title: Recommendation for a Council opinion in accordance with the third paragraph of Article 5 of Council Regulation (EC) n°1466/97 of 7 July 1997 on the updated stability programme of Luxembourg, 2000-2004

text: ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---


title: Council Recommendation of 14 July 2015 on the 2015 National Reform Programme of France and delivering a Council opinion on the 2015 Stability Programme of France

text:
               18.8.2015

               EN

               Official Journal of the European Union

               C 272/51

         COUNCIL RECOMMENDATION
   of 14 July 2015
   on the 2015 National Reform Programme of France and delivering a Council opinion on the 2015 Stability Programme of France
   (2015/C 272/14)
   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 resolutions of the European Parliament,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

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

               (2)

               On 14 July 2015, the Council, on the basis of the Commission's proposals, adopted a Recommendation on the broad guidelines for the economic policies of the Member States and the Union and, on 21 October 2010, it adopted a decision on guidelines for the employment policies of the Member States (3). Together these form the ‘integrated guidelines’ which Member States were invited to take into account in their national economic and employment policies.

               (3)

               On 8 July 2014, the Council adopted a Recommendation (4) on France's National Reform Programme for 2014 and delivered its opinion on France's updated Stability Programme for 2014. On 28 November 2014, in line with Regulation (EU) No 473/2013 of the European Parliament and of the Council (5), the Commission presented its opinion on France's draft budgetary plan for 2015.

               (4)

               On 28 November 2014, the Commission adopted the Annual Growth Survey, marking the start of the 2015 European Semester for economic policy coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report, in which France was identified as one of the Member States for which an in-depth review would be carried out.

               (5)

               On 18 December 2014, the European Council endorsed the priorities for fostering investment, intensifying structural reforms and pursuing responsible growth-friendly fiscal consolidation.

               (6)

               On 26 February 2015, the Commission published its 2015 country report for France. This assessed France's progress in addressing the country-specific recommendations adopted on 8 July 2014. The country report also includes the results of the in-depth review under Article 5 of Regulation (EU) No 1176/2011. The Commission's analysis leads it to conclude that France is experiencing excessive macroeconomic imbalances which require decisive policy action and specific monitoring. In particular, in a context of low growth and low inflation, coupled with poor company profitability, and given the insufficient policy response so far, risks stemming from both cost and non-cost competitiveness and from high and rising indebtedness, in particular public debt, have increased significantly. The need for action to reduce the risk of adverse effects on the French economy and, given its size, on the economic and monetary union more widely, is particularly great.

               (7)

               On 30 April 2015, France submitted its 2015 National Reform Programme and its 2015 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (8)

               France is currently in the corrective arm of the Stability and Growth Pact. In its 2015 Stability Programme, the government plans to correct the excessive deficit by 2017, in line with the Council recommendation of 10 March 2015 and to reach the medium-term objective — a structural deficit of 0,4 % of GDP — by 2018 (6). While the government plans to respect the headline deficit targets set by the Council, the fiscal effort (7) planned over 2015-2017 is below the recommended level. In its 2015 Stability Programme the government expects the public debt-to-GDP ratio to peak at 97 % in 2016 before receding to 95,5 % of GDP in 2018. The macroeconomic scenario underpinning these budgetary projections is plausible. On 10 June 2015, France submitted a report on action taken providing further information on the measures planned over 2015-2017. Following its assessment of the report, the Commission issued a Communication on 1 July 2015 in which it considered that the excessive deficit procedure is to be held in abeyance. Based on the Commission's 2015 spring forecast updated to take into account the report on action taken submitted by France, the headline deficit for 2015 is projected at 3,8 % of GDP thereby respecting the target of 4 % of GDP set by the Council under the excessive deficit procedure. However, the fiscal effort expected for that year will be lower than the one recommended by the Council. Regarding 2016, taking into account the additional information included in France's report on action taken, the Commission's updated forecast foresees that the headline deficit will reach 3,4 % of GDP, in line with the recommended target. The fiscal effort recommended by the Council is however not expected to be delivered. The Council recommendation of 10 March 2015 called for an evaluation of the key measures planned for 2016 and 2017, which was not provided in the report on action taken.
               Finally, the ‘loi de programmation des finances publiques’ was not updated as recommended by the Council. Overall, the consolidation strategy pursued by France relies primarily on the improving cyclical conditions and a continuation of the low interest rate environment and is therefore subject to risks. Based on its assessment of the Stability Programme, taking into account the Commission's 2015 spring forecast and the Commission Communication of 1 July 2015, the Council is of the opinion that France is broadly compliant with the provisions of the Stability and Growth Pact. However, in order to ensure a durable correction of the excessive deficit by the established deadline, the budgetary strategy would need to be reinforced and backed by the implementation of comprehensive and ambitious structural reforms.

               (9)

               It will be crucial to intensify spending reviews and identify large areas of expenditure cuts so that they can deliver the expected results. France should make sure that spending reduction targets take account of the close-to-zero rate of inflation. At the same time, the savings resulting from the lower than expected costs of the public debt due to lower interest rates should be channelled to reducing the deficit. In addition, sizeable short-term savings cannot be achieved without curbing significantly the increase in social security spending, which represented 26 % of GDP in 2014, accounting for nearly half of all public sector expenditure. Healthcare expenditure savings of EUR 11 billion are planned for 2015-2017, but further efforts are needed to limit expenditure increases in this area. In particular, there is scope to implement further cost-containment policies in the area of pharmaceutical prices and hospital spending. The pension system will continue to face deficits up to 2020 and previous pension reforms will not suffice to eliminate the system's deficit. In particular, schemes for state officials and employees of state-controlled companies continue to weigh on the overall pension deficit. Moreover, the macroeconomic situation has a large impact on the sustainability of the pension system, in particular the situation of complementary pension schemes. Decisive action is needed to restore the financial health of the complementary pension system.

