               EUROPEAN COMMISSION
            Brussels, 13.5.2015
            COM(2015) 270 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2015 National Reform Programme of Polandand delivering a Council opinion on the 2015 Convergence Programme of Poland

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2015 National Reform Programme of Poland

                  and delivering a Council opinion on the 2015 Convergence Programme of Poland

               THE COUNCIL OF THE EUROPEAN UNION,

               Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,

               Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies
                  1
               , and in particular Article 9(2) thereof,

               Having regard to the recommendation of the European Commission
                  2
               ,

               Having regard to the resolutions of the European Parliament
                  3
               ,

               Having regard to the conclusions of the European Council,

               Having regard to the opinion of the Employment Committee,

               Having regard to the opinion of the Economic and Financial Committee,

               Having regard to the opinion of the Social Protection Committee,

               Having regard to the opinion of the Economic Policy Committee,

               Whereas:

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

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

               (3)On 8 July 2014, the Council adopted a Recommendation on Poland’s National Reform Programme for 2014 and delivered its opinion on Poland’s updated Convergence Programme for 2014.

               (4)On 28 November 2014, the Commission adopted the Annual Growth Survey
                  4
               , marking the start of the 2015 European Semester of economic policy coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report
                  5
               , in which it did not identify Poland as one of the Member States for which an in-depth review would be carried out.

               (5)On 18 December 2014, the European Council endorsed the priorities for boosting investment, accelerating structural reforms and pursuing responsible growth-friendly fiscal consolidation.

               (6)On 26 February 2015, the Commission published its 2015 country report for Poland
                  6
               . This assessed Poland’s progress in addressing the country-specific recommendations adopted on 8 July 2014.

               (7)On 29 April 2015, Poland submitted its 2015 National Reform Programme and on 30 April 2015 its 2015 Convergence Programme. To take account of their interlinkages, the two programmes have been assessed at the same time.

               (8)Poland is currently in the preventive arm of the Stability and Growth Pact [following the abrogation of the Excessive Deficit Procedure in June 2015]. In its 2015 Convergence Programme, the government plans to gradually reduce the headline deficit from 3.2% of GDP to 2.7 % of GDP in 2015 and further to 1.2% of GDP in 2018. Based on the Commission 2015 Spring forecast, the excessive deficit can be considered to have been already corrected in 2014, one year ahead of the deadline, taking into account that the excess over the 3% of GDP reference value is explained by the net budgetary cost of the systemic pension reform. According to the Convergence Programme, the government plans to reach the medium-term objective – a structural deficit of 1% of GDP – by 2019. After a peak of 51.7% in the government debt-to-GDP ratio in 2015 the government plans to reduce it to 49.1% in 2018. The macroeconomic scenario underpinning these budgetary projections is plausible in 2015 and favourable in 2016. On the basis of an overall assessment, Poland is projected to comply with the required adjustment towards the medium-term objective in 2015 since net expenditure growth is below the benchmark. Measures to support the planned deficit targets from 2016 have not been sufficiently specified. In the light of the Commission's 2015 spring forecast there is a risk of some deviation from the required adjustment in 2016 as the structural adjustment falls short of the requirement. Therefore, further measures will be needed in 2016. Based on its assessment of the Convergence Programme and taking into account the Commission's 2015 spring forecast, the Council is of the opinion that Poland is expected to broadly comply with the provisions of the Stability and Growth Pact. Tax revenues could be increased by reducing the extensive use currently made of reduced VAT rates and by increasing the efficiency of the tax administration.

               (9)Poland’s fiscal framework would benefit from the creation of an independent body, responsible for carrying out ex ante and ex post assessments of compliance with fiscal rules, assessment of macroeconomic and budgetary forecasts, and analysis of the long-term sustainability of public finances.

               (10)Poland reversed the systemic pension reform of 1999 at the end of 2013. While producing some budgetary relief in the short term, the reversal of the systemic pension reform of 1999 does not improve the long-term sustainability of public finances, as the short term from higher social contributions and lower interest payments will be offset by higher future pension payments from the public pension pillar. Overall the reversal of the systemic pension reform of 1999 carries some risks for Polish public finance in the long run.

               (11)The social security privileges granted to farmers and miners continue to hamper professional mobility and impose significant costs on public finances. These preferential schemes deter people from moving to more productive sectors, create hidden unemployment and, due to low contributions, are heavily subsidised by taxpayers. Poland’s agricultural sector employs 11.4 % of the workforce, more than double the EU average, while generating only 3.3 % of national gross value added. State subsidies to the social security scheme for farmers are worth almost 1 % of GDP, and those to miners’ pensions 0.5 % of GDP. The link between contributions and benefits is weak and contributions are mostly based on a flat rate. Farmers on high incomes cannot be systematically excluded from the scheme, and the system is therefore open to abuse. Introducing a system for recording and assessing farmers’ incomes would constitute an indispensable first step towards a reform of the social security scheme for farmers.

               (12)Labour market segmentation persists in Poland. The incidence of temporary contracts is the highest in the EU, while the transition rate from temporary to permanent employment is low and the wage differential the highest in the EU. Rigid dismissal provisions, long judicial proceedings and other burdens placed on employers encourage the use of fixed-term and non-standard employment contracts. Furthermore, the perceived high cost of contracts covered by the labour code leads to excessive use of civil law contracts (umowy cywilno-prawne), which are attractive to employers due to the associated lower social security contributions. The high proportion of contracts of this type, i.e. associated with lower contributions, may, however, reduce the quality of employment available, especially for young workers. Youth unemployment is high, partly as a result of the mismatch between candidates’ qualifications and skills, on the one hand, and labour market needs, on the other. Continued efforts are therefore needed to reform the system of vocational education and training and increase the low level of participation in lifelong learning. Female labour market participation remains low. In order to address this issue, Poland has increased the availability of pre-school education, but still ranks among the poorest performing countries in the EU for the availability of early childcare services.

