				|

		52013DC0284

			Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive government deficit in Cyprus /* COM/2013/0284 final */

			   	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 on the Functioning of the European Union
(TFEU) 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)       On 13 July 2010, the
Council decided, in accordance with Article 126(6) TFEU that an excessive
deficit existed in Cyprus[1]
and issued a Recommendation to correct the excessive deficit by 2012 at the
latest, in accordance with Article 126(7) TFEU and Article 3 of Council
Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the
implementation of the excessive deficit procedure.
(4)       On 27 January 2011, the
Commission concluded in a Communication to the Council that Cyprus had taken effective action in compliance with the Council recommendation of 13 July 2010 to
bring its government deficit below the 3% of GDP reference value and considered
that no additional steps under the excessive deficit procedure were necessary.
(5)       On 11 January 2012, the Commission
confirmed in a second Communication to the Council that Cyprus had taken effective action in compliance with the Council recommendation of 13 July 2010 to
bring its government deficit below the 3% of GDP reference value and considered
that no additional steps under the excessive deficit procedure were necessary.
(6)       According to Article 3(5)
of Regulation (EC) No 1467/97, the Council may decide, on a recommendation from
the Commission, to adopt a revised recommendation under Article 126(7) TFEU, if
effective action has been taken and unexpected adverse economic events with
major unfavourable consequences for government finances occured after the
adoption of the initial recommendation. The occurrence of unexpected adverse
economic events with major unfavourable budgetary effects shall be assessed
against the economic forecast underlying the Council recommendation.
(7)       In accordance with Article
126(7) of the TFEU and Article 3 of Council Regulation (EC) No 1467/97, the
Council is 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 maximum deadline of six months
for effective action to be taken by the Member State concerned to correct the excessive
deficit. Furthermore, in a recommendation to correct an excessive deficit the
Council should request the achievement of annual budgetary targets which, on
the basis of the forecast underpinning the recommendation, are consistent with
a minimum annual improvement in the structural balance, i.e. the
cyclically-adjusted balance excluding one-off and other temporary measures, of at
least 0.5% of GDP as a benchmark.
(8)       On the basis of an
in-depth review of the nature, origin, and severity of macroeconomic
developments in Cyprus, the Commission concluded in May 2012 that Cyprus was experiencing very serious imbalances, in particular as regards the external
position, public finances, and the financial sector, which needed to be
urgently addressed. The situation in the Cypriot banking sector was seen to
threaten the sustainability of the country's position. On the external side,
the current account balance exhibited sizeable and persistent decifits, linked
to a gradual erosion of price/cost competitiveness, while the international
investment position was found to be a cause for concern. Moreover, the
situation in the Cypriot banking sector was seen to threaten the sustainability
of the country's position. On the internal side, the highly leveraged private sector,
with the outstanding debt level of non-financial corporations and very high
household indebtedness were a source of concern. In addition, government
finances have swung to annual deficits and widened even as the economy
recovered from recession, with recent efforts to correct the excessive deficit
found to possibly not be sufficient. The public debt has progressively been
above the Treaty-based threshold and was expected to increase sharply.
(9)       On 10 July 2012, the
Council addressed country-specific recommendations to Cyprus based, inter alia, on the assessment of Cyprus's national reform programme and Cyprus's stability programme covering the period 2012-15. The first recommendation calls
for the rigorous implementation of the budgetary strategy in 2013 and beyond. It
also calls for an acceleration of the phase-in of an enforcable multianuual
budgetary framework with a binding staturory basis and corrective mechanism.
This framework should be reinforced also by the implementation of programme and
performance budgeting. Given the inefficiencies in the tax administration and
the tax collection, measures improving tax compliance and combating tax evasion
need to be adopted.
(10)     In view of increasingly severe
economic and financial conditions, the Cypriot authorities officially requested
financial assistance under the terms of a loan by the European Financial
Stability Facility / European Stability Mechanism (ESM) on 25 June 2012, as
well as from the International Monetary Fund (IMF), with a view to supporting
the return of the economy to sustainable growth, ensuring a
properly-functioning banking system and safeguarding financial stability in the
European Union and in the euro area. On 27 June 2012, the Eurogroup invited the
Commission, in liaison with the ECB, the Cypriot authorities, and the IMF to
agree on a macroeconomic adjustment programme, including the financing needs,
and to take appropriate action to safeguard financial
stability in the very challenging environment with a risk of spill-over effects
from sovereign market turbulence. On 16 March and 25 March 2013, the Eurogroup reached a political
agreement with Cyprus on a financial assistance and the key elements of a
programme. On 12 April 2013, the Eurogroup considered
that the necessary elements of the macroeconomic adjustment programme were in
place to launch the relevant national procedures for the formal approval of the
ESM financial assistance facility. On 25 April 2013, the Council adopted a
decision under Article 136 TFEU containing the main elements of the
macroeconomic adjustment programme to be implemented by Cyprus. On 26 April 2013, a Memorandum of Understanding consistent with the said decision
was signed by the Cypriot authorities and the Commission, acting on behalf of
the ESM.
(11)     More than a decade of
sustained and strong economic expansion in Cyprus came to an end in 2009. Economic
activity fell by 1¾%, with weak domestic demand and an adverse external
environment weighing strongly on growth. Economic activity recovered in 2010 with
real GDP growth of 1.1% and a growth of 1.5% was recorded in the first half of
2011. According to the Commission services’ 2010 Spring Forecast, which was
underlying the Council recommendation under Article 126(7) TFEU of 13 July
2010, the Cypriot economy was expected to grow by 1.3% in 2011. Despite a very good
tourist season in 2011, the recovery suffered a setback from the grave accident
in July 2011 that destroyed the Vasilico electricity producing plant,
accounting for half of total generating capacity. Moreover, the unwinding of very
serious private and public sector imbalances in the Cypriot economy resulted in
tightening financial and fiscal conditions, which compounded the negative
effect on economic activity, caused a high degree of economic uncertainty and
exacerbated the deterioration in labour market conditions. The continued
weakness of the international environment prevented external demand from
offsetting the impact on domestic demand. As a result, 2011 annual economic
growth turned out at 0.5%, close to one percentage point below the Commission forecast
at the time of the Council Recommendation. 2012 was beyond the forecast horizon
at the time of the Commision forecast underlying the Council recommendation.
However, under the hypothesis of a gradual closure of the negative output gap,
higher growth than in 2011 was expected for 2012. According the latest
Commission services' forecast, real GDP growth is expected to be -2.4% in 2012.