               (10)

               France has undertaken a reform of local administration aimed at increasing the efficiency of the system. It should continue to implement the planned reduction in grants from central government and strengthen the control of local government expenditure, by capping the annual increase in local government tax revenue, taking into account existing ceilings on a number of local taxes. Action is also needed to contain the rise in the administrative costs of local authorities.

               (11)

               Policy measures have been taken to reduce labour costs and improve firms' profit margins through the EUR 20 billion tax credit for competitiveness and employment and the EUR 10 billion additional cuts in employers' social security contributions planned under the responsibility and solidarity pact. These two measures account for 1,5 % of GDP and should contribute to reducing the gap between France and the euro area average in terms of labour tax wedge. Implementation of these measures should continue in 2016 but, given their high cost for the public budget, it is important to assess their effectiveness at company level. This evaluation should take particular account of the rigidities affecting the labour and product markets, especially those affecting wages. The cost of labour at the minimum wage remains high compared with other Member States. The minimum wage should evolve in a manner that is more conducive for competitiveness and job creation. In addition, in a context of low inflation, its automatic indexation may lead to wage increases beyond what is necessary to preserve purchasing power.

               (12)

               France should take decisive action to remove the regulatory thresholds in labour law and accounting regulations that limit the growth of French firms, in particular SMEs. Overall, there is scope for increasing competition in the services sector, in particular in professional services, retail trade and network industries. A number of regulations and tariffs for regulated professions constrain economic activity. New measures for improving competition in legal professions have been adopted through the recent law on growth, economic activity and equal opportunities, and their implementation will be crucial to ensure that barriers are removed on the ground. France should also take action to remove barriers in other sectors, in particular the health sector. The numerus clausus principle for access to health professions is still hampering access to services and could be reviewed without jeopardising quality and safety.

               (13)

               In 2014, the tax-to-GDP ratio stood at 45,8 %, one of the highest in the Union. Corporate tax rates are high and weigh negatively on French companies' investment. The effective tax rate paid by a company on average stands at 38,3 %, among the highest in the Union. In addition to the ongoing phasing out of the solidarity surcharge on companies and the reduction in the statutory rate to 28 % in 2020, France should increase efforts in the short term to make corporate taxation conducive to growth and investment. Efforts are needed to simplify the tax system by removing inefficient taxes. Over 100 taxes have been identified as yielding little or no revenue and remove these could simplify procedures for companies and households.

               (14)

               The French unemployment rate remained high in 2014 and long-term unemployment deteriorated, reflecting poor economic growth. The overall unemployment rate stood at 10,2 %, as compared with 10,3 % in 2013 and 7,5 % in 2008, particularly hitting young people, older workers and the low-qualified. France suffers from labour market segmentation, with fixed-term contracts accounting for an increasing proportion of hires. Targeted efforts to reduce the level of segmentation, in particular through higher social contributions for very short-term contracts, have failed to curb this trend. Reviewing the legal framework governing labour contracts could help to reduce the segmentation. Recent reforms have created only limited scope for employers to depart from branch-level agreements through company-level agreements. This limits companies' ability to modulate the workforce according to their needs. Sectors and companies are given flexibility to determine case by case and after negotiations with social partners at which conditions working time should depart from 35 hours a week, but there are important cost implications. The law creating the accords de maintien de l'emploi has not brought the expected results. Very few companies have made use of the new arrangements for company-level agreements to increase the flexibility of working conditions. This scheme should be reviewed to give companies more scope to adapt wages and working time to their economic situation.

               (15)

               The long-lasting deterioration in the labour market has affected the unemployment benefit system, calling into question the sustainability of the model. The new convention on the unemployment benefit system introduced on 1 July 2014 is insufficient to reduce the deficit. The various measures introduced are expected to yield EUR 0,3 billion in savings in 2014 and a further EUR 0,8 billion in 2015. Nevertheless, the deficit of the system is still projected to rise from EUR 3,9 billion in 2014 to EUR 4,4 billion in 2015 leading to a further increase in the system's debt to EUR 25,9 billion. Structural measures are needed to ensure the viability of the system. In particular, eligibility conditions, the degressive structure of benefits and the replacement rates for workers with the highest wages should be reviewed between the social partners in charge of managing the system.

               (16)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of France's economic policy and published it in the 2015 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to France in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in France but also their compliance with EU rules and guidance, given the need to strengthen the overall economic governance of the Union by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations (1) to (6) below.

               (17)

               In the light of this assessment, the Council has examined the Stability Programme, and its opinion (8) is reflected in particular in recommendation (1) below.

               (18)

               In the light 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 recommendations (1) to (6) below.

               (19)

               In the context of the European Semester, the Commission has also carried out an analysis of the economic policy of the euro area as a whole. On the basis of this analysis, the Council has issued specific recommendations addressed to the Member States whose currency is the euro (9). As a country whose currency is the euro, France should also ensure the full and timely implementation of these recommendations,

         HEREBY RECOMMENDS that France take action in 2015 and 2016 to:

               1.

               Ensure effective action under the excessive deficit procedure and a durable correction of the excessive deficit by 2017 by reinforcing the budgetary strategy, taking the necessary measures for all years and using all windfall gains for deficit and debt reduction. Specify the expenditure cuts planned for these years and provide an independent evaluation of the impact of key measures.

