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29 February 2012                                         Issues PaperIn the context of the European semester, the March Eu...
1.          Fiscal consolidationProgress has been made, but, given structurally weak fiscal positions in several MemberSta...
Prioritizing growth-friendly expenditure, such as education, research and innovation,which are an investment in future gro...
Romania, Spain are likely, however, to have lowered these estimates.) The modernisation ofpension systems should be couple...
2.      Growth and competitivenessA number of priority areas to                                                           ...
deteriorated over the past few                                                                                            ...
productivity developments. Recent substantial improvements notwithstanding, Belgium,Italy, Ireland, Spain and Portugal hav...
Protecting the vulnerable:As demonstrated by the chart, many EU Member States face significant challenges with regardto po...
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Le rapport de Van Rompuy sur les couts salariaux

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Ce rapport présenté le 1er mars aux dirigeants européens par le président du Conseil, Herman Van Rompuy, et le président de la Commission, José Manuel Barroso, dans le cadre d'une
coordination plus stricte de la politique économique et budgétaire européenne indique que les coûts salariaux totaux ont crû en Belgique plus vite que dans la plupart des pays européens cette dernière décennie.

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Transcript of "Le rapport de Van Rompuy sur les couts salariaux"

  1. 1. 29 February 2012 Issues PaperIn the context of the European semester, the March European Council gives, on the basis of theCommissions Annual Growth Survey, guidance to Member States for the Stability orConvergence Programmes and National Reform Programmes to be submitted by each MemberState in April. As described in the Presidencys synthesis report on the European Semester,progress is lagging in a number of key areas where reform is essential to promote growth andjobs. Furthermore, the recent Alert Mechanism Report by the European Commission points topossible challenges and risks raised by macroeconomic developments in some Member States.The stagnation of economic activity in 2012, as projected by the latest Commission interimforecast, also highlights the necessity of serious action to revive growth across Europe.The objective of the discussion in the European Council is thus to identify the prioritiesMember States should focus on in the preparation of their National Reform Programmeand Stability or Convergence Programme. The Commissions Annual Growth Survey hasidentified a number of key priorities for 2012. Some of them, such as restoring normal lendingto the economy, requires action at the EU level and are being addressed. Others require actionat Member State level. This paper aims to highlight these through a number of illustrative,though non-exhaustive charts and figures. Of course, by definition, these illustrations arepartial in nature. Moreover, they will not capture some of the more recent reform measures andactions taken in some Member States. But given the scale of the economic challenge Europefaces, their underlying message remains pertinent.
  2. 2. 1. Fiscal consolidationProgress has been made, but, given structurally weak fiscal positions in several MemberStates, fiscal consolidation needs to be pursued in earnest. Member States benefiting fromfinancial assistance programmes have been leading fiscal efforts, with Greece, Portugal andIreland recording changes in the structural balance above 5 percent of GDP since 2009.Looking ahead, as previously agreed, differentiated strategies should be pursued andimplemented within the common framework, taking account of country-specific fiscal andmacro-financial risks. Countries under an assistance programme or market scrutiny should stickto agreed targets, whilst those with more fiscal space should let automatic stabilisers operatefully. The following graph, based on the Autumn 2011 Commission forecast, highlights thechallenge, as showing the distance between the then projected 2011 fiscal deficit, MemberStates 2012 targets and the three percent deficit limit. Percent of GDP Government fiscal balances 6 2011 General government balance in 2011 autumn forecast 2012 Government target (SCP or more recent up to 4 Nov 2011) 2 0 BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK (fy) -2 3% 3% -4 -6 -8 -10 -12 Source: Commission ServicesTo ensure growth-friendly consolidation, Member States should pay particular attentionto the following elements:
