Verbatim report of proceedings

Wednesday, 15 December 2010 - Strasbourg

13. Economic governance and Article 9 of the Treaty of Lisbon (debate)

  President. − The next item is the debate on

the oral question by Stephen Hughes, Pervenche Berès and Udo Bullmann, on behalf of the S&D Group, to the Council: Economic governance and Article 9 of the Treaty of Lisbon (O-0200/2010 - B7-0660/2010), and

the oral question by Stephen Hughes, Pervenche Berès and Udo Bullmann, on behalf of the S&D Group, to the Commission: Economic governance and Article 9 of the Treaty of Lisbon (O-0201/2010 - B7-0661/2010)

  Pervenche Berès, author. − (FR) Madam President, President-in-Office of the Council, Commissioner, both your institutions have worked very hard in the field of economic governance and, today, the European Parliament is debating the six Commission proposals on economic governance.

Today, we are under the regime of the Treaty of Lisbon, Article 9 of which provides that, in the definition and implementation of its policies and actions, the Union shall, and I quote, ‘take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health’. This article is binding on all the institutions of the Union and on all its policies.

Yet, today, you have not carried out an impact assessment on the ‘economic governance package’ on which you are asking me to deliberate. These impact assessments are very close to the heart of the Commission when, for example, it comes to implementing legislation on electromagnetic diseases.

This is to be welcomed, but we would like the same zeal to be applied to economic governance. Otherwise, what do we see? We see Commissioner Rehn explaining to us today that there would be three pillars in his strategy: growth on the one hand, economic governance on the other, and, finally, supervision of the financial markets. But if the right hand does not know what the left hand is doing, the action of the European Union will be incoherent and European law in terms of Article 9 will not be complied with.

We therefore urge you to evaluate the social impact in terms of employment, in terms of the funding of retirement pension, in terms of social protection, in terms of the funding of public services, of the measures you are preparing to take.

What impact will the fight against poverty have on your 2020 Strategy objective, when we learn that, today, within the European Union, 116 million people were threatened by poverty or social exclusion on the basis of figures valid for 2008?

The reality is that the Commission seems to be applying a secret mandate asking you, in response to the concerns of some Member States, within the Council, to reform the Stability and Growth Pact to make it more binding, to provide for preventive and corrective sanctions, while ignoring the necessary investment strategy around what you yourselves have adopted, the 2020 Strategy.

We know that, as regards job creation, over the next few years the situation in terms of growth prospects will be more difficult than in the years that have just elapsed.

We are not opposed to a return to public finance scenes but we are opposed to a growth strategy that has no means of financing, with austerity plans that may have immeasurable social effects, with potential consequences in terms of inequality, and where none of the inequalities, with respect to the distribution of wealth, is addressed.

This cannot be the spirit of the Treaty of Lisbon, for which we fought so hard and which you, President-in-Office of the Council, Commissioner, have an obligation to implement.

  Olivier Chastel, President-in-Office of the Council. − (FR) Madam President, Commissioner, honourable Members, I am delighted that the public is present. That is good.

I should like to thank Parliament, of course, for having put this issue on the agenda of this part-session. It allows us to address an important issue, on which a great deal of work has been done in recent months within the Council.

I am aware, of course, of the importance this Parliament attaches to economic governance and to its links with social issues in the broader sense, as set forth in Article 9 of the Treaty on the Functioning of the European Union. The obligation deriving from Article 9 must be complied with when defining and implementing all the policies and actions of the Union, including, therefore, all the work on future economic governance.

I should first like to point out that, during the Belgian Presidency, the importance of the implementation of Article 9 and hence of the cross-section clause has been referred to so often. I should therefore like to recall the conclusions adopted by the Council on 6 December on the social dimension in the context of an integrated Europe 2020 Strategy. These conclusions call on the European Commission to strengthen and encourage the use of the existing system for the evaluation of the social impact. It calls on the Council to produce a report on the way in which Article 9 is implemented in work and in European policies through the open coordination method. It also calls on the Commission to seek out means of implementing social mainstreaming and thus, also, Article 9 in the context of its flagship initiative of a European platform against poverty, which should be published in the next few days.