               (13)The railway sector suffers as a result of high track access charges and inadequate national financing. Procedures for designing and implementing projects tend to be lengthy and cumbersome, as a result of the regulatory and administrative environment. While the recent legislative changes may have a positive effect on railway transport, they are unlikely to affect investment projects launched during the 2007-2013 programming period. Over the period 2014-2020, however, EU funding for the railway sector is to be significantly increased.

               (14)In the context of the European Semester, the Commission has carried out a comprehensive analysis of Poland’s economic policy and published it in the 2015 country report. It has also assessed the Convergence Programme and the National Reform Programme and the follow-up given to the recommendations addressed to Poland in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Poland but also their compliance with EU rules and guidance, given the need to reinforce the overall economic governance of the European Union by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations 1 to 4 below.

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

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

               1.Following the correction of the excessive deficit, achieve a fiscal adjustment of 0.5% of GDP towards the medium-term objective both in 2015 and 2016 Establish an independent fiscal council. Limit the use of reduced VAT rates.

               2.Start the process of aligning the pension arrangements for farmers and miners with those for other workers, and adopt a timetable for progressive full alignment; put in place a system for assessing and recording farmers’ incomes.

               3.Take measures to reduce the excessive use of temporary and civil law contracts in the labour market.

               4.Remove obstacles to investment in railway projects.

               Done at Brussels,

                     For the Council

                     The President

                     (1)
                  OJ L 209, 2.8.1997, p. 1.

                     (2)
                  COM(2015) 270.

                     (3)
                  P8_TA(2015)0067, P8_TA(2015)0068, P8_TA(2015)0069.

                     (4)
                  COM(2014) 902.

                     (5)
                  COM(2014) 904.

                     (6)
                  SWD(2015) 40 final.

                     (7)
                  Under Article 9(2) of Council Regulation (EC) No 1466/97.


               EUROPEAN COMMISSION
            Brussels, 22.5.2017
            COM(2017) 512 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2017 National Reform Programme of Cyprusand delivering a Council opinion on the 2017 Stability Programme of Cyprus

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2017 National Reform Programme of Cyprus

                  and delivering a Council opinion on the 2017 Stability Programme of Cyprus

               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,
                  3

               Having regard to the resolutions of the European Parliament,
                  4

               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 16 November 2016, the Commission adopted the Annual Growth Survey,
                  5
                marking the start of the 2017 European Semester of economic policy coordination. The priorities of the Annual Growth Survey were endorsed by the European Council on 9-10 March 2017. On 16 November 2016, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report,
                  6
                in which it identified Cyprus 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. That Recommendation was endorsed by the European Council on 9-10 March 2017 and adopted by the Council on 21 March 2017.
                  7

               (2)As a Member State whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, Cyprus should ensure the full and timely implementation of the Recommendation for the euro area which is reflected in recommendations 1 to 5 below.

               (3)The 2017 country report for Cyprus
                  8
                was published on 22 February 2017. It assessed Cyprus’ progress in addressing the country-specific recommendations adopted by the Council on 12 July 2016, the follow-up given to the recommendations adopted in previous years and Cyprus’ progress towards its national Europe 2020 targets. It also included an in-depth review under Article 5 of Regulation (EU) No 1176/2011, the results of which were also published on 22 February 2017.
                  9
                The Commission’s analysis leads it to conclude that Cyprus is experiencing excessive macroeconomic imbalances. In particular, it is essential that it tackles the large stock of imbalances in the form of private, public and external debt overhang, and the high level of non-performing loans.

               (4)On 27 April 2017, Cyprus submitted its 2017 Stability Programme and on 28 April 2017 Cyprus submitted its 2017 National Reform Programme. To take account of their interlinkages, the two programmes have been assessed at the same time. Cyprus’ National Reform Programme includes commitments both for the short and the medium term. In particular, it includes measures to reduce private sector indebtedness, improve the business environment, facilitate access to finance, overhaul the healthcare sector, and commits to reforms of the public sector and the justice system. The National Reform Programme also covers the challenges identified in the 2017 country report and the Recommendation for the euro area, including the need to re-launch investment and ensure the sustainability of public finances. If fully implemented within the indicated timelines, these measures would help address Cyprus’ macroeconomic imbalances and country-specific recommendations. Based on the assessment of Cyprus’ policy commitments, the Commission confirms its previous assessment that at this stage no further steps are warranted in the framework of the Macroeconomic Imbalances Procedure. The implementation of the policy reform agenda will be followed closely by means of specific monitoring.

               (5)The relevant country-specific recommendations have been taken into account in the Member States’ programmes for the European Structural and Investment Funds (ESI Funds) covering the 2014-2020 period. As foreseen in the legislation governing the ESI Funds,
                  10
                where it is necessary to support the implementation of relevant country-specific recommendations, the Commission may request a Member State to review and amend its relevant ESI Funds programmes. The Commission has provided further guidelines on the application of those rules.
                  11

               (6)Cyprus is currently in the preventive arm of the Stability and Growth Pact and subject to the debt rule. In its 2017 Stability Programme, the government plans a budgetary surplus in headline terms over 2016-2020 (headline balance around 0.4% of GDP over the programme period). The medium-term budgetary objective, set at a balanced budgetary position in structural terms, is planned to be reached in 2017. The recalculated
                  12
                structural balance is projected to steadily move away from the medium-term objective in the following years, which is not in line with the requirements of the preventive arm of the Stability and Growth Pact. The general government debt-to-GDP ratio is expected to have reached 107.8 % in 2016 and to decline to 99.7% in 2018 and further to 88.8 % by 2020. The macroeconomic scenario underpinning these budgetary projections is plausible. The risks associated to the macroeconomic assumptions presented in the Stability Programme are to the downside, mainly linked to the high stock of non-performing loans and a possible deterioration of the external environment.

