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COMPLETING AND REBALANCING THE ECONOMIC AND MONETARY UNION
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In the second half of 2015, under the
Luxembourg Presidency of the Council, two
meetings of the Eurozone ministers of Labour
and Social Affairs were organized, focusing on
was to deepen employment and social policy
coordination in the EMU and develop alterna-
tives to harmful internal devaluation policies.
The European Parliament established in early
2016 a Financial Assistance Working Group,
bringing together members from ECON, EMPL,
REGI, BUDG and CONT committees, in order to
strengthen democratic accountability for the
implementation of the on-going financial assis-
tance program for Greece.
On 8 March 2016, the Commission launched
a public consultation on a European Pillar of
Social Rights, relevant for whole EU but particu-
larly for countries committed to using the euro.
The consultation is to be concluded by the end
of 2016 and followed by legislative proposals in
2017.
At institutional level, this approach should
entail a stronger role for Employment and Social
Affairs Ministers from within the Eurozone,
alongside the institutionalised Eurogroup of
Finance ministers, in order to ensure a properly
joint up and balanced contribution to the socio-
economic policy agenda of EMU. Regular minis-
terial meetings within a Social Eurogroup should
become the norm in the future to provide input
to the Euro Summits on macro-social develop-
ments in the EMU.
Last, but not least, this new approach would
greatly benefit from stronger social dialogue at
EMU level, including exchanges of views on
convergences or divergences in wage and pro-
ductivity levels that could help inform national
and sub-national collective bargaining.
Developing a comprehensive emu fiscal
capacity
A monetary union can only be strengthened if it
can rely on a fiscal capacity enabling it to effec-
tively develop, finance and implement union-
wide economic policy strategies and to fight
adverse economic shocks affecting one or more
of its members, or the union as a whole, in par-
ticular when this leads to a major and long last-
ing crisis exhausting national automatic stabilis-
ers, such as now. Private risk-sharing through
financial markets can complement but cannot
substitute fiscal shock absorbers.
Time has clearly come for EMU member
countries and for the European institutions to
accept this reality and to act accordingly by
gradually developing a comprehensive fiscal ca-
pacity.
The key functions for a fiscal capacity are:
– Addressing asymmetric, country-specific
economic shocks.
– Addressing symmetric economic shocks af-
fecting the whole of the Eurozone.
– Supporting adequate levels of investment in
conjunction with national investment poli-
cies, targeted so as to promote balanced and
sustainable growth.
– Redressing macroeconomic imbalances and
promoting structural convergence among its
members.
Each of these functions requires specific in-
struments and processes, financing modes, and
political/institutional settings.
A powerful symmetric shock management
capacity and a strong Eurozone-wide invest-
ment capacity would need to be supported
through a public borrowing capacity backed up
by a Eurozone budget, at least partly financed
by its own resources. This would of course equip
the Eurozone with a fully-fledged capacity to