With regard, more specifically, to the new macroeconomic monitoring and coordination mechanism, the Council does not see employment and social protection as simply outcomes affected by the new macroeconomic monitoring framework, the impact of which would have to be studied, but also as factors stimulating macroeconomic and fiscal growth in the short and medium term. This is important if we want to avoid an unbalanced macroeconomic framework and preserve the institutional balance sought by the treaties.

The Council’s willingness to promote Article 9 in practice is also evident in the European Semester, which has to reflect, in an integrated approach, a balanced position between the Europe 2020 Strategy and the Stability and Growth Pact. The principles contained in Article 9 must therefore apply across all these documents and legislative measures so that they become an integrated whole.

With this in mind, the Council carried out its work in two phases. In the first phase, the work of the Council consisted in developing a European Employment Strategy, as provided for by the Treaty and the new economic governance framework. In the conclusions adopted on 21 October, the Council defined the place of the European Employment Strategy in economic governance.

In the second phase, at the 6 December European Council, the Council adopted a new instrument for the multilateral monitoring of employment and social policies, the Joint Assessment Framework, which will make for better monitoring of the employment and social integration policies of the Member States and, therefore, ensure that better account is taken of these dimensions at European level.

These new instruments will have to be mobilised in the preventive phase of macroeconomic monitoring so that adequate attention is paid to the situation of the labour markets and to social problems which could jeopardise Economic and Monetary Union (EMU). They will, of course, also be central instruments for the thematic monitoring of the Europe 2020 Strategy.

The Council also recalled that it intended to contribute both to thematic monitoring, based on the five key objectives of the Europe 2020 Strategy, and to macroeconomic monitoring, since both these frameworks are closely linked. And, in response to the request of the Belgian Presidency, the Social Protection Committee delivered an opinion on the social dimension of the Europe 2020 Strategy, in which it stresses the need for synergy among the priorities of the Europe 2020 Strategy and the indivisible whole formed by the objectives set by the European Council.

I would also note that the Council referred to Article 9 in other conclusions: the conclusions on pensions and the conclusions of the Council on social services of general interest.

Madam President, honourable Members, our discussion this afternoon allows us to address issues relating to economic governance and, in particular, its social aspects. As President-in-Office of the Council, I will naturally listen carefully to your speeches and I look forward to a fruitful exchange of views, which will help us all in the subsequent negotiations.

  Janusz Lewandowski, Member of the Commission. − Madam President, Article 9 of the Treaty of Lisbon, to which you are referring, really defines the specific features of the European social economic model. When you read our Europe 2020 Strategy you can see it explicit reinforces this very model of Europe by bringing together efforts to improve performance in areas such as labour participation, lifelong education, labour adaptability and mobility and social inclusion.

However, this is not a sufficient answer at this time of severe challenges, when the climate of crisis in Europe is affecting negatively, or even dramatically, the real economy, public finances, the labour market and the quality of life in Europe. To address the challenges revealed by the crisis, the Commission has launched several policy initiatives. To reinforce the stability of our financial system, the EU has agreed on a new architecture for financial regulation. This has been debated in Parliament. Secondly, to address the challenges to public finances and macroeconomic imbalances, the European Commission has proposed a comprehensive strengthening of economic governance in the European Union, the legislative package you referred to in your question.

The package includes, as you know, proposals to address excessive public debt more seriously than in the past by defining a satisfactory pace of debt reduction. It also proposes minimum requirements for national fiscal frameworks to ensure that they are in line with Treaty obligations as well as a monitoring system for macroeconomic imbalances such as large current account deficits or bubbles in the housing market. It underlines prevention and prudence to ensure better preparedness in times of economic downturn. To ensure the credibility of the new framework, the Commission is proposing a wide range of sanctions that should start kicking in at an early stage.

The philosophy behind the proposed legislation is that it should help Member States to follow disciplined policies and lay the basis for stable long-term growth performance, which is critical to the welfare of European citizens, while making an important contribution to the prevention of future crises.

Given the current economic situation it is really important to have this economic governance framework in place as soon as possible. As to the impact assessment, the government reforms were prepared by far-reaching analysis in the EMU@10 study in 2008. Also, in preparing and following up the Commission communications announcing the new governance structures of the so-called EU semester that were adopted in May and June 2010, the Commission discussed its proposal with many stakeholders alongside the European Parliament and the Council and promoted vigorous, broad-based debate of the issues. And of course, we was developed the proposals in the light of past performance and lessons learnt.