               (7)On 12 July 2016, following the correction of the excessive deficit, the Council recommended Cyprus to respect the medium-term budgetary objective in 2016 and in 2017. Based on the Commission 2017 spring forecast, Cyprus is compliant with that requirement in 2017 following an overall assessment. For 2018, Cyprus is recommended to remain at the medium-term budgetary objective. Based on the Commission 2017 spring forecast, this is consistent with a maximum nominal growth rate of net primary government expenditure
                  13
                of 0.3%, corresponding to a structural adjustment of 0.2% of GDP. Under unchanged policies, Cyprus would be at risk of some deviation from that requirement in 2018 following an overall assessment. Cyprus is forecast to comply with the debt rule in 2017 and 2018. Overall, the Council is of the opinion that Cyprus needs to stand ready to take further measures to ensure compliance in 2018.

               (8)Public debt is on a downward trajectory but its sustainability remains subject to risks. A number of recent fiscal measures as well as delays in the implementation of key structural reforms are expected to lead to a deterioration of the structural balance and risk reducing the scope for growth-enhancing public investments.

               (9)Despite having one of the euro area’s highest wage bills (as a percentage of GDP), the Cypriot public sector remains characterised by inefficiencies. Under the macroeconomic adjustment programme, a series of reforms aiming to address this issue were designed and agreed with social partners. These included the introduction of a binding permanent mechanism limiting wage growth for public employees and a comprehensive reform of the public administration. However, the adoption of these legislative reforms is facing obstacles, in particular after a negative vote by the House of Representatives in December 2016. Pending adoption in its binding form, the mechanism limiting growth of public sector wages is being implemented under collective bargaining agreements and is applicable until 2018.

               (10)Some reforms have been undertaken to tackle corruption. Recent developments include reforms to professionalise public procurement at local level, and a political party funding law enacted in December 2015. A constitutional amendment enabling asset disclosure for public officials has been adopted in 2016. However, the Coordinating Body against Corruption is not adequately staffed, and weaknesses in the disciplinary regime for public servants remain unaddressed.

               (11)Cyprus also continues to face critical challenges for the functioning of the judicial system. Inefficient court procedures and limited capacity lead to significant delays in processing court cases. This in turn undermines the business environment and notably the functioning of the new foreclosure and insolvency frameworks. The latter have been introduced to help reduce unviable private debt, providing incentives to banks and debtors to agree on restructuring solutions. Yet, the effectiveness of these tools is impaired by a number of factors, including the aforementioned inefficiencies in the court system, weak administrative capacity and a low level of awareness of the procedures among debtors. Backlogs and delays with issuing and transferring title deeds also remain significant. These contribute to undermining debt reduction efforts and weigh on the recovery of the housing market.

               (12)The level of non-performing loans is declining but remains very high, hampering the proper functioning of the banking sector and impacting credit supply to the real economy. Banks underperform the loan restructuring targets agreed with the Central Bank of Cyprus, pointing to the need to broaden the targeting system and make it more efficient and binding, notably by setting ambitious targets for the reduction of non-performing loans, consistent with banks’ non-performing loans reduction strategies. Re-default rates remain high, exposing potential deficiencies in loan restructuring solutions. Risk provisioning levels increased but remain below the euro area average, underscoring the need to ensure that collateral valuations are reliable and underpin appropriate risk provisioning. The lack of a secondary market for loans and a loan securitisation framework limit the scope for accelerating deleveraging and moving non-performing loans off banks’ balance sheets, which calls for additional regulatory and legislative actions to complete the necessary tools to facilitate banks' balance sheet management. In addition, the governance and administrative capacity of insurance and pension funds supervision remain weak, posing risks to financial stability.

               (13)Cyprus’ economic recovery continues. Yet, potential growth remains weak, constrained by limited implementation of structural reforms, bottlenecks to investment and shortcomings in the business environment. Growth-enhancing initiatives presented in the action plan for growth are being implemented, albeit rather slowly. A legislative proposal to attract and facilitate strategic investments is still in the draft stage. The government is working on improving access to finance for medium-sized and small businesses. In order to solve this pressing issue, some new targeted initiatives have been launched, as reported in the National Reform Programme. However, most of these new initiatives on access to finance still remain at a preliminary stage. Privatisation efforts, aimed at attracting productivity-enhancing foreign investments, are facing political opposition and, in many cases, have come to a standstill. The reform of the energy sector can also be an important driver for competitiveness, yet there have been delays in its implementation. These notably concern the unbundling of the Electricity Authority of Cyprus and the establishment of the new electricity market, which still hinges upon ensuring the effective independence of the transmission system operator.

               (14)Unemployment is decreasing but remains high, especially among young people and the long-term unemployed. Plans to increase the numbers of counsellors in public employment services and improve their specialisation have not yet been implemented. Moreover, their recruitment is likely to occur on temporary contracts, therefore not addressing the challenge in structural terms. As a consequence, there is still insufficient capacity to meet the needs of jobseekers, especially those having more difficulties to integrate in the labour market, and to put in place outreach measures for their activation. The impact of active labour market programmes and income support schemes continues to be constrained by limited quality assessment and follow-up measures.

               (15)Cyprus maintains a level of spending in education that is above the EU average. But, educational outcomes are low and have even declined compared to previous years. According to the 2015 results of the Programme for International Student Assessment, Cyprus ranks among the lowest in the EU on the level of basic skills in mathematics, science and reading. While recently introduced remedial measures such as a better system for appointing teachers and a modernisation of school curricula are first steps in the right direction, further action to complete planned reforms, including of teachers’ evaluation, could significantly contribute to improving the situation.

               (16)Skills mismatches in the labour market are still largely unaddressed, affecting prospects for long-term sustainable growth. Participation levels are low in upper-secondary vocational education and training and the labour market relevance of higher education is weak, resulting in a high share of tertiary graduates working in occupations that do not necessarily require a tertiary degree.

