On Wednesday (11 March), the European Parliament supported the European Commission’s push to accelerate structural and fiscal reforms demanded by the EU of each Member State, every year, under the so-called ‘European Semester‘.
“Reforms and fiscal consolidation are the right way to reduce unemployment and poverty in the Member States most affected by the financial crisis, and help the euro area to return to sustainable growth”, said Polish MEP Dariusz Rosati (EPP) who steered the report through Parliament.
The European Semester, introduced in 2010 in the aftermath of the eurozone sovereign debt crisis, enables the coordination of Member States’ budgetary and economic plans for the year. It also allows the Commission – in cooperation with Member States – to provide country-specific recommendations to EU countries and monitor their implementation.
The 2015 cycle started last November with the Annual Growth Survey, which outlined the main economic priorities for the EU. The Survey also proposed to streamline the European Semester, in order to improve the uptake of country-specific recommendations.
Up to now, Member States have been slow to implement the Country-Specific Recommendations (CSR).
Only 9% of the CSRs were fully implemented in 2013, and in 2014, the numbers were even lower. According to the Commission, the 28-country bloc fully or substantially implemented only 12 out of the 157 recommendations, or about 7.5% received in 2014.
“The European Semester must be taken more seriously by Member States. The low implementation rate is appalling. Whether they are big or small, all Member States should respect the Stability and Growth Pact. They can use the existing flexibility clause, but they must stick to the rules,” Rosati added, presenting the report in Strasbourg.
Even though all Member States are expected to grow in 2015, recovery is still fragile, and the eurozone is facing record unemployment levels of almost 12%, with rising inequality and poverty in Europe.
The circus performer on a high rope
“Structural reforms are necessary, but they should not mean an erosion of the European social model,” said Alfred Sant, a Socialist MEP (S&D) from Malta, who argued in favour of structural reforms, such as the elimination of monopolies, freer access to the provision of services, curtailment and digitalisation of government bureaucracy, incentivising those who produce, streamlining public procurement practices, and encouraging public-private partnerships.
Some MEPs, including Sant, questioned whether CSRs are properly designed to satisfy eurozone or national priorities.
“I am not too surprised that so many CSRs are ignored by national parliaments and governments. In the absence of a central treasury to regulate transfers between centre and periphery, much of the exercise that we are carrying out could be compared to that of a circus performer on a high rope juggling with nineteen balls,” he reckoned.
“Of course in order to succeed, even such a juggling operation needs commitment, discipline and a high level of competence.”
In the resolution, MEPs call for more involvement of national parliaments in the European Semester talks, and more national ownership of the country-specific recommendations.
Change of time
This year, for the first time, the Commission has decided to publish the country reports earlier, so that governments, national parliaments and other stakeholders have time to engage with the Commission before it crafts the recommendations.
At the same time, Commission representations in the Member States have put in place European Semester officers, so that there is better communication flow and engagement between Brussels and EU capitals.
— EPP Group (@EPPGroup) March 11, 2015
MEPs called also for more flexibility in implementing reforms in Member States in dire financial straits, so as to ensure that stability measures are compatible with growth, job creation and the welfare state, in a resolution on the employment and social aspects of the European Semester, drafted by Sergio Gutiérrez Prieto (S&D) for the Employment and Social Affairs Committee.
Miguel Viegas, shadow rapporteur for the leftist GUE/NGL group on the 2015 Annual Growth Survey, commented: "As expected, the essence of the 2015 Annual Growth Survey does not differ from previous years as it continues to defend austerity and structural reforms, particularly in terms of the labour market and the privatisation of welfare services and public companies. This is totally unacceptable because it prevents countries from intervening with redistributive policies to help those in need and to avoid the collapse of aggregate consumption. This report does nothing to question the current mainstream approach to economic policymaking.
"The European Semester is a way of binding member states to a series of measures that further entrench the neoliberal model."
MEP Marisa Matias (GUE/NGL) said: "The European Semester is the worst negative example of integration at the EU level. The European Commission takes ever more power from member states by issuing them with recommendations on structural reforms. An aspect of the European Semester that is particularly problematic are the indicators on which the recommendations are based - no social indicators are included. Not only does the European Semester take decision-making power away from member states, it also imposes sanctions on them if they don't meet the criteria."
All Member States have committed to achieving the so-called 'Europe 2020' targets for economic reform and have translated them into national targets.
But only if the individual efforts of all countries are coordinated and focused, can they result in the desired impact on growth.
Therefore, the European Union has set up a yearly cycle of economic policy coordination called the European Semester.
Each year, the Commission undertakes a detailed analysis of EU Member States' plans of budgetary, macroeconomic and structural reforms and provides them with recommendations for the next 12-18 months.
The European Semester starts when the Commission adopts its Annual Growth Survey, usually towards the end of the year.