And what are the major lessons? The major lesson is that preventive action is much more valuable than imposing corrective sanctions on a state that is already in difficulties. Therefore our emphasis is on influencing positively the national policy mix responsible – and here is the real responsibility – for the trade-off between real economic revival and growth, and austerity and consolidation of public finances.

Europe needs both.

  Elisabeth Morin-Chartier, on behalf of the PPE Group. – (FR) Madam President, President-in-Office of the Council, Commissioner, following Mrs Berès’s question, I should like to focus on the economic model on which we in the Group of the European People’s Party (Christian Democrats) base ourselves: social market economics. That is to say we must indeed put all of our efforts not only into ending the crisis and combating poverty, but more importantly into ensuring the social inclusion of some of our fellow European citizens who are today left by the wayside.

This social inclusion must be addressed today, on the one hand to ensure that these fellow citizens can get back into work, which means creating jobs to fight the crisis, and on the other hand – and this is extremely important – to ensure that in the years to come we can have training programmes – initial training initiatives and lifelong learning initiatives – in every Member State, which will enable our fellow European citizens to adapt to the jobs of the future, to the new qualifications that we will require, and to the rise in the level of qualifications expected in the Europe 2020 Strategy.

On the basis of Article 9, therefore, we can clearly see that, beyond everything that is being done at the financial systems level, there is also an extremely important contribution to develop to ensure our fellow citizens are trained and able to fully become stakeholders in society because they are active in this society, and active means trained and ready to take on the jobs of the future.

I therefore call for Commission policies to comply with this objective, otherwise we will lose sight of the objective of a Europe with strong social cohesion.

  Antolín Sánchez Presedo, on behalf of the S&D Group. – (ES) Madam President, representatives of the Council and the Commission, ladies and gentlemen, over the last 50 years our economy’s interdependence has increased, along with the interdependence of our economic policies.

The eyes of citizens are on the European Union; they know that the process of European integration has placed many aspects of their lives under the responsibility of the EU institutions: many decisions are made jointly.

Many of the Member States’ traditional instruments have moved to European level, and everyone recognises that economic policies are an issue of common interest at European level. The European Union is therefore the focal point of this crisis: all eyes are on the EU.

We are not, as some say, in a ‘post-crisis’ scenario. At most we might be in a ‘post-recession’ scenario. Predicted growth for this year will be low and uneven, and the problem is that next year forecasts are still indicating that growth could decline slightly. The number of people unemployed in the European Union is currently 23 million. This crisis has opened up a significant social gap, and, moreover, it has put pressure on public finances and even threatened the future of the euro.

It is essential that we strengthen the economic governance of the European Union in order to respond to the crisis and ensure the future of the EU project. In order to tackle these common challenges, we need to restore growth and employment, change the economic model and promote global sustainable development, and we must do so while ensuring the future of the European social model.

From the first economic crisis in 1929, we learnt that the public authorities have a commitment to restoring growth and employment; from the second economic crisis, which was the rebuilding of Europe following the Second World War, that the new Europe should be built on foundations of social justice. Neither of those lessons must be forgotten, and both of them must play an integral role in the future of a sustainable Europe.

Article 9 of our Treaty on the Functioning of the EU states that ‘In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.’

It is not, therefore, just a question of austerity. Austerity could cause the economy to contract. We need policies that also promote growth, in other words responsible policies. It is also not a question of growing first and distributing later: we have learnt that distribution contributes to growth. It is also not a question of making progress first and later providing for the basic needs of citizens: we have learnt that education, health, social security and public services are essential in order for societies to progress. If they are not in place, they are costs that are a burden on the future of our society, and it is not possible to have a healthy economy in a sick society.

We therefore raise the following questions: must the future legislative framework on economic governance be in line with the model of a social Europe and Article 9 of the Treaty on the Functioning of the EU? Does a true impact assessment exist? Finally, is what we really want for President Barroso to fulfil his commitment to there being a social impact and to clearly state that Europe needs a new social pact, in terms of both fiscal and employment standards, a model that ensures employment, fairness, environmental responsibility and global development? Any other reform will be insufficient.