               (17)The Cypriot healthcare sector remains characterised by a lack of universal coverage and various levels of inefficiency. This limits access to adequate and effective care. Legislation aiming to create a national health system and provide public hospitals with greater autonomy is key to improving the capacity and cost-effectiveness of the healthcare sector but is still pending parliamentary adoption.

               (18)In the context of the European Semester the Commission has carried out a comprehensive analysis of Cyprus’ economic policy and published it in the 2017 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to Cyprus in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Cyprus, but also their compliance with EU rules and guidance, given the need to strengthen the EU’s overall economic governance by providing EU-level input into future national decisions.

               (19)In the light of this assessment, the Council has examined the Stability Programme and its opinion
                  14
                is reflected in particular in recommendation 1 below.

               (20)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 made under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations 1 to 4 below,

               HEREBY RECOMMENDS that Cyprus take action in 2017 and 2018 to:

               1.Pursue its fiscal policy in line with the requirements of the preventive arm of the Stability and Growth Pact, which implies to remain at its medium-term budgetary objective in 2018. By end-2017, adopt key legislative reforms aiming to improve efficiency in the public sector, notably on the functioning of public administration, governance of State-owned entities and local governments.

               2.Increase the efficiency of the judicial system by modernising civil procedures, implementing appropriate information systems and increasing the specialisation of courts. Take additional measures to eliminate impediments to the full implementation of the insolvency and foreclosure frameworks, and to ensure reliable and swift systems for the issuance of title deeds and the transfer of immovable property rights.

               3.Accelerate the reduction of non-performing loans by setting related quantitative and time-bound targets for banks and ensuring accurate valuation of collateral for provisioning purposes. Create the conditions for a functional secondary market for non-performing loans. Integrate and strengthen the supervision of insurance companies and pension funds.

               4.Accelerate the implementation of the action plan for growth, focussing in particular on fast-tracking strategic investments and improving access to finance and by end-2017, resume the implementation of the privatisation plan. Carry out the ownership unbundling of the Electricity Authority of Cyprus by the end of 2017.

               5.Speed up reforms aimed at increasing the capacity of public employment services and improving the quality of active labour market policies delivery. Complete the reform of the education system to improve its labour market relevance and performance, including teachers' evaluation. By end-2017, adopt legislation for a hospital reform and universal health care coverage.

               Done at Brussels,

                     For the Council

                     The President

                     (1)
                  OJ L 209, 2.8.1997, p. 1.

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

                     (3)
                  COM(2017) 512 final.

                     (4)
                  P8_ TA(2017)0038, P8_ TA(2017)0039, and P8_ TA(2017)0040.

                     (5)
                  COM(2016) 725 final.

                     (6)
                  COM(2016) 728 final.

                     (7)
                  OJ C92/01, 24.3.2017, p. 1.

                     (8)
                  SWD(2017) 78 final.

                     (9)
                  COM(2017) 90 final.

                     (10)
                  Article 23 of 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.

                     (11)
                  COM(2014) 494 final.

                     (12)
                  Cyclically-adjusted balance net of one-off and temporary measures, recalculated by the Commission using the commonly agreed methodology.

                     (13)
                  Net government expenditure is comprised of total government expenditure excluding interest expenditure, expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a 4-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off measures on both the revenue and expenditure sides are netted out.

                     (14)
                  Under Article 5(2) of Council Regulation (EC) No 1466/97.


