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THE STATE OF THE EUROPEAN UNION
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Single Market. Reforms should be aimed at
supporting the broader transformation towards
a fully sustainable new growth model by driv-
ing both stronger competitiveness for sustain-
able growth and social upward mobility, cohe-
sion and fairness. All such reforms will need to
be accompanied by sufficient levels of invest-
ment.
Common and fundamental social standards
and norms to prevent a social race-to-the-
bottom
A sustainable Economic and Monetary Union
requires processes and instruments able to
maintain social cohesion. Macro-economic pol-
icy strategies must be complemented by macro-
social strategies, preventing excessive social in-
equalities within and between EMU countries
and better connecting growth and public fi-
nance objectives to employment, income and
social fairness objectives.
It goes without saying that this needs to be
underpinned by sufficiently strong common so-
cial standards and norms within a well-function-
ing Single Market, especially in order to provide
boundaries to internal devaluation processes
where cost-cutting is required and thus to elim-
inate the risk of social dumping as a harmful
source of social regression within Member
States, leading to a social race-to-the-bottom
within the Eurozone as a whole. A basic set of
common and fundamental labour standards,
active labour market policies, minimum income
schemes and national floors on statutory or ne-
gotiated minimum wages, as well as standards
of protection in unemployment should be es-
tablished in the EMU.
Moreover, the recently strengthened monitor-
ing and surveillance of employment and social
imbalances and challenges in the context of EU
economic governance should be adequately fol-
lowed up in Country-Specific Recommendations.
A minimal reform would consist of equipping the
scoreboard of key employment and social indica-
tors in the Joint Employment Report with warning
thresholds highlighting the most worrying social
situations and developments, triggering in-depth
analysis in the Country Reports and where rele-
vant Country-Specific Recommendations setting
out how to address the identified employment
and social problems. The scoreboard should also
be presented in gender-disaggregated form. A
more advanced reform of the existing processes
would be to create a proper Social Imbalances
Procedure (SIP) joined up with the existing Macro-
Economic Imbalances Procedure, and providing
for a legally enshrined macro-social surveillance
and, as far as possible, for an enforcement of cor-
rective policies when unemployment, poverty or
inequalities reach alarming levels.
Such reinforcement in the EMU’s socio-eco-
nomic governance could also guide the use of
funding provided from the EMU’s fiscal capacity
and would help to ensure that social crises un-
dermining the whole EMU’s functioning and
growth potential are tackled in a timely and ef-
fective way. In this context, the role of the social
economy –especially as a factor of resilience
during bad economic times– should be properly
recognised and fostered.
In the 2016 alert mechanism report of the
macroeconomic imbalances procedure, the
Commission paid increased attention to three
employment-related indicators: the participa-
tion rate, youth unemployment rate and long-
term unemployment rate. The Parliament’s re-
ports on the 2016 European Semester stressed
also the importance of properly reflecting in
policy guidance key social indicators, such as
household incomes, poverty and inequality.