  Marian Harkin, on behalf of the ALDE Group. – Madam President, when I was canvassing for a ‘yes’ vote for the Treaty of Lisbon, I gave Irish citizens 10 reasons to vote ‘yes’ to Lisbon. One of those was the social clause, Article 9.

On several occasions in this Chamber and elsewhere I have asked the Commission and the Council to now apply Article 9 in their proposals on economic governance and, of course, in their response to the current economic crisis, which is a real test of their commitment to the social clause. In Ireland we see the evidence of this response, where the minimum wage has been cut by one euro an hour in the last week, and where invalidity payments and payments to blind persons have also been cut. What now do the phrases ‘the fight against social exclusion’ or ‘the guarantee of adequate social protection’ contained in Article 9 signify to those citizens?

Of course, you may say that this is an internal matter for Ireland, but it is not. The parameters for austerity in Ireland were set by the EU, and our government will send monthly reports to you. Will you remind them of Article 9 when the report comes in about the cut in the minimum wage? Why has this happened? This has happened because Irish banks and European banks engaged in reckless lending and borrowing right under the noses of the ECB.

The interest rates you are now charging to Ireland for borrowing, according to today’s newspapers, are 3% more than were charged to Latvia, Romania and Hungary. Representatives from the Court of Auditors say that there is no precedent for the EU charging such a margin on loans. Can I ask you to confirm or deny this situation? If it is true, please explain to me, so that I can explain to Irish citizens, how the social clause is working for them. This situation is specific to Ireland, but if it is a template for other Member States in trouble, then Article 9 is dead in the water.

  Philippe Lamberts, on behalf of the Verts/ALE Group. – (FR) Madam President, I will be brief. If we look at the policies being implemented today, broadly speaking there is an 80% cut in expenditure and a 20% increase in new revenue, and I think that is being generous.

Everybody knows very well that when there is an 80% cut in public expenditure, the first ones to pay the price are the most vulnerable people in our societies. I should therefore like to share my indignation with you by drawing on two contrasts: the first being the contrast I see between economic governance, on the one hand, and the EU 2020 Strategy on the other.

Economic governance requires harsh, immediate action and stringent rules that are binding. The EU 2020 Strategy indeed has good intentions, in particular to reduce poverty, but it is a soft, voluntary option and governments will only follow it if they really want to and have the time. There is nothing binding about any of that. I feel that is a contrast that is untenable and therefore incompatible with the spirit of Article 9.

The second contrast exists between the issue of economic governance, on the one hand, and the issue of public expenditure on the other. Public expenditure must be reduced quickly otherwise we will be heading for catastrophe. The debt must be reduced within a maximum of 20 years and, if possible, even sooner than this but without an impact assessment we are not giving it much thought.

When it comes to generating new revenue – because in any case a budget is made up of both revenue and expenditure – with taxes on financial transactions, taxes on energy, and a consolidated basis for corporate tax, we say, ‘Wait, an assessment is required, we must consider the impact, we must not do too much. Let us think about it, let us take our time, let us assess …’. I really do not understand why on the one hand we have to charge full speed ahead without worrying about the impact, whereas on the other hand we move slowly and take the time to think, while, in the meantime, the people are paying the price.

These contrasts, I think, demonstrate to everyone that Article 9 does not hold as much weight as the articles on economic convergence in the Treaties of the European Union and it is, I believe, a contrast we must resolve if we wish to win back the trust of our citizens.

  Proinsias De Rossa (S&D). - Madam President, I want to ask the Commission if it would give the House a specific definition of how it intends to implement Article 9. We constantly hear about macroeconomic monitoring. We never hear it talking about macro-social monitoring of what Member States are doing in pursuit of European social policy and objectives.

I want it to tell us if it intends to use this simply as an impact assessment, i.e. that it hopes its measurements will have no social impact. That is not good enough, because Article 9 is intended to promote the objectives of the European Union as outlined in Article 3 of the Treaty. It is not good enough simply to have no impact – it must have a positive impact. This is the obligation on the Commission and it must implement the treaties.