title: Draft council Recommendation on a parking card for disabled persons

text:
COMMISSION OF THE EUROPEAN COMMUNITIES
                            Brussels, 15.12.1995
                            COM(95) 696 final
                            95/0353 (SYN)
   DRAFT COUNCIL RECOMMENDATION ON A
    PARKING CARD FOR DISABLED. PERSONS
       (presented by the Commission)
 ---pagebreak---  ---pagebreak---                             EXPLANATORY MEMORANDUM
I.      INTRODUCTION
1        In its medium-term social action programme (1995-97) (COM(95) 134 final of
         12 April 1995), the Commission undertook, in section 6.33, to present a
        recommendation on the reciprocal recognition of parking cards for disabled
        persons with a view to facilitating their freedom of movement.
2-       The question of parking cards for disabled persons was previously addressed by
         the Council of Transport Ministers in a recommendation of 6 December 1977
         emanating from the European Conference of Ministers of Transport (ECMT)1, .
         calling for:
         -        parking facilities to be provided for disabled people; •
         -        appropriate parking cards giving entitlement to such facilities to be issued;
                  holders^of parking cards from other member countries (of the ECMT) to
                  be granted the same parking facilities as nationals of the country
                  concerned, and
     . ' .-.       the necessary arrangements to be made, with these measures in mind, for
                  the reciprocal recognition of parking cards.
         Experience has shown, however, that numerous practical problems are encountered
         in spite ofjthis recommendation, owing mainly to the lack of a standardised
          format for\ national parking cards, combined with comprehension difficulties
          arising from the variety of languages/involved.
 3 •". Against this background, the ECMT commissioned a progress report on the
          implementation of the 1977 recommendation. This report was completed in July
          1995 with the title "Towards a common European parking badge for motorists
          with disabilities". It makes it clear that, in addition to the problems already
          mentioned, the main difficulty lies in the fact that, while most member countries
          of the ECMT are generally tolerant of parking cards for disabled people from
          other countries, there are no formal arrangements. A. disabled person therefore has
          no way of knowing whether a national parking card will be accepted in a given
          situation in; another country, and the absence of any formal agreement makes it
          impossible for such persons to assert their rights in cases of doubt.
 4         The report therefore comes to the conclusion that the introduction of a European
           parking card for disabled persons is the appropriate instrument to give, those
           concerned the right to use it to avail themselves of the special local parking
          facilities provided in the various countries.
   The European Conference of Ministers of Transport is an organisation of government representatives
 which was set up on the strength of a protocol signed in Brussels on 17 October 1953. The Conference
  Council brings together the transport ministers from 31 European countries.
                                                      A
 ---pagebreak--- 5   The Commission is thus intent on putting forward an appropriate recommendation
    for the introduction of a parking card which can be easily administered.
n.  THE COMMISSION'S POSITION
6   This proposal supplements the Community provisions in respect of a common
    transport policy aimed at improving road traffic safety, which includes the public
    parking of cars. Parking arrangements fall within the scope of transport policy.
    Parking facilities for disabled people take account of their special requirements
    stemming from reduced mobility and thus contribute to road traffic safety.
    Thé goal of road traffic safety can be further pursued by making it possible for
    disabled people who travel abroad to avail themselves of the special local parking
    facilities provided, using a standardised card based on a Community model which
    is recognised throughout the Union, thereby making parking easier for disabled
    people who are not citizens of the country concerned.                     -
 7  Having regard to the principle of subsidiarity, the recommendation aims only to
    standardise the format of-the paricing caccLfondisabled persons and to ensure its
     reciprocal recognition. There is to be no interference as regards national rules
    governing the issue of such cards or the parking facilities to which they give
     entitlement.
     Such rules differ from one Member State to another, and a move towards uniform
     parking arrangements would be of great practical benefit to the disabled persons
     concerned. In this connection, the Commission also .considers it possible to
     provide disabled people with information on the respective local parking facilities
     available in the Member States of the European Union. Appropriate steps are to
     be taken after presentation of the.recommendation.
 8   The recommendation is intended to standardise the format of parking cards for
     disabled persons and to ensure their reciprocal recognition. The idea is not to
     introduce a European parking card; on the contrary, parking-cards will retain their
     national status, although they are to be designed on the basis of the European
     Communities model, as is the case with driving licences (cf. Council Directive
     91/439/EEC of 29 July 199.1 on driving licences, OJ No L 237 of 24.8.1991,
     p. 1). Consequently, reciprocal recognition is necessary to ensure that a card
     issued in one country can be used in the other EU Member States without having
     to be exchanged or applied for anew.
.9   A standardised format makes the card readily recognisable. Previous difficulties
     arising from the variety of existing cards will be overcome. The proposed
   . designation on the front of the card in all the official languages of the EU, as with
     driving licences, will also.clear up any linguistic misunderstanding. Use of the
     Community-model parking card, with reciprocal recognition by the Member
     States, will facilitate parking throughout the EU for the disabled persons
     concerned.
 ---pagebreak--- 10    The Commission takes the view that at the same time this will help to promote
      the integration of disabled people in both occupational and social terms.
      Opportunities for travelling to other countries by car, e.g. as tourists, will be
      enhanced.
11    The draft recommendation has arisen out of a process of wide-ranging
      consultation among the Member States and non-governmental organisations,
      involving the consultative bodies of the HELIOS II programme, namely the
      Advisory Committee (government representatives of the Member States) and the
      European Disability Forum (representatives of European non-governmental
      organisations, national disability councils or non-governmental organisations and
      the social partners), which were consulted in September 1995;'the HELIOS
    . Working Party on Mobility and Transport (government representatives plus one
      non-governmental organisation) was consulted in October 1995. Consultation also
      took place, in November 1995, with the ECMt's ad-hoc working party on the
      transport of persons with reduced mobility-.
       The Commission's initiative has been generally welcomed, with broad agreement
       berngTeached:on the content of the recom mendati on and, for the most part, on the
       format of the parking card as set out in the recommendation.
EL     THE SITUATION IN THE MEMBER STATES
 12    A national parking card"for disabled people is available in all the Member States.
       Spain has a number of regional variations.
                  » •*•*".                                                        *
       Most of ttfe national parking cards for disabled persons show the internationally
       recognised wheelchair-user symbol of accessibility, along with the name of the
       holder, the stamp of the issuing authority and the period of validity.
 13    The parking facilities associated with the card are similar, entailing, for instance,
       parking of unlimited or extended duration, or exemption from stopping/parking
       prohibitions, with due regard for road traffic safety. The exact situation differs
       from country to country, though (and in some cases from region to region and
        from town to town).
        This makes it necessary to provide disabled persons with accurate information on
        the parking facilities available in each country.
 14     Under certain conditions, various Member States already operate a system of
        reciprocal recognition of parking cards for disabled persons, with formal
        arrangements laid down in some cases. However, the lack of standardisation
        causes considerable uncertainty as to the use of such cards among persons
        travelling abroad.
 ---pagebreak--- IV.    PRESENTATION OF THE RECOMMENDATION
A.     Legal basis
15     The recommendation aims to improve road traffic safety by making it possible for
       disabled people to avail themselves of the special local parking facilities provided, using
       a reciprocally recognised parking card of standardised format; Article 75(l)(c).
B.     Provisions
 16    Point 1 advocates the introduction of a national parking card for disabled persons based
       on a standardised Community model.
       Point 2 goes on to recommend that such "a card be recognised on a reciprocal basis so that
       the holder of the card may benefit from the associated parking facilities granted by the
       respective Member States.
       In Point 3 it is proposed that the Member States should issue the parking sard only to
       disabled persons with reduced" mobility. The reason for this is that the parking facilities
       are intended to compensate for disabled people's reduced mobility by enabling them to
       park their car as near to their destination as possible.
       Point 4 proposes 1 January 1998 as the,deadline for implementing the recommended
        measures. The intervening period gives the Member States enough time to take the
        necessary steps.
     • Accordingly, the Commission recommends, under Point J, that the Member States should,
        by 1 Marcrwi998, furnish a report on the measures taken. These reports will also play a
        part in gauging the extent to vvhith the disabled persons concerned have to be informed
        about the various parking facilities in the Member States which can be obtained using the
        reciprocally recognised, standardised parking card.
  17    Annex
        The Annex describes the format of the Community-model parking card for disabled
        persons, which is based both on existing national cards and on the~above-mentioned
        Directive on driving licences.
        Point A:
        The card is the same size as a number of existing nationalcards and is two-thirds the size
        of the Community-model driving licence. The format chosen affords sufficient space for
        inserting the necessary details cleariy.