  3. 3. Prioritizing growth-friendly expenditure, such as education, research and innovation,which are an investment in future growth, and ensuring the efficiency of such spending.Nordic countries, for example, seem well positioned as regards the level of publicinvestment on R&D. For many Member States, however, prioritization on R&D remains achallenge. R&D expenditure in the public sector Growth rate percent of GDP 25% 1,2 5-year growth rate (lhs) Level 2010 (rhs) 20% 1 15% 0,8 EU 27 level average 10% 0,6 EU 27 growth average 5% 0,4 0% 0,2 EU27BE BG CZ DK DE EE IE GR ES FR IT CY LV LT LU HUM T NL AT PL PT RO SI SK FI SE UK -5% 0 Source: Innometrics. Innovation Union Scoreboard 2011Pursuing the reform and Public Pension Spending relative to GDPmodernization of pensionsystems, respecting national IT FRtraditions of social dialogue, to AT EL PLensure financial sustainability PT HUand adequacy of pensions. After DE EU 27reforms over many years, a FI 2060 BE 2007number of Member States SI SEanticipate only moderate DK LUincreases of public pension ES BG CZexpenditures, but for some, MT SKwithout further reform, the LT UKprojected change could be RO NLsubstantial or the level could CY EEremain elevated. (For example, LV IE Percent of GDPthe chart suggests that in 0 5 10 15 20 25 Source: Interim EPC-SPC Joint Report on Pensions, 2010. Hungarys 2009 pension reform is not included in the projections.Luxembourg, Cyprus, Greece,Romania, Slovenia, or Spain public pension expenditure could rise by more than 6percentage points as a share of GDP over the next fifty years. Latest reforms in Greece,
  4. 4. Romania, Spain are likely, however, to have lowered these estimates.) The modernisation ofpension systems should be coupled with a reform of health systems aiming at cost-efficiency, sustainability and a more healthy labour force to lift labour participation.Growth-friendly national tax policies. This can be achieved via: − Reducing distortive high tax rates, including by a broadening of the tax base. − Reducing the tax burden on labour, especially on low income earners. This seems to be a challenge for most Member States, with only Ireland, Malta, Luxembourg or the UK reporting a tax burden below 30 percent, which is close to the average of OECD countries. While in some parts of Europe, developments have been encouraging, in others, budgetary pressures during the crisis drove up the tax-related cost of labour. Tax burden on Labour Percent 60 2006 50 2010 40 30 20 10 0 Fr m p 7 y Sp k er e St r g th i c Lu ing ia Ne Gr ia U em om Ge ce Au ia Es nia Sw nia ain Sl land Cy a Hu ly Po d M d R stria Sl onia De enia ec E n La y us ite Bu gal Po s Ire es Re 2 ar th eec an n al t ar lan e nd iu Li ubl K r ak tv ted u Ita an la d lga pr at h U ed nm ua a x d rt u ni bo rm lg ng la om ov n t ov Be Fi Cz Un Source: European Commission. As 2010 dat a is unavailable for Cyprus, the dat a point for 2010 refers to 2007. T he tax burden is measured as the difference between the before- and after-tax wage for an employed person with low earnings. − Improving the efficiency of Shadow economy (as percent of GDP) 50 tax collection and tackling 45 tax evasion to increase 40 2000 government revenue, 2007 35 including through agreements 30 with third countries based on a 25 coordinated approach where 20 15 relevant. Measures to 10 encourage moves from 5 informal or undeclared work 0 to regular employment should eth gd g to a H S pa m h pu en p a nl k Bu a n a l ia th c e Cz ak S w a n d un in Popub ic D ma d G rel a ce La ni a en n y M ary ia e r om lg l ov d F r nds rtu l ic I ta ni x us s d b ia Po ta ly Li ree s Es ga ri Be g a N Ki n our Cy eni Fi ma r m i er n U Lu A t ate Sl lan G ru l iu Ro uan tv te e m t r e c Re e d al I n Re b g a la be reinforced. Gains from S d te ni ov U doing so appear large in Sl Source: Shadow Economies all over the World: New Estimates for 162 Countries from 1999 to 2007 Southern and Eastern Europe (2010); Paper for World Bank Regional Report. and the Baltic Countries.
  5. 5. 2. Growth and competitivenessA number of priority areas to Product Market Efficiency and Growth, 2000–10reduce the productivity gap,enhance trade and reap the 1,0benefits of the Single Market Adjusted change in real GDP per capita, 0,5 Swedenhave been identified by the Greece 2000–10, annualized (percent) Austria Finland Netherlands SwitzerlandCommission in the Annual 0,0 Iceland Germany IrelandGrowth Survey and by Member United Kingdom Belgium -0,5 Cyprus France DenmarkStates. Reforms which improve Spain Maltathe business environment and -1,0raise competitiveness are a Italy -1,5 Portugalpriority. Member States need tofocus on: -2,0 3,5 4,0 4,5 5,0 5,5 6,0 Goods market efficiency index (2010)¹ Further opening of Source: IMF; October 2011 Regional Economic Outlook ¹ Higher value means better score. Because of data limitations, not all MS are shown. sheltered sectors by removing The indicator Goods market efficiency is developed by the World Economic Forum. It is an aggregate measure of domestic and foreign competition in product markets, including measures on the extent of market dominance, unjustified restrictions on effectiveness of antimonopoly policy, tariffs, restrictive rules on FDI etc. professional services and the retail sector. Efforts are underway, notably in countries Global Government Effectiveness Rank such as Italy, Portugal or Greece. ROMANIA BULGARIA IT ALY GREECE Ensuring a more effective HUNGARY LAT VIA government sector, for example POLAND LIT HUANIA 2005 by ensuring that exchanges SLOVAKIA SPAIN 2010 between administrations and CZECH SLOVENIA enterprises as well as citizens can PORT UGAL MALT A be done mostly digitally; reducing EST ONIA IRELAND administrative burdens; increasing FRANCE UNIT ED ST AT ES CYPRUS the absorption rates of EU funds, GERMANY UNIT ED and ensuring that the judiciary BELGIUM LUXEMBOURG operates