I also want to address the issue of social services of general interest, on which I am a rapporteur. There is absolutely no doubt whatsoever that the current crisis exit strategy which the Commission is pursuing is going to destroy social services of general interest in the Member States. You need only look at the Memorandum of Understanding which the Commission has concluded with the Irish Government for a demonstration of that. It is stated on page 2 that a reduction of current expenditure in 2011 of just over EUR 2 billion will be implemented, including social protection expenditure reductions, a reduction of public service employment numbers, a reduction of existing public service pensions on a progressive basis, other expenditure savings of over EUR 1 billion, and a reduction of close to EUR 2 billion in public capital expenditure against existing plans for 2011.

What other impact can that have than to decimate services of general interest, and in particular social services of general interest? So where is Article 9? Where was Article 9 when the Commission was negotiating this deal with a Conservative Irish Government on the point of collapse?

I would also ask the Commission, when it is going to present this Memorandum of Understanding it has signed off with the Irish Government before this House? It is obliged to do so under the Treaty of Lisbon. When are we going to see it? When are we going to have an opportunity to discuss it here?

One of the other aspects of this agreement which I mentioned this morning is the insistence by the Commission that the minimum wage in Ireland be reduced by EUR 2 000 a year. I repeat, the minimum wage. The Treaty of Lisbon declares that we must have adequate social protection, that we must encourage people to stay in work, that we must eliminate poverty traps, etc., etc., etc., and yet we reduce the minimum wage by EUR 2 000 a year. What will that do other than drive more people out of work into the safe haven, relatively speaking, of welfare dependency?

These are questions which the Commission must respond to. We do not want any more flannel. No more plámás. No more Eurospeak. We want clear answers on how the Commission is going to apply Article 9 of the Treaty in relation to economic governance and, in particular, on the arrangements it is making with Member States with regard to the crisis exit strategy.

  Salvatore Iacolino (PPE). – (IT) Madam President, President-in-Office of the Council, Commissioner, there is no doubt that remaining alert to the matter of economic governance is an absolutely right and proper aim of the European Parliament.

Article 9, mentioned in the question, is absolutely consistent with the need to take everything concerning the individual citizen into the greatest consideration.

Today, no more than a few hours ago, an important piece of legislation was passed, recognising citizens’ rights to take the legislative initiative, to give primacy to their right to citizenship.

Greater stability means more controls, it means intervening promptly and effectively, and it means making the most of competitiveness. Toughness must be combined with efficiency and substance. Social protection is closely linked to a real will to create jobs in a situation, such as our own, of particular difficulty.

For this reason, we need to talk about this – and talk about it meaningfully – with all the stakeholders.

  Kyriakos Mavronikolas (S&D). – (EL) Madam President, may I say that the question of economic governance and the targets it sets, especially as put forward under the Treaty of Lisbon, raise specific questions as to whether a policy is being applied that is socially correct, whether an economy is being applied that targets green growth and whether an economy is being applied that prevents against unemployment, especially among young people.

I should like to refer to the Republic of Cyprus, which is now under observation. The measures taken do everything except offer a way out into proper social policy and social standing, especially the measures which conflict with the interests of the young generations growing up on the island.

  Nikolaos Salavrakos (EFD). – (EL) Madam President, the new report on employment in Europe in 2010 highlights the fact that young people have borne the burden of the crisis and that young people are facing more and more problems, with unemployment mainly affecting the 15-24 year age group. It is not enough to establish the problem; we need to resolve it. We have 3 million unemployed in the European Union. Commissioner, tell me please, what are we to do about it? I consider that the efforts you have made to record the problem are positive, but the problem needs to be resolved and you have an historic role to play. What is worrying for Greece, the country I come from, is that unemployment among young people up to the age of 24 has reached 27.5%, an astonishing and very dangerous number; and what is most worrying is that unemployment rates are not falling as more formal qualifications are obtained. As you know, employment is not merely a livelihood; it is the basis of human dignity. We need to give our young people dignity.

  Andreas Mölzer (NI). – (DE) Madam President, there have been recent reports in the media about the directors of the failing German bank HRE being entitled to huge pensions after only working there for two years and on the basis of contracts which were drawn up after the bank had already received massive amounts of state aid. This confirms the belief of the citizens of the European Union that money is simply being thrown at the banks, while strict austerity programmes are being imposed on ordinary people.

