Members of the Committees on Economic and Monetary Affairs (ECON) and on Employment and Social Affairs (EMPL) hold an Economic Dialogue on the 2021 European Semester Spring Package, with Valdis DOMBROVSKIS, Executive Vice-President for An Economy that Works for People, Paolo GENTILONI, Commissioner for Economy and Nicolas SCHMIT, Commissioner for Jobs and Social Rights. The Spring Package focuses on providing medium-term fiscal guidance to Member States as they gradually reopen their economies. This transcription is the result of an automatic process. Please check against delivery.

Economic Dialogue and exchange of views on the 2021 European Semester Spring Package in EMPL/ECON Committees with Valdis DOMBROVSKIS, Paolo GENTILONI and Nicolas SCHMIT: opening remarks by Committee Chairs and Commissioners

https://api.multimedia.europarl.europa.eu/documents/20125/15148435/I208343Chapters%5BSD-EN%5D.srt

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), ECON Chair, Hello, good afternoon. I think we can start our Joint Committee meeting jointly with EMPL Committee. We will start with the adoption of the agenda. If there are no objections I considered the agenda as adopted and we can move straight to the second part, which is the economic dialogue and exchange of views on the 2021 European Semester Spring Package. And on this regard, I welcome today Executive Vice President Dombrovskis and Commissioners Gentiloni and Schmit for this dialogue. This economic dialogue is part of the accountability of the EU economic governance framework. And today we are eager to hear about the main elements of the semester package, the latest developments under the semester surveillance framework and ongoing work to strengthen the governance and the resilience of the economic and monetary Union.

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), ECON Chair, As usual, before we start, I want to inform you about some housekeeping rules. Commissioners, today will be given six minutes each for their introductory statements, and this will be followed by a question and answer session with the ECON and EMPL members with two minutes for each question, which will be collected in groups of four. And then we will have nine minutes in total for the commission to answer. I ask you all to strictly respect the time given to you. And one last point on interpretation before we start today, we have interpreters for 18 languages. The Lithuanian interpretation is only available in passive mode. And I also would like to remind you, as usual, that only phone interventions or only audio connections will not be interpreted and that speakers are invited to speak in the mather tongue, when available. Now, let's go straight into the debate and give the floor to Executive Vice President Valdis Dombrovskis for six minutes.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, Madam Chair, honourable members, first of all, it's a pleasure to be back with you today at a time when finally we see economic recovery around the corner. Vaccination rates are rising, restrictions are easing. The economic situation and outlook is brighter than we predicted a few months ago. We project a strong growth both in 2021 and 2022. For the EU as a whole, economic output will return to its pre crisis level this year. And while divergences across member states remain, we expect nearly all economies to return to precrisis levels during the next year. This is in great part, a thanks to the EU's unprecedented policy response. As you know, we have made a forced use of flexibility within a fiscal and state aid rules, as well as in financial regulation.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, This remarkable coordination and alignment of our fiscal and monetary policy since the start of a pandemic has boosted our credibility and amplified their positive socio economic impact. The spring European Semester Package takes this coordination one step further. This year, we have adopted the European Semester to take into account roll out of the Recovery and Resilience Facility and to allow for its most launch. Since we are working on the assessments of the National Recovery and Resilience plans, which cover the broader reform agenda as a package focussed on setting out fiscal guidance and assessing macroeconomic imbalances. Actually, I look forward for discussing the state of play of the Recovery and Resilience Plan, our dialogue together on 14th of July.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, Today I will focus on European Semester, the EU's key policy tool for coordinating economic employment and social policies. Let me set out its the main elements of our policy guidance. First, based on the spring forecast, the general escape clause will stay activated in 2022, but no longer as of 2023. Secondly, the member states should not prematurely was draw fiscal support. Fiscal policy should remain supportive both this year and next. And here the Recovery and Resilience Facility will contribute a good deal. Its grant will make it possible to fund high quality investment projects and cover costs of the reforms that raise productivity, without causing higher national deficits and debt.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, As the recovery takes hold, fiscal policies will need to become more differentiated. Those countries with high debt should pursue prudent policies using that RRF to fund more investment. Those countries with low sustainability risks should support their economies, including through the impulse provided by the RRF. All members should preserve investment, improve the composition of their public finances, and pay attention to the quality of the budgetary measures. Growth nationally financed current expenditure should be kept under control for countries with high debt that should be limited. This will allow us to support the recovery and strengthen the EU growth potential. But without creating a permanent burden on public finances.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, Certainly for the medium term, it is important to maintain a credible and coordinated approach. I say that because there is still a lot of uncertainty and we do not know what the lasting effects of the crisis may be. And it is also why we decided not to open excessive deficit procedure at this stage. However, when economic conditions allow, member states should pursue policies aimed at prudent medium term fiscal positions, ensuring fiscal sustainability. We should be able to provide more precise guidance next year.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, Honourable members as health risks diminish, support measures should move from emergency relief to more targeted measures that promote a resilient, inclusive and sustainable recovery. A main priority during this phase will be to create jobs and to make sure that people have the right skills to fill those jobs as we strive for a recovery, as that is as inclusive as possible. Policy should shift from protecting existing employee company relationships to increasing job opportunities for people not in work. They should support and move from crisis induced unemployment and short term work schemes towards other opportunities.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, This is what our ease initiative is all about effective active support for employment. It invites member states to make the most of funding options available to do this, including from the RRF., which is designed to strengthen our country's social as well as economic resilience. In addition, as part of the Semester spring Package and in light of the recent Porto's summit, we helped reconfirm the 2020 employment guidelines to steer national policies at this critical phase. Nicolas will talk more on this.

