title: Recommendation for a Council Recommendation with a view to bringing an end to the situation of an excessive government deficit in Cyprus

text:
   EN
EN    EN
 ---pagebreak---                   EUROPEAN COMMISSION
                                                   Brussels, 15.6.2010
                                                   SEC(2010) 741 final
                                  Recommendation for a
                           COUNCIL RECOMMENDATION
   with a view to bringing an end to the situation of an excessive government deficit in
                                          Cyprus
EN                                                                                EN
 ---pagebreak---                                          Recommendation for a
                                     COUNCIL RECOMMENDATION
       with a view to bringing an end to the situation of an excessive government deficit in
                                                 Cyprus
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular
   Article 126(7) thereof;
   Having regard to the recommendation from the European Commission;
   Whereas:
   (1)     According to Article 126 of the Treaty Member States shall avoid excessive
           government deficits.
   (2)     The Stability and Growth Pact is based on the objective of sound government finances
           as a means of strengthening the conditions for price stability and for strong sustainable
           growth conducive to employment creation.
   (3)     The 2005 reform of the Stability and Growth Pact sought to strengthen its
           effectiveness and economic underpinnings as well as to safeguard the sustainability of
           the public finances in the long run. It aimed at ensuring that in particular the economic
           and budgetary background was taken into account fully in all steps in the EDP. In this
           way, the Stability and Growth Pact provides the framework supporting government
           policies for a prompt return to sound budgetary positions taking account of the
           economic situation.
   (4)     The Council has decided on [13 July 2010], in accordance with Article 126(6) of the
           Treaty, that an excessive deficit exists in Cyprus.
   (5)     In accordance with Article 126(7) of the Treaty and Article 3 of Council Regulation
           (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive
           deficit procedure1 (which is part of the Stability and Growth Pact), the Council is also
           required to make recommendations to the Member State concerned with a view to
           bringing the situation of excessive deficit to an end within a given period. The
           recommendation has to establish a deadline of six months at the most for effective
           action to be taken by the Member State concerned to correct the excessive deficit as
           well as a deadline for the correction of the excessive deficit, which should be
           completed in the year following its identification unless there are special
           circumstances. In deciding whether special circumstances exist, “relevant factors” as
           clarified in Article 2(3) of Regulation (EC) No 1467/97 should be taken into account.
   1
           OJ L 209, 2.8.1997, p. 6.
EN                                                   2                                               EN
 ---pagebreak---        Furthermore, in a recommendation to correct an excessive deficit the Council should
       request the achievement of a minimum annual improvement in the structural balance,
       i.e. the cyclically-adjusted balance excluding one-off and other temporary measures, of
       0.5% of GDP as a benchmark.
   (6) Special circumstances, which are relevant for the greater flexibility in the application
       of the EDP introduced with the 2005 reform of the Stability and Growth Pact, are
       deemed to exist in the case of Cyprus. In 2009, for the first time in 35 years, economic
       activity contracted. The recession reflected a significant fall in domestic demand and
       an adverse external environment. In particular, high household indebtedness together
       with tighter lending conditions, a worsening labour market outlook and negative
       confidence effects led to a decline in private consumption. In parallel, investment
       recorded a strong correction, amidst a fall in foreign demand for housing, low capacity
       utilisation and restructuring of corporate balance sheets. Moreover, exports of goods
       and services, especially tourism, plummeted as a consequence of the financial crisis
       and the global slowdown, in particular the much lower growth prospects of the main
       trading partners (United Kingdom, Euro Area, Russia). The deficit in 2009 is a
       consequence of both the economic downturn and the stimulus measures taken in line
       with the EERP by the Cypriot authorities. The existence of special circumstances
       authorises the Council to allow the correction of the excessive deficit in a medium-
       term framework.
   (7) In the years prior to the crisis and in a context of good economic times, supported by
       an asset boom and buoyant tax receipts, Cyprus was able to build up budgetary
       surpluses and reduced its gross debt ratio to 48.4% of GDP in 2008 (from 70.2% in
       2004). In 2009, however, the economic crisis weighed heavily on public finances. As a
       result, the budget balance plunged from a surplus of 0.9% of GDP in 2008 to a deficit
       of 6.1% of GDP in 2009. This was also the result of a number of discretionary
       measures in response to the economic downturn (in line with the EERP) and of rather
       large composition effects on account of a much less tax-rich GDP growth pattern. The
       deficit is projected to widen further to 6.2% of GDP in 2010 according to the March
       2010 EDP notification presented by the Ministry of Finance. However, the budgetary
       projections of the Commission services’ spring 2010 forecasts indicate that the
       budgetary deficit would reach about 7% of GDP in 2010. Potential extra-budgetary
       measures still under discussion with uncertain or no information on their modalities
       and timing of implementation, were not incorporated.
   (8) Considering the special circumstances and the EERP framework, an average annual
       fiscal effort is recommended. The fiscal effort should take into account all factors
       relevant for achieving the fiscal policy objectives, starting with the level of the general
       government deficit and gross debt as well as other indicators, such as the current
       account position, the level of contingent liabilities of the financial sector, interest
       payments, risk premia and the expected change in age-related expenditure in the
       medium term. In calculating the average annual fiscal effort, the 2011 deficit in the
       Commission services' spring 2010 forecast is taken as the starting point. The total
       fiscal effort needed to reach the nominal deficit target of 3% by the deadline is then
       calculated by assuming a gradual closure of the output gap by 2015.
   (9) Against this background, it is appropriate to consider the correction of the excessive
       deficit in a medium-term framework with a deadline for the correction of 2012. In
       particular, in view of the high external and domestic imbalances, a credible and
EN                                              3                                                  EN
 ---pagebreak---         sustainable adjustment path would require Cypriot authorities to strengthen the fiscal
        strategy in 2010 with measures to control current expenditure, to reduce the deficit to
        below 6% of GDP in 2010, and take timely action to define an expenditure-driven
        consolidation strategy. To this effect, the Cypriot authorities should ensure an average
        annual fiscal effort of 1¾% of GDP over the period 2010-2012; specify the measures
        that are necessary to achieve the correction of the excessive deficit by 2012, cyclical
        conditions permitting, and accelerate the reduction of the deficit if economic or
        budgetary conditions turn out better than currently expected. In its stability programme
        submitted to the Commission and the Council on 1 April 2010, Cyprus committed to
        reduce its deficit to 4.5% of GDP in 2011 and 3.4% of GDP in 2012. Therefore, the
        additional effort requested to Cyprus in this recommendation compared to the initial
        plan of the Cypriot authorities is considered to be doable and necessary. The budgetary
        consolidation should also contribute to bringing the government gross debt ratio back
        on a declining path that approaches the reference value at a satisfactory pace by
        restoring an adequate level of the primary surplus.
   (10) In the recent past, Cyprus' budgetary framework has been improved with the adoption
        of the Financial Management Accounting System (FIMAS). As from 2006, Cyprus
        also enacted the gradual adoption of a three-year medium term budgetary framework
        (MTBF) and as from 2007 it introduced a Programme and Performance Budgeting
        (PPB). Nevertheless, the new framework is still phasing in and is only foreseen to be
        fully in place in 2012. Therefore, its impact could become effective only in the
        medium-term. The new framework's timely implementation would be critical for a
        successful and lasting consolidation of public finances. The existing practice of
        adopting supplementary budgets during the course of the year has implied an increase
        in current expenditure beyond the intended reallocation of funds. Once the new
        budgeting framework is fully implemented, it is expected to end this practise and lead
        to a more effective and efficient budgeting process and contribute to containing
        expenditure by ministry according to the ceilings set. At the same time, the new
        budgeting process would set a sound basis for reallocating expenditure in favour of
        growth enhancing activities.
   (11) The long-term budgetary impact of ageing is significantly above the EU average,
        mainly as a result of a relatively high increase in pension expenditure as a share of
        GDP over the coming decades partly due to the fact that the pension scheme is still in
        a maturing phase. A pension reform introduced in April 2009 would slightly reduce
        the increase in pension expenditure and, more significantly, raise the social security
        contribution rates. The reform should improve the long-term balance of the pension
        system and reduce risks to sustainability, however without having an effect on the
        overall assessment. The budgetary position in 2009 compounds the budgetary impact
        of population ageing on the sustainability gap. Improving the primary balance over the
        medium term and implementing further measures aimed at curbing the substantial
        increase in age-related expenditure, especially pension and healthcare expenditure,
        would contribute to reducing the risks to the sustainability of public finances, which
        were assessed in the Commission 2009 Sustainability Report2 as high.
   2
        In the Council conclusions from 10 November 2009 on sustainability of public finances "the Council
        calls on Member States to focus attention to sustainability-oriented strategies in their upcoming stability
        and convergence programmes" and further "invites the Commission, together with the Economic Policy
        Committee and the Economic and Financial Committee, to further develop methodologies for assessing
EN                                                     4                                                            EN
 ---pagebreak---    (12) According to data notified by the Cypriot authorities in April 2010, general
        government gross debt was 56.2% of GDP in 2009. This increase was mainly the
        result of the significant deterioration in the primary balance and debt-increasing
        "snowball" effects on the back of falling nominal GDP. Stock-flow adjustments also
        had a negative contribution to the debt level equivalent to about 1 percentage point of
        GDP, due to accumulation of government assets at the end of the year in order to meet
        debt maturity obligations arising early in January of 2010, as well as, differences
        between cash and accruals. For 2010, Cyprus notified a planned debt of 62% of GDP,
        thus exceeding the 60% of GDP Treaty reference value (the April 2010 stability
        programme plans a slightly lower figure (61%) and foresees a further increase to
        63.2% of GDP in 2011). In view of the downward risks to the macroeconomic
        scenario and the budgetary targets, the evolution of the debt ratio may be less
        favourable than planned. The Commission services spring 2010 forecast projects debt
        to rise further to 62.3% of GDP in 2010 and 67.6% in 2011, on the back of a
        deteriorated primary balance.
   (13) Enhanced surveillance under the EDP will require regular and timely monitoring of
        the progress made in the implementation of the fiscal consolidation strategy. In this
        context, a separate chapter in the forthcoming updates of the Cypriot stability
        programme could usefully be devoted to this issue.
   (14) In general, in the view of the Council, budgetary consolidation measures should secure
        a lasting improvement in the general government balance, while being geared towards
        enhancing the quality of the public finances and reinforcing the growth potential of the
        economy.
   HAS ADOPTED THIS RECOMMENDATION:
   (1)    Recognising that Cyprus’ budgetary position in 2009 resulted from measures
          amounting to about 1½% of GDP in 2009, which is an adequate response to the
          downturn and were in line with the European Economic Recovery Plan, as well as
          from the free play of automatic stabilisers, Cyprus’ authorities should put an end to
          the present excessive deficit situation as rapidly as possible and at the latest by 2012.
   (2)    The Cypriot authorities should bring the general government deficit below 3% of
          GDP in a credible and sustainable manner by taking action in a medium-term
          framework. Specifically, to this end, the Cypriot authorities should:
        (a)     take necessary measures to reduce the 2010 deficit to below 6% of GDP and
                define an expenditure-driven consolidation strategy, in order to bring the
                deficit below the reference value by 2012;
        (b)     to this end ensure an average annual fiscal effort of at least 1¾% of GDP over
                the period 2010-2012, which should also contribute to bringing the government
                gross debt ratio back on a declining path that approaches the reference value at
                a satisfactory pace by restoring an adequate level of the primary surplus;
        the long-term sustainability of public finances in time for the next Sustainability report", which is
        foreseen in 2012.
EN                                                   5                                                        EN
 ---pagebreak---           (c)      specify and rigorously implement the measures that are necessary to achieve
                   the correction of the excessive deficit by 2012, cyclical conditions permitting,
                   and accelerate the reduction of the deficit if economic or budgetary conditions
                   turn out better than currently expected.
   (3)      To limit risks to the adjustment, Cyprus should strengthen the binding nature of its
            medium-term budgetary framework as well as improve the monitoring of the budget
            execution throughout the year.
   (4)      Improve the long-term sustainability of public finances by implementing reform
            measures to control pension and health care expenditure in order to curb the
            projected increase in age-related expenditure.
   (5)      In addition, the Cypriot authorities should seize opportunities beyond the fiscal
            effort, including from better economic conditions, to accelerate the reduction of the
            gross debt ratio back towards the reference value.
   (6)      The Council establishes the deadline of [13 January 2011] for the Cypriot
            government to take effective action to specify the measures that will be necessary to
            progress towards the correction of the excessive deficit. The assessment of effective
            action will take into account economic developments compared to the economic
            outlook in the Commission services' spring 2010 forecast.
   The Cypriot authorities should report on progress made in the implementation of these
   recommendations in a separate chapter in the forthcoming updates of the stability
   programmes until the abrogation of the excessive deficit procedure.
   In addition, the Council highlights the importance of achieving the medium-term objective
   (MTO) for appropriate budgetary management of economic downturns. It therefore invites the
   Cypriot authorities to ensure that budgetary consolidation towards the medium-term objective
   for the budgetary position – a balanced budget in structural terms – is sustained after the
   excessive deficit will have been corrected. The adherence to the budgetary targets and the
   firm containment of expenditure over the medium-term could be improved by the full
   implementation, as envisaged, of an effective multi-annual budgetary framework.
   This recommendation is addressed to the Republic of Cyprus.
   Done at Brussels,
                                                  For the Council
                                                  The President
EN                                                  6                                               EN


