Commission Communication: "Strengthening the social dimension of EMU" 2 October 2013 Vilnius, 17 October 2013 Rob Cornelissen

Why this Communication? Legal and political context Article 9 TFEU: "In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion and a high level of education, training and protection of human health". December 2012 European Council asks Commission to present possible measures on social dimension EMU June 2013 European Council recalled that social dimension EMU should be strengthened

Why? (continuation) Ensure social and political sustainability of EMU. Risk of losing popular support if perceived as purely economic and budgetary project not taking into account challenges facing European social model. A well-functioning EMU must be able to cater for the social implications of reforms that are necessary to boost jobs, growth and enhance competitiveness. It also needs to detect and tackle in a timely way the most serious employment and social problems across its Member States as these can have negative impact beyond national borders and lead to long-lasting disparities

Framework The European semester is the overall policy environment for EU economic governance and EMU governance

What is "Social dimension EMU"? Ability of governance mechanisms and policy instruments to identify, take into account and address problematic developments and challenges related to employment and social policies in EMU. Potential for improvement in three areas: Enhance EU coordination of employment and social policies under European semester Taking advantage of solidarity offered by EU budget and working with Member States to improve job mobility Stronger involvement of EU and national social partners in EMU governance

1. Enhance EU coordination of employment and social policies in EMU Develop a key employment and social indicators scoreboard to follow issues relevant for the well-functioning of entire EMU Should serve as an analytical tool allowing earlier identification of developments that warrant stronger employment and social policy responses and would be incorporated in annual Joint Employment Report Five headline indicators: unemployment, youth unemployment and NEET rate, household disposable income, at risk of poverty rate, and inequalities. Scoreboard is analytical tool. No automatic consequences if MS breach indicators on the scoreboard

Enhance EU coordination of employment and social policies in EMU Reinforce monitoring of employment and social developments as part of macroeconomic surveillance Insert social issues in the implementation of MIP (macroeconomic imbalances procedure) and add a number of employment and social indicators in the Alert Mechanism Report (participation rate, long-term unemployment ratio, youth unemployment + NEET rate; at risk of poverty rate) Develop further benchmarking within work of Employment Committee and Social Protection Committee, of best practices and performance assessment

2. Take advantage of solidarity offered by EU budget MS should fully exploit scope of EU budget to develop social dimension of EMU. For period 2014-2020 resources and programmes have been boosted (European Structural and Investment Funds, Employment and Social Innovation Programme, Fund for European Aid to Most Deprived, European Globalisation Adjustment Fund, Youth Employment Initiative, etc.)

Long term vision for deepening EMU The current EMU is based on decentralised national fiscal policies governed by common rules in the Stability and Growth Pact. Under current Treaties, MS are competent to define social protection systems. Design, efficiency and functioning of automatic stabilizers are responsibility of MS. Communication refers to Commission's 2012 Blueprint providing a long term vision for EMU. In the long term the Blueprint mentions the possibility of an autonomous euro area budget with a fiscal capacity providing for an EMU level stabilisation tool to support adjustment to asymmetric shocks.

Long term vision for deepening EMU This tool could take the form of a kind of an insurance system whereby the central budget provides support to MS facing a rise of already very high unemployment rates. Under current Treaties, EU does not have competence to adopt such measures. EU cannot engage MS' budgetary responsibilities. EU competence in field of employment and social protection is limited (Articles 149 and 153 TFEU). Article 352 TFEU is also not an appropriate legal basis (establishment of macroeconomic stabilisation system would exceed general framework of Treaties)

Improve job mobility To some extent, labour mobility can act as an adjustment mechanism in times of economic upheaval Cross-border mobility in EU is still low (in euro area less than 4% of working population are nationals of a different MS) Looking for a job in another MS is still complicated Commission will table before end 2013 a proposal to simplify the way cross-border vacancies and job applications are handled and to step up support for jobseekers and employers 2014: proposal to modify chapter "unemployment" of Regulation 883/2004

3. Stronger involvement of EU and national social partners in EMU governance Goal: increase ownership of policies and ensure meaningful implementation How? Make best use of existing social dialogue fora at EU level: Macroeconomic Dialogue and Tripartite Social Summit Deepen consultation of social partners throughout the European Semester process (e.g. Commission will meet EU social partners before adopting Annual Growth Survey; it will organise debate with EU social partners on Annual Growth Survey in order to promote better mutual understanding of expectations and concerns; Tripartite Social Summit should be prepared by technical preparatory meeting to be organised by Social Dialogue Committee

Thank you for your attention!