        Point B:
        Blue was chosen as the colour because it is frequently used in connection with: the
        stylised wheelchair-user symbol of accessibility, and is already used for certain national
        parking cards (e.g.. in Belgium, Portugal and Luxembourg).
         Point C:
 ---pagebreak--- The parking card is to be plastic-coated both to protect it and for security reasons, making
it more difficult to forge. Only the space reserved for the holder's signature will not be
plastic-coated, as is the case with cheque and credit cards. This avoids the need for the
disabled person to go to the issuing authority before the card is plastic-coated. He or she
can sign the parking card subsequently.                                  ,
Point D:
This point describes the exact content and positioning of the text and other details shown
on the parking card.
The front of the card contains all the elements necessary for recognition: the wheelchair-
 user symbol, designation in all the official languages of the European Union, period of
 validity, name and stamp of the issuing authority validating the document. As with
 driving licences, provision is made for the national distinguishing code of the respective
 Member States to be affixed; surrounded by theringof 12 stars symbolising the European
 Union, with express mention being made of the fact that it is a European Communities
 model.
 In view of the fact that, in some Member States, the parking card is linked to the
 registration number of the holder's vehicle, theregistrationnumber may, ifrequired,also
 be shown on thefrontof the card.
 It is not deemed necessary to include any other details on the front of the parking card
 for purposes of recognition.
 The reverse of the card contains data which will identify the authorised holder, namely
 surname, forename(s), date of birth, address and signature.
            A
  '•••••        ...     ' •   '     ' ••   • '•"'• •'V '•' ' ••' •• ••••   '••••••'
 Also shown on thereverseare the basic conditions of use which, irrespective of specific
 national rules, apply to all parking cards based on the Community model, namely:
 -         an explanatory statement to the effect that the parking card, when in use, i.e.
           when the authorised holder wishes to take advantage of the associated parking
           facilities, must be positioned in such a way as to be clearly visible for checking
           purposes;
  -        a statement to the effect that the parking card gives entitlement only to the special
           local parking facilities available in the Member State concerned, as opposed to
           such parking facilities as may be available in the person's country of origin.
   Point E:
   This point deals with linguistic requirements applying to the parking card; corresponding
 to those for the Community-model driving licence.
 ---pagebreak---  ---pagebreak---                         EUROPEAN COMMISSION
                             DRAFT COUNCIL RECOMMENDATION ON A
                               PARKING CARD FOR DISABLED PERSONS
The Council of the European Union,                           „
Having regard to the Treaty establishing-the-Eu,ropean Community,; and in particular
Article 75(l)(c) thereof,
Having regard to the proposal for a recommendation submitted by the Commission,
In cooperation wirh the European Parliament1,
Having regardto.the opinion of the Economic andSocial Committee2,
Having regard to the opinion of the Committee of the Regions3,
Whereas the reciprocal recognition of a parking card for disabled persons based on a
standardised Community model was advocated by the Commission in its communication
on a medium-term social action programme (1995-97), forwarded to the Council, the
European Parliament, the Economic and Social Committee and the Committee of the
Regions on 12 April 19954, and also in its report of .26 November 1993 to the Council
on the measures to be taken in the Community regarding the accessibility of transport to
persons with reduced mobility5;
Whereas it is stated in Title I, section 26 of the Community Charter of the Fundamental
Social Rights of Workers that all disabled persons, whatever thé origin and nature of their
disablement, should be entitled to additional concrete measures aimed at improving their
         COM(95) 134
         COM(93) 433
Rue de la Loi 200, B-1049 Bruxelies/Wetstraat 200, B-1049 Brussel - Belgium - Office: J27 0/121.
Telephone: direct line (+32-2)2955039, exchange 299.11.11. Fax: 2951012.
Telex: COMEU B 21877. Telegraphic address: COMEUR Brussels.
 ---pagebreak--- social and occupational integration; whereas such.measures should concern, in particular,
according to the capacities of the beneficiaries, accessibility, mobility and means of
transport;
Whereas a private car constitutes, for many disabled people who are unable to use public
transport, the only means of getting about independently for purposes of occupational and
social integration; whereas, in certain circumstances and with due regard to road safety,
it is only right that disabled persons should be enabled, by means of a designated parking .
card, to park their car as hear to their destination as possible; whereas disabled people
should thus have the opportunity to avail themselves of the facilities provided by the said
parking card throughout the European Community in accordance with the. national rules
applying in the respective countries;          y
Whereasr in view of the fact that parking cards for disabled persons may come within the
remit of regional authorities» the Committee of the Regions should be consulted;
Whereas, in accordance with the principle of subsidiarity, Community action is necessary
to ensure that parking cards for disabled persons are readily recognised on a reciprocal
basis and to facilitate freedom of movement for disabled people, enabling them also to
participate in tourist activities, thereby avoiding thé practical problems which divergent
 national models may present for disabled people and supervisory officials;
 Whereas, for the purposes of the common transport policy and with a view to helping to
 improve road traffic safety, which includes car parking, it is desirable that there should
 be a Community^model parking card for disabled persons recognised reciprocally by the
 Member States,
 Hereby recommends the Member States to:;
  1.     introduce a national parking card for disabled persons, issued in accordance with
         the respective national provisions, on the basis of the standardised Community
         model described in the Annex;
 2;      recognise reciprocally the parking cards for disabled persons introduced by each
         Member ^tate in accordance with the standardised Community model, so that the
         holder of the card may benefit from the associated parking facilities available in
         the respective countries;
 3.       issue the parking card only to disabled persons^ with reduced mobility;
  4.      take the necessary steps to ensure that the parking cards for disabled persons based
          on the standardised Community model, and the arrangements for reciprocal
          recognition, are introduced by 1 January 1908 at the latest;
  5.      inform the Commission, by 1 March 1998, of the measures taken pursuant to this
         Tecommendation.
  Done at Brussels,
  For the Council
 ---pagebreak---                                       ANNEX
                PROVISIONS CONCERNING THE COMMUNITY-MODEL
                     PARKING CARD FOR DISABLED PERSONS
A. The overall dimensions of the parking card for disabled persons as per the
   Community model shall be:
   -      height: 106 mm;                                                           v
          width: 148 mm.
B. The colour of the parking card shall be light blue, except for the white
   wheelchair-user symbol which shall have a dark blue background.
C. The parking card for disabled persons shall be plastic-coated, with.the exception
   of the space reserved for the holder's signature on the left-hand side of the
   reverse.
D. The parking card for disabled persons.shall be divided vertically into two halves
   on bothr the front and reverse.
           — - < ' .                     • • .
   The left^and side of the front shall contain:
   -       the wheelchair-user symbol in white on a dark blue background;
   -       the period of validity of the parking card;
   -       the serial number of the parking card;
   -       the name and stamp of the issuing authority/organisation;
   -       optional: the vehicle registration* number.
   Theright-handside of the front shall contain:
   -        in capital letters, the words "Parking card for disabled persons" in the
            language(s) of the Member State issuing the card. After a suitable space,
            the words "Parking card" shall appear in capital letters/small type in the
            other languages of the European Union;
   -        the words "European Communities model" in the language(s) of the
           Member State issuing the parking card;
 ---pagebreak---         as background, the distinguishing code of the Member State issuing the
        parking card, as follows:
                 B:      Belgium                I:      Italy
                 DK: Denmark                    L:      Luxembourg
                 D:      Germany                NL: Netherlands
                 GR: Greece                     A:      Austria
                 E:      Spain                  P:      Portugal
                 F:      France                 FIN: Finland
                 IRL: Ireland                   S:      Sweden
                                                UK: United Kingdom,
        surrounded by the ring of 12 stars symbolising the European Union.
The left-hand side of the reverse shall contain:
1.      the holder's surname;
2.       the holder's,forename(s);
3.       the holder's date of birth;
4.       the holder's address;
5.       the holder's signature.
Therightrhandside of the reverse shall contain:
 1.      the statement:
          "This card gives entitlement to the special local parking facilities available
          in the Member State concerned.";
2.        the statement:
          "When in use,, the card is to be affixed to the inside of the windscreen or,
          in the absence of a windscreen, to the front of the vehicle in such a way
          that the front of the card is clearly and wholly visible.".
 With the exception of theright-handside of the front, entries shall be shown in
 the language(s) of the Member State issuing the parking card.
 If a Member State wishes to make the entries in a national language other than
 one of the following: Danish, Dutch, English, Finnish, French, German, Greek,
 Italian, Portuguese, Spanish, Swedish, it shall draw up a bilingual version of the
 parking card using one of the eleven aforementioned languages, without prejudice
 to the other provisions of this Annex.
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                   ISSN 0254-1475
                                                            COM(95) 696 final
                                              DOCUMENTS
EN                                                                       05 07
                                     Catalogue number : CB-CO-95-732-EN-C
                                                             ISBN 92-77-98213-6
Office for Official Publications of the European Communities
L-2985 Luxembourg


