Social dimension of EU/EMU

30.10.2013.

Since the outset of the European project, EU economic integration has had a positive impact on growth and employment, and therefore on European citizens‟ prosperity.
Business is the backbone of Europe‟s economy. The single market is its cornerstone, and the single currency its heart.
If Europe does not have a healthy heart, it will not have a promising future. Safeguarding the euro continues to be a top priority. Citizens are not suffering because of the Euro. They are suffering from bad past political choices, which the advantages of the Single Market and of the Euro contributed to hide.
If Europe does not have a strong cornerstone, it will not have thriving companies delivering growth and jobs. The single market has led to the creation of 3 million new jobs since its creation. It contributes significantly to reaching Europe‟s social objectives. Measures to further develop the Single Market are therefore essential.
If Europe does not have an agile backbone, it will not be able to help society to absorb economic shocks. Boosting the social dimension of the EU and EMU cannot come from increasing public spending. It can only result from measures to boost competitiveness, growth and jobs in the context of a coherent European growth strategy. And this requires making progress with sustainability of public finances and growth enhancing structural reforms in all Member States, in particular on labour markets. Structural reforms are bringing positive results, including in the countries most hardly hit by the crisis. But declining competitiveness, insufficient labour market flexibility, education and training weaknesses and unsustainable social protection systems continue to weigh on the overall European growth and job creation. Addressing the real cause of the persistence of high unemployment is essential to make further progress towards a job rich recovery and to restore economic, political and social cohesion.

The crisis has not been caused by a lack of social dimension in the EU. The social dimension has always been inherent to European economic integration. The EU represents only 7% of the world population and 20% of global GDP but at least 40% of global public spending in social protection. It has highly developed labour market regulations, including some 70 European directives setting minimum social standards in the Single Market. If Europe wants to defend its living standards, it must reform its social systems and shape the social dimension of the European Union in the right way.
Wage flexibility is important to compete globally. The EU must respect the autonomy of national social partners for wage bargaining. The Commission can issue recommendations to Member States to reconsider mechanisms, such as automatic wage indexation systems, but it cannot impose solutions and interfere in minimum wage setting which is a national competence.

Discussions on how to further strengthen EMU are currently focussed on the role that EMU institutions can play in risk-sharing between member states, the so-called solidarity mechanisms. BUSINESSEUROPE supports the introduction of contractual arrangements, provided that the proposals strike the right balance between solidarity and responsibility, by increasing incentives for structural reforms and do not lead to an increase in the overall tax burden in the EU or Euro Area. To be effective, EMU solidarity mechanisms should be targeted, temporary, and conditional to the delivery of necessary structural reforms.

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