On 13th July 2018, the Economic and Financial Affairs Council (ECOFIN) shall vote on the Country-Specific Recommendations for 2018/19, which were recommended by the Commission within the framework of the European Semester. With regard to the newly recommended Multiannual Financial Framework, the Commission also suggested a stronger link between the payment from EU funds and the implementation of these recommendations. For that reason, the European Parliament's Committee on Employment and Social Affairs (EMPL) invited the Commissioners responsible, Valdis Dombrovskis and Marianne Thyssen, to a hearing, where subsequently some of the Commission’s recommendations were debated.


Apart from the usual economic measures, the Country-Specific Recommendations also increasingly include social aspects; however, the Member States are not bound by them. Whilst many EPP and ALDE MEPs lamented the Member States' unwillingness to implement the Commission recommendations on budget discipline over the past years — according to the Commission, ca. 2/3 of Country-Specific Recommendations are fully implemented or with substantial progress, mainly those to stabilise the financial sector after the crisis – the majority of S&D, Greens and GUE/NGL MEPs still criticised the still missing consideration of social measures, such as the Pillar of Social Rights.


Mady Delvaux (S&D, LUX), for example complained that none of the country-specific recommendations provides for increasing minimum wages. She referred to ECB President Mario Draghi, who himself came out in support of comprehensive and fair minimum wages as a means to tackle growing inequality. Delvaux also regarded the increased “macroeconomic conditionality”, which was proposed in the Multiannual Financial Framework 2021-2027 and the Cohesion Fund contained therein as being problematic: hence, the investment in Europe’s poorest regions will be linked to the implementation of the Country-Specific Recommendations — according to Delvaux a mechanism, which gives the Commission to much macroeconomic decision-making power.


Emilian Pavel (S&D, RO) took an equal line, and elaborated on the recommended strict budget discipline that would prevent major state investment, for example in the infrastructure of his native country Rumania. After Fiscal Pact, which came into force in 2013, 0.5 % of the general government deficit compared to GDP may not be exceeded. Hence, it would be difficult for Rumania, to economically catch up with the “old” Member States — whereby Rumania’s national debt (36.9 % in 2017) is just half of Austria (78.8 %), Great Britain (87 %) or France (97 %). Pavel therefore demanded to exempt public infrastructure projects, subsidised by the EU, from the deficit rule and to refrain from including relevant recommendations on budgetary policy.


Tom Vandenkendelaere (EPP, BE), who is also a member of the Special committee on financial crimes, tax evasion and tax avoidance (TAX3) thought that the aggressive tax planning of some Member States still did not receive enough consideration, even though this time the Commission issued seven countries with an explicit warning: Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and the Netherlands.


Replying to questions by MEPs, the Commissioner for the Euro and Social Dialogue, Valdis Dombrovskis, repeatedly emphasised the Unions improved economic situation, which had caused the Commission to make more ambitious recommendations on structural reforms and debt reduction. After the record high 2009 (6.3 % of GDP), the overall fiscal deficit in the Euro area was relatively normal (0.7% of GDP). He defended linking EU funds to the implementation of the recommendations; however, the Commission had no intention to make this linkage into an absolute.


Contrary to the criticism of the missing socio-political component, Employment Commissioner Marianne Thyssen emphasised that about a third of the package of measures was related to socio-political areas, among them the Work Life Balance, improved and inclusive access to education and the labour market or gender equality. However, she also admitted that so far implementation in these fields had been far from good. The introduction of the “Social Score Board” — a measuring instrument for the overall social situation in the EU and a socio-political but non-binding opposite of the economic European Semester - would be a step towards making these shortcomings more visible.


Thyssen’s motto that economic growth had to go hand in Hand with social progress is one, the Chamber of Labour shares. With regard to Austria, the recommendation to increase the retirement age was also mentioned; however, the Chamber of Labour is not convinced of this move and therefore clearly rejects this recommendation.


Further links:

Commission: The European Semester

Commission: European Semester - Winter Package: reviewing Member States’ progress on their economic and social Priorities

Comparison of Country-Specific Recommendations 2018

AK-EUROPA: Winter Package 2018: European Commission presents Country Reports within the European Semester

Social Score Board