               EUROPEAN COMMISSION
            Brussels, 22.5.2017
            COM(2017) 515 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2017 National Reform Programme of Luxembourgand delivering a Council opinion on the 2017 Stability Programme of Luxembourg

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2017 National Reform Programme of Luxembourg

                  and delivering a Council opinion on the 2017 Stability Programme of Luxembourg

               THE COUNCIL OF THE EUROPEAN UNION,

               Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,

               Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies,
                  1
                and in particular Article 5(2) thereof,

               Having regard to the Recommendation of the European Commission,
                  2

               Having regard to the resolutions of the European Parliament,
                  3

               Having regard to the conclusions of the European Council,

               Having regard to the opinion of the Employment Committee,

               Having regard to the opinion of the Economic and Financial Committee,

               Having regard to the opinion of the Social Protection Committee,

               Having regard to the opinion of the Economic Policy Committee,

               Whereas:

               (1)On 16 November 2016, the Commission adopted the Annual Growth Survey,
                  4
                marking the start of the 2017 European Semester of economic policy coordination. The priorities of the Annual Growth Survey were endorsed by the European Council on 9-10 March 2017. On 16 November 2016, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report,
                  5
                in which it did not identify Luxembourg 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. That Recommendation was endorsed by the European Council on 9-10 March 2017 and adopted by the Council on 21 March
                  6
               .

               (2)As a country whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, Luxembourg should ensure the full and timely implementation of the Recommendation for the euro area which is reflected in recommendation 2 below.

               (3)The 2017 country report for Luxembourg
                  7
                was published on 22 February 2017. It assessed Luxembourg’s progress in addressing the country-specific recommendations adopted by the Council on 12 July 2016, the follow-up given to the recommendations adopted in previous years and Luxembourg’s progress towards its national Europe 2020 targets.

               (4)On 28 April 2017, Luxembourg submitted its 2017 National Reform Programme and its 2017 Stability Programme. To take account of their interlinkages, the two programmes have been assessed at the same time.

               (5)The relevant country-specific recommendations have been taken into account in the Member States' programmes for the European Structural and Investment Funds (ESI Funds) covering the 2014-2020 period. As foreseen in the legislation governing the ESI Funds,
                  8
                where it is necessary to support the implementation of relevant country-specific recommendations, the Commission may request a Member State to review and amend its relevant ESI Funds programmes. The Commission has provided further guidelines on the application of those rules.
                  9

               (6)Luxembourg is currently in the preventive arm of the Stability and Growth Pact. In its 2017 Stability Programme the government plans a decrease in the headline surplus from 1.6% of GDP in 2016 to 0.2% of GDP in 2017, followed by a steady increase thereafter, reaching a surplus of 1.2% of GDP in 2021. The medium-term budgetary objective — a structural deficit of 0.5% of GDP — continues to be met with a margin throughout the programme period. According to the stability programme, the government debt-to-GDP ratio is expected to remain well below the Treaty reference value of 60% of GDP. The macroeconomic scenario underpinning these budgetary projections is plausible, with the exception of 2018 when it is markedly favourable and 2021 when it is markedly cautious. Based on the Commission 2017 spring forecast, the structural balance is forecast to register a surplus of 0.4% of GDP in 2017 and 0.1% of GDP in 2018, broadly in line with the stability programme and above the medium-term budgetary objective. Overall, the Council is of the opinion that Luxembourg is projected to comply with the provisions of the Stability and Growth Pact in 2017 and 2018.