(12)     The general government deficit
reached 6.3% of GDP in 2011, increasing from 5.3% in 2010. The worsening of the
budget balance took place in spite of the fiscal consolidation measures in the 2011
Budget Law and three sets of further deficit-reducing measures adopted over the
course of 2011, which were insufficient to stem the deterioration of public
finances. The abovementioned series of economic events, notably the unwinding
of very serious private and public sector imbalances in the Cypriot economy,
form the background of the developments in public finances, including non-negligible
growth composition effects and higher debt financing cost implied by loss of
access to longer-term market financing.
(13)     According to the Commission
services' most recent forecast, the general government deficit is projected to
reach 6.3% of GDP in 2012. This projected deficit outturn is significantly
worse than previous Commission services' forecasts, in particular due to a
significant shortfall of both indirect and direct tax revenues (mostly due to
VAT, corporate taxation and social contributions) and higher expenditures due
to increasing unemployment and higher-than-expected early retirement. Compared
to the Commission services' 2013 Winter Forecast, the 2012 deficit was adjusted
upwards by around ½% of GDP due to an one-off expenditure relating to insurance
costs from the explostion at the Vasilico electricity producting plant in July
2011, payable in a period of four years but booked fully in 2012, as well as
the recording of a capital transfer for the capitalised interest payment on the
recapitalisation bond for Cyprus Popular Bank.
(14)     According to the Commission
services' most recent economic forecast, the structural deficit was 5.7% and 6.6%
of GDP in 2010 and 2011 respectively. It is expected to reach 6.6% of GDP in
2012. The Commission services' forecast underlying the Council Recommendation
in July 2010 pointed to an expected average potential growth of around 1% over
the adjustment period. Under the Commission services' most recent economic
forecast, the average potential output for the years 2011-2012 is now
considered to be negative (around -0.5%) and is estimated to remain negative over
2013-2016. Correcting for the downward revision of the potential output since
the Council Recommendation, the average fiscal effort over 2011-2012 would be around
0.5%. However, the estimated change in the structural balance was also severely
affected by unexpected revenue shortfalls, due to lower-than-projected final
domestic demand and lower imports, as well as the stronger deterioration in the
labour market. This led to major revenue shortfalls, notably in indirect taxes.
Taking these effects into account, the overall adjusted fiscal effort is
estimated at around 2.4% of GDP on average, well above the required average
annual fiscal effort over 2011-2012 of at least 1½% of GDP recommended by the
Council. Cyprus can therefore be considered to have taken effective action in
line with the Council Recommendation.
(15)     The 2012 Budget Law adopted
on 16 December 2011 incorporated an expenditure-driven consolidation strategy
consisting of mainly (i) contributions from public sector employees to their
pensions combined with a freeze of emoluments in the broader public sector for
two years (ii) inclusion of new public sector employees in the general pension
scheme under the social security fund instead of in the more generous public
sector pension scheme, (iii) a better targeting of social transfers, iv) cuts
in selected government expenditure categories, (v) a hike of the VAT rate from
15% to 17%, (vi) a temporary contribution on gross earnings of private sector
employees and pensioners and (vii) an increase in the tax rate on deemed
dividend distribution. The aforementioned fiscal projections include also consolidation
measures taken by the Cypriot authorities for the remaining part of 2012 after
a provisional agreement with programme partners on fiscal policies in November
2012, in particular a scale reduction in emoluments of public and broader
public sector pensioners and employees sector. In sum, Cyprus adopted consolidation measures in 2011-2012 with an estimated direct
deficit-reducing impact of more than 5½% of GDP. This bottom-up assessment of
the fiscal consolidation measures taken in the years 2011-2012 confirms the
conclusion that effective action has been taken by Cyprus.
(16)     Gross public debt rose to 71.1%
of GDP in 2011, compared to 67.6% of GDP projected in the Commission services'
2010 Spring Forecast underlying the Council recommendation under Article 126(7)
TFEU of 13 July 2010. Debt developments were mostly driven by the
higher-than-expected deficit outcomes, lower-than-expected growth, and Cyprus's difficulties in accessing international markets to cover its financing needs, which
resulted in increases in the borrowing costs. These factors, together with the government's
participation in the recapitalisation of one commercial bank in June 2012, led
to an increase in the general government debt to about 85.8% of GDP in 2012. In
the next years, the government debt will inevitably increase further, reflecting
the weak growth and substantial fiscal financing needs. In 2013-14, the
government debt will increase further upon receipt of the financial assistance.
The debt-to-GDP ratio is forecast to peak at around 128% of GDP in 2015 before
declining thereafter on the back of sustainable primary surpluses and the
return to positive real GDP growth rates.
(17)     Considering all these
factors and in particular the substantial deterioration in the budgetary
position resulting from the worse-than-expected economic downturn and the
weaker overall position of the economy than envisaged at the time of the
original Council recommendation under Article 126(7) TFEU implies that a new
deadline for correction of the excessive deficit by Cyprus is warranted. Granting
four additional years for the correction of the excessive deficit is necessary
in view of the projected distance to the 3% of GDP reference value at end-2012
and the adverse macro-economic circumstances.
(18)     Under the Commission
services' most recent economic forecast for nominal GDP growth, the primary
general government balance is projected to attain a deficit of 2.4 % of GDP in
2013, a deficit of 4.3 % of GDP in 2014, a deficit of 2.1 % of GDP in 2015 and
a surplus of 1.2% of GDP in 2016, while the headline general government deficit
is projected to reach 6.5% of GDP for 2013, 8.4% of GDP for 2014, 6.3% of GDP
for 2015 and 2.9% of GDP in 2016. For monitoring
purposes, and in view of the limited control of the Cypriot authorities over
interest payments, the macroeconomic adjustment
programme to be implemented by Cyprus sets primary balance fiscal targets.
(19)     In order to ensure a
sustainable correction of the excessive deficit, the appropriate adjustment
path shall be established and evaluated on the basis of an overall assessment
with the structural balance as the reference and with a minimum annual
improvement in the structural balance of at least 0.5 % of GDP as a benchmark. Fully-specified
consolidation measures of about 4¾% of GDP in 2013 are projected to result in
an improvement in the structural fiscal balance of around 1.3% of GDP in 2013. For
2014, the adopted consolidation measures amount to around 1¾% of GDP and are estimated
to improve the structural balance by 0.3% of GDP in 2014while the improvement
of the structural balance is estimated at 0.7% of GDP in 2015 and 1.8% of GDP
in 2016.
(20)     The adjustment for 2013-16
contains measures to reduce the growth in expenditure mainly on the public
sector wage bill and social benefits, and to increase revenue in partiuclar by
increasing VAT rates, excise duties, tax rate on interest income, property and
corporate taxation. Fiscal consolidation should be maintained over the medium
term by containing expenditure growth, improving the structure of taxation and
undertaking fiscal-structural measures.
(21)     In light of the substantial
additional consolidation in 2013 and the adverse and highly uncertain
macroeconomic conditions, inter alia due to the imposition of temporary capital
controls, loss of confidence and financial sector instability, an ex-ante obligation
of further fiscal consolidation measures for 2014 (additional to the measures
adopted in December 2012 with effect from 1 January 2014) was not considered
appropriate. However, an obligation of the Cypriot authorities to stand ready
to preserve the programme objectives by taking additonal measures in the event
of underperformance of revenues or higher social spending, taking into account
adverse macroeconomic effects, is laid down in the economic and financial
adjustment programme.
(22)     In 2014, the structural
balance is estimated to improve by 0.3% of GDP on the basis of agreed fiscal consolidation
measures that have remained unchanged compared to those that were laid down in
the November 2012 draft MoU. The estimated structural effort in 2014 is
therefore, based on the most recent Commission services' forecast, slightly
below the minimum annual improvement in the structual balance of at least 0.5%
of GDP as a benchmark. This level of improvement should nevertheless be
considered acceptable in the current exceptional situation of highly uncertain
macroeconomic conditions with significant shifts in actual and estimated
potential output, structural balance estimates being more uncertain and subject
to variation over time than under more stable macroeconomic conditions. The
Commission services' Winter 2013 forecast took into account the consolidation measures
for 2014 and indicated an improvement in the structural balance from 2013 to
2014 of around 1.4% of GDP. The lower improvement of the structural balance in
2014 now estimated – in spite of an unchanged set of consolidation measures –
can be explained by (i) the deterioration of the tax base of the 2013 revenue
measures, which implies that some of these measures are projected to have a
decreasing impact in 2014; (ii) the downward revision of the impact of some of
the consolidation measures already taken for 2014 due to the worse
macroeconomic conditions throughout the programme period; (iii) a projected
reduction of revenue collection in 2014 of some tax measures, the revenue of
which (e.g. collection of income taxation and VAT) depends on economic activity
of 2013 and (iv) the fact that the standard elasticity used to determine the
split between the cyclical component and the structural balance may lead to underestimating
the true underlying fiscal effort. A bottom-up view of discretionary
consolidation measures, item-by-item, is an important element of an assessment
of the fiscal policy stance. It may, in particular under highly uncertain
macroeconomic conditions, give a useful complementary view of the true
underlying fiscal effort. The amount of fiscal consolidation measures is on
average above 3% of GDP for the years 2013-2014. Albeit significant, the
corresponding improvement in the structural balance is only around ¾% of GDP on
average.
(23)     Monitoring of progress on
implementation of Cyprus's EDP commitments will be carried out at regular
intervals. In the event of underperformance of revenues or higher social
spending needs, Cyprus should stand ready to take additional measures to
preserve the attainment of fiscal targets.
(24)     Cyprus fulfils the
conditions for the extension of the deadline for correcting the excessive general
government deficit as laid out in Article 3(5) of Regulation (EC) No 1467/97 on
speeding up and clarifying the implementation of the excessive deficit
procedure,
HAS ADOPTED THIS RECOMMENDATION:
(1)
Cyprus should put an end
to the present excessive budget deficit situation by 2016.
(2)
In order to bring the headline government
deficit below the 3% of GDP reference value by 2016, Cyprus should achievethe headline
general government deficit targets of 6.5% of GDP in 2013, 8.4% of GDP in 2014,
6.3% of GDP in 2015, and 2.9% of GDP in 2016.
(3)
To this end, Cyprus should rigorously implement
the 2013 Budget Law and the agreed additional consolidation measures, which
should amount to at least EUR 351 million in 2013. Cyprus should fully implement the fiscal measures for 2014 that were adopted in December
2012, amounting to at least 270 million EUR in 2014. Cyprus should monitor the
budgetary effect of consolidation measures taken on a monthly basis and stand
ready to preserve fiscal targets by taking additional measures in the event of
underperformance of revenues or higher social spending, taking into account
macroeconomic circumstances.
(4)
Cyprus should maintain fiscal consolidation over
the medium term, converging towards its medium-term
budgetary objective of a balanced budget in structural terms, by containing
expenditure growth, improving the structure of taxation and undertaking fiscal-structural measures.
(5)
The Council establishes the deadline of 3 months
for the Cypriot authorities to take effective action and, in accordance with
Article 3(4a) of Council Regulation (EC) No 1467/97, to report in detail the
consolidation strategy that is envisaged to achieve the targets.
Beyond the report foreseen in
recommendation (5) and also in parallel to the financial adjustment programme, Cyprus should report on progress made in the implementation of these recommendations every
three months as well as in a separate chapter in the stability programme, until
full correction of the excessive deficit has taken place.
This Recommendation is addressed to the Republic of   Cyprus.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 186, 20.07. 2012, p. 30.