title: Council Recommendation of 10 July 2012 on the National Reform Programme 2012 of Cyprus and delivering a Council opinion on the Stability Programme of Cyprus, 2012-2015

text:
               24.7.2012

               EN

               Official Journal of the European Union

               C 219/13

         COUNCIL RECOMMENDATION
   of 10 July 2012
   on the National Reform Programme 2012 of Cyprus and delivering a Council opinion on the Stability Programme of Cyprus, 2012-2015
   2012/C 219/04
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
   Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
   Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   After consulting the Economic and Financial Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission’s proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which focuses on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.

               (2)

               On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines for the employment policies of the Member States (3), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

               (3)

               On 12 July 2011, the Council adopted a recommendation (4) on Cyprus’s National Reform Programme for 2011 and delivered its opinion on Cyprus’s updated Stability Programme for 2011-2014 (‘2011 Council Recommendation’).

               (4)

               On 23 November 2011, the Commission adopted the second Annual Growth Survey, marking the start of the second European Semester of ex ante and integrated policy coordination, which is anchored in the Europe 2020 strategy. On 14 February 2012, the Commission, on the basis of Regulation (EU) No 1176/2011, adopted the Alert Mechanism Report, in which it identified Cyprus as one of the Member States for which an in-depth review would be carried out.

               (5)

               On 1 December 2011, the Council adopted conclusions calling on the Social Protection Committee, in cooperation with the Employment and other Committees, to present its views on actions recommended within the Europe 2020 policy cycle. These views form part of the opinion of the Employment Committee.

               (6)

               The European Parliament has been duly involved in the European Semester, in accordance with Regulation (EC) No 1466/97, and, on 15 February 2012, adopted a resolution on employment and social aspects in the Annual Growth Survey 2012 and a resolution on the contribution to the Annual Growth Survey 2012.