               2.

               Step up efforts to make the spending review effective, continue public policy evaluations and identify savings opportunities across all sub-sectors of general government, including on social security and local government. Take steps to limit the rise in local authorities' administrative expenditure. Take additional measures to bring the pension system into balance, in particular ensuring by March 2016 that the financial situation of complementary pension schemes is sustainable over the long term.

               3.

               Ensure that the labour cost reductions stemming from the tax credit for competitiveness and employment and from the responsibility and solidarity pact are sustained, in particular by implementing them as planned in 2016. Evaluate the effectiveness of these schemes in the light of labour and product market rigidities. Reform in consultation with the social partners and in accordance with national practices, the wage-setting process to ensure that wages evolve in line with productivity. Ensure that minimum wage developments are consistent with the objectives of promoting employment and competitiveness.

               4.

               By the end of 2015, reduce regulatory impediments to companies' growth, in particular by reviewing the size-related criteria in regulations to avoid threshold effects. Remove the restrictions on access to and the exercise of regulated professions, beyond the legal professions, in particular as regards the health professions as from 2015.

               5.

               Simplify and improve the efficiency of the tax system, in particular by removing inefficient tax expenditure. To promote investment, take action to reduce the taxes on production and the corporate income statutory rate, while broadening the tax base on consumption. Take measures as from 2015 to abolish inefficient taxes that are yielding little or no revenue.

               6.

               Reform the labour law to provide more incentives for employers to hire on open-ended contracts. Facilitate take up of derogations at company and branch level from general legal provisions, in particular as regards working time arrangements. Reform the law creating the accords de maintien de l'emploi by the end of 2015 in order to increase their take-up by companies. Take action in consultation with the social partners and in accordance with national practices to reform the unemployment benefit system in order to bring the system back to budgetary sustainability and provide more incentives to return to work.

      Done at Brussels, 14 July 2015.

            For the Council

            The President

         P. GRAMEGNA

      (1)  OJ L 209, 2.8.1997, p. 1.

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

      (3)  Maintained by Council Decision 2014/322/EU of 6 May 2014 on guidelines for the employment policies of the Member States for 2014 (OJ L 165, 4.6.2014, p. 49).

      (4)  Council Recommendation of 8 July 2014 on the National Reform Programme 2014 of France and delivering a Council opinion on the Stability Programme of France, 2014 (OJ C 247, 29.7.2014, p. 42).

      (5)  Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area (OJ L 140, 27.5.2013, p. 11).

      (6)  Compared to the previous Stability Programme, the government has revised its medium-term objective from a structural deficit of 0,25 % of GDP to 0,4 %. The medium-term objective is set to be achieved one year later than foreseen in last year's Stability Programme.

      (7)  The structural balance as recalculated by the Commission based on the information in the Stability Programme, following a commonly agreed methodology.

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

      (9)  OJ C 272, 18.8.2015, p. 98.


title: Commission Recommendation of 26 July 2012 on the implementation of performance plans and targets in consistency with the European Union-wide performance targets adopted pursuant to Commission Regulation (EU) No 691/2010 and the preparation for the second performance reference period  Text with EEA relevance

text:
               31.7.2012

               EN

               Official Journal of the European Union

               C 228/1

         COMMISSION RECOMMENDATION
   of 26 July 2012
   on the implementation of performance plans and targets in consistency with the European Union-wide performance targets adopted pursuant to Commission Regulation (EU) No 691/2010 and the preparation for the second performance reference period
   (Text with EEA relevance)
   2012/C 228/01
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 100(2) thereof,
   Having regard to Commission Regulation (EU) No 691/2010 laying down a performance scheme for air navigation services and network functions and amending Commission Regulation (EC) No 2096/2005 laying down common requirements for the provision of air navigation services (1),
   Whereas:

               (1)

               Commission Regulation (EU) No 691/2010 provides for the adoption by the Member State(s) of national or functional airspace block performance plans including binding national targets or targets at the level of functional airspace blocks. It also provides that the Commission should assess whether national or functional airspace blocks targets are found consistent with, and adequately contributing to, the European Union-wide performance targets, which were adopted for the first performance reference period (from 2012 to 2014) by Commission Decision 2011/121/EU of 21 February 2011 (2).

               (2)

               A Performance Review Body was designated by the Commission on 29 July 2010, pursuant to Article 3 of Commission Regulation (EU) No 691/2010, to assist it in the implementation of the performance scheme.

               (3)

               Member States communicated their initial national plans to the Commission by 5 July 2011, including a plan jointly presented by Belgium and Luxembourg. Denmark and Sweden communicated a plan to the Commission on behalf of their functional airspace block (Danish-Swedish FAB). Belgium, France, Germany, Luxembourg and the Netherlands communicated a plan to the Commission on behalf of their functional airspace block (FABEC).

               (4)

               Pursuant to Article 13(3) of Commission Regulation (EU) No 691/2010, the Commission adopted on 23 November 2011 Commission Recommendation C(2011) 8329 final on the revision of targets contained in performance plans.

               (5)

               By 1 February 2012, all Member States except Cyprus notified the Commission in accordance with Article 13(4) of Commission Regulation (EU) No 691/2010 their adoption of revised performance plans and targets. By the date of adoption of this Recommendation, Cyprus had not notified the Commission that it had adopted a revised performance plan and targets.

               (6)

               The Commission, assisted by the Performance Review Body, assessed the revised national or functional airspace block performance plans and targets in accordance with the procedure referred to in Article 14(1) of Commission Regulation (EU) No 691/2010.