title: 2013/105/EC: Commission Recommendation of 9 October 2009 on mobilising Information and Communications Technologies to facilitate the transition to an energy-efficient, low-carbon economy

text:
               23.2.2013

               EN

               Official Journal of the European Union

               L 51/18

      COMMISSION RECOMMENDATION

   of 9 October 2009
   on mobilising Information and Communications Technologies to facilitate the transition to an energy-efficient, low-carbon economy
   (2013/105/EC)
   THE COMMISSION OF THE EUROPEAN COMMUNITIES,
   Having regard to the Treaty establishing the European Community, and in particular Article 211 thereof,
   Whereas:

               (1)

               In April 2006, the European Parliament and the Council adopted a Directive on Energy End-Use Efficiency and Energy Services (1), setting the framework for measures addressing energy saving potential in the energy end-use sectors not covered by the Emissions Trading Scheme (ETS).

               (2)

               National Energy Efficiency Action Plans (NEEAPs) required by the Directive 2006/32/EC play a central role in planning and reporting on implementation of national measures addressing energy efficiency with the exception of the ETS. In their first NEEAPs a number of EU Member States have indicated plans to tackle the energy saving potential of ICT (2).

               (3)

               In October 2006, the Commission adopted the Communication Action plan for energy efficiency: Realising the potential
                   (3) which underscores the need for a paradigm shift to change the behavioural patterns of our societies so that we use less energy while maintaining our quality of life.

               (4)

               Subsequently, in March 2007 the European Council confirmed the objective to save 20% of the EU's energy consumption compared with projections for 2020 and endorsed the target of 20% reduction of greenhouse gas emissions by 2020. The European Council also called for the development of a sustainable EU climate and energy policy in recognition of the link between energy consumption and carbon emissions. Unlocking the potential to reduce 20% of the EU's energy consumption is expected to result in significant cost savings and environmental benefits.

               (5)

               In January 2008, the Commission adopted the Communication 20 20 by 2020: Europe's climate change opportunity, proposing a far-reaching package of concrete proposals indicating that the agreed climate change targets are technologically and economically feasible and provide a unique business opportunity for thousands of European companies (4). The proposals were approved by the European Council (5) and the European Parliament in December 2008.

               (6)

               In May 2008, the Commission adopted the Communication Addressing the challenge of energy efficiency through information and communication technologies
                   (6) in which it recognised the potential of Information and Communication Technologies (ICT) to provide a cost-effective means of improving energy efficiency across industry and broader civil society.

               (7)

               In July 2008 the Commission adopted the Communication on the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan
                   (7), (SCP/SIP), with proposals aiming to improve the environmental performance of products throughout their life-cycle and to increase the demand for more sustainable goods, while encouraging EU industry to take advantage of opportunities to innovate.

               (8)

               In support of the SCP/SIP Action Plan and based on a related mandate in the Communication Integrated Product Policy: Building on Environmental Life-Cycle Thinking
                   (8), the Commission is developing, via its Joint Research Centre, a guidance handbook (9) on quantifying and analysing the environmental life cycle impact of products and processes, including carbon emissions and energy efficiency.

               (9)

               In November 2008, the Commission adopted a European Economic Recovery Plan (10) for a faster return to economic growth, emphasising the immediate need for investment in energy efficiency and clean technologies. To implement this plan, in the Communication Investing today for tomorrow's Europe
                   (11), the Commission proposed a package of measures to channel financial support towards energy and high speed broadband networks.

               (10)

               As part of the European Economic Recovery Plan, the Commission has launched Public-Private Partnerships that aim to further develop green technologies and smart energy infrastructures in the buildings, manufacturing and transport domains: the Energy Efficient Buildings, Factories of the Future and Green Cars Initiatives, respectively.

               (11)

               In December 2008, the Commission adopted, as part of the Green Transport initiative, an Action Plan for the Deployment of Intelligent Transport Systems in Europe and an accompanying Proposal for a Directive laying down the framework for the deployment of Intelligent Transport Systems (ITS) in the field of road transport and interfaces with other transport modes (12). The Commission proposed specific measures aimed to accelerate the deployment of ITS with the aim of improving energy efficiency in transport systems.

               (12)

               Energy use by ICT equipment and services represents about 8% of electrical power in the EU, and about 2% of carbon emissions (13). The Directive 2005/32/EC of the European Parliament and of the Council of 6 July 2005 establishing a framework for the setting of ecodesign requirements for energy-using products (14) provides EU-wide rules for placing energy-using products on the market, including ICT products, in relation to their energy efficiency and environmental performance over their full life-cycle. The Directive also gives opportunities to voluntary initiatives tabled by industry.

               (13)

               In its Communication on mobilising Information and Communications Technologies to facilitate the transition to an energy-efficient, low-carbon economy
                   (15), the Commission underscored the untapped potential for the ICT sector to focus on systemic improvements to its own processes, including operations, manufacturing, service delivery and supply chain management.

               (14)

               The results of a public consultation (16) published in September 2009 confirmed that different companies currently pursue different strategies to improve their energy and environmental performance. A co-ordinated approach would better highlight opportunities, focus investment and yield economic benefits for the sector as a whole, as well as contributing to energy-efficiency goals.

               (15)

               Setting ambitious targets by the ICT sector for improving the energy and environmental performance of its processes is of the utmost importance. Progress towards such targets should be measurable and verifiable. Targets should be updated as more reliable baseline data becomes available. The ICT sector has expressed an interest in setting up an ICT for Energy Efficiency (ICT4EE) Forum that would work to adopt and implement a framework to measure the sector's energy and carbon footprints, set targets and benchmark progress.

               (16)

               For the purposes of this Recommendation, the ICT sector refers to the ICT manufacturing industries, ICT trade industries and ICT services industries as defined by the Organisation for Economic Co-operation and Development (17).

               (17)

               It is estimated that ICT-enabled improvements in other sectors could save about 15% of total carbon emissions by 2020 (18). Significant ICT-enabled energy efficiency gains are expected to be achievable in the short term in buildings and construction, in transport logistics and energy end-use.

               (18)

               The ICT sector can deliver simulation, modelling, analysis, monitoring and visualisation tools that are vitally needed to facilitate a whole building approach to the design and operation of buildings that takes into account the many factors that influence energy demand. However investments are hampered by the absence of a sector-wide reliable and transparent means of quantifying and tracking energy and cost savings over time, which ideally would form the basis of design strategies and tools.

               (19)

               Transport and logistics industries rely heavily on the use of ICT for the functioning and optimisation of their overall operations, in particular transportation and storage requirements. They are thus well-positioned to take a leading role in optimising the energy and carbon footprints of their services and providing relevant information to customers.

               (20)

               In the buildings and construction, and transport and logistics domains, a need for comparable methodologies for measuring energy performance and carbon emissions has already been identified, and work to this end has already been initiated. Common methodologies should serve to provide reliable data and a basis upon which ICT tools could be developed.