               (7)Long-term fiscal sustainability concerns remain given the projected increase in ageing costs. Under the 2012 pension reform, an exercise to monitor and evaluate the sustainability of the pension system should be carried out every 5 years from the adoption of the reform. The government advanced the first evaluation to 2016. Although the review concluded that the pension system is still recording a recurrent surplus which allowed sizeable pension reserves to be accumulated, the pension system is expected to record a negative balance from 2023. According to the recent revised Eurostat population projections, the projected increase in population will be less significant than previously expected. This will have an impact on the dependency ratio, which will increase faster than previously expected and lead to a higher projected increase in public expenditure for pensions. There has been no progress in linking statutory retirement age to life expectancy, as previously recommended by the Council. Luxembourg stands out as the only Member State where no increase of the statutory retirement age has been laid down for the period between 2013 and 2060. Luxembourg has the Union’s highest projected increase in the share of dependent population by 2060. Luxembourg has made limited progress on early retirement. In July 2015, a draft law modifying early retirement schemes was presented to Parliament, where it is still pending. Overall, early retirement remains widespread and incentives to work longer remain limited. Following the revision of demographic prospects, Luxembourg faces further risks related to long-term care expenditure. This is already at one of the highest levels among Member States as a share of GDP and is projected to increase from 1.5 % to 3.2 % of GDP by 2060 (more than doubling from the current level). A project of reform of the long-term care insurance is still being discusses by the Parliament.

               (8)The Luxembourg authorities have adopted a comprehensive tax reform that entered into force in January 2017. The reform introduced changes mostly in the area of direct taxation, both for individuals and corporations, aimed at gradually reducing the corporate income tax rate (with the goal of increasing competitiveness) and increasing the progressivity of personal income tax (with the goal of increasing fairness). At the same time, the increase in certain tax expenditures risks narrowing the tax base. To improve the predictability of tax revenues, there is scope to further broaden the tax base. This could be achieved in particular by revisiting the current low taxation on housing and making greater use of alternative sources. This could include ensuring more coherence between environmental taxation and the diversification objectives of the economy.

               (9)The Luxembourg authorities have sought to diversify the economy, acknowledging the risks associated with heavy dependence on the financial sector. Reducing the economy’s reliance on the financial sector remains a central long-term challenge. To tackle this, the diversification analysis needs to be translated into specific measures with a clearly defined timeline. Given the country’s high labour costs, activities with higher added value offer the potential to unlock alternative sources of growth. The successful diversification of Luxembourg’s economy therefore depends to a large extent on sectors that are less sensitive to labour cost levels. These are largely based on research and innovation, which tend to be technology- and knowledge-intensive. Reducing or removing barriers to investment and innovation that limit economic development would unleash the potential for innovation and help diversification. While public investment is above the euro area average, private investment is underperforming. Sustaining a high level of investment is essential to maintaining growth prospects.

               (10)Further expanding the already successful non-financial service sector could also help diversify the economy. High regulatory barriers remain in the business services sector, in particular for accountants, architects, engineers and lawyers. For all these professions, the business turnover rate is lower than both the EU average and the average rate for the overall economy. Restrictions on these professions may thus be harming the competitiveness of businesses in Luxembourg. These barriers include the wide scope of activities reserved for architects; reserving simple tasks such as payroll activities or preparation of tax declarations for highly qualified professionals; reserving legal advice for lawyers; and legal form and shareholding requirements, incompatibility rules and multidisciplinary restrictions for lawyers which may be disproportionate in relation to core principles, such as the independence of the profession, and to the corresponding supervisory arrangements.

               (11)Targeted active labour market policies and lifelong learning programmes, in particular for older workers, whose employment rate remains among the lowest in the EU, are necessary to avoid negative impacts. Measures have been adopted to improve their employability and labour market attachment. A law on the reclassification of workers with working disabilities has been implemented since 1 January 2016, increasing the possibilities for such workers to remain longer on the labour market. However, a comprehensive strategy, following consultations with social partners, is yet to be put forward. The ‘age pact’, a draft law submitted to Parliament in April 2014 which aims to encourage firms with more than 150 employees to retain older workers, has still not been adopted. Upskilling opportunities through targeted active labour market policies and lifelong learning to support older workers will remain important for the success of such policies. Investment in skills is crucial to reap the full benefits of digitalisation and to maintain competitiveness.

               (12)A substantial package of measures has been enacted to tackle the supply shortage in real estate, but its real impact has yet to be seen. Incapacity to access the land available for construction, which is mostly owned by private individuals, appears to be one of the main obstacles to increasing housing supply. Limited housing supply coupled with solid demand has led to a steady increase in housing prices. This contributes to explaining the trend towards increasing household indebtedness, which is mostly mortgage related. Moreover, despite substantial investment in transport infrastructure, tackling traffic congestion remains a challenge. This is all the more so as modern work practices, such as teleworking, are discouraged in the case of cross-border workers by the fiscal policies in neighbouring countries. Both housing and mobility challenges are likely to put additional strain on efforts to diversify the economy and increase competitiveness. They could also act as barriers to attracting high-skilled workers into the labour market.

               (13)In the context of the European Semester, the Commission has carried out a comprehensive analysis of Luxembourg’s economic policