Mr. Koos Richelle:

I thank the Chairman and honourable members for their invitation. It is a pleasure and an honour to be here. It is an honour for reasons I do not have to explain. It is a pleasure because this is the only parliament that has invited people from Brussels to come and explain the social elements of EMU. I thank it for this. As part of the ongoing work to complete EMU, the European Commission on 2 October adopted a proposal to strengthen the social dimension of EMU. This communication can be understood only in connection with the blueprint the Commission published on the way forward for EMU.

The work started under the Irish Presidency of the European Union. Ireland has made a much appreciated input into this matter. The discussions at the time were critically important for the proposals on the table. The social dimension of EMU relates to the ability of economic governance mechanisms and related instruments to identify, take into account and address problematic developments related to employment and social policies in monetary union in good time. The proposals set out concrete ways to develop the social dimension of monetary union as an integral part of economic governance.

We see three major strands of action. First, there are reinforced surveillance of employment and social developments and strengthened policy co-ordination within existing economic policy co-ordination instruments. Second, there are enhanced solidarity action and support for labour mobility. Third, there is a strengthening of social dialogue. When we started to develop our thoughts, there was a big discussion on whether we should build this into macroeconomic governance or make it a separate line. This discussion was quickly ended with the conclusion that if we did not build it into macroeconomic governance, we would lack the strong legal foundation created for macroeconomic governance. Such a thing does not apply for social governance at a European level. We would also have a difficulty in bringing this into the yearly process of discussion.

We developed the idea of developing a limited number of additional auxiliary employment and social indicators in the main part of macroeconomic governance, that is, the alert mechanism report we produce every year. It was published on 13 November this year, with the annual growth strategy and the joint employment report. The in-depth country reviews assessing the existence of macroeconomic imbalances should also consider a wide range of social indicators to clarify interlinkages between mounting macroeconomic imbalances and social developments and arrive at better calibrated policy orientations.

The Commission has put forward an autonomous scoreboard of key employment and social indicators allowing for early identification of major negative developments in the employment and social performance of a member state, as well as a significant divergence between countries. The proposed indicators on this scoreboard are: unemployment levels; NEETs, people not in employment, education or training, and youth unemployment rates; the real gross disposable income of households; the at-risk-of-poverty rate of the working age population; and inequalities. The Commission believes these indicators should allow for timely identification of major employment and social problems, especially those with cross-border effects. The cross-border effects make the link with the European semester.

The issues are not just expressions of a warm heart, a good feeling and sympathy. They can also be put into clear economic reasoning. High levels of unemployment and inequality translate into lower domestic demand and spillover effects for imports. They result in a loss of human capital and skills, which undermines future productivity. They may lead to political instability and insecurity and a country is confronted with higher rates on the financial markets. The Commission has incorporated the employment and social scoreboard into the draft joint employment report that is linked with the annual growth strategy. This will help to better target the discussions in the course of the European semester where we have facts and figures to deepen our analysis of a country and form the basis for country-specific recommendations that will be issued in May in view of the European Parliament elections in early June next year.

Having a scoreboard is one issue. Identifying countries or sectors for actions and priorities is a second. The scoreboard must be understood because it includes only facts and figures. To understand the scoreboard, we use the work of the employment committee and the social protection committee, two committees serving the Employment, Social Policy and Consumer Affairs, EPSCO, Council at which these issues are dealt with on a political level. Policy guidance based on best performance and multilateral surveillance can help to focus the efforts of governments and stakeholders and there is a world to gain. Europe is not really a learning society. Despite the existence of many mechanisms and institutions, committees and meetings at which people can learn from each other, there is not a habit of being interested in best practices and trying to copy them to save time and money.

Some things have changed since the crisis. A concrete example is the youth guarantee on which we had some conferences specifically geared to presenting best practice on benchmarking and mutual learning. Public employment services are very much involved in this idea of comparing their performances. We have the open method of co-ordination in place in the social and employment fields that could be used on a structural basis. Apart from enhanced surveillance, there is a second strand of action that concerns enhanced solidarity which is to be set in motion through reinforced EU financing instruments, especially the European Structural Funds, the European Social Fund, the Globalisation Adjustment Fund, the fund for European aid for the most deprived and the youth employment initiative. These are the main providers of money.

Proposals to support labour mobility and effective transnational matching between labour supply and demand are being stepped up. We have many unemployed persons in Europe, but we also have more than 2 million vacancies, many of which are unfilled for longer than six months. Skills are not always available where the jobs are.

Mobility is important and in that sense, we will try to go live on 1 January with a job mobility portal called Eures, in which public employment services can match vacancies and CVs across Europe.

The Commission also considers establishing an embryonic fiscal capacity linked to deeply integrated co-ordination mechanisms. I refer in particular to the strengthening of co-ordination of policies and reforms through an ex-ante mechanism and on the creation of the CCI convergence and competitive instrument that has been indicated in the blueprint, but not received very positively until now by the member states. In the longer term, the CCI should be seen as the precursor for what is mentioned as a euro area budget and fiscal capacity that would provide for EMU level stabilisation tools, such an EMU unemployment benefit scheme. The emphasis here is on the limits of the current legal framework. We could not do that without a treaty change. The maximum distance we could go is this competitiveness and convergence instrument that would provide a bit of macroeconomic support to countries that are confronted with an asymmetric shock in order to prevent them from going down the whole slope, and give them a kind of solidarity support from the rest of the Union.

The last trend aims better to involve the social partners in the economic governance of the monetary union. We have begun a tradition of consulting the social partners at European level before we issue the annual growth strategy and the joint employment report. There is a need to make more concrete consultation with EU and national social partners at key steps of the decision making process within the European semester and what I might call national semesters. It is still a work in progress. Every year we try to move forward in harmony with other stakeholders in order to strengthen economic governance, especially the social dimension of it. In the longer term, the Commission has put proposals on the table for completing and making monetary union sustainable, and we pursue reflections so that we can learn the thoughts of the member states.

The next steps come at the December summit of the European Council summit of heads of state and governments, where we expect the heads of state and governments to endorse the short-term proposals being made on the scoreboard, and encourage the committees and the Council to do further work on this. We are working closely with the employment committee and social protection committee, but with the scoreboard, we also need to introduce threshold triggers. Nothing of this social dimension will trigger automatically any consequence. It is to understand better what is happening in the social field and ex ante to plough this into policy making. Unlike the macroeconomic governance of the six pack and the two pack that may trigger automatic consequences, including fines, this is not the case at the moment for the social element. We are committed to make progress in this area and we want to go forward in close co-operation with all stakeholders on the European and national level.

Chairman, I hope that this was a sufficient introduction to provoke many interesting questions.