Fairness and competitive sustainability at the heart of the green and digital transition

In an opinion adopted at its plenary session on 23 February, the European Economic and Social Committee (EESC) welcomed the communication of the European Commission (EC) on this year's Annual Sustainable Growth Survey, outlining the priorities and guiding principles for the 2022 European Semester cycle. The Committee applauded the unprecedented actions of solidarity taken by the EU in dealing with the COVID-19 crisis. The impact on economic activity, however, has been significant, and the level of uncertainty in Europe continues to rise.

The European Commission's Communication on the 2022 Annual Sustainable Growth Survey (ASGS) presents a competitive sustainability agenda for the EU covering four dimensions: productivity, environment, fairness and stability. The EESC advocates that these dimensions, as well as competitiveness, should be placed on an equal footing in order to achieve the intended reinforcing effects and successful transformation.

EESC rapporteur Judith Vorbach, welcomed the EC decision to build on the objective of competitiveness to include social and environmental attributes and stated that very rightly, the Commission strives for a policy stance so that the four dimensions of competitive sustainability reinforce each other, while recalling that the lower the level of involvement of parliaments, social partners and other civil society organisations, the more likely it is that contradictory effects will occur, so political measures could support one dimension while weakening another.

The rapporteur highlighted the importance of guaranteeing that investment needs are met, while also ensuring that productivity is integrated with sustainability and inclusiveness. Moreover, rule of law, quality and efficient justice systems, effective anti-corruption structures, efficient administration, including tax administration, and anti-money laundering and antifraud frameworks, must be respected as important factors for improving business environments and safeguarding fair competition among companies.

The twin transition

Decoupling economic prosperity from environmental degradation is one of the most pressing challenges of the twenty-first century, and this competitive sustainability agenda is essential for achieving the green and digital transition. The EESC applauds the Commission's assertion that fairness needs to be at the heart of the recovery, and calls on the Commission to scrutinise the distributional effects of pay-outs under the Multiannual Financial Framework (MFF) and Next Generation EU (NGEU), and to secure their contribution to the development of a greener and digitalised economy, as well as to upward social convergence.

In this regard, Ms Vorbach stressed that striving for a fair, just, green and digital transition which requires sustainable social conditions, will serve as a foundation for future prosperity and resilience. Well-designed labour market policies and social protection systems are the basis for resilience and inclusive growth.

In addition, the EESC emphasises the importance of preserving Europe's sound business climate and strong industrial value chains, and urges European industrial leadership to strive for sustainability. The carbon border adjustment mechanism must be designed effectively and state aid measures need to be linked to the creation of quality jobs as well as the respect for workers' rights and fiscal obligations. The Committee stresses that any shift towards environmental taxation should not entail regressive distributional effects or energy poverty, and supports the closer monitoring of financial market risks arising from the climate crisis.

Particular attention must be paid to the asymmetric impact of the environmental crisis on various population groups, sectors, and regions. Commitments to safeguarding social well-being must not become meaningless slogans. It is crucial to ensure a fair distribution of the efforts and gains of the transition. As a result, the EESC calls for increased efforts to protect low- and middle-income households and vulnerable people, who are disproportionately affected by the crisis and transition process. Moreover, the EESC warns against cutting current social, education and health expenditures, and advocates for enhancing productivity in a prosperity-oriented way by promoting advanced technologies and innovation, boosting training and education, and promoting resource efficiency.

The 2022 European Semester

The EESC perceives that we are entering a new phase of economic policy and that the evolving 2022 European Semester represents an opportunity to improve economic, environmental and social sustainability. Therefore, the Committee reiterates that the greater involvement of social partners and organised civil society in the process is long overdue, and believes that economic governance needs to be integrated into the European Semester process in such a way as to ensure the democratic involvement of parliaments and organised civil society.

Finally, Judith Vorbach underlined the EESC's support for a reflection on the reform of the European Semester in order to foster a multilateral and democratic dialogue on macroeconomic, social and environmental challenges and to support policy coordination. Furthermore, the Committee welcomes the important integration of the European Pillar for Social Rights into the framework of the European Semester, and I look forward to seeing its implementation in the country-specific recommendations, concluded Ms Vorbach.