Article 9 of the Treaty of Lisbon refers to ‘a high level of employment, the guarantee of adequate social protection’. For those people in Europe who have been hard hit by the financial and economic crisis and who are now being forced to make savings, this sounds like adding insult to injury. For example, when the pension reform in Hungary is rolled back and the citizens have to transfer back to the state pension system or lose 70% of their pension rights, it is clear that an icy wind is blowing through the EU. In the debate in plenary on the future of the euro area, the President-in-Office of the Council explained that events in Dublin had highlighted the importance of an economic policy control mechanism in the EU. In my opinion, completely the opposite is the case. We have too much centralism and too much conformity.

  Janusz Lewandowski, Member of the Commission. − Madam President, to defend what is called the European social economic model we have to adjust the European model to reality, namely the global challenges and the crisis in Europe. If we want to defend the model, it cannot remain the same.

A major assumption, which has already been stated, is as follows – this is a basic philosophy: consolidation and the regaining of the confidence of the markets is the basis for stable, sustainable growth and jobs. That is critical to the future welfare of European citizens.

Referring precisely to the questions from Ms Harkin and Mr De Rossa – Mr De Rossa’s being Irish-oriented – we are setting the same rate as the IMF in this respect. We are not obliged to make our Memorandum to the Irish Government open to the public. I have to say that there is nothing more anti-social than to produce deficit and debt, which will be charged to future generations of European citizens. There is nothing less responsible than banking practices that are transferring the banking problem into the sovereign debt problem. These are anti-social, irresponsible actions and we cannot blame the Commission for them.

We recognise that there is a clear tension between the austerity being undertaken in so many countries and its impact upon social inclusion and the level of poverty. We recognise that and therefore we need impact assessments and discussions. Such a discussion has been conducted here in Parliament.

Again, our basic philosophy is that prevention is what is valuable. Prevention means that we should influence the policy mix at the national level. The policy mix at national level is mainly responsible for the trade-off between austerity and growth. This is the major responsibility, but we are to influence this policy mix at national level in such a way as to discourage building the future of Europe upon debts and deficits because that does not lead anywhere.

  Olivier Chastel, President-in-Office of the Council. − (FR) Madam President, Commissioner, ladies and gentlemen, as you will have understood from my first speech, the Council is well aware of the obligations pursuant to Article 9 of the Treaty on the Functioning of the European Union regarding the need to take account of the overall aspect of the requirements associated with promoting a high level of employment, ensuring adequate social protection and combating social exclusion, as well as achieving a high level of education, training and protection of human health. These obligations are and will be duly respected in all of the Council’s work.

Given the universality of this obligation, it is also required in the field of economic governance. It applies to the results contained in the report by the task force chaired by President Van Rompuy, which the October European Council fully endorsed. It also applies to the six legislative proposals that came out of the work of the task force, which were tabled by the Commission on 29 September.

Nevertheless, compliance with the obligations in Article 9 does not require a formal social impact assessment procedure. Our obligation, which applies to both the Council and Parliament, especially since it is up to our institutions to lay down the policies and work of the Union by adopting legislation in this field, is to take account of these requirements. That is what the Council will do.

  President. – The debate is closed.

Written statements (Rule 149)

  Nikolaos Chountis (GUE/NGL), in writing. – (EL) The package of economic governance measures proposed by the Commission makes provision for stricter discipline in the Stability and Growth Pact and budgetary supervision, by proposing penalties for ‘undisciplined’ Member States. In other words, it is a worse version of the recipe which led the EU into the crisis and recession and drastically exacerbated its social problems. The path marked out by the Commission, with the demand for institutional changes, is exacerbating social and regional inequalities. Consequently, the very unfortunate social repercussions addressed by my fellow members in their questions are a known fact. Moreover, we are already seeing these repercussions in practice and the workers are paying for them, not only in certain countries in the South, but in the entire EU also. The European Parliament must stand up against this policy which, apart from including harsh austerity measures and cuts to workers’ rights, is undermining its role and the role of the national parliaments. In other words, it is undermining the role of the elected representatives of EU institutions, which should, however, demonstrate greater awareness in their demands of the citizens’ fight.