               (7)

               On the basis of this assessment, the Commission found that the targets contained in the national or functional airspace block performance plans are consistent with, and contribute adequately to, the European Union-wide targets. Member States were notified thereof pursuant to Article 14(2) of Commission Regulation (EU) No 691/2010.

               (8)

               While the overall assessment allowed the Commission to establish consistency and adequate contribution to the European Union-wide targets, the assessment showed that there are significant differences between the individual efforts made by Member States. In some instances, the Commission found that individual Member States could have further improved their performance targets.

               (9)

               In the light of the Commission’s assessment, this Recommendation covers the implementation of performance plans and targets in consistency with the European Union-wide performance targets and the preparation for the second performance reference period. To this end, the Commission will take into account the outcome of the first performance reference period in its assessment of performance plans and targets for the second performance reference period.

               (10)

               The Commission consulted the Member States concerned by the present Recommendation,

         HAS ADOPTED THIS RECOMMENDATION:

               1.

               The aim of this Recommendation is to ensure the implementation of performance plans and targets in consistency with the European Union-wide performance targets adopted by Commission Decision 2011/121/EU for the first performance reference period, i.e. the years 2012 to 2014. It also aims to ensure that the outcome of the first performance reference period is duly taken into account when preparing for the second performance reference period.

               2.

               Based on the recommendations contained in the assessment reports of the Performance Review Body and taking due consideration of the collective progress achieved by the Member States participating in the performance scheme, the Commission considers that:

                           (a)

                           Member States should ensure that their air navigation service providers amend their capacity plans to enable sufficient capacity to be provided in order to meet the targets of the performance plans adopted;

                           (b)

                           Member States should deliver the planned capacity, whilst remaining within the set cost-efficiency target for which the control of cost evolution will be particularly important;

                           (c)

                           Member States should report to the Commission on a yearly basis, as from the first performance reference period:

                                       (i)

                                       the difference between the determined costs and the actual costs, with a view to identifying the uncontrollable costs in particular and to scrutinise the development and relevance of these costs;

                                       (ii)

                                       the difference between the investments of the air navigation service providers recorded in the performance plans and the actual spending, as well as between the planned date of entry into operation of these investments and the actual situation;

                           (d)

                           Member States from the following functional airspace blocks: North European Functional Airspace Block (NEFAB), Baltic and Blue MED should communicate to the Commission by the end of 2012 at the latest, for information, aggregated performance targets highlighting the consistency at functional airspace block level with the European Union-wide targets as specified in Article 5(3) of Commission Regulation (EU) No 691/2010.

               3.

               With a view to preparing for the second performance reference period, the Commission considers that:

                           (e)

                           the relative contribution of Member States to the attainment of the EU-wide performance targets during the first performance reference period should be taken into account when assessing the performance plans and targets for the second performance reference period, taking the year 2009 as the benchmark year;

                           (f)

                           Member States should anticipate that substantial efforts will be needed in order to achieve a cost-efficiency target for the second performance reference period well below the average rate in the first performance reference period. It is expected that this will entail major downward pressure on costs to European air navigation service providers consistent with the establishment of functional airspace blocks;

                           (g)

                           Member States should take into full consideration for the preparation of the second performance reference period the actual risk faced by the air navigation service providers and ensure that the return on equity more reasonably reflects this risk.

               4.

               The Commission, in conjunction with the Performance Review Body, intends to follow up this Recommendation and other recommendations contained in the assessment report of the Performance Review Body through bilateral and/or multilateral contacts with the Member States.

               5.

               The Commission reminds the Member States of their obligation under Article 17(1) and (3) of Commission Regulation (EU) No 691/2010 to ensure ongoing monitoring and reporting of the implementation of the performance plans.

               6.

               This Recommendation is addressed to the Member States.

      Done at Brussels, 26 July 2012.

            For the Commission

         Siim KALLAS

            Vice-President

      (1)  OJ L 201, 3.8.2010, p. 1.

      (2)  OJ L 48, 23.2.2011, p. 16.


title: Council Recommendation of 10 July 2012 on the National Reform Programme 2012 of Austria and delivering a Council opinion on the Stability Programme of Austria, 2011-2016

text:
               24.7.2012

               EN

               Official Journal of the European Union

               C 219/1

         COUNCIL RECOMMENDATION
   of 10 July 2012
   on the National Reform Programme 2012 of Austria and delivering a Council opinion on the Stability Programme of Austria, 2011-2016
   2012/C 219/01
   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 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 (2), 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 (3) on Austria’s National Reform Programme for 2011 and delivered its opinion on Austria’s updated Stability Programme for 2011-2014.

               (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 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (4), adopted the Alert Mechanism Report, in which it did not identify Austria 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 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 24 April 2012, Austria submitted its Stability Programme covering the period 2011-2016 and, on 25 April 2012, its 2012 National Reform Programme. In order to take account of their interlinkages, the two Programmes have been assessed at the same time.

               (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 is cautious for the years 2012 and 2013. For 2014-2016, the scenario becomes more optimistic, projecting average GDP growth of 2,1 %, consistently above the current estimates of potential growth. The objective of the budgetary strategy outlined in the Stability Programme is to correct the excessive deficit by 2013 and reach the medium-term budgetary objective (MTO) by 2016. The Stability Programme has changed the MTO from the target of a balanced budget over the business cycle to a structural deficit of 0,45 % of GDP, adequately reflecting the requirements of the Stability and Growth Pact. The foreseen 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 (‘EDP’) in December 2009. However, based on the (recalculated) structural budget balance, (5) the average annual fiscal effort planned at 0,5 % of GDP for the period 2011-2013 is lower than the 0,75 % of GDP recommended by the Council. The envisaged structural progress towards the MTO is sufficient in 2015, but lower than 0,5 % of GDP per year benchmark of the Stability and Growth Pact in 2014 and 2016. However, in 2014-2015 the projected growth rate of government expenditure, taking into account discretionary revenue measures, respects the expenditure benchmark of the Stability and Growth Pact. Nevertheless, there are risks accompanying the fiscal targets both on the revenue and on the expenditure sides. For example, the budgetary effect of some measures is difficult to quantify because of dependence on individual uptake. Since the legislation has not yet been agreed the details of the financial transaction tax are not yet known. The envisaged expenditure cuts at the sub-national level are not identified. The Stability Programme foresees that the debt-to-GDP ratio, which amounted to 72,2 % at the end of 2011, is going to peak at 75,3 % in 2013 before gradually falling to 70,6 % in 2016. In terms of the debt reduction benchmark of the Stability and Growth Pact, Austria will be in a transitional period in the years 2014-2016 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 because of the growing debt of state-owned companies classified outside the general government sector and potential further burden due to the banking sector government support.

               (11)

               With the adoption of the latest fiscal consolidation package, Austria is set on a path leading to more sustainable public finances. However, the measures contained in the package do not encompass significant streamlining in the fiscal relations between the federal, regional and local governments, widely acknowledged as a major source of potential savings. An agreement in principle was reached between the federal and regional governments on the centralisation of health care financing, but details still need to be negotiated.

               (12)

               In order to raise the effective retirement age, Austria has enacted reforms mainly aimed at restricting access to the invalidity pension scheme. Bringing forward the harmonisation of the statutory retirement age between men and women, currently foreseen for 2024-2033, has not been addressed. Employability of older workers and active aging cultures within companies need to be further enhanced. The proposed measures might not be far-reaching enough to substantially raise the effective retirement age.

               (13)

               The performance of the Austrian labour market has been very good, as demonstrated by the lowest unemployment rate in the Union in 2010 and 2011. However, Austria’s labour force potential is projected to shrink from 2020 onwards. Therefore, Austria will have to strive to fully tap the potential of working age population by addressing the problems of the low employment rate of older workers and the widespread use of early retirement and invalidity pension schemes, the high tax and social security burden on labour income, and the relatively high concentration of women in low-wage and part-time employment. Furthermore, the potential of people with a migration background is not fully used due to low education achievements or difficulties with the recognition of skills acquired abroad. Education outcomes as reflected in the OECD Programme for International Student Assessment (‘PISA’) results are below the EU average and the influence of socioeconomic background on education achievements is particularly high. A steadily growing number of students, due to high incoming mobility (‘mass university’) and high drop-out rates (around 40 %), remain the main challenges together with a considerable gap in funding.

               (14)

               Austria enjoys a favourable position in terms of competitiveness and productivity. Nevertheless, it faces relative structural weaknesses in several areas, which may harm its long-term growth potential. Competition in the services sector has not been particularly supportive of domestic demand. The issues of high network access prices and the distortive behaviour of incumbent firms (hampering market entry, competition and innovation) have not been addressed. Unjustified restrictions in the liberal professions persist: the number of regulated professions notified by Austria to the Commission is far above the EU average. There is a need to assess the justification and proportionality of regulation in these professions. There has been no tangible progress on Austria’s commitment to strengthen the federal competition authority. 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’) has finally been implemented through the adoption of a ‘horizontal’ law and through changes in legislation at province level, as recommended by the Council in 2011.

               (15)

               The Austrian financial sector faces particular challenges related to the high exposure of Austrian banks to the countries of Central, Eastern and South Eastern Europe, because in several of these economies asset quality deterioration may still be ongoing. Policy decisions with cross-border impact need to be preceded by information exchange and coordination with host country supervisors. Authorities also need to continue to closely monitor and restructure the banks which benefited from public sector support, especially the credit institutions which were nationalised.

               (16)

               Austria has made a number of commitments under the Euro Plus Pact. These commitments, and the implementation of the commitments presented in 2011, relate to fostering employment, improving competitiveness, and enhancing sustainability of public finances. 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.

               (17)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of Austria’s economic policy. It has assessed the stability programme and national reform programme. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Austria but also their compliance with 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.

               (18)

               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,

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

               1.

               Implement the 2012 budget as envisaged and reinforce and rigorously implement the budgetary strategy for the year 2013 and beyond; sufficiently specify measures (in particular at the sub-national level), to ensure a timely correction of the excessive deficit and the achievement of the average annual structural adjustment effort specified in the Council Recommendations under the EDP. Thereafter, ensure an adequate structural adjustment effort to make sufficient progress towards the MTO, including meeting the expenditure benchmark.

               2.

               Take further steps to strengthen the national budgetary framework by aligning responsibilities across the federal, regional and local levels of government, in particular by implementing concrete reforms aimed at improving the organisation, financing and efficiency of healthcare and education.

               3.

               Bring forward the harmonisation of the statutory retirement age between men and women; enhance older workers’ employability and monitor closely the implementation of the recent reforms restricting access to early exit channels in order to ensure that the effective retirement age is rising including through linking the statutory retirement age to life expectancy.

               4.

               Take steps to reduce the effective tax and social security burden on labour especially for low income earners with a view to increasing employment rates for older persons and women given the need to counteract the impact of demographic change on the working population. Shift the tax burden in a budgetary neutral way, towards real estate taxes, and environmental taxes. Reduce the high gender pay gap and enhance full-time employment opportunities for women, in particular through the provision of additional care services for dependants.