               (7)

               On 2 March 2012, the European Council endorsed the priorities for ensuring financial stability, fiscal consolidation and action to foster growth. It underscored the need to pursue differentiated, growth-friendly fiscal consolidation, to restore normal lending conditions to the economy, to promote growth and competitiveness, to tackle unemployment and the social consequences of the crisis, and to modernise public administration.

               (8)

               On 2 March 2012, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments in time to be included in their Stability or Convergence Programmes and their National Reform Programmes.

               (9)

               On 7 May 2012, Cyprus submitted its Stability Programme covering the period 2012-2015 and on 10 May 2012 its 2012 National Reform Programme. In order to take account of their interlinkages, the two Programmes have been assessed at the same time. The Commission has also assessed, in an in-depth review under Article 5 of Regulation (EU) No 1176/2011, whether Cyprus is affected by macroeconomic imbalances. The Commission concluded in its in-depth review that Cyprus experiences an internal imbalance due to its banking sector and the indebtedness of the corporate sector and an external and an internal imbalance on its fiscal dynamics and competitiveness, although not excessive ones.

               (10)

               Based on the assessment of the Stability Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underpinning the budgetary projections in the Programme appears optimistic in 2012-2014. Although incorporating a major downward revision of the growth outlook, the macroeconomic scenario underpinning the budgetary projections in the Stability Programme remains subject to downside risks, relating in particular to the evolution of domestic demand in 2012-2013. The objective of the budgetary strategy outlined in the Stability Programme is to correct the excessive deficit by 2012 and to reach the medium-term budgetary objective (MTO) by 2014, and to stay at MTO in 2015. The Stability Programme confirms the previous MTO of a balanced budget in structural terms, which adequately reflects the requirements of the Stability and Growth Pact. The planned correction of the excessive deficit is in line with the deadline set by the Council recommendation issued in the context of the excessive deficit procedure on 13 July 2010. Based on the (recalculated) structural budget balance (5), the average annual fiscal effort planned at 1,5 % of GDP for the period 2011-2012 is equal to the effort recommended by the Council. The envisaged progress towards the MTO in 2013 is sufficient as it is higher than the 0,5 % of GDP benchmark of the Stability and Growth Pact both according to the Commission services 2012 spring forecast and the Stability Programme.
               The growth rate of government expenditure, taking into account discretionary revenue measures, is in line with the expenditure benchmark of the Stability and Growth Pact in 2013-2014, but not in 2015. There are risks accompanying the budgetary targets of the Stability Programme linked to the macroeconomic scenario appearing optimistic in 2012-2014 and the planned consolidation effort in 2013, partly relying on not fully specified measures. According to the Stability Programme, the debt-to-GDP ratio, which amounted to 71,6 % in 2011, is to increase to 72,1 % in 2012 before gradually dropping to 65,4 % in 2015. In terms of the debt reduction benchmark of the Stability and Growth Pact, Cyprus will be in a transitional period in the years 2013-2015 and the plans presented in the Stability Programme would ensure sufficient progress towards compliance with the debt reduction benchmark. However, there are risks attached to this projection linked to the possible rescue operations of financial corporations.

               (11)

               The efficiency of the tax administration needs considerable improvement as administrative costs in relation to revenue collection in Cyprus are very high. Tax collection is relatively low. In particular, tax administration expenditure as a share of GDP and the administration costs in relation to net revenue collection are high and on a rising trend. Measures to encourage a move away from informal/undeclared work and tackle tax evasion are necessary. Furthermore, initiatives to render tax collection more efficient should be reinforced.

               (12)

               Given the wide exposure of Cyprus’s banking institutions to the Greek economy, the banks’ asset performance, profitability, capital and liquidity buffers have been negatively affected by the restructuring of the Greek government debt, and by the increasing number of non-performing loans (NPLs) extended to Greek borrowers. Total exposure of the consolidated Cypriot banking sector to Greece is very high. The Parliament adopted, on 14 December 2011, two bills to strengthen the financial system’s resilience against banking crises. However, progress with the strengthening of supervision of the cooperative credit societies, which hold about 40 % of all domestic deposits, has so far not been satisfactory.

               (13)

               Cyprus faces challenges in ensuring the long-term sustainability of public finances, in particular in the area of pensions. Cyprus has implemented two important structural measures to reform its pension system. However, while the measures adopted are relevant and credible, the response of Cyprus is not sufficiently ambitious to secure sustainability and adequacy, and improve the system’s fairness in the longer term. Measures are still required to maintain the employability of workers within enterprises and underpin the increase in the effective retirement age. In terms of poverty of the elderly, Cyprus has only partly addressed their high at-risk-of-poverty rate. The adopted measures are insufficient to improve the short-term adequacy of income for pensioners at risk of poverty.

               (14)

               Inequality and inefficiencies in the healthcare sector have not been tackled in a meaningful manner. In spite of the 2011 Council Recommendation, recommendation (3) thereof, no clear timeline for proceeding with the National Health Insurance System has been presented so far. This poses risks to the long-term control and sustainability of public finances and the quality of healthcare provided.

               (15)

               The Government has taken some steps to respond to the 2011 recommendation on wage indexation (cost of living allowance — COLA), in particular by adopting a two-year pay freeze in the broader public sector. The Government and social partners also agreed to initiate a dialogue with the aim of reviewing the COLA system by the end of June 2012. A comprehensive reform of the system should be pursued, in consultation with social partners and in accordance with national practices, with a view to strengthening the link between real wages and productivity developments and making the system more equitable. This would not only support Cyprus’s competitiveness, but would also lead to a more efficient allocation of labour. While these developments are first steps in the right direction, their relevance and credibility depend crucially on the degree of ambition and enforcement of the final outcome of the social dialogue currently under way regarding the reform of the wage indexation system.

               (16)

               The worsening of the macroeconomic outlook adversely affected the Cypriot labour market, raising the unemployment rate and causing a large increase in youth unemployment. Cyprus has taken a number of positive steps to address this challenge. These measures are relevant but not ambitious enough, in particular in education and vocational training where implementation should be speeded up. Further efforts are required for resolving youth unemployment as well as for the re-skilling and up-skilling of the workforce to facilitate the necessary transitions in the labour market, focusing in particular on those groups with a low participation rate in lifelong learning activities such as the low-skilled and older workers.

               (17)

               As regards the service sector, Cyprus transposed Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (6) (‘Services Directive’) by way of a horizontal law accompanied by a number of sector-specific amending laws and regulations. However, in some sectors (e.g. retail, tourism, and construction services) the adoption of sector-specific legislation is still pending. Although Cyprus ranks favourably in relation to the EU average with regard to the regulation of professional services and, of the 90 regulated professions in Cyprus, only four are in business services, there are a few regulated professional services where fixed or minimum tariffs still exist, such as for lawyers and architects.

               (18)

               On the basis of the analysis in the in-depth review, it can be concluded that Cyprus is affected by imbalances. In particular, macroeconomic developments in the current account, public finances and the financial sector require close monitoring and urgent economic policy attention in order to avert any adverse effects on the functioning of the economy and economic and monetary union. More specifically, the Cypriot economy has experienced persistent and sizeable current account deficits, driven by deficits in the volume of trade due to a gradual loss in price/cost competitiveness, imbalances in the government finances that have swung to annual deficits which have widened even as the economy recovered from recession, and increasing private indebtedness. In particular, non-financial corporations are very vulnerable due to their high indebtedness coupled with their low profitability, resulting to a significant increase in non-performing loans in this sector. Also, the high exposure of the banking sector to sovereign Greek bonds and the Greek economy is very risky. Moreover, growth prospects are dim which further hinders the relatively slow unwinding of imbalances.