SOUNDBITE (English), Valdis DOMBROVSKIS, Executive Vice-President of the EC in charge of an Economy that works for People, and Commissioner for Trade, Honourable members, the economic impact of Covid-19 also adds to the existing vulnerabilities in terms of macroeconomic imbalances. Our index reviews reconfirmed excessive macroeconomic imbalances existing in three member states: Cyprus, Greece and Italy. And nine other countries: Croatia, France, Germany, Ireland, Netherlands, Portugal, Romania, Spain and Sweden continue to record imbalances. The Recovery and Resilience Facility is an opportunity to tackle those challenges. Thank you. And I now cross the floor over to Paolo.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, Well, thank you, Madam Chair. Honourable members, let me give you some more details on the package before sharing a reflection with you on the on the way ahead. We adopted three fiscal surveillance documents, first commission recommendation for all member states, second and omnibus report covering all member states, except Romania, under Article 1-6 of the treaty due to the breach of the deficit. And that reference values. And third, a EDP recommendation for Romania. Our fiscal guidance remains qualitative and we continue to apply as well, said the general escape clause in 2022. We recommend all member states to further support the recovery in 2022 by preserving national finance investment and in particular through the use of the RRF. Let me therefore underline that we want all member states to pay particular attention to the composition of public finances and the quality of budgetary measures.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, We propose to prioritise sustainable and growth enhancing investment, notably to support the green and digital transition. In addition, fiscal and structural reforms would help provide financing for public policy priorities and contribute to the long term sustainability of public finances. This also includes the strengthening of the coverage, adequacy and sustainability of health and social protection systems. Concerning the EDP, we have prepared an omnibus report, as I said, in response to several member states breaking the reference values. Overall, our analysis suggests that the deficit criterion is not fulfilled by all member states except three. Our analysis also suggests that the depth criterion is not fulfilled by 13 member states. As mentioned by Valdis, we consider that at this juncture, a decision on whether to place these member states and under the EDP procedures should not be taken.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, The only state that is subject to an EDP is Romania, it has been handled in a specific way because its deficit above the reference value reflects fiscal policies that pre-date the pandemic. Romania has been under the EDP since spring 2020, and the new recommendation asks Romania to put an end to the excessive deficit situation by 2024. Turning to the macroeconomic imbalances, the Alert Mechanism report of last November proposed 12 member states or an in-depth review in order to examine more closely the risks to macroeconomic stability. The covid crisis has dramatically changed the backdrop against which we have been assessing imbalances, but most of the imbalances which were already there before persist. Main message from the IDR is that with the covid crisis, imbalances have typically stopped the previous trend of gradual improvement, and a number of them have worsened with the crisis.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, That is the case of private government and external debts. They have increased in nearly all countries, sometimes by large margins. External accounts have been mostly stable over this crisis. At the outset of the crisis, current account deficits were very limited in EU countries. Still, in a few member states where tourism is very relevant, current accounts worsened somewhat with the crisis. In addition, large current account surpluses persist. All the 12 countries analysed in the IDR has been identified with imbalances or excessive imbalances already last year, and the respective classifications have remained unchanged. Honourable members. The policy focus is now clearly centred on the effective implementation of the Resiliance plans, and we will discuss this together in mid-July.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, A strong implementation of the RP reforms and investment will be important to support growth and to create an economic environment which in turn favour the correction of imbalances and the deleveraging of the economies. The commission's assessment of RP takes into account to what extent they contribute to effectively addressing imbalances. All this calls for continued and close monitoring, and the commission will continue to do that. This brings me to a final reflection as we go forward on economic policy. Surveillance and coordination will need to go hand in hand with the implementation of national recovery and resilience plans until the end of 2026. Our goal is not only the rebound of our economies bringing us back to where we were in 2019.

