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2019 Annual Growth Survey: no grounds for complacency

EESC rapporteur Anne Demelenne

The EESC draws mixed conclusions from the European Commission's growth survey

Given the mixed results of past reform policies, it is essential the European Union and the Member States conduct an in-depth evaluation. Despite improvements to date, further reforms and political measures are needed to boost productivity and economic growth and to strengthen cohesion and the social dimension of policies. These are some of the main conclusions the European Economic and Social Committee (EESC) has drawn regarding the 2019 Annual Growth Survey (AGS).

In its recently adopted opinion on the AGS  the Committee criticises the Commission's broadly favourable assessment of economic and social progress since 2014 and of past reform policies. It is therefore unable to endorse all the Commission's policy recommendations.

A proper assessment of EU performance must meet data in all areas and cannot be complacent, was the view from Anne Demelenne, rapporteur for the EESC opinion. Improvements in economic growth, investment and developments on the labour market would be positive, she thought, but needed to be put into perspective, especially with reference to the performance of other advanced economies.

Economic growth in the EU as a whole would still be slower than before the crisis and differences within and between regions needed to be considered. The AGS gives no grounds for putting our feet up, said the EESC rapporteur. We cannot be satisfied with past improvements. Improved productivity is crucial to our competitiveness and the wellbeing of our citizens. So we have to preserve past improvements and move on with reforms.

Given the current economic outlook and the persisting negative fallout of the last recession, reforms and policies should stiffen the resilience of the economy and labour markets and so improve growth in the economy and productivity. This would also favour public and private debt reduction.

The EESC welcomes the Commission's commitment to supporting reforms and calls for new reform proposals and policies to be based on a thorough evaluation of past policies. This is clearly needed, given the mixed results, including the slow pace of economic recovery, continuing concerns over productivity relative to competitors and an increase in unstable employment.

New approaches must also demonstrate a real commitment to the European Pillar of Social Rights priorities and international climate goals. The Committee regrets that the AGS fails to provide adequate proposals for the implementation and financing of these, despite the poor economic and social performance in many countries since 2008 and the urgent need for action on climate.

In view of the importance of promoting sustainable growth (in economic, environmental and social terms), the Committee proposes the AGS be renamed the Annual Sustainable Growth Survey.

This name would recognise the seriousness of climate change and the interest in a sustainable use of resources and the environmental protection of future generations, said Anne Demelenne.

In its opinion the EESC also criticises the lack of proposals for countering external risks to growth, such as changes in the global economy and Brexit. The EU and the Member States should frame stimulus policies to maintain growth and employment levels and should budget for this accordingly. Establishing the euro area macro-economic stabilisation function would be an example.

High-quality investment in education and training, as proposed in the AGS, would be welcome in this context because of their influence on productivity.

40% of employers report difficulties in recruiting adequately qualified personnel and many prospective employees find it difficult to get jobs appropriate to their qualifications in their home countries, said EESC rapporteur Anne Demelenne. The social partners, civil society and public and private investment – also backed by the European Structural Funds – can help to improve education and training.

The social partners and civil society could also help in general in accelerating the work on new policy proposals and make sure that reforms are country specific, suitable and practical.

Finally, the Committee welcomes the priority the Commission gives to reforms to increase private and public sector investment, but disagrees with its assessment that the investment gap is almost closed.

The implementation of policy depends in many areas on some degree of public and private sector investment. Efforts to create a favourable environment for private sector investment should be stepped up and adequate support set aside from the EU budget. Completion of the Energy Union and international trade agreements, for example, could offer new investment opportunities.

Anne Demelenne: "The EU fiscal rules should allow for funding from national budgets for socially and economically productive investment that does not threaten future budget sustainability." Ensuring macro-financial stability and sound public finances would be of the utmost importance but must be aimed at sustainability.

Background:

The EESC calls for inclusive growth and wage convergence, adequate social protection and wage growth. The return to quality jobs and sustainable employment contracts is crucial and the EPSR should be fully integrated into the European Semester. The EESC urges redoubled efforts to deepen the EMU and complete the Banking Union and the Capital Markets Union, since current proposals would be insufficient to tackle asymmetric shocks. Fair taxation needs to be another priority.

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