               5.

               Continue to implement measures to improve educational outcomes, especially of disadvantaged young people. Take measures to reduce drop-outs from higher education.

               6.

               Take further steps to foster competition, in the services sectors, by removing barriers to market entry in the communications, transport and energy retail markets. Where unjustified restrictions on access to liberal professions exist, they should be removed. Enhance the powers of the federal competition authority and speed up the implementation of the competition law reform.

               7.

               Further restructure and continue to monitor those banks that benefited from public support, while avoiding excessive deleveraging. Further improve the cooperation and coordination of national policy decisions with financial sector supervisors in other countries.

      Done at Brussels, 10 July 2012.

            For the Council

            The President

         V. SHIARLY

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  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).

      (3)  OJ C 210, 16.7.2011, p. 8.

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

      (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.


				|

		52011SC0808

			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Greeceand delivering a Council opinionon the updated Stability Programme of Greece, 2011-2014 /* SEC/2011/0808 final  */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of Greece
and delivering a Council opinion
on the updated Stability Programme of Greece, 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 , and in
particular Article 5(3) 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 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,[1]
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.
(5)
On 3 May 2010, Greece presented an encompassing
adjustment programme supported by financial assistance provided by the
euro-area Member States and the IMF amounting to EUR 110 billion. The
accompanying Memorandum of Understanding and its successive supplements lay
down the economic policy conditions on the basis of which the financial
assistance is disbursed.
(6)
The key elements of policy conditionality have
been enshrined in Council Decision 2010/320/EU and its subsequent amendements[2]
addressed to Greece with a view to reinforcing and deepening fiscal
surveillance and giving notice to Greece to take measures for the deficit
reduction judged necessary to remedy the situation of excessive deficit under
the provisions of Articles 136 and 126(9) of the Treaty.
(7)
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. Greece has not yet submitted an updated
Stability Programme nor have specific Euro Plus Pact commitments and actions
for 2011 been explicitly communicated by Greece. These are expected to be
submitted to the European Council.
(8)
Over the last decade, Greece’s growth
performance was based on unsustainable drivers: consumption and residential
investment booms were accompanied by high real wage increases and rapid credit
growth; low real interest rates associated with euro adoption and financial
market liberalisation fed the boom. The 2008-2009 global crisis exposed the
vulnerabilities, including: unsustainable fiscal policies, partly hidden by
unreliable statistics and temporarily high revenues; rigid labour and product
markets; loss of competitiveness and rising external debt. While not at the
origin, the banking sector was affected by the economic and confidence crisis.
The extent of the deterioration in the fiscal position was revealed late due to
grave deficiencies in Greece's accounting and statistical systems. This delayed
the implementation of corrective measures. As concerns about Greek fiscal
sustainability arose and global risk aversion heightened, market sentiment
vis-à-vis Greece worsened sharply in early 2010. In April 2010, Greece asked for international financial assistance as it was confronted with sizeable
financing needs and not able to access international capital markets.
(9)
Greece committed to
implementing the economic and financial adjustment programme with the aim of correcting
fiscal and external imbalances and restoring confidence in the short term. In
the medium run, it should lay the foundations for a growth model that relies
more on investment and exports supporting growth and employment. The programme
foresees comprehensive action on three fronts: (i) a frontloaded fiscal
consolidation strategy, supported by structural fiscal measures and better
fiscal control; (ii) structural reforms in the labour and product markets to
address competitiveness and growth; and (iii) efforts to safeguard banking
system stability.
(10)
The Commission has assessed the draft National
Reform Programme[3]. It has taken into
account not only its relevance for sustainable fiscal and socio-economic policy
in Greece but also its conformity with EU rules and guidance, given the need to
strengthen the overall economic governance of the European Union by providing
EU level input into future national decisions. In this context, the Commission
stresses the urgency of implementing the planned measures to comply with
Council Decision (2010/320),
HEREBY
RECOMMENDS that Greece should:
fully implement the measures as laid down
in the Council Decision 2010/320/EU as amended by Council Decision XXXX/XXX,
and further specified in the Memorandum of Understanding of XX/XX/XXXX and its
subsequent supplements[, in particular the last supplement of XX/XX/XXXX].
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[2]               Council Decision of 10 May 2010 (2010/320/EU), (OJ L
145, 11.6.2010, p. 6); Council Decision of 7 September 2010 (2010/486/EU), (OJ
L 241, 14.9.2010, p. 12); Council Decision of 20 December 2010 (2011/57/EU),
(OJ L 26, 29.1.2011, p. 15); Council Decision of 7 March 2011 (2011/257/EU),
(OJ L 110, 29.4.2011, p. 26).
[3]               SEC(2011) 717.


				|

		52014DC0422

			Recommendation for a COUNCIL RECOMMENDATION on Poland’s 2014 national reform programme and delivering a Council opinion on Poland’s 2014 convergence programme /* COM/2014/0422 final  - 2014/ () */

