Since 2011, the so-called European Semester has been a key element of European Economic policy: each year, the Commission prepares an Annual Growth Survey for the EU, Country Reports for each Member State and finally country-specific recommendations. For example, in 2019 these recommended to Austria to raise the state pension age. However, at the same time the Commission criticised the increasing pressure, which the social partnership in Austria is exposed to as well as the “striking wealth inequality and the absence of inheritance and gift taxes”.

In order to improve the coordination with the countries of the eurozone, the Commission proposed an additional instrument in July 2019, which is exclusively aimed at the euro countries, namely a Governance framework for the euro area. According to this, the Commission shall in future set annual strategic requirements for reform and investment priorities. Subsequently, country-specific guidances shall be derived from these. The aim is to additionally increase the resilience of economies against crises in the euro area.

However, from the AK’s point of view, even the basis of this governance framework, namely the current structure of the European Semester, has to be assessed as unsuitable. The country-specific recommendations present a string of demands, which often appear random, essentially unjustified and also socially unbalanced. In addition, they are also in contrast to the social principles of a wealth-oriented policy, which are integrated in EU treaties. This is demonstrated by earlier recommendations of the Commission, which include for example a decentralisation of collective agreement systems or an increase of the general state pension age - even in contrast to own empirical formula. Hence, the AK demands a realignment of the European Semester, which is orientated towards the so-called magic polygon for a wealth-oriented economic policy.

From a purely economic view, the Commission has over the past years gradually extended the country-specific recommendations of the European Semester, which are to be based on these new “country-specific guidances”, to other policy areas. Meanwhile, almost have of them cover the areas Social Issues, including newly created “Social Scoreboards”, Employment, Education, Equality, Healthcare, Long-Term Care, Pensions, Poverty and Social Exclusion. There is the danger that the implementation of the new recommendations might run contrary to a wealth-oriented policy. From the AK’s point of view, in particular the false understanding of “competitiveness” goes in this direction. In this context, one has to fear that - as has happened in the past - warnings might be issued for example regarding a necessary increase of (minimum) wages or that once again a decentralisation of collective agreement systems would be driven forward.

The manner, in which the guidances are to be created, is extremely problematic: according to the draft, the Council, at the suggestion of the Commission, shall accept an appropriate recommendation. Only representatives of the Euro Member States are taking part in the Council. Thereby, the process is in contrast to the “new push for European democracy”, which had been announced by the Commission President-designate Ursula von der Leyen. According to this, a direct integration of European Parliament and social partners in the decision-making process to determine reforms, worthy of support, would not be provided for. The European Parliament has been merely granted a right to be heard. The social partners do not have any co-determination rights, even though their members might be directly affected by the reform measures.

The decision on country-specific guidances at EU level as well as the application and later processing of the support/funding at Member States level means a significant administrative effort, whose value added cannot be recognised. From the AK’s point of view there is no need for a new budgetary instrument for convergence and competitiveness for the euro area, but rather a need to reform the European Semester, so that the social objectives embedded in the EU treaties are in line with a wealth-oriented policy.

Further information:

AK Position Paper: Governance framework for the budgetary instrument for convergence and competitiveness

AK Position Paper: Annual Growth Survey 2019 - time for change

AK EUROPA: European Semester: Integrating social partners!

A&W Blog: Learning from the crisis: a magical polygon of wealth-oriented economic policy

European Commission: Commission proposes governance framework for the budgetary instrument for convergence and competitiveness