SOUNDBITE (English), Paolo GENTILONI, European Commissioner for Economy, Our goal, the goal of next generation EU is to go beyond the growth and to achieve a stronger and sustainable path of growth for the EU. This will imply changes to the European semester cycles in the years ahead, and this process will need to pursue President Von Der Leyen's commitments to integrate the SDGs in the semester. In this reflection, it will also be important to take into account the relaunch of the six and to path-review. The outcome of this review will determine many aspects of the way we do things moving forward. Currently, as you know, the review is still on hold and should resume this autumn once the recovery is well underway. Thank you. Now to you, Madam President.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, Thank you, Madam Chair, honourable members. Today's exchange of views takes place in a key moment of the rollout of the EU recovery strategy. And this year we have learnt how indispensable our social foundations are for the resilience of the EU and its member states. Our social protection systems have allowed to cushion the consequences of the crisis and preserve our economy. National welfare state systems have helped protect Europeans lives and income. You show true solidarity by deciding in record time, on emergency instruments like SURE, at the most ambitious recovery package ever, next Generation EU.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, The answer that the EU has deployed provides the EU and member states with the opportunity to rebuild our economies and societies in a more inclusive and sustainable manner. In this context, the European Semester 21 Spring Package comes at a critical juncture. It comes after the important social summit in Porto, where leaders expressed their engagement towards deepening the implementation of the European Pillar of Social Rights at EU and national level as a fundamental element of the recovery.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, They also expressed their support of the Pillar Action Plan and the new 2030 headline targets on jobs, skills and poverty reduction. I would like to highlight here in particular the targets aiming at quality job creation. 78 percent of people aged from 24 to 64 should be in employment and we should aim at a better integration of women in the labour market. Finally, the importance of closely following, including at the highest level, the progress in the implementation of the Social Pillar and the headline targets for 2030. It comes against the background of the approval and rolling out of the National Recovery and Resilience Plans, which provide a unique opportunity to build better with green digital and social objectives pursued, jointly under a common vision and with more vigour.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, Only by moving in this direction, we can really build an economy that works for people catering to the needs and aspirations. In this regard, the support of the European Parliament has been instrumental in anchoring key social objectives in the recovery package. EU leaders not only welcome the new EU headline targets, but they also stressed the key role of the revised social scoreboard, with a view to monitoring social Europe in the context of the European Semester. And I want to recall that the president's inner agenda for Europe said very clearly that I quote our economic policy must go hand in hand with social rights, a social market economy that integrates the sustainable development goals is therefore the right way to strengthen the resilience of our economies and our societies.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, The EPSCO Council of 14th of June formally endorsed the proposal for a new headline indicators in the social scoreboard, for which we can measure social progress with a view to the vision and the objectives set for 2030. All these elements and the message of Porto are also well reflected in our proposal for the 2021 employment guidelines as part of the Spring Semester package. Already in 2020 the guidelines were adjusted substantially to reflect, in particular the political priorities of this Commission, notably the green and digital objectives. The further mention of the twin transition and the integration of the sustainable development goals.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, The need for updated policy guidance to member states in light of the socio economic consequences of the Covid-19 crisis. The employment guidelines cover the following areas, boosting the demand for labour enhancing labour supply and improving access to employment skills and competences, enhancing the functioning of labour markets and the effectiveness of social dialogue. And finally, promoting equal opportunities for all fostering social inclusion and fighting poverty. As the latest changes remain fully valid in the current context, the Commission proposes that the Council carries over the 2020 employment guidelines for 2021. However, we did propose an update of the recitals to reflect the latest developments, namely by agreeing that the implementation of the Social Pillar to Recovery and Semester Process.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, The employment guidelines are fully in line with the Commission recommendation on effective active support to employment presented on March 4th. His in particular provides the member states with advice on how to accompany labour market transitions from declining to expanding sectors, including green and digital, to foster a job rich recovery and quality job creation. The modernisation of labour market institutions, promotion of upskilling and reskilling and reinforcement of social protection and health systems will be crucial to strengthening economic and social resilience, and securing growth and employment.

SOUNDBITE (English), Nicolas SCHMIT, European Commissioner for Jobs and Social Rights, In the Recovery and Resilience Facility Plans there are many promising reforms and investments included, including notably in the employment skills and social domain's. Reforms and investments supporting the categories of people who have been hit hardest, namely women, young people and children. Future high in several national plans. It is key to ensure effective implementation. Thank you very much.

Economic Dialogue and exchange of views on the 2021 European Semester Spring Package in EMPL/ECON Committees with Valdis DOMBROVSKIS, Paolo GENTILONI and Nicolas SCHMIT: opening remarks by Committee Chairs and Commissioners

Info

Description

Related media

EMPL - Committee on Employment and Social Affairs

ECON - Committee on Economic and Monetary Affairs