               (21)

               Partnerships between sectors could accelerate the development and wide-scale roll-out of ICT-based solutions for monitoring, managing and measuring energy-use and carbon emissions in energy-using activities, thus helping to provide a reliable basis for energy-saving and emissions-reducing decisions.

               (22)

               Smart metering can provide real-time information flows and the possibility of new control loops, thereby enabling better management and control of energy, and influencing final consumption by consumers, in particular when metering is accompanied by informative billing. Several Member States have introduced, or are considering legal obligations to introduce, smart metering. Concerted action by Member States to set minimum functional specifications for smart meters would help avoid technical barriers, ensure interoperability and enable the introduction of innovative ICT-based applications for managing energy end-use.

               (23)

               Smart metering and smart grids are important means to maximise energy savings in buildings, for the widespread deployment of electric vehicles, and for efficient energy supply and distribution and for integrating renewable energy sources. Applications and services stemming from such developments will likely give rise to new sectors of economic activity, involving actors from both the energy and ICT sectors. The conditions conducive to spawning new markets should be considered alongside pilot schemes and other exploratory initiatives.

               (24)

               For the purposes of this Recommendation, dematerialisation of ICT should be understood as reducing the need for the physical equipment that underlies electronic services delivery. Dematerialisation is of particular relevance to public procurement of ICT. This can be achieved by optimising the use of existing physical resources, by optimising the configuration of ICT systems and by ensuring that extensions or upgrades to existing systems are not contractually or technically limited.

               (25)

               There is a readiness at all levels of government to engage in activities to improve energy efficiency and reduce carbon emissions, as evidenced by the public consultation referred to in recital 14. The role of ICT in achieving these objectives is also the focus of ongoing initiatives by public authorities across Europe. Effective cooperation among national, regional and local levels of Member State governments is needed to ensure coherence between measures, exploit positive synergy between them and build a body of collective knowledge from sharing the results of experience.

               (26)

               It is estimated that the wider use of applications such as, on-line public services and applications, and advanced collaboration technologies could save at least 1 to 2% of total energy-use by 2020 worldwide (19). For the EU to generate savings on a large scale, a Europe-wide broadband infrastructure will be essential.

               (27)

               No single organisation or group of stakeholders can act effectively alone. Concerted action by many organisations, in both the public and private sectors, including partnerships at city and regional levels, can pioneer systemic change across society. Moreover, the Commission wishes to encourage the exchange of best practices on the use of ICT solutions to improve energy efficiency.

               (28)

               Engagement at national, regional and local level is necessary if real progress is to be made. It is therefore up to the Member States national, regional and local policy makers to confirm their full commitment to facilitating the timely implementation of the measures set out in this Recommendation.

         HEREBY RECOMMENDS that the Information and Communication Technologies sector
   In order to curtail its growing share of global carbon emissions and strengthen the potential of Information and Communication Technologies (ICT) to play a central and critical role in the transition to an energy-efficient, low carbon economy,

               (1)

               commits to a progressive decarbonisation process leading to a measurable and verifiable reduction in energy intensity and carbon emissions of all processes involved in the production, transport and sales of ICT equipment and components.

               (2)

               participates, through its sector associations, in an exercise to be initiated by the European Commission that aims to:

                           (a)

                           develop a framework to measure its energy and environmental performance, for which the sector will be expected to contribute the baseline data by 2010;

                           (b)

                           adopt and implement common methodologies to this end by 2011;

                           (c)

                           identify, by 2011, energy efficiency targets that aim to exceed the EU 2020 targets by 2015;

                           (d)

                           issue a roadmap within three months of adoption of this Recommendation, thereafter annual reports;

               (3)

               works with the European Commission and other relevant public bodies and international organisations in order to develop an auditing and verification framework assessing whether and how energy intensity and carbon emissions reduction targets will be met by individual companies.

               (4)

               in close cooperation with the buildings and construction sector identifies ICT solutions to improve the environmental and energy performance of new and existing buildings, and construction and renovation practices, leading to a joint roadmap for large-scale adoption of such solutions.

               (5)

               in close cooperation with the buildings and construction sector addresses barriers to the wider use of ICT modelling and simulation tools and other relevant applications that facilitate and assist compliance with applicable regulatory regimes governing buildings performance.

               (6)

               in close cooperation with the transport and logistics sector identifies ICT solutions to improve the environmental and energy performance of their services, leading to a joint roadmap for large-scale adoption of such solutions, in coordination with the work carried out under the ITS Action Plan.

               (7)

               in close cooperation with the transport and logistics sector drafts a systematic framework to provide comprehensive, comparable and reliable data on the energy consumption and carbon emissions of freight and transport operations and services to all potential users.

         HEREBY RECOMMENDS THAT MEMBERS STATES:
   In order to ensure full coherence of ICT policies with national, local and regional approaches to making the transition to an energy-efficient, low-carbon economy,

               (8)

               through their competent national authorities:

                           (a)

                           by the end of 2010 at the latest, agree on a common minimum functional specification for smart metering that focuses on providing consumers with improved information on, and improved capabilities to manage, their energy consumption;

                           (b)

                           by the end of 2012 at the latest, set up a coherent timeframe for the rollout of smart metering.

               (9)

               adopt and implement procurement practices that leverage the strength of public sector demand to promote the dematerialisation of ICT goods and services.

               (10)

               facilitate, at all levels of administration, the use of relevant ICT tools to better understand the implications of different policies and avoid negative spill-over effects from their interaction.

               (11)

               encourage the use of energy simulation and modelling in the education and training of professionals in critical sectors, in particular:

                           (a)

                           architects, builders and installers;

                           (b)

                           energy auditors;

                           (c)

                           logistics and the transport of goods or persons;

                           (d)

                           public services, planning and policy functions.

               (12)

               through their national, regional and local authorities, pursue, and, where necessary, upgrade strategies for the roll-out of a dependable, high-speed, broadband infrastructure to facilitate monitoring and management of consumption, distribution and production of energy including renewables, and the introduction of community-wide systems such as smart metering, smart-grids and smart-cities.

               (13)

               in addition to their obligation foreseen in the Art. 3.11 and Annex I.2 of the Directive 2009/72/EC for the internal market in electricity (20) engage all relevant stakeholders in large-scale pilots and demonstrations of smart metering and smart grids, to build consensus on the requirements for the emergence of future ICT-enabled innovations.

               (14)

               through their national, regional and local authorities, make use of open digital platforms to facilitate an integrated approach to urban planning and public service delivery, and to support knowledge-sharing, catalogues of best practices, and the maintenance of easily accessible information repositories.

               (15)

               through their national, regional and local authorities, open up opportunities for creative forms of collaboration and problem-solving at the community level through calls for ideas, competitions, and where possible by providing open access to a wide range of public digital resources and public data.

               (16)

               through their national, regional and local authorities, extend the benefits of substituting offline administrative processes with online applications and services, which realise energy efficiency improvements, to all segments of their communities.

         HEREBY INVITES the Member States:
   to inform the Commission of action taken in response to this Recommendation within 12 months of its publication, and once a year thereafter.

      Done at Brussels, 9 October 2009.

            For the Commission

         Viviane REDING

            Member of the Commission

      (1)  OJ L 114, 27.4.2006, p. 64.

      (2)  As mentioned in the Synthesis of the complete assessment of all 27 National Energy Efficiency Action Plans, ‘Moving forward together on saving energy’, SEC(2009)889 final, required by Directive 2006/32/EC.

      (3)  COM(2006) 545.

      (4)  COM(2008) 30.

      (5)  Conclusions of the European Council 11 and 12, December 2008 - Presidency conclusions, 17271/1/08 REV 1, 13 February 2009.

      (6)  COM(2008) 241.

      (7)  COM(2008) 397.

      (8)  COM(2003) 302.

      (9)  The International Reference Life Cycle Reference System (ILCD) Handbook and supporting Data Network. http://lct.jrc.ec.europa.eu/eplca/deliverables/international-reference-life-cycle-data-system-ilcd-handbook.

      (10)  COM(2008) 800, A European Economic Recovery Plan.

      (11)  COM(2009) 36.

      (12)  COM(2008) 886, Action Plan for the Deployment of Intelligent Transport Systems in Europe and COM(2008) 887, Proposal for a Directive: Framework for the deployment of Intelligent Transport Systems in the field of road transport and for interfaces with other transport modes.

      (13)  Bio Intelligence ‘Impacts of Information and Communication Technologies on Energy Efficiency’.