Recommendation for a
COUNCIL RECOMMENDATION
on Poland’s 2014 national reform programme
and delivering a Council opinion on Poland’s 2014 convergence programme
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 9(2) thereof,
Having regard to the recommendation of the
European Commission[2],
Having regard to the resolutions of the
European Parliament[3],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
Having regard to the opinion of the
Economic and Financial Committee,
Having regard to the opinion of the Social
Protection Committee,
Having regard to the opinion of the
Economic Policy Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the Commission’s proposal to launch a new strategy for growth and jobs, 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, on the basis of
the Commission's proposals, 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, 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 29 June 2012, the Heads of State or
Government decided on a Compact for Growth and Jobs, providing a coherent
framework for action at national, EU and euro area levels using all possible
levers, instruments and policies. They decided on action to be taken at the
level of the Member States, in particular expressing full commitment to achieving
the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.
(4)
On 9 July 2013, the Council adopted a
recommendation on Poland’s national reform programme for 2013 and delivered its
opinion on Poland’s updated convergence programme for 2012-2016.
(5)
On 13 November 2013, the Commission adopted the
Annual Growth Survey[4],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[5],
in which it did not identify Poland as one of the Member States for which an
in-depth review would be carried out.
(6)
On 20 December 2013, 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.
(7)
On 24 April 2014, Poland submitted its 2014 national
reform programme and on 30 April 2014 its 2014 convergence programme. In order
to take account of their interlinkages, the two programmes have been assessed
at the same time.
(8)
The objective of the budgetary strategy outlined
in the 2014 Convergence Programme is to bring the deficit below the 3% of GDP
reference value of the Treaty by 2015 and reach the medium-term objective by
2018. The medium-term objective (-1% of GDP in structural terms) is more
stringent than what the Stability and Growth Pact requires. The targets for the
headline deficit presented in the 2014 Convergence Programme are consistent
with a timely correction of the excessive deficit. Moreover, while the
(recalculated) structural adjustment in 2014 is in line with the Council recommendation
under the Excessive Deficit Procedure, it is below the required improvement in
2015. In the years after the planned correction of the excessive deficit, the
planned (recalculated) annual progress towards the medium-term objective is
lower than the requirement of the Stability and Growth Pact. Therefore, the
programme objectives are partly in line with the requirements of the Stability
and Growth Pact. The general government debt is projected to remain below 60%
of GDP over the programme period. The Polish authorities project it to fall
sharply from 57.1% of GDP in 2013 to 49.5% in 2014, mainly due to the large,
one-off transfer of pension fund assets, and remain at this level in 2015. The
macroeconomic scenario underpinning the budgetary projections in the programme
is plausible for 2014 and optimistic for 2015 with a higher rate of real GDP
growth of 3.8% compared to 3.4% in the Commission 2014 spring forecast. Based
on its assessment of the programme and the Commission forecast, pursuant to
Council Regulation (EC) No 1466/97, the Council is of the opinion that while
Poland is expected to stay within the ceiling of the headline deficit
recommended by the Council for 2014, there are risks to a sustainable
correction of the excessive deficit in 2015 and, thereafter, to the appropriate
adjustment path towards the medium-term objective.
(9)
To ensure the success of the fiscal
consolidation strategy, it is important that the fiscal consolidation is backed
by comprehensive structural reforms. A low share of growth-enhancing
expenditure (education, research and innovation) hampers long-term growth
prospects. Healthcare spending is expected to grow considerably in the medium
to long term because of an aging society. The burden on public finances could
be lowered and the access to healthcare improved through strengthening primary
care and referral systems and exploiting the potential for cost-efficiency
gains in hospital care. Low tax compliance remains an issue, in particular in
terms of efficiency of tax administration and in the level of administrative
burden on taxpayers. Poland has an extensive system of reduced VAT rates which
contributes to the highest VAT policy gap in the EU. It leads to revenue losses
and increased tax compliance costs. The level of energy taxation is relatively
low. Steps have been taken in the recent past to improve the Polish fiscal
framework. Nevertheless, the framework would benefit from the introduction of a
fully-fledged independent fiscal council, responsible for ex-ante checks of
compliance with fiscal rules, an assessment of macroeconomic and budgetary
forecasts and an analysis of the long term sustainability of public finances as
well as an ex-post assessment of compliance with fiscal rules.
(10)
Youth unemployment has been gradually increasing
over the last year, which partly results from the ongoing mismatch between
education outcomes and labour market needs as well as the growing proportion of
young people that are not in education, employment or training. Despite ongoing efforts to reform the vocational education and
training system, there is a need to further facilitate
access to good quality apprenticeships and work-based learning, to strengthen
cooperation between schools and employers and to reach out non-registered youth,
in line with the objectives of a youth guarantee. Adjustment of skills to
labour market requirements is also particularly important in the context of
lifelong learning, where participation remains very low, especially with regard
to older workers, whose competencies are often outdated. Labour market
segmentation persists with the extensive use of fixed-term employment,
including civil law contracts. The incidence of fixed-term employment is
particularly high among the young. While fixed-term contracts are often argued
to be an instrument for the unemployed to enter the labour market with a view
to later moving on to a permanent contract, this seems not to be the case for
the majority of workers in Poland, given that the transition rate from
fixed-term employment to permanent employment is low, which tends to negatively
influence productivity and the quality of human capital.
(11)
Female labour market participation remains low. Poland has taken several measures to enhance female employment,
including an increase in the availability of early childcare services
(nurseries), and an increase in public funding for kindergartens to encourage
parents to enrol their children in pre-school education. Nevertheless,
availability of early childcare services is still low, especially in rural
areas, and disparities in access to pre-school education remain. Labour market participation
of older workers in Poland remains low. Early retirement possibilities have
