quality, effectiveness and sustainability. In their health systems reforms, Member States should take into account the Council conclusions on the 'Reflection process on modern, responsive and sustainable health systems' adopted by the Council on 10 December 2013.

• The Council, in its recommendations on pension policy in the framework of the 2013 Semester, recommended a wider menu of policy options focusing on rising the effective retirement age by aligning retirement age or pension benefits to changes in life expectancy. Whilst this remains valid, pension reforms should also consider - according to country specificities - the priorities of longer working lives and active ageing, extending contributory periods, balancing contributions and benefits in an appropriate and socially fair manner, and promoting adequate safe and sustainable public and private pension schemes.

• The Council underlines that growth and labour markets delivering higher employment rates are crucial for the success of pension and health care reforms.

(...)

CALLS UPON the MEMBER STATES:

• To reflect the priorities of the Annual Growth Survey and the Joint Employment Report in their National Reform Programmes and to implement policies to address the 2013 Country-specific recommendations.

• To consider the policy conclusions of the Social Protection Performance Monitor in-depth reviews and the results of the multilateral surveillance work of EMCO and the SPC in the design of their policies.

(...)

CALLS UPON the COMMISSION

• To deliver the package of proposed Country-specific recommendations in a timely manner by taking into account the lessons learned from the 2013 Semester in order to facilitate the working of the Council and deepen the multilateral examination of the proposed recommendations and avoid overly prescriptive recommendations on the implementation of reforms.

• To work with Member States to improve the timeliness of social and employment indicators.

• To ensure the close involvement of the Employment and Social Protection Committees in any possible further work on the development of the concept of partnerships based on a system of voluntary mutually agreed contractual arrangements and associated solidarity mechanisms.

Full conclusions

Council conclusions on the social situation in the EU

Council conclusions on European Semester 2014

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