      (14)  OJ L 191, 22.7.2005, p. 29.

      (15)  COM(2009) 111 final.

      (16)  Public Consultation on Information and Communication Technologies for a Low Carbon Society, March 30 - June 14, 2009.

      (17)  OECD Guide to Measuring the Information Society, Rev. July 2009. www.oecd.org/sti/measuring-infoeconomy/guide.

      (18)  SMART 2020: Enabling the low carbon economy in the information age, a report by The Climate Group on behalf of the Global eSustainability Initiative (GeSI).

      (19)  SMART 2020: Enabling the low carbon economy in the information age, a report by The Climate Group on behalf of the Global eSustainability Initiative (GeSI).

      (20)  OJ L 211, 14.8.2009, p. 55.


title: Council Recommendation of 12 July 2016 on the 2016 National Reform Programme of France and delivering a Council opinion on the 2016 Stability Programme of France

text:
               18.8.2016

               EN

               Official Journal of the European Union

               C 299/114

         COUNCIL RECOMMENDATION
   of 12 July 2016
   on the 2016 National Reform Programme of France and delivering a Council opinion on the 2016 Stability Programme of France
   (2016/C 299/27)
   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 November 2015, the Commission adopted the Annual Growth Survey, marking the start of the 2016 European Semester for economic policy coordination. The priorities of the Annual Growth Survey were endorsed by the European Council on 17-18 March 2016. On 26 November 2015, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report, in which it identified France as one of the Member States for which an in-depth review would be carried out. On the same day, the Commission also adopted a recommendation for a Council Recommendation on the economic policy of the euro area. This Recommendation was endorsed by the European Council on 18-19 February 2016 and adopted by the Council on 8 March 2016 (3). As a country whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, France should ensure the full and timely implementation of the Recommendation.

               (2)

               The 2016 country report for France was published on 26 February 2016. It assessed France's progress in addressing the country-specific recommendations adopted by the Council on 14 July 2015 and France's progress towards its national Europe 2020 targets. It also included the in-depth review under Article 5 of Regulation (EU) No 1176/2011. On 8 March 2016, the Commission presented the results of the in-depth review. The Commission's analysis leads it to conclude that France is experiencing excessive macroeconomic imbalances. In particular, with moderate growth and low inflation, France has a high and increasing public debt coupled with a deteriorated competitiveness. The need for action to reduce the risk of adverse effects on the French economy and, given its size, of negative spillovers to the economic and monetary union, is particularly important.

               (3)

               On 29 April 2016, France submitted its 2016 National Reform Programme and its 2016 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (4)

               Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds for the 2014-2020 period. As foreseen in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council (4), where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of this provision in guidelines on the application of the measures linking the effectiveness of the European Structural and Investment Funds to sound economic governance.

               (5)

               France is currently in the corrective arm of the Stability and Growth Pact. In its 2016 Stability Programme, the Government plans to correct the excessive deficit by 2017, in line with the Council Recommendation of 10 March 2015. The headline deficit is planned to decline further to 1,2 % of GDP in 2019. The medium-term budgetary objective — a structural deficit of 0,4 % of GDP — is planned to be achieved by 2018. According to the Stability Programme, the government debt-to-GDP ratio is expected to peak at 96,5 % of GDP in 2017 before declining to 93,3 % of GDP in 2019. The macroeconomic scenario underpinning the budgetary projections is broadly plausible. However, the measures needed to support the planned deficit targets from 2017 onwards have not been sufficiently specified. Based on the Commission 2016 spring forecast, the headline deficit is projected to reach 3,4 % of GDP in 2016, in line with the deficit recommended by the Council in 2015. For 2017, under unchanged policies, the headline deficit is projected to reach 3,2 % of GDP, putting at risk compliance with the deadline to correct the excessive deficit. The recommended fiscal effort is not projected to be delivered in 2016 and 2017 as the consolidation strategy pursued by France relies primarily on improving cyclical conditions and a continuation of the low interest rate environment, which are outside the control of the authorities, thereby entailing compliance risks. Based on its assessment of the Stability Programme and taking into account the Commission 2016 spring forecast, the Council is of the opinion that, although currently projected to achieve its headline target in 2016, there is a risk that France will not comply with the provisions of the Stability and Growth Pact. Therefore, further measures will be needed to ensure a durable correction of the excessive deficit by 2017.

               (6)

               The public expenditure-to-GDP ratio in France is one of the highest in the Union and, despite a slight decrease in 2015, it remains significantly above the euro area average. France is implementing a plan to reduce public spending by EUR 50 billion compared to trend growth between 2015 and 2017 at all levels of general government, but this may not achieve a significant reduction in public expenditure. Detailing the measures underpinning the spending reductions, while making sure that the savings measures take into account the close-to-zero inflation, would help to increase the efficiency of this plan.

               (7)

               Challenges remain to reduce further the expenditure ratio as planned, since the process of identifying large areas of potential savings has not delivered enough results and the spending reviews have had modest outcomes so far. In the housing sector, France spends almost twice as much as its European peers without noticeable better outcomes in the housing market. The combined effect of the implementation of the planned reduction in grants to local authorities from the central government and a stronger control of local government expenditure, in particular by containing the rise in administrative costs of local authorities, could preserve their investment capacity. The spending reviews could be an appropriate tool to identify such savings. Moreover, the recent reform of local administration has the potential to increase the efficiency of the system over the medium- to long-term.

               (8)

               Sizeable short-term savings cannot be achieved without significantly curbing the increase in social security spending, which represents more than half of the general government expenditure. The sustainability of the pension system has been improved through the agreement on complementary pension schemes in 2015 but it could continue to face deficits over the short- to medium-term, especially under adverse macroeconomic conditions. Moreover, the previous pension reforms are only expected to curtail the current high level of public pension expenditure ratio after 2025. France has set ambitious targets for 2016 and 2017 to limit the growth of health expenditure. These targets could be complemented by further efforts to identify efficiency gains in the medium- to long-term.

               (9)

               Policy measures to reduce labour costs and improve firms' profit margins have been undertaken through the EUR 20 billion tax credit for competitiveness and employment and the EUR 10 billion in additional cuts in employers' social contributions under the responsibility and solidarity pact. The design of these measures, which account for 1,5 % of GDP and contribute to reducing the gap between France and the euro area average in terms of labour cost, may hamper their effectiveness. The results of the planned evaluations of these cost reduction measures will help any decision on the future design of these schemes, to ensure that these measures meet their objectives in terms of efficiency. The effect on wage formation and employment is of particular interest for these evaluations.

               (10)

               In the current context of high unemployment, there are risks that the cost of labour at the minimum wage hampers employment of low-qualified people. While the minimum wage is high compared with the median wage, the cost of labour at the minimum wage has been reduced by social contribution exemptions. Increases in the minimum wage induce wage increases for most categories of workers and risk creating upward wage compression. Because of the minimum wage indexation mechanism, there are feedback loops between increases in average wages and changes in the minimum wage, which delay the necessary wage adjustment in response to a weak economic situation.

               (11)

               Recent reforms have created only limited flexibility for employers to depart from branch-wide agreements. This concerns all aspects of employment conditions, including wages, working time, employment and working conditions and limits the possibilities for companies to adjust the workforce according to their needs. At present, branches may prevent companies from determining, on a case by case basis and after negotiations with social partners, the conditions under which working time could depart from branch-wide agreements. The take-up of derogations from branch agreements and general legal provisions on employment conditions, via firm-level agreements, could be facilitated, in consultation with social partners.

               (12)

               In 2015, the unemployment rate increased to 10,4 %. Unemployment is higher among young people, non-EU nationals and less qualified workers. The structure of the labour market is increasingly polarised, with highly educated workers hired on open-ended contracts and a constant proportion of low-skilled jobs becoming more and more precarious. The proportion of fixed-term contracts of less than one month in total hires rose to close to 70 % in 2015. The legal framework governing labour contracts, in particular as regards the legislation on dismissal for open-ended contracts, may contribute to the high segmentation of the labour market. The long-running deterioration in the labour market has put a strain on the sustainability of the unemployment benefit system. In February 2016, the deficit was projected to be at EUR 4,5 billion in 2015, EUR 4,2 billion in 2016 and EUR 3,6 billion in 2017. This would further increase the system's debt from EUR 25,8 billion in 2015 to EUR 30,0 billion in 2016 and EUR 33,6 billion in 2017. The benefit calculation favours a succession of short-term full-time jobs over long-term part-time jobs and creates incentives for employers to offer short-term employment to be complemented by in-work benefits. Moreover, the design of the unemployment benefit system, in particular as regards eligibility conditions and degressivity of benefits, may weaken incentives to return to work.

               (13)

               The transition from school to work remains challenging and the least qualified young people are the most affected. Recourse to apprenticeship is decreasing among low-qualified categories in a context of differentiated regional strategies and a limited capacity of the system to adapt to new economic needs. The offer of training for the unemployed, less qualified workers and SME employees remains insufficient. The ongoing vocational training reforms, including on governance, incentives and counselling and the new targeted unemployed training plan are still to be fully implemented and should be reinforced. The unsatisfactory cooperation between the various actors involved in continuous vocational training prevents an efficient allocation of resources. The upcoming personal activity account may help to rebalance access.

               (14)

               The French business environment continues to be middle ranking, in particular as regards the burden of government regulation, where France ranks poorly in international comparisons. The simplification programme is being pursued as planned but progress with implementation is uneven, especially as regards measures targeting companies, and there remain challenges in a number of areas.

               (15)

               The French economy has a disproportionately high proportion of smaller businesses compared to other Member States and this limits their productivity level. Recent initiatives to soften the impact of size-related requirements are not expected significantly to affect firms' growth, in particular given their limited scope, and the temporary nature of some measures. As a consequence, threshold effects will continue to limit the growth of French firms.

               (16)

               Competition in services has improved in some sectors, but barriers remain in place in others, in particular in business services, as a significant proportion of these services were unaffected by the recent reforms, and network industries. A number of barriers to entry and regulations, as well as tariffs, constrain economic activity in regulated professions and weigh on the productivity of other sectors that use these services. The adoption of the Macron Law in 2015 has reduced some constraints but further efforts are needed. Further problems stem from the restrictive application of authorisation requirements.

               (17)

               France continues to lag behind EU innovation leaders, in spite of the generosity of public support in this area. There has been an inflation and instability of public schemes to support innovation over the past 15 years, which raises concerns as regards the overall coordination, consistency and efficiency of these schemes. This affects SMEs in particular.

               (18)

               The tax-to-GDP ratio is one of the highest in the Union. Its composition is not conducive to economic growth as it weighs significantly on production factors but relatively little on consumption. Taxes on corporations started decreasing modestly in 2014 and France has begun to close the gap with the EU average in terms of environmental taxation, but revenues from VAT remain low both as a share of GDP and as a percentage of total taxation due to low rates, the widespread application of reduced rates and the high occurrence of exemptions compared to the EU average. Beyond the ongoing phase-out of the solidarity surcharge on companies and the suppression of the exceptional corporate income tax, concrete steps to reach the announced objective of reducing the corporate income statutory rate to 28 % in 2020 have to be fully specified.

               (19)

               The tax system is very complex. A high number of inefficient taxes yielding little or no revenue remains and personal income taxation is particularly complex, which comes at a significant administrative cost. In spite of the introduction in the 2014-2019 public finance programming law of the requirement regularly to assess and monitor tax expenditures, the projected reduction in tax expenditures for 2016 is modest after several years of increase.

               (20)

               Overall, the barriers to private investment are moderate, with the high regulatory burden and high corporate tax rates being the main obstacles. The investment environment would be improved by enhancing the business environment, reducing taxes on production and corporate income and simplifying the tax system. All measures taken to improve the cost and non-cost competitiveness of French firms have the potential to increase investment levels and to incentivise firms to invest in physical and human capital, with a view to improving productivity. The long-term growth potential is also limited by subdued investment in innovation activities.

               (21)

               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 2016 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 reinforce the EU's overall economic governance by providing EU-level input into future national decisions. Its recommendations under the European Semester are reflected in recommendations (1) to (5) below.

               (22)

               In the light of this assessment, the Council has examined the Stability Programme and its opinion (5) is reflected in particular in recommendation (1) below.

               (23)

               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 (5) below,

         HEREBY RECOMMENDS that France take action within the period 2016-2017 to:

               1.

               Ensure a durable correction of the excessive deficit by 2017 by taking the required structural measures and by using all windfall gains for deficit and debt reduction. Specify the expenditure cuts planned for the coming years and step up efforts to increase the amount of savings generated by the spending reviews, including on local government spending, by the end of 2016. Reinforce independent public policy evaluations in order to identify efficiency gains across all sub-sectors of general government.

               2.

               Ensure that the labour cost reductions are sustained and that minimum wage developments are consistent with job creation and competitiveness. Reform the labour law to provide more incentives for employers to hire on open-ended contracts.

               3.

               Improve the links between the education sector and the labour market, in particular by reforming apprenticeships and vocational training, with emphasis on the low-skilled. By the end of 2016, take action to reform the unemployment benefit system in order to bring the system back to budgetary sustainability and to provide more incentives to return to work.

               4.

               Remove barriers to activity in the services sector, in particular in business services and regulated professions. Take steps to simplify and improve the efficiency of innovation policy schemes. By the end of 2016, further reform the size-related criteria in regulations that impede companies' growth and continue to simplify companies' administrative, fiscal and accounting rules by pursuing the simplification programme.

               5.

               Take action to reduce the taxes on production and the corporate income statutory rate while broadening the tax base on consumption, in particular as regards VAT. Remove inefficient tax expenditures, remove taxes that are yielding little or no revenue and adopt the withholding personal income tax reform by the end of 2016.

      Done at Brussels, 12 July 2016.

            For the Council

            The President

         P. KAŽIMÍR

      (1)  OJ L 209, 2.8.1997, p. 1.

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

      (3)  OJ C 96, 11.3.2016, p. 1.

      (4)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

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


title: Commission Recommendation of 21 December 2009 on the safe implementation of the use of low sulphur fuel by ships at berth in Community ports (Text with EEA relevance)

text:
               29.12.2009

               EN

               Official Journal of the European Union

               L 348/73

      COMMISSION RECOMMENDATION

   of 21 December 2009
   on the safe implementation of the use of low sulphur fuel by ships at berth in Community ports
   (Text with EEA relevance)
   (2009/1020/EU)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
   Whereas:

               (1)

               Article 4b of Council Directive 1999/32/EC of 26 April 1999 relating to a reduction in the sulphur content of certain liquid fuels (1) as amended provides for the maximum sulphur content of marine fuels used by ships at berth in Community ports, including, as of 1 January 2010, the obligations for Member States to ensure that vessels do not use marine fuels with a sulphur content exceeding 0,1 % by mass and that marine gas oils are not placed on the market in their territory if the sulphur content of those marine gas oils exceeds 0,1 % by mass.

               (2)

               Article 6 of the Directive also provides that Member States shall check by sampling that the sulphur content of marine fuels complies with the relevant provision of Article 4b and that sampling commence from the date of entry into force of the requirement.

               (3)

               As indicated in the Commission Communication on notifications of postponements of attainment deadlines and exemptions from the obligation to apply certain limit values pursuant to Article 22 of Directive 2008/50/EC on ambient air quality and cleaner air for Europe (2), concentrations in more than 40 % of the zones and agglomerations in the Community currently exceed the daily PM10 limit value. Implementation of low sulphur limit on fuel by ships while they are at berth in Community ports is essential to improve ambient air quality, as highlighted in the Communication from the Commission to the European Parliament and to the Council on an EU strategy to reduce atmospheric emissions from seagoing ships (3) and the Thematic Strategy on Air Pollution adopted in 2005 (4).

               (4)

               Requirements were adopted in October 2008 by the International Maritime Organisation (IMO) in the context of the revision of the International Convention for the Prevention of Pollution from Ships (Marpol Convention), to be implemented from 1 January 2015 for ships sailing within emission control areas as defined by Article 2(3e) of Directive 1999/32/EC.

               (5)

               The Commission, considering the safety risks at stake, deems is necessary to issue appropriate guidance to Member States in order to ensure a high level of safety and effective prevention of pollution from ships in the enforcement of the provisions of that Directive throughout the Community.

               (6)

               From 1 January 2010, ships using heavy fuel oil while at sea are to switch to lighter marine fuels such as marine diesel or gas oil when at berth in Community ports as heavy fuel oil with a sufficiently low sulphur content is not generally available.

