On the 22nd November, the European Commission kicked off the 2018 European Semester cycle, which sets out EU's economic and social priorities for the year ahead, gives policy recommendation for the euro area and completes the assessment of euro area Member States' Draft Budgetary Plans.
The 2018 European Semester cycle of economic, fiscal and social policy coordination starts against the backdrop of robust economic activity in the euro area and the EU, high employment levels and unemployment rates declining towards pre-crisis levels. As all Member States contribute to this growth momentum, the priority now is to make sure that this lasts and brings benefits to all members of our societies. Alongside responsible fiscal policies, the Commission calls for the pursuit of structural reforms focusing on creating the conditions to boost investment further and to increase real wage growth to support domestic demand. The Semester package is based on the Commission's Autumn 2017 Economic Forecast and builds on the priorities of President Juncker's 2017 State of the Union address. It also reflects the recent proclamation of the European Pillar of Social Rights at the Gothenburg Social Summit.
2018 Annual Growth Survey
Building on previous guidance, and taking account of Member States' different situations in the economic cycle, the Annual Growth Survey (AGS) calls on Member States to boost investment as a way to support the expansion and to increase productivity and long-term growth. The Commission also recommends further structural reforms that are needed to make Europe's economy more stable, inclusive, productive and resilient. Fiscal policies should strike the appropriate balance between ensuring the sustainability of public finances and supporting the economic expansion. Reducing high levels of debt and re-building fiscal buffers must continue to be a priority. Closing tax loopholes, improving the quality of the composition of public finances and better targeted spending can help in this effort. Social fairness remains a crosscutting priority and the principles and rights of the European Pillar of Social Rights will be mainstreamed in the European Semester from now on.
When it comes to our fields of interest, the report recalls that Europeans need affordable, accessible and quality services. Services such as childcare, out-of-school care, education, training, housing, health services and long-term care are essential for ensuring equal opportunities for all. Reforms of health care and long-term care systems need to be pursued to enhance their cost-effectiveness, ensure their fiscal sustainability and ensure quality, affordable access. Expenditure on health care and long-term care is set to increase due to population ageing and non-demographic cost drivers such as technological progress in treatments and pharmaceuticals. Policy actions are therefore needed to enable people to stay healthy for longer, by making health systems and long-term care more cost-effective and ensuring timely access to affordable preventive and curative healthcare of good quality.
Promoting work-life balance is also crucial for gender equality and increased female labour market participation. Ensuring access to quality services for all, such as childcare and early education, is therefore important. Taxation systems that do not penalise second-earners and the provision of suitable family leave and flexible working arrangements for parents and carers also improve work-life balance.
Draft Joint Employment Report
This year's draft Joint Employment Report is the first edition to bring into practice the Social Scoreboard, launched as one of the tools to implement the European Pillar of Social Rights. The performance of Member States is assessed on the basis of 14 headline indicators. The Joint Employment Report (JER) also takes into account the national policy reforms vis-à-vis the ambitions set by the Pillar.
The JER points to continued improvements in the labour market: around 8 million additional jobs have been created since the current Commission took office. The unemployment rate continues to fall and stood at 7.5% (8.9% in the euro area) in September 2017, the lowest level since 2008. However, the labour market recovery is not reflected in wage growth. In a number of Member States disposable incomes are still below pre-crisis levels.
Proposal for employment guidelines
The employment guidelines present common priorities and targets for the national employment policies and provide the basis for country-specific recommendations (CSRs). This year's proposal aligns the text with the principles of the European Pillar of Social Rights, with a view to improving Europe's competitiveness and making it a better place to invest, create quality jobs and foster social cohesion.
The Commission invites the Council to discuss the package and endorse the guidance offered today and it looks forward to a fruitful debate with the European Parliament on the policy priorities for the EU and euro area.
For More Information
Annual Growth Survey 2018
Alert Mechanism Report 2018
Euro area recommendation 2018
Draft Joint Employment Report 2018
Proposal for the Amendment of Employment Guidelines
Communication on the Draft Budgetary Plans of the euro area