               (19)

               Cyprus has made a number of commitments under the Euro Plus Pact. These commitments, and the implementation of the commitments presented in 2011, relate to improving competitiveness, improving the employment rate, the sustainability of public finances, and strengthening financial sustainability. The Commission has assessed the implementation of the Euro Plus Pact commitments. The results of this assessment have been taken into account in the recommendations.

               (20)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of Cyprus’s economic policy. It has assessed the Stability Programme and National Reform Programme, and presented an in-depth review. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Cyprus but also their observance of EU rules and guidance, given the need to reinforce the overall economic governance of the Union by providing EU-level input into future national decisions. Its recommendations under the European Semester are reflected in recommendations (1) to (7) below.

               (21)

               In the light of this assessment, the Council has examined the Stability Programme, and its opinion (7) is reflected in particular in recommendation (1) below.

               (22)

               In the light of the results of the Commission’s in-depth review and this assessment, the Council has examined the National Reform Programme and the Stability Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in particular in recommendations (1), (2) and (7) below,

         HEREBY RECOMMENDS that Cyprus take action within the period 2012-2013 to:

               1.

               Take additional measures to achieve a durable correction of the excessive deficit in 2012. Rigorously implement the budgetary strategy, supported by sufficiently specified measures, for the year 2013 and beyond to ensure the achievement of the MTO by 2014 and compliance with the expenditure benchmark and ensure sufficient progress with the debt reduction benchmark. Accelerate the phasing-in of an enforceable multiannual budgetary framework with a binding statutory basis and corrective mechanism. Take measures to keep tight control over expenditure and implement programme and performance budgeting as soon as possible. Improve tax compliance and fight against tax evasion.

               2.

               Further harmonise the supervisory and the regulatory framework for the cooperative credit societies in line with the standards applied for the commercial banks. Strengthen regulatory provisions for the efficient recapitalisation of the financial institutions in order to limit exposure of the financial sector to external shocks.

               3.

               Further improve the long-term sustainability and adequacy of the pensions system and address the high at-risk-of-poverty rate for the elderly. Ensure an increase in the effective retirement age, including through aligning the statutory retirement age with the increase in life expectancy.

               4.

               Complete and implement the national healthcare system without delay, on the basis of a roadmap, which should ensure its financial sustainability while providing universal coverage.

               5.

               Improve the skills of the workforce to reinforce their occupational mobility towards activities of high growth and high value added. Take further measures to address youth unemployment, with emphasis on work placements in companies and promotion of self-employment. Take appropriate policy measures on the demand side to stimulate business innovation.

               6.

               Remove unjustified obstacles in services markets, in particular by improving the implementation of the Services Directive in service sectors with the most growth potential (including tourism) and by opening up the provision of professional services.

               7.

               Improve competitiveness, including through the reform of the system of wage indexation, in consultation with social partners and in line with national practices, to better reflect productivity developments. Take steps to diversify the structure of the economy. Redress the fiscal balance by restraining expenditure.

      Done at Brussels, 10 July 2012.

            For the Council

            The President

         V. SHIARLY

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  OJ L 306, 23.11.2011, p. 25.

      (3)  Maintained for 2012 by Council Decision 2012/238/EU of 26 April 2012 on guidelines for the employment policies of the Member States (OJ L 119, 4.5.2012, p. 47).

      (4)  OJ C 210, 16.7.2011, p. 12.

      (5)  Cyclically-adjusted balance net of one-off and temporary measures, recalculated by the Commission services on the basis of the information provided in the Programme, using the commonly agreed methodology.

      (6)  OJ L 376, 27.12.2006, p. 36.

      (7)  Under Article 5(2) of Regulation (EC) No 1466/97.