               (7)

               There may be operational problems and safety risks associated with the use of marine diesel and gas oil in ships that have not been designed to use such fuels or have not undergone the necessary technical adaptation. The Commission has considered the risks associated with the change of fuels and concluded that the main safety risk relates to use in ships’ boilers which have not yet been assessed and certified for use with the required type of fuel. While boilers can use heavy fuel oil or distillate fuels, a risk arises because marine diesel and gas oils are less viscous and more volatile and heating of the fuel system, which is required for heavy fuel oil, is not necessary for distillate fuels. The numbers of affected ships and the probability of such occurrences are difficult to assess precisely.

               (8)

               Directive 1999/32/EC allowed sufficient time for the shipping industry to bring about the technical adaptation to a maximum limit of 0,1 % sulphur by mass for marine fuels used by ships at berth in Community ports. Technical solutions to limit the risks are available. However, to date, there are still ships that have not gone through the necessary modifications and very few ships have undergone the necessary verification and certification process.

               (9)

               Technical solutions are available to mitigate potential consequences of switching fuel at berth. Limited demand from the shipping industry has delayed the development of the necessary technical solutions, resulting in subsequent delays in the verification and certification process.

               (10)

               The information available to the Commission underlines that, for these ships that have not undergone the technical modifications, completion of the whole process should not take more than eight months.

               (11)

               There is a need for boiler and engine manufacturers to develop specific recommendations and procedures for the retrofitting of these solutions, while shipowners should develop and implement specific operational procedures and provide appropriate training to crews,

         HAS ADOPTED THIS RECOMMENDATION:

               1.

               As part of the Member States enforcement actions against ships which fail to comply with the requirement to use fuels with a maximum permitted sulphur content of 0,1 % while at berth, Member States should request those ships to provide detailed evidence of the steps they are taking to achieve compliance. This should include a contract with a manufacturer and an approved retrofit plan which should be approved by the ship’s classification society or, for ships flying the flag of a Member State, by the organisation having recognition in accordance with Regulation (EC) No 391/2009 of the European Parliament and of the Council (5). The retrofit plan should clearly state the date of completion of the adaptation and certification process.

               2.

               Member States may consider the existence of an approved retrofit plan when assessing the degree of penalties to be applied to non-complying ships.

               3.

               Member States should take appropriate measures to raise awareness among owners, operators and seafarers of the safety risk related to fuel changeover in the absence of any necessary technical adaptation to a ship’s fuel system and the necessity for training to be provided.

      Done at Brussels, 21 December 2009.

            For the Commission

         Antonio TAJANI

            Vice-President

      (1)  OJ L 121, 11.5.1999, p. 13.

      (2)  COM(2008) 403.

      (3)  COM(2002) 595.

      (4)  COM(2005) 446.

      (5)  OJ L 131, 28.5.2009, p. 11.


title: Commission Recommendation of 31 March 2008 on enhanced administrative cooperation in the context of the posting of workers in the framework of the provision of services (Text with EEA relevance)

text:
               4.4.2008

               EN

               Official Journal of the European Union

               C 85/1

      COMMISSION RECOMMENDATION

   of 31 March 2008
   on enhanced administrative cooperation in the context of the posting of workers in the framework of the provision of services
   (Text with EEA relevance)
   (2008/C 85/01)
   THE COMMISSION OF THE EUROPEAN COMMUNITIES,
   Having regard to the Treaty establishing the European Community, and in particular Article 211 thereof,
   Whereas:

               (1)

               Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (1) imposes clear obligations as regards cooperation between national administrations, and makes it the responsibility of the Member States to create the necessary conditions for such cooperation. This obligation includes the designation, in accordance with national legislation and/or practice, of one or more monitoring authorities organised and equipped in such a way as to function effectively and to be able to deal promptly with requests of information regarding terms and conditions of employment covered by Directive 96/71/EC.

               (2)

               Directive 96/71/EC furthermore sets out a clear obligation for the Member States to take the appropriate measures to make the information on the terms and conditions of employment generally available, not only to foreign service providers, but also to the posted workers concerned.

               (3)

               Notwithstanding improvements in terms of access to information, there are still justified concerns as to the way the Member States have implemented and/or apply in practice the rules on administrative cooperation as provided for by Directive 96/71/EC (2). Satisfactory implementation, correct application and effective compliance with and enforcement in practice of Directive 96/71/EC do not seem possible unless this situation is corrected (3).

               (4)

               The monitoring exercise launched by the Commission on the basis of its Communication ‘Guidance on the posting of workers in the framework of the provision of services’ (4) furthermore showed that many Member States tend to rely solely on their own national measures and instruments to monitor the compliance with the terms and conditions of employment applicable to posted workers by service providers. This situation may well be related to, if not caused by, the virtual absence of administrative cooperation, the still unsatisfactory access to information as well as cross-border enforcement problems (5).

               (5)

               To ensure compliance with their terms and conditions of employment (6), the authorities of the Member State in which the services are provided apply certain control measures or administrative formalities to posting undertakings. The necessity for preventive actions and appropriate sanctions aimed at protecting posted workers is indisputable. The analysis of the control measures used by the Member States, however, shows their striking diversity and indicates that some of these may not be proportionate and may therefore not be in conformity either with Article 49 of the Treaty as interpreted by the European Court of Justice or with Directive 96/71/EC.

               (6)

               Legitimate monitoring needs cannot be fulfilled while fully complying with Community law unless the Member States improve, and reinforce if necessary, the way they effectively cooperate with each other and/or unless access to information is improved as stipulated in Directive 96/71/EC (7).

               (7)

               Adequate and effective implementation and enforcement are key elements in protecting posted workers rights, whereas poor enforcement undermines the effectiveness of the Community rules applicable in this area. Close co-operation between the Commission and the Member States is therefore essential, without neglecting the important role of labour inspectorates and the social partners in this respect.

               (8)

               With respect to the posting of workers in the framework of the provision of services different administrative cultures, structures and languages, as well as lack of clearly established procedures and clearly identified actors constitute significant barriers for an efficient working cooperation between Member States in this area. The use of an appropriate and well functioning electronic information system designed to facilitate mutual assistance and information exchange between Member States is a very effective tool to break down many of these barriers and is thus essential for Member States to be able to cooperate closely. Such a system should allow competent authorities and other actors involved, such as social partners, to identify easily their relevant interlocutors in other Member States and to communicate in an efficient way. Furthermore, it should help in creating a climate of mutual trust and confidence, fundamental for administrative cooperation to function effectively.

               (9)

               Providing easily accessible, accurate and up to date information to undertakings and workers about the terms and conditions of employment that will apply to posted workers in the host Member State is a fundamental condition contributing to preventing the emergence of conflicts, problematic situations and abuses. Therefore, the necessary measures should be taken to provide effective access to information for posted workers and their employers (8).

               (10)

               Urgent action is required to remedy shortcomings in the implementation, application and enforcement of the legislation pertaining to the posting of workers, by reinforcing administrative cooperation between the Member States, through using more effective systems of exchange of information, improving access to information and promoting exchange of information and on best practices,

         HEREBY RECOMMENDS:
   1.   Information exchange system

      Member States should take the necessary measures and make the required efforts to put in place an electronic information exchange system, such as the Internal Market Information System (‘IMI’)
       (9)
      , and in particular to develop, in close cooperation with Commission services, first of all a — specific — application to support the administrative cooperation necessary to improve the practical implementation of Directive 96/71/EC.

   The development of such an electronic information exchange system for the administrative cooperation in the context of Directive 96/71/EC would imply the following for Member States:

               1.

               identifying the main issues and questions on which information will have to be exchanged and which thus should be included in the exchange system;

               2.

               identifying the competent authorities and, if necessary, other actors involved in the monitoring and control of the employment conditions of posted workers that will take part in the exchange system;

               3.

               clarifying of the role of liaison offices;

               4.

               examining the issue of adequate safeguards for the protection of personal data exchanged during an information exchange between Member States authorities and, if necessary, other actors involved (10).

      Member States should, on the basis of the results of these preliminary examinations, furthermore assess and decide, in cooperation with Commission services, whether IMI provides the most suitable support for the information exchange as set out in Article 4 of Directive 96/71/EC.

