The economic crisis caused by COVID-19 could turn into a “social crisis”, the EU’s economic affairs commissioner Paolo Gentiloni has warned, calling for greater involvement from trade unions in the elaboration of national recovery plans.
The arrival of vaccines have brought some hope in the fight against the pandemic. “But even if we are starting to see the light at the end of the tunnel, we don’t know how long the tunnel will be,” Gentiloni told an event organised by the European Commission’s economic affairs directorate and the European Trade Union Confederation (ETUC).
The third wave of the virus and the new restrictions adopted by national governments are weighting on the European recovery, while the risk of a new downturn increases.
“We are at a crossroads, with the risk of the pandemic transforming itself into a social crisis,” Gentiloni said during the videoconference. “But we also have the opportunity to relaunch our Union with policies of growth and jobs,” he added.
The EU’s €800 billion recovery fund should provide a shot in the arm for the European economy. Member states are currently finalising national recovery plans, while keeping close contacts with the European Commission to make sure their part of the fund is mobilised quickly.
But in order to ensure the “quality” of these investment and reform plans, “the involvement of stakeholders, in particular of the unions, is absolutely crucial,” Gentiloni stressed.
Their participation however “is not yet satisfactory,” he lamented.
The Italian commissioner explained that, without the participation of trade unions, it would be “much more difficult” for national governments to push the reforms of labour markets and pension systems that were requested from national governments in exchange for EU cash.
Social dialogue will play an important role during this semester, with Portugal prioritising the social agenda during its rotating presidency of the EU Council of Ministers.
The Commission is not fully satisfied with the ongoing work with the national recovery plans. Last week, the EU executive told member states to be more precise and ambitious in their investment and reform drafts.
Gentiloni also underlined the need to maintain the EU’s supportive fiscal stance over the next months, including the temporary suspension of the EU’s debt and deficit rules, which was decided at the beginning of the COVID-19 crisis.
“One of the main issues to be discussed” in the member states will be how and when to phase out measures to support jobs and the economy, he said.
“From our point of view, we should avoid premature withdrawal” because “we have to fight the risk of a double dip recession,” he explained.
The Commission and member states agreed to keep the EU’s economic stimulus package this year. By the end of the first semester, the EU executive will open the discussion on whether the Stability and Growth Pact, which limits national debt and deficits, should be reactivated next year.
This discussion will come as part of the Commission’s ongoing review of the Pact, launched last February but interrupted by the pandemic.
Some countries, including France, want to reinstate the EU’s fiscal rules only once they have been amended.
The Commission is expected to put forward its proposals for the Stability and Growth Pact review this year, although the date is not confirmed yet.
Gentiloni said that the EU’s new fiscal policy should support the green transition, growth and sustainability, both from a social and environmental standpoint.
[Edited by Frédéric Simon]