				|

		52011SC0816

			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Sloveniaand delivering a Council opinionon the updated Stability Programme of Slovenia 2011-2014 /* SEC/2011/0816 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of
Slovenia
and delivering a Council opinion
on the updated Stability Programme of Slovenia 2011-2014
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1],
and in particular Article 5(3) thereof,
Having regard to the recommendation of the European
Commission[2],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the European Commission’s proposal to launch a new strategy for jobs and
growth, Europe 2020, based on enhanced coordination of economic policies, which
will focus on the key areas where action is needed to boost Europe’s potential
for sustainable growth and competitiveness.
(2)
On 13 July 2010, the Council adopted a
recommendation on the broad guidelines for the economic policies of the Member
States and the Union (2010 to 2014) and on 21 October 2010 the Council adopted
a decision on guidelines for the employment policies of the Member States[3],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)
On 12 January 2011, the Commission adopted the
first Annual Growth Survey, marking the start of a new cycle of economic
governance in the EU and the first ‘European semester’ of ex-ante and integrated
policy coordination, which is anchored in the Europe 2020 strategy.
(4)
On 25 March 2011, the European Council endorsed
the priorities for fiscal consolidation and structural reform (in line with the
Council’s conclusions of 15 February and 7 March 2011 and further to the
Commission’s Annual Growth Survey). It underscored the need to give priority to
restoring sound budgets and fiscal sustainability, reducing unemployment
through labour market reforms and making new efforts to enhance growth. It requested
Member States to translate these priorities into concrete measures to be
included in their Stability or Convergence Programmes and National Reform
Programmes.
(5)
On 25 March 2011, the European Council also
invited the Member States participating in the Euro Plus Pact to present their
commitments in time to be included in their Stability or Convergence Programmes
and their National Reform Programmes.
(6)
On 18 and 19 April 2011,
Slovenia submitted its 2011 updated Stability Programme
covering the period 2010-2014 and its 2011 National Reform Programme. In order
to take the interlinkages into account, the two programmes have been assessed
at the same time.
(7)
In the years preceding the crisis, Slovenia
enjoyed fast economic growth, driven by buoyant exports and investment. However,
Slovenia was heavily impacted by the crisis, losing nearly 10% of its GDP over
2008-2010, which reversed a portion of the previous catch-up process. The
interaction of automatic stabilisers, recovery measures and strong in-built
expenditure dynamics combined to push the general government deficit from 1.8%
of GDP in 2008 up to 6.0% of GDP in 2009 (with gross debt levels of 21.9% of
GDP and 35.2% respectively). The labour market reacted with a considerable lag
and employment continues its downwards trend. While the unemployment rate
remains below the EU average, it increased sharply from its pre-crisis levels of
4.4% to 7.3% in 2010. Economic recovery so far has been rather slow and is
expected to rally only in 2012 with an estimated growth of 2.5% GDP.
(8)
Based on an assessment of the updated Stability
Programme pursuant to Regulation Council Regulation (EC) No 1466/97, the
Council is of the opinion that the macroeconomic
scenario underpinning the budgetary projections of the programme is plausible in
the near term, and too favourable towards the end of the programme period. Starting
from 5.6% of GDP in 2010, the programme plans to bring the general government deficit
below the 3% of GDP reference value by 2013, through a broad-based containment
of primary expenditure. After correcting the excessive deficit, the programme
envisages modest progress towards, but not achievement of, the medium-term
objective (MTO) of a balanced budgetary position in structural terms. Although the
MTO is set at a more ambitious level than in the previous programme, it cannot
be regarded as appropriate at this stage as it is not
clear whether it ensures sufficiently rapid progress towards long-term
sustainability of public finances. The average annual fiscal effort over the
period 2011-13, as calculated by the Commission services based on the
information in the programme following the commonly agreed methodology, is
planned to be around 0.5 percentage points of GDP, below the level recommended
by the Council. Moreover, deficit and debt outcomes could fall short of the
targets. Additional measures are expected to be adopted as part of a supplementary
budget to achieve the 2011 deficit target. After 2011, the programme does not
specify measures to contain expenditure and the possibility of
additional financial rescue operations affecting deficit and debt cannot be
excluded.
(9)
While the general government deficit has
narrowed since its peak in 2009, further consolidation to correct the excessive
deficit by 2013 and achieve the MTO thereafter is a key challenge for Slovenia.
In line with the consolidation strategy pursued in recent years, the further
expenditure savings envisaged in the Stability Programme for the period 2011-2014
mainly affect the public sector wage bill, social transfers (including pensions)
and public investment. However, the Stability Programme offers no detailed information
on the planned measures beyond 2011. Further corrective action appears necessary
to achieve the 2011 deficit. The credibility of the medium-term consolidation
strategy would be enhanced by adopting more structural expenditure-containing
measures — as opposed to the temporary interventions that have characterised
recent consolidation efforts — and by a more binding medium-term budgetary framework.
The Stability Programme confirms the introduction of an expenditure rule but
key provisions, for instance on the definition of non-compliance, remain to be
worked out. Finally, comparatively low spending efficiency, for example in
healthcare and education, implies that Slovenia may have additional scope for
expenditure-based consolidation without compromising the quality of public
services. The Stability Programme announces initiatives to rationalise public
services, transfers and subsidies and introduce a unified public procurement
system, but the detail of some of these is lacking.
(10)
The long-term budgetary impact of ageing in
Slovenia is significantly higher than the EU average. Moreover, the participation
and employment rates for older workers are very low (36.5% and 35% compared to
the EU averages of 49.7% and 46.3% respectively), mainly due to the low
retirement age and insufficient incentives for active ageing. The parliament
recently adopted a pension reform, with the aim of increasing the retirement
age, while preserving the adequacy of pensions. According to the Stability
Programme, this would stabilise age-related spending until 2030 and would
therefore be an important first step in tackling the sustainability of the
pension system. It was submitted to a referendum on 5 June 2011 and rejected.
The problem of sustainability of the pension system remains and other ways of
resolving it will need to be found.
(11)
The labour market is relatively segmented
between forms of contract: employment protection for workers on permanent
contracts is strict compared to that accorded to workers with fixed-term
contracts. The share of young workers aged 15-24 years on temporary contracts
is the highest in the EU (67% in 2009) and transition from temporary to permanent
contracts appears to be relatively difficult. Previous attempts to address this
issue proved insufficient. The government plans to negotiate with the social
partners a revision of the Employment Relationship Act, with a view to aligning
rights and obligations under different types of employment contracts.
Furthermore, ‘student work’ constitutes a sizeable, largely unregulated,
tax-advantageous, parallel labour market. This important issue is absent from
the National Reform Programme.
(12)
Apart from segmentation, the structural problems
on the Slovenian labour market are also caused by the mismatch between labour
market needs and skills, which is recognised in the National Reform Programme.
The NRP envisages intensive investment in training to
improve skills and employability. It outlines plans to further improve the
transition from education to the labour market, with a focus on providing
career guidance services throughout the education system. It plans to modernise
the employment service with the objective of better matching the supply of
skills to labour market needs. Successful implementation of these reforms
would, however, require improving the system to identify in a timely way
current and projected labour market needs.
(13)
The downturn is impacting on loan portfolios
with a lag and the growing share of non-performing loans has been raising
banks' impairment and provisioning costs. The two main state-owned banks have
been recapitalised, which was crucial. The government has also proposed
measures to accelerate recovery of claims and incentivise lending for
productive activities, which may not be fully sufficient to restore the flow of
credit to the real economy, so further action may be needed.
(14)
Certain segments of the services sector are
sheltered from competitive pressures and are characterised by high mark-ups and
high concentration, raising costs throughout the economy. Together with the
high degree of state involvement in the economy, this keeps potentially
beneficial foreign direct investment (FDI) relatively low. Slovenia plans to
speed up the implementation of the Services Directive, where considerable
delays were accumulated. It also plans to give the Competition Protection
Office full independence and identify state capital investments suitable for sale.
These plans are not specified in detail and there are risks related to
implementation.
(15)
Slovenia has signed up to the Euro Plus Pact
While the Slovenian National Reform Programme indicates potential commitments
and targets in the four areas of the Euro Plus Pact of fostering
competitiveness and employment, contributing to the sustainability of the
public finances and reinforcing financial stability, no firm commitments had
been notified to the Commission by 7 June.
(16)
The Commission has assessed the Stability
Programme and National Reform Programme. [4] It has taken
into account their relevance for sustainable fiscal and socio-economic policy
in Slovenia and compliance with EU rules and guidance, given the need to
reinforce the overall economic governance of the European Union by providing EU
level input into future national decisions. In this light, the Commission considers that achieving the 2011 deficit target set in the
Stability Programme requires the adoption of additional measures. Beyond 2011,
there are significant risks to the deficit and debt targets
as the Stability Programme does not specify sustainable
measures to contain expenditure. The National Reform
Programme contains measures to repair the financial sector, but they may not be
sufficiently ambitious. The assessment also indicates that domestic sources of
growth need to be boosted, in particular by increasing labour market
participation of young and older workers through reducing labour market
segmentation and removing skill mismatches. Finally, there is a need to
strengthen competition and open up opportunities for investment and growth in
the service sector and network industries.
(17)
In light of this assessment, also taking into
account the Council Recommendation of 2 December 2009 under Article 126(7) of
the Treaty on the Functioning of the European Union, the Council has examined
the 2011 update of the Stability Programme of Slovenia and its opinion[5]
is reflected in particular in its recommendations under (1) and (2) below.
Taking into account the European Council conclusions of 25 March 2011, the
Council has examined the National Reform Programme of Slovenia,
HEREBY RECOMMENDS that Slovenia
should take action within the period 2011-2012 to:
(1)
Achieve the 2011 deficit target, underpin the
2012 deficit target with concrete measures and implement the necessary
consolidation rigorously, standing ready to adopt additional measures to
prevent possible slippages. Underpin this required adjustment process over the
programme period to achieve an appropriate medium-term objective with
structural measures to contain expenditure and address identified
inefficiencies with a more binding medium-term budgetary framework.
(2)
Take steps to ensure the long-term
sustainability of the pension system, while preserving the adequacy of
pensions. Increase the employment rate of older workers by introducing
incentives to retire later, and by further developing active labour market
policies and lifelong learning measures.
(3)
Take further measures to ensure sufficient loan
loss recognition and cleaning of balance sheets across the banking sector.
(4)
Take steps, in consultation with the social
partners and in accordance with national practices, to reduce asymmetries in rights
and obligations guaranteed under permanent and temporary contracts. Renew
efforts to tackle the parallel labour market resulting from ‘student work’.
(5)
Set up a system to forecast skills and
competencies needed to achieve a responsive labour market. Evaluate the
effectiveness of the public employment service, notably on career guidance and counselling services, to improve the
matching of skills with labour market needs.
(6)
Streamline regulated professions and improve the
administrative capacity of the Competition Protection Office, in order to
enhance the business environment and attract investment.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ C , , p. .
[3]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[4]               SEC(2011) 732.
[5]               Foreseen in Article 5(3) of Regulation (EC) No
1466/97.