   The Commission will provide support and assistance to the Member States in this respect and undertakes to work very closely with them in order to achieve the necessary progress in due time. In particular, it will facilitate and coordinate the work of an operational task force, to be set up on a voluntary basis, and provide external technical assistance if appropriate, throughout the development of the specific application.
   2.   Access to information

      Member States should increase their efforts to enhance access to the information on the terms and conditions of employment that must be applied by service providers, and to ensure that their liaison offices are in a position to carry out their tasks effectively.

   In order to bring about further improvements with respect to the access to information, Member States should:

               1.

               avoid referring to or providing general information on labour law only, but instead to indicate clearly which terms and conditions of employment and/or which part of their (national and/or regional) legislation have to be applied to workers posted to their territory;

               2.

               take the necessary measures to make generally available the information on which collective agreements are applicable (and to whom), and which terms and conditions of employment have to be applied by foreign service providers; where possible, links to existing Internet sites and other contact points, in particular the relevant Social Partners, should be provided;

               3.

               make this information available to workers and service providers in languages other than the national language(s) of the country in which the services are provided; if possible, in a summarised leaflet form indicating the main labour conditions applicable;

               4.

               make better use of possibilities offered by the Internet and to improve the accessibility and clarity of the information provided on the national websites (11).

         In addition Member States should:

               5.

               enable liaison offices to have an efficiently organised structure at their disposal and be equipped with appropriate staff and other resources to fulfil their duties to provide information;

               6.

               indicate, if possible, a contact person within the liaison office in charge of dealing with requests for information.

         The Commission will continue to support the Member States in this area, especially through the existing portal on the EUROPA website with links to national websites on the posting of workers.
   3.   Exchange of good practice

      Member States should participate actively in a systematic and formal process of identification and exchange of good practice in the field of posting of workers through any forums of cooperation established by the Commission to that end, such as the envisaged High-Level Committee (for further details see the Annex).

      Done at Brussels, 31 March 2008.

            For the Commission

         Vladimír ŠPIDLA

            Member of the Commission

      (1)  OJ L 18, 21.1.1997, p. 1.

      (2)  Commission's Staff Working Documents SEC(2006) 439 and SEC(2007) 747, as well as Communication ‘Posting of workers in the framework of the provision of services: maximising its benefits and potential while guaranteeing the protection of workers’, in particular part 6 Conclusions, COM(2007) 304 final of 13 June 2007, page 9.

      (3)  See in this context also Resolution of the European Parliament of 11 July 2007, B6-0266/2007.

      (4)  COM(2006) 159 final, 4 April 2006.

      (5)  Communication ‘Posting of workers in the framework of the provision of services: maximising its benefits and potential while guaranteeing the protection of workers’, in particular part 6 Conclusions, COM(2007) 304 final of 13 June 2007, as well as the accompanying Staff working document, SEC(2007) 747.

      (6)  Idem Resolution of the European Parliament on the Schroedter report of 26 October 2006.

      (7)  The same point is stressed in the Resolution of the European Parliament, see in particular points 21 and 32 et seq. From the replies received in the context of the public consultation launched on the modernisation of labour law, COM(2006) 708 of 22 November 2006, it resulted also that the need for better and improved cooperation was also largely supported by the Member States (see COM(2007) 627 final of 24 October 2007) and the accompanying Staff Working Document, SEC(2007) 1373.

      (8)  The same point and call for action was stressed by the European Parliament in its Resolution of 11 July 2007, see point 18.

      (9)  IMI is an information system designed to facilitate mutual assistance and information exchange between Member States. It provides a tool for secure and fast data exchange among European authorities, allowing them to work together effectively despite barriers due to different languages and administrative procedures and structures. The first applications developed will support the revised Professional Qualifications Directive (2005/36/EC of the European Parliament and of the Council) and the Services Directive (2006/123/EC of the European Parliament and of the Council).

      (10)  See in this context also Commission Decision 2008/49/EC of 12 December 2007 concerning the implementation of the Internal Market Information System (IMI) as regards the protection of personal data (OJ L 13, 16.1.2008, p. 18).

      (11)  The national websites have links in the Commission website on posting of workers:
   http://europa.eu.int/comm/employment_social/labour_law/postingofworkers_en.htm

      ANNEX
      High-Level Committee in the field of posting of workers (to be established): envisaged role, tasks and responsibilities
      The exchanges of information that have taken place so far on a voluntary basis within the informal group of governmental experts on the posting of workers, have shown that the group was effective in improving the available means of exchange of information on the terms and conditions of employment for posted workers. Furthermore, it has provided useful information to the Commission with respect to the implementation and application of Directive 96/71/EC.
      Enhanced administrative cooperation requires also developing effective means for identifying and exchanging good practice in all matters relevant to the correct application and enforcement in practice of Directive 96/71/EC. It will thus be possible to greatly improve administrative cooperation and prevent the emergence of conflicts and the frequent recourse to jurisdictional dispute settlement.
      Therefore, as already announced in its Communication of 13 June 2007, the Commission envisages setting up a High-Level Committee, with the following intended tasks and objectives:

                  1.

                  identify and promote the exchange of experience and best practices;

                  2.

                  promote the exchange of relevant information, including information on existing forms of (bilateral) administrative cooperation between the Member States and/or Social Partners;

                  3.

                  examine (administrative) questions, difficulties and specific issues concerning the implementation, application, as well as effective compliance with and enforcement of Directive 96/71/EC or the national implementing measures, relevant for the posting of workers;

                  4.

                  examine any difficulties which might arise in the application of Article 3(10) of Directive 96/71/EC;

                  5.

                  monitor progress achieved in improving administrative cooperation, in particular the development of the — specific — application to support the administrative cooperation, and the adaptation and implementation of the IMI, as well as improvement of access to information and, if necessary, suggest steps or actions to be taken;

                  6.

                  examine possibilities to increase effective compliance with and enforcement of workers rights and protection of their position, if necessary;

                  7.

                  engage in an in-depth examination of practical cross-border enforcement problems.

            In order to reach these objectives, the High-Level Committee should closely involve the public bodies responsible for the control of the legislation in Member States that applies to posted workers, such as labour inspectorates. It should also, in accordance with national law and/or practice, formally involve social partners regularly, in particular representatives of sectoral social partners in sectors with a high incidence of recourse to posted workers.
      The Commission is ready to adopt a Commission Decision setting up such a High-Level Committee in the near future, where its composition, objectives and working methods will be defined. To this effect, it will take into account the outcome of the debate in the Council following this Recommendation.


title: Council Recommendation of 21 March 2013 concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (tenth EDF) for the financial year 2011

text:
               26.3.2013

               EN

               Official Journal of the European Union

               C 88/3

         COUNCIL RECOMMENDATION
   of 21 March 2013
   concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (tenth EDF) for the financial year 2011
   2013/C 88/03
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (1) and amended by the Agreement signed in Luxembourg on 25 June 2005 (2),
   Having regard to the Internal Agreement between the Representatives of the Governments of the Member States, meeting within the Council, on the financing of Community aid under the multiannual financial framework for the period 2008 to 2013 in accordance with the ACP-EC Partnership Agreement and on the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies (3) (the ‘Internal Agreement’) setting up, amongst others, the 10th European Development Fund (‘10th EDF’), and in particular Article 11(8) thereof,
   Having regard to Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th European Development Fund (4), and in particular Articles 142 to 144 thereof,
   Having examined the revenue and expenditure account and the balance sheet relating to the operations of the 10th EDF as at 31 December 2011 and the Annual Report of the Court of Auditors on the activities funded by the 8th, 9th and 10th European Development Funds (EDFs) (5), concerning the financial year 2011, together with the Commission's replies contained in that Annual Report,
   Whereas:

               (1)

               Pursuant to Article 11(8) of the Internal Agreement, the discharge for the financial management of the 10th EDF is to be given to the Commission by the European Parliament on the recommendation of the Council.

               (2)

               The overall implementation by the Commission of the operations of the 10th EDF during the financial year 2011 has been satisfactory,

         HEREBY RECOMMENDS that the European Parliament give the Commission a discharge in respect of the implementation of the operations of the 10th EDF for the financial year 2011.

      Done at Brussels, 21 March 2013.

            For the Council

            The President

         P. HOGAN

      (1)  OJ L 317, 15.12.2000, p. 3.

      (2)  OJ L 287, 28.10.2005, p. 4.

      (3)  OJ L 247, 9.9.2006, p. 32.

      (4)  OJ L 78, 19.3.2008, p. 1.

      (5)  OJ C 344, 12.11.2012, p. 243.