been reduced significantly but further efforts are needed to increase the
employability of older workers and the effective duration of working life.
Reforming the special pension schemes for miners and farmers remains a
challenge. The farmers’ scheme (KRUS) creates incentives for small-scale
farmers to remain in the agricultural sector, resulting in hidden unemployment
in rural areas and stimulating the informal economy. Miners continue to enjoy
privileges in terms of pension rights and minimum work record required. Both
pension schemes impede sectoral and territorial labour mobility.
(12)
Poland is among the EU countries with the lowest
level of R&D expenditure and is one of the worst performers in broader
innovation indicators. Private R&D expenditure is
especially low. Low R&D spending is coupled with weak research and
innovation activity by companies and an insufficiently innovation-friendly
business environment. The innovation support system in
Poland has been risk-averse, based mostly on grants, supporting technology
absorption and transfer without a big impact on genuinely new innovation.
Existing tax incentives for R&D are ineffective in promoting internal
R&D by the private sector and are used only by big companies. Polish
enterprises have relied largely on technology absorption. While this has been
successful in ensuring productivity gains and economic growth, Poland now needs
a transition towards a more indigenous innovation-based model. Raising the
innovation capacity of Polish companies, improving links between science and
industry and developing targeted instruments adapted to the whole innovation
cycle remains a challenge.
(13)
There are still very high potential gains from
improvements in energy efficiency in all sectors of Poland’s economy and such
gains could support growth, improve competitiveness and contribute to reducing
Poland's energy dependency. Domestic energy generation capacity is ageing and
the electricity grid is still congested but projects to create more
interconnection capacity to neighbouring Member States are advancing. The key
problem in the natural gas market remains the lack of diversification and
competition.
(14)
Poland’s underdeveloped transport and broadband infrastructure
remains a major bottleneck to growth. In particular, significant investments
are needed in the degraded railway network to increase the competitiveness of
the rail sector and achieve a better balance between road and rail transport.
Only around one third of the total of about 20000 km of operated railway lines
is in a good technical condition. Problems with the
timely implementation of railway projects continue. Resource
efficiency can be increased by improving waste management.
(15)
Contract enforcement in Poland is lengthy and
the procedure to obtain construction permits is long and burdensome. Tax compliance costs are high, which is a major problem in the
business environment. Poland has made substantial
progress in implementing an ambitious reform facilitating access to regulated
professions.
(16)
In the context of the European Semester, the
Commission has carried out a comprehensive analysis of Poland's economic
policy. It has assessed the convergence programme and the national reform
programme. It has taken into account not only their relevance for sustainable
fiscal and socio-economic policy in Poland but also their 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. Its recommendations under the European Semester are
reflected in recommendations (1) to (6) below.
(17)
In the light of this assessment, the Council has
examined Poland’s convergence programme, and its opinion[6] is reflected in
particular in recommendation (1) below.
HEREBY RECOMMENDS that Poland take
action within the period 2014-2015 to:
1.
Reinforce the budgetary strategy to ensure the
correction of the excessive deficit in a sustainable manner by 2015 through
achieving the structural adjustment effort specified in the Council
recommendation under the Excessive Deficit Procedure. After the correction of
the excessive deficit and until the medium-term objective is achieved, pursue
an annual structural adjustment of 0.5% of GDP as a benchmark. A durable
correction of the fiscal imbalances requires a credible implementation of ambitious
structural reforms to increase the adjustment capacity and boost growth and
employment. In that regard, minimise cuts in growth-enhancing investment,
improve the targeting of social policies and the cost effectiveness of spending
and the overall efficiency of the healthcare sector, broaden the tax base by
addressing the issue of an extensive system of reduced VAT rates, and improve
tax compliance, in particular by increasing the efficiency of the tax
administration. Establish an independent fiscal council.
2.
Strengthen efforts to reduce youth unemployment,
notably by further improving the relevance of education to labour market needs,
increasing the availability of apprenticeships and work-based learning places and
by strengthening outreach to unregistered youth and the cooperation between
schools and employers, in line with the objectives of a youth guarantee. Increase
adult's participation in lifelong learning in order to adjust skills supply to
skills demand. Combat labour market segmentation by stepping up efforts to
ensure a better transition from fixed-term to permanent employment and by
reducing the excessive use of civil law contracts.
3.
Continue efforts to increase female labour
market participation, in particular by taking further steps to increase the
availability of affordable quality childcare and pre-school education and
ensuring stable funding. Include farmers in the general pension system,
starting by speeding up the creation of the system for assessment and recording
of farmers' incomes. Phase out the special pension system for miners with a
view to integrating them into the general scheme. Underpin the general pension
reform by stepping up efforts to promote the employability of older workers to
raise exit ages from the labour market.
4.
Improve the effectiveness of tax incentives in
promoting R&D in the private sector as part of the efforts to strengthen
the links between research, innovation and industrial policy, and better target
existing instruments at the different stages of the innovation cycle.
5.
Renew and extend energy generation capacity and
improve efficiency in the whole energy chain. Speed up and extend the
development of the electricity grid, including cross-border interconnections to
neighbouring Member States, and develop the gas interconnector with Lithuania. Ensure
effective implementation of railway investment projects without further delay
and improve the administrative capacity in this sector. Accelerate efforts to
increase broadband coverage. Improve waste management.
6.
Take further steps to improve the business
environment by simplifying contract enforcement and requirements for
construction permits. Step up efforts to reduce costs and time spent on tax
compliance by businesses. Complete the ongoing reform aimed at facilitating
access to regulated professions.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               COM(2014) 422 final.
[3]               P7_TA(2014)0128 and P7_TA(2014)0129.
[4]               COM(2013) 800 final.
[5]               COM(2013) 790 final.
[6]               Under Article 9(2) of Council Regulation (EC) No
1466/97.