				|

		52011SC0827

			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of the United Kingdomand delivering a Council opinionon the updated Convergence Programme of the United Kingdom, 2011-2014 /* SEC/2011/0827 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of
the United Kingdom
and delivering a Council opinion
on the updated Convergence Programme of the United Kingdom, 2011-2014
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1],
and in particular Article 9(3) thereof,
Having regard to the recommendation of the European
Commission[2],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the Employment
Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the European Commission's proposal to launch a new strategy for jobs and
growth, Europe 2020, based on enhanced coordination of economic policies, which
will focus on the key areas where action is needed to boost Europe’s potential
for sustainable growth and competitiveness.
(2)
On 13 July 2010, the Council adopted a
recommendation on the broad guidelines for the economic policies of the Member
States and the Union (2010 to 2014) and on 21 October 2010, adopted a decision
on Guidelines for the employment policies of the Member States[3],
which together form the “Integrated guidelines”. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)
On 12 January 2011, the Commission adopted the
first Annual Growth Survey, marking the start of a new cycle of economic
governance in the EU and the first European semester of ex-ante and integrated
policy coordination, which is anchored in the Europe 2020 strategy.
(4)
On 25 March 2011, the European Council endorsed
the priorities for fiscal consolidation and structural reform (in line with the
Council’s conclusions of 15 February and 7 March 2011 and further to the
Commission’s Annual Growth Survey). It underscored the need to give priority to
restoring sound budgets and fiscal sustainability, reducing unemployment
through labour market reforms and making new efforts to enhance growth. It
requested Member States to translate these priorities into concrete measures to
be included in their Stability or Convergence Programmes and National Reform
Programmes.
(5)
On 28 April 2011, the United Kingdom submitted
its updated 2011 Convergence Programme covering the period 2011-2014 and its
2011 National Reform Programme. In order to take account of interlinkages, the two programmes have been assessed at the same time.
(6)
The UK was particularly exposed to the
international financial crisis because of its large, globally-integrated
financial sector and high levels of household debt. GDP fell by 0.1% in 2008
and 4.9% in 2009. The UK government intervened massively to support the banking
sector, and provided extraordinary additional liquidity to the whole sector.
The government deficit rose by 8.5 percentage points in two years to 11.2% of
GDP in 2009. Unemployment rose from 5.3% in 2007 to 7.6% in 2009. Quarterly
growth returned in the fourth quarter of 2009 although output remains below its
pre-crisis peak. The short-term outlook is for moderate growth driven by strong
corporate investment and an exchange-rate driven rebound in net exports.
However, growth will be held back by weak or negative
growth in household and government consumption. Inflation is expected to remain well above the 2% official target
during 2011, reflecting increases in value added tax and higher import and
energy prices, before falling in 2012. High inflation is likely to erode real
incomes as wage growth remains low. The main downside risks
to the forecast are that the rebounds in corporate investment or net exports
may not materialise and that persistent high inflation may prevent the use of
monetary policy to offset lower government spending.
(7)
Based on the assessment of the updated convergence
programme pursuant to Council Regulation (EC) No 1466/97, the Council is of the
opinion that the macroeconomic scenario underpinning the budgetary projections
is plausible except for 2012 when it is slightly too favourable. The programme
does not include a Medium Term Objective (MTO) as foreseen by the code of
conduct although it can be derived from targets therein. The objective of the
budgetary strategy is to bring down the deficit from 9.9% in 2010-11 to 1.7% in
2015-16, mainly based on expenditure restraint. The programme plans to bring
the deficit below the 3% reference value by 2014-15, the deadline set by the
Council. Starting from a debt ratio of 78.7% in 2010-11, the budgetary
projections in the programme foresee the debt ratio increasing to 87.2% by
2013-14 before beginning to fall slowly. The average annual fiscal effort over
the period of 2010-11 to 2014-15 is 1.6%. This is slightly below that
recommended by the Council in December 2009 (1.75% of GDP) but is nevertheless
appropriate given that the effort is being pursued from a significantly
lower-than-expected budget deficit in 2009-10 and is therefore consistent with
reducing the headline deficit to below the reference value by 2014-15. The UK
appears to be at high risk with regard to the long-term sustainability of
public finances. The long-term cost of ageing is above the EU average and the
current budgetary position compounds the cost of ageing. Based on the current
fiscal position, debt would increase to 128% of GDP by 2020. However, the full
implementation of the programme would be enough to put debt on a downward path
but would still be above 80% by 2020.
(8)
Implementing the proposed fiscal consolidation
remains a major challenge. Ensuring no slippage from published spending plans
will be vital to re-establishing a sustainable fiscal position. Subject to
this, the historically low rates of public infrastructure investments,
particularly as regards transport, mean that growth-enhancing expenditure
should be prioritised. Ensuring sufficient primary surpluses over the
medium-term, as already envisaged in the Programme, would improve the
sustainability of public finances.
(9)
The UK's flexible labour market allowed it to
cope reasonably well with the large contraction in GDP during the crisis. However,
increases in unemployment were heavily concentrated on young people: between
2008 and 2010 youth unemployment increased from 15% to almost 20%. Poor labour
market outcomes for young people are linked to more general and structural
shortcomings in skills provision. The proportion of UK 18-24-year-olds who are
early leavers from education and training, at 15.7%, is higher than the EU
average of 14.4%. While the share of people aged 25-64 having attained high
skill levels is particularly high in the UK, there are weaknesses at
intermediate skills level, with the share of people in this group currently
below the EU average. A further key challenge for the UK labour market is the
significant proportion of children living in jobless households: at 17.5% this
is the highest level in the EU, where the overall average is 10.2%. The problem
is specifically acute for single parent households, reflecting poor financial
incentives and lack of viable childcare options: over 32% of people with care
responsibilities are inactive or work part-time due to lack of care services
(this is 4 percentage points higher than the EU average).
(10)
The UK experienced a house price boom in the
decade before the crisis. Prices fell sharply after the crisis hit but have
since recovered partially and remain at historically high levels. Transaction
levels collapsed and have remained very low. The house price boom contributed
to the large increases in household indebtedness and unsustainable growth in
household consumption in the pre-crisis decade. The collapse in housing
transactions drove corresponding falls in receipts on housing transaction
taxes, contributing to the worsening of the UK fiscal position. Weaknesses in
the housing market also help explain the UK's high expenditure on housing
benefits and high share of the population in state-subsidised housing. The UK
has announced initial reforms to its planning system and to mortgage
regulation. Reflecting the importance of this challenge to all sectors of the
UK economy, there is a case to build on these measures to develop a more
comprehensive package of reforms including in the mortgage market and property
taxation to address these issues.
(11)
A recovery in private investment would be an
essential component of the necessary rebalancing of the economy away from
domestic consumption and help drive productivity gains. Surveys suggest that
credit availability and cost is a significant constraint on investment and
expansion plans in the private sector, notably for smaller firms reliant on
bank financing. The annual rate of growth in lending to SMEs has been negative
since late 2009, with lending to small businesses contracting even more
steeply. Moreover, whilst spreads over reference rates seem to have stabilised
for medium-sized businesses, they have increased somewhat for small businesses.
The UK has recently put in place a number of measures to improve SME access to
finance including state sponsored investment vehicles and reaching an agreement
with UK banks requiring them to increase their gross lending to SMEs. To
develop a solution which can continue to work without regular government
intervention, there is a case for further reform with the aim of improving
competition in the banking sector and facilitating the development of markets
for non-bank finance accessible to smaller firms.
(12)
The Commission has assessed the Convergence
Programme and National Reform Programme[4]. It has taken into
account not only their relevance for sustainable fiscal and socio-economic
policy in the UK but also conformity with EU rules and guidance, given the need
to reinforce the overall economic governance of the European Union by providing
EU level input into future national decisions. It considers that the programmes
set out ambitious measures to reduce the deficit and encourages the government
to proceed as planned. Further steps should also be taken to reform the housing
market, reduce youth unemployment, early school leaving, address the situation
of children living in workless households and improve credit availability to
the private sector.
(13)
In light of this assessment, also taking into
account the Council Recommendation under Article 126(7) of the Treaty on the
Functioning of the European Union of 2 June 2010, the Council has examined the
2011 update of the Convergence Programme of the United Kingdom and its opinion[5]
is reflected in particular in recommendation (1) and (2) below. Taking into
account the European Council conclusions of 25 March 2011, the Council has
examined the National Reform Programme of the United Kingdom,
HEREBY RECOMMENDS that the United
Kingdom should take action within the period 2011-2012 to:
(1)
Implement the planned fiscal consolidation
aiming at a deficit of 6.2% of GDP in 2012-13, ensuring no slippage from the
ambitious spending reduction targets, thereby strengthening long-term
sustainability; subject to this, prioritise growth-enhancing expenditure
including research and innovation, and infrastructure investment.
(2)
Develop a programme of reform which addresses
the destabilising impact of the house price cycle on public finances, the
financial sector and the economy, with a view to alleviating problems of
affordability and the need for state subsidy for housing. This should include
reforms to the mortgage market, property taxation and the planning system.
(3)
Take steps to tackle youth unemployment by
adopting a comprehensive strategy to reduce early school leaving, by the end of
2012. Address skill shortages by increasing the numbers attaining intermediate
skills, in line with labour market needs.
(4)
Take measures to reduce the high proportion of
jobless households by increasing the supply of child care provision to
facilitate single parents' and second earners' labour market participation.
(5)
Significantly improve the availability of bank
and non-bank financing to the private sector and in particular to SMEs.
Encourage competition within the banking sector and explore ways to improve
access to non-bank financing such as venture and risk capital and
publicly-issued debt.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ C , , p. .
[3]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[4]               SEC(2011) 736.
[5]               Foreseen in Article 9(3) of Council Regulation (EC)
No 1466/97.


Avis juridique important

|

31994H0780

94/780/ECSC: Commission Recommendation of 16 November 1994 concerning steel merchants statistics

Official Journal L 315 , 08/12/1994 P. 0021 - 0028

COMMISSION RECOMMENDATION of 16 November 1994 concerning steel merchants statistics (94/780/ECSC)THE COMMISSION OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 47 thereof,  Whereas statistics on steel merchants are essential for the Community to carry out the tasks required of it under Article 3 of the ECSC Treaty;  Whereas this is particularly true given the importance of this sector for the supply of the consumers of steel rolling mill products with regard to the fact that the branch receives, beside its own imports, nearly 30 % of the European Community steel  works home market deliveries of rolling mill products in the meaning of the ECSC Treaty;  Whereas the enlargement of the steel merchants' field of activity in further processing of the steel products received, presents an additional important reason for this statistical inquiry;  Whereas the evaluation of final steel consumption and the implementation of the Commission's forecast programmes, particularly since the realization of the single market as from 1993 and in view of the European Community's enlargement as from 1995,  require an in-depth knowledge of the steel merchants' activity,  HAS MADE THIS RECOMMENDATION:   Article 1  The Member States shall supply the Commission, with effect from January 1995, with monthly statistical information on receipts, deliveries, and stocks and, on a yearly basis, with statistics on further processing of ECSC iron and steel  products by stockholders specified in the questionnaires annexed to this recommendation under the conditions laid out therein.   Article 2  This recommendation is addressed to the Member States.  Done at Brussels, 16 November 1994.  For the Commission Henning CHRISTOPHERSEN Vice-President   ANNEX   NOTE  The questionnaires reproduced in the Annex are supplied by the SOEC in the original size.  EUROPEAN COMMISSION ECSC STATISTICAL OFFICE D 2  Luxembourg, January 1995 Questionnaire 3-70 RECEIPTS, DELIVERIES AND STOCKS OF ECSC IRON AND STEEL PRODUCTS BY STOCKHOLDERS EXPLANATORY NOTES I. GENERAL 1. The questionnaire covers all steel stockholders - individual or legal entities - who buy, stock and resell currently ECSC steel products on their own behalf, either as they stand or after initial processing, such as decoiling, slitting, flame  cutting, sawing, cutting, bending etc.  2. The month in question is the calendar month.  3. Stocks include all products in the possession of stockholders located on national territories, whether awaiting dispatch or otherwise, or already purchased or otherwise, but excluding products of transportation.  4. Deliveries cover all products, including those downgraded (such as non-prime products, plate and sheet cuttings or crop ends) but not intended for remelting.  5. Net tonnages should be given by taking products in the state in which they are dispatched from works.  II. DEFINITIONS A. STEEL QUALITIES Steel qualities are defined, as in European Standard EN 10 020, Definition and Classification of Grades of Steel, by requirements for chemical composition based on specified ladle analysis.  1. Non-alloy steel Steel grades in which none of the following limit values is reached by any specified element as defined in clause 4.1 and Table 1 and its footnotes of EN 10 020:  - 1,65 % of manganese,  - 0,50 % of silicon,  - 0,40 % of copper or lead,  - 0,30 % of chromium or nickel,  - 0,10 % of aluminium, bismuth, cobalt, selenium, tellurium, vanadium or tungsten,  - 0,08 % of molybdenum,  - 0,06 % of niobium,  - 0,0008 % of boron,  - 0,05 % of any other alloy element except carbon, nitrogen, phosphorus or sulphur.  It follows that alloy steel is any grade with a specified chemical composition reaching any of the above limit values.  2. Stainless steel Alloy steel grades containing by weight 10,50 % or more of chromium but not more than 1,20 % of carbon, with or without other alloying elements. (EN 10 020: 5.2.2.2.1) 3. Other alloy steel Any steel grade defined as alloy (EN 10 020: 4.2.2) not meeting the definition of stainless steel given above.  B. STEEL PRODUCTS Line 200 Semi-finished products Products obtained by:  - continuous casting which may be followed by rolling or cutting,  - pressure casting,  - rolling or cutting of ingots.  The cross-sections may be square, rectangular, round, or pre-formed for the manufacture of sections (concave polygons).  Line 310 Hot-rolled wide strip Hot-rolled flat products supplied in widths of 600 mm or more wound into coils. As rolled, wide strip has slightly convex edges, but may also be supplied with sheared edges or slit from wider strip.  Line 320 Hot-rolled narrow strip Hot-rolled flat products supplied in widths up to 600 mm obtained by slitting hot-rolled wide strip or by rolling as such and wound into coils. Hot-rolled narrow strip may also be supplied as lengths.  Line 330 Plates and sheets cut from hot-rolled wide strip Flat hot-rolled products, obtained by transverse cutting of hot-rolled wide strip, generally into square or rectangular shapes with a width of 600 mm or over. Include clad products according to the chemical composition of the substrate (base) layer.  According to thickness, hot-rolled plates and sheets are defined as:  - plates thickness 3 mm or over,  - sheets thickness up to 3 mm.  Line 340 Plates and sheets hot rolled in other mills This line refers principally to plates (quarto plates) hot rolled in reversing mills, and occasionally to plates and sheets hot rolled in other mills capable of the same process route.  Include tapered plates rolled in reversing mills, and clad products according to the chemical composition of the substrate (base) layer.  Wide flats Hot-rolled flat products of width over 150 mm up to and including 1 250 mm and thickness generally over 4 mm, always suppled in lengths, i.e. not coiled. A special requirement is that the edges are square; wide flats are hot rolled on the four sides (or  in box passes).  Line 410 Cold-rolled uncoated flat products Plates, sheets and strip, generally defined as for hot-rolled uncoated flat products, which have been substantially reduced, in thickness by cold rolling.  Electrical sheets and strip Cold-rolled strip of width 500 mm or over, and sheets with specified, requirements for specific, total watts loss and peak magnetic flux density which may be:  - non-oriented; i.e. after final annealing the magnetic properties are similar in both the direction of rolling and in the transverse direction, which may be supplied uncoated or with an insulating coating on one or both surfaces; these steels may also  be supplied in the not finally annealed condition for final annealing by the user,  - grain oriented with superior magnetic properties in the direction of rolling, and supplied with an insulating coating on both surfaces.  Line 420 Blackplate Cold-rolled non-alloy low carbon steel less than 0,50 mm thick in strip or sheet forms normally used to manufacture tinplate or ECCS, but in certain packaging applications it may be used as such. Report also any blackplate supplied by an ECSC steelworks  with lacquered (varnished) or printed surfaces.  Tinplate, other tinned sheet and ECCS Tinplate and ECCS are products which comply with the definitions of blackplate above but have been coated electrolytically respectively with tin or a duplex film of chromium adjacent to the steel substrate with an outer layer of hydrated chromium oxide  or hydroxide.  