swiftly and fairly. The NET HERLANDS AUST RIA Nordic countries are indeed world SWEDEN DENMARK leaders in government FINLAND effectiveness, and large gaps 45 55 65 75 85 95 Source: World Bank Governance Indicators 2011, A x percentile rank implies that x percent of 213 separate them from many other countries in the world have a lower ranking on the indicator in that year. T he WGI summarize information from 30 existing data sources on views and experiences of citizens, entrepreneurs, and Member States. Worth noting also experts in the public, private and NGO sectors. Government effectiveness captures perceptions of the quality of public services and the civil service; the degree of its independence from political pressures, that the relative ranking of a the quality of policy formulation and implementation, and the credibility of the governments commitment to such policies. number of Member States has
  6. 6. deteriorated over the past few Patents and Growth, 2000–10 years. 1,0 Adjusted change in real GDP per capita, 2000–10, annualized (percent) 0,5 Sweden Greece Promoting innovation and Austria Netherlands Finland 0,0 Switzerland Iceland Ireland Germany business creation by improving Belgium United Kingdom -0,5 Cyprus Malta France Denmark the quality of support systems, Spain -1,0 and promoting entrepreneurial -1,5 Portugal Italy skills. European venture capital -2,0 markets remain underdeveloped, 0 1 2 3 4 5 6 7 8 9 10 Patent applications in 2008 per billion euro GDP and patenting especially Sources: IMF October 2011 Regional Economic Outlook and 2011 Innovation scoreboard sluggish in some parts of Europe. Venture Capital as percent of GDP in 2010 Percent 0,25 0,2 0,15 Average 0,1 0,05 0 ES R SE LU CH RO BG L E IE K K O U FR 27 BE CZ FI IT T PT PL N D G U D N A H EU Source: Innometrics. Innovation Union Scoreboard 20113. Employment Labour costs and export growth (2000-2010) Mobilising labour for 14 growth: 12 Germany Increase in export/GDP ratio, 2000–10 10 Austria Netherlands 8 SwitzerlandTo create jobs and ensure a job-rich (percentage points) 6 Sweden Ireland 4 Denmarkrecovery, several priorities have been 2 United Kingdom Belgium Portugalidentified in the Annual Growth 0 Italy -2 SpainSurvey. -4 France Greece -6 Finland -20 -10 0 10 20 30 40 50 Revising wage-setting Change in ULC in manufacturing, 2000–10 (percent) Sources: IMF October 2011 Regional Economic Outlook mechanisms, in conformity with national social dialogue practices, to better align changes in wages with
  7. 7. productivity developments. Recent substantial improvements notwithstanding, Belgium,Italy, Ireland, Spain and Portugal have seen nominal unit labor costs in manufacturingrising by over 20 percent in 2000-2010.Enhancing labour mobility. According to the September 2011 Eurobarometer, aroundone in 10 EU citizens has worked in another Member State, the proportion being higherin Luxembourg (35 percent) and Ireland (21 percent). But for more than half ofrespondents working abroad was considered of no interest.Restricting access to early retirement schemes and other early exit pathways whilesupporting longer working lives. In most EU member states, the average effectiveretirement age still remains below 62 years, while in many other developed parts of theworld it now exceeds 65 years. Effective average retirement age of men (2004-2009) Korea Iceland Japan Romania New Zealand Portugal Cyprus Chile Estonia Sweden Switzerland United States Australia Norway Denmark United Kingdom Bulgaria Latvia Canada Ireland Turkey Netherlands Czech Republic Slovenia Lithuania Greece Finland 62 years Germany Spain Poland Italy Malta Hungary Slovak Republic Belgium France Austria Luxembourg 45,0 50,0 55,0 60,0 65,0 70,0 Number of years Source: OECDAs agreed by the EC on January 30th, a particular effort needs to be placed onraising employment of the young. Improving skill-sets, training and apprenticeshipscan play a role here.
  8. 8. Protecting the vulnerable:As demonstrated by the chart, many EU Member States face significant challenges with regardto poverty and social exclusion. Action should thus focus on:− the effectiveness of social protection systems;− the implementation of active inclusion strategies;− access to services supporting integration in the labour market and in society. People at risk of poverty after social transfers (percent of total population) Percent 25 2005 20 2010 15 10 5 0 in e n Fr ain ep ia L ru s ec Bu ium e n ic ov a Fi kia G nd N M ry Po tri a ay un g N and Sp e Es any ted Sw and Ic o m A ds Cy ly r d Ire nia r la a ov a m l ce er k L u thu ia m ia Sl e n i Ro tuga H our ec Po lan he lt Sl a n i G m ar R r D ubl K ed Li atv x e an I ta ga n w an h lga la et a p a re to gd us m nl lg el or b Be Cz ni U Source: Eurostat; data for Slovenia in 2005 is unavailable, the data point thus reflects 2004. *****This paper illustrates the extent of current reform challenges at hand. To address these, acomprehensive and broad approach, to be reflected in the national reform programmes, shouldbe adopted, facilitating the reform process - politically, socially and via improved marketperception. This and coherence across sectors and ministries would also ensure that reformefforts are sustained and can bear fruits relatively quickly.

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