The EMU needs a common strategic vision, efficient governance mechanisms and a clear social dimension
The European Economic and Social Committee (EESC) is strongly convinced that, despite extensive initial reforms, the Economic and Monetary Union (EMU) is at this juncture still not resilient and stable enough to effectively face future economic and financial crises. It therefore urges the relevant decision-makers to reach a broader and swifter political agreement on how to approach the final objective of a deep and genuine EMU.
In its latest opinion on the Economic and Monetary Union Package the EESC welcomes the recent European Commission's proposals but not without some reservations.
Further steps on EMU must be based on a firm common position of all Member States, but a common strategic vision is clearly missing in the current political debate, said EESC rapporteur Mihai Ivaşcu (Various Interests, RO).
We should make use of the current economic momentum and work swiftly towards an agreement on completing EMU.
Stefano Palmieri (Workers, IT), EESC co-rapporteur for the opinion, sets out further conditions for successful reform:
The completion of the EMU requires first of all a strong political commitment, efficient governance and better use of the available finances, in order to actually cope with both risk reduction and risk sharing among Member States. New financial instruments for crisis prevention and countering pro-cyclical measures need to be developed.
The Committee believes that further reforms need to strike the right balance between responsibility and solidarity. It also highlights the fact that the current proposals lack a clear commitment for a social dimension and provisions for structured participation by the institutional consultative committees and social partners, whose involvement in the European Semester – together with the European Parliament – would be necessary in order to regain European citizens' trust and support.
The EMU must address citizens' needs and provide real added value, said Mihai Ivaşcu.
We urge a clear commitment to the European Pillar of Social Rights. Social rights must enjoy the same level of importance as economic freedoms, so as to enforce the 'social market economy' concept of the Treaty.
Apart from its general comments on the EMU Package, the EESC also provides recommendations on the specific proposals put forward by the Commission.
First, the EESC makes it clear that the transformation of the European Stability Mechanism into a European Monetary Fund – to be anchored in EU law – should not act like a golden parachute encouraging banks to take unnecessary risks. It should rather prevent bank crises, support economic development and absorb shocks.
In parallel, the Treaty on Stability, Coordination and Governance (TSCG) should be incorporated into EU law, while also opening a discussion at EU-level on the possibility of excluding value-adding strategic investment from the scope of the Stability and Growth Pact. In the Committee's view, public investment should not be seen as a cost, but rather as a source of future revenue which smoothens the business cycles and ensures growth and job creation.
As regards the proposed new budgetary instruments, the EESC fully supports the creation of a macroeconomic stabilisation function for the euro area to the tune of 1% of GDP that should be rapidly activated in case of a downturn. It also endorses a dedicated convergence facility to help Member States which are on their way to adopting the Euro. These instruments should be included in the EU budget to avoid creating new institutions.
Concerning the proposed Minister of Economy and Finance, the Committee supports the creation of such a figure as a first step to enhancing the coherence of policies that are currently fragmented, but calls for further reflection with a view to enhancing the minister's democratic accountability.
Within its overall response to the Commission's EMU package, the EESC issued also a separate opinion dealing specifically with Support to structural reforms in the Member States. The Committee suggests:
- developing a clear strategy for the Structural Reform Support Programme (SRSP), including selection criteria, given that the budget of the tool is still not in line with the demand;
- prioritising social, economic and institutional reforms with spill-over effects for other countries and aiming at social and economic development and convergence;
- giving special attention to non-eurozone Member States that are on track to join the euro area;
- increasing the financial envelope of the SRSP without penalising the budgets of other equally important funds;
- funding and linking specific reforms with the new reform delivery tool, which should have its own dedicated financing mechanism in the post-2020 multiannual framework.
Finally, the EESC suggests introducing a rule whereby no financing should be given to Member States unless they have fully adopted the application of the partnership principle with real involvement of the social partners and civil society when deciding on the multiannual reform commitment packages.
The EESC advocates completing EMU, as is also demonstrated in its previous work, and considers that a properly reformed EMU architecture along the lines indicated by the Committee could counter the rise in nationalism, populism and EU-scepticism, ensure long-term stability and prosperity of the Union and strengthen Europe's position in the world. The political debate on EMU and its various pillars is expected to continue within the upcoming informal Ecofin Council and Eurogroup meetings on 27-28 April in Sofia, the Commission's proposal on the next MFF to be published in May and the European Council deliberations in June this year.