Tinned sheel is non-alloy low carbon steel in strip or sheet form of a thickness of 0.50 mm or over, coated with tin.  Report also any tinplate, tinned sheel or ECCS with lacquered (varnished) or printed surfaces.  Line 451 Hot dipped metal coated Sheets which have been continuously metal coated by hot dipping. The principal coatings are:  (a) lead tin alloy (Terneplate);  (b) zinc (galvanized);  (c) aluminium or aluminium silicon alloys;  (d) aluminium zinc alloys.  Include any other metal coatings applied by continuous hot dipping.  Line 454 Electrolytically metal coated Sheets continuously metal coated by an electrolytic process. The principal coatings are:  (a) lead tin alloy;  (b) zinc (electro-zinc);  (c) zinc nickel alloys.  Include any other metal coatings applied by a continuous electrolytic process.  Line 457 Organic coated Sheets, whether or not already metal coated, subsequently coated with an organic material or a mixture of metal powder and organic material by a continuous process.  Line 510 Rod, including deformed rod Hot-rolled long products with nominal transverse dimensions of 5 mm or over wound into coils. For non-alloy steels a distinction is made between:  - deformed rod with a crenelated or ribbed surface for reinforcement of concrete,  - smooth surfaced rod with cross-sections that may be round, square, rectangular, hexagonal, octagonal, half round or any similar shape.  Line 520 Bars for reinforcement of concrete Deformed long products with a cross-section that is round or almost round hot rolled in lengths to produce a crenelated or ribbed surface and destined for reinforcement of concrete. Include lengths obtained by straightening and cutting deformed rod.  Also include smooth surfaced bars destined for reinforcement of concrete.  Line 530 Merchant bars This term covers the following hot-rolled long products; flats and other bars (convex sections), hollow drill bars, angles, toes, bulb flats, light and special sections. A distinction is made between:  (a) flats:  - hot-rolled bars of rectangular cross-section rolled on the four faces of thickness generally 5 mm or over and width not over 150 mm;  (b) other bars including:  - rounds, squares, hexagons and octagons bars of solid (convex) cross-sections which may be circular or regular polygons four, six or eight sides, and in Parts II and III include bars of stainless or other alloy steel destined for reinforcement of  concrete, whether or not deformed, concrete, whether or not deformed,  - bars of special shapes (e.g. triangles, bevels, trapezoids, bars for groove springs half rounds, half flat half rounds, etc.),  - hollow mining drill bars;  (c) angles, tees, bulb flats, light and special sections which comprise:  - L and T sections,  - bulb flats,  - light U, I and H sections or height up to 80 mm,  - special sections (e.g. Z sections, T sections with unequal flanges, square edged L, U and T sections, caterpillar track sections, etc.).  Line 540 Heavy sections Hot-rolled long products with cross-sections ressembling the letters I, H or U (concave polygons) with web heights of 80 mm or over.  Sections for mining frames Hot-rolled long products with cross-sections resembling the letters H, I or the Greek letter O. The H or I sections may be distinguished from other heavy sections by a greater slope of the inside face of the tapered flanges. Generally these products  have a width more than 0,7 of the nominal web height.  Sheet pilling Hot-rolled long products (concave polygons) manufactured with external interlocks which can be fastened together to form partitions or continuous walls.  Railway materials Report heavy and light railway and tramway rails and products for other rail systems (e.g. crane rails, bridge rails, grooved rails) together with hot-rolled railway accessories (e.g. sleepers, fish plates, base plates, etc.).  C. BUILDING INDUSTRY This relates to plants-carrying out the following activities:  Steel and metal structures The following activities fall in this group:  - manufacture of steel structures and parts of structures (bridges, bridge-sections, frames, frameworks, superstructures),  - manufacture of pit propping equipment,  - manufacture of standard-gauge railway track fixtures and fittings such as building cores, points, pillars, crossings and turntables etc.  Building and public works Construction, repair and demolition of buildings, roads, public highways and waterworks such as canal buildings, railway (excluding railway track) embankments, piers, tunnels, underground track, elevated roadways, bridges, viaducts, dams, drainage work,  cleaning work, aqueducts, irrigation and salvage operations, hydro-electric schemes, hydraulic plant, gas piping, pipelines, construction of support material (e.g. mine frames) and all other types of heavy construction work, marine work such as  drag-lining, dredging, pile-driving, draining and construction of ports and of naval installations, wells, airports, sports grounds, golf courses, swimming pools, tennis courts, car parks, communications systems such as telephone and telegraph lines and  all other work carried out by private enterprises or by the Government. This heading includes subcontractors in the construction field such as scaffolders, plumbers, plasterers and electricians and the manufacture of posts and pillars and pipes of  reinforced concrete etc.  EXPLANATORY NOTES  I. GENERAL REMARKS  1. The questionnaire covers all steel stockholders - individual or legal entities - who process ECSC steel products on their own behalf.  2. The reference period is the calendar year.  3. Working is taken to mean the processing of a flat-rolled product by slitting and/or by decoiling and/or by surface prefinishing to create a new or a more highly processed finished rolled product.  4. The primary products used for processing (Part A of the questionnaire) must be in a plausible ratio in weight terms to the products resulting therefrom (Part B), allowance being made for processing waste. Input = output, the former relating only to  ECSC products.   II. DEFINITIONS  1. The questionnaire relates to all qualities of steel (i.e. alloy and non-alloy steels) within the meaning of the European Standard EN 10 020.  2. Line 11 Cold-rolled wide strip (or cold-rolled sheet and plate) is a cold-rolled flat product in coils (or panels) of a width of 500 mm or more. (Cold-rolled plate in the form of coils or panels of a thickness of 3 mm or more is regarded as an ECSC product  pursuant to the Council Decision of 21 February 1983).  3. Line 12 Hot-rolled wide strip (or hot-rolled sheet and plate) is a hot-rolled flat product in coils (or panels) of a width of 600 mm or more; hot-rolled strip has a width of less than 600 mm.  4. Line 21 Cold-rolled slit strip is strip which is less than 500 mm wide made by slitting cold-rolled wide strip (not regarded as an ECSC product).  5. Line 22 Hot-rolled slit strip is strip made by slitting hot-rolled wide strip (at least 600 mm wide) or hot-rolled strip (less than 600 mm wide).  6. Line 31 Cold-rolled sheet and plate in panels: sheet and plate made by decoiling cold-rolled wide strip.  7. Line 32 Hot-rolled sheet and plate in panels: sheet and plate made by decoiling hot-rolled wide strip.  8. Line 40 Strip in bars: bars made from cold- or hot-rolled wide strip or from hot-rolled strip by decoiling or by slitting and decoiling.  9. Line 50 Coated finished rolled products comprise all types of sheet and strip made from the primary product which have been given a metallic and/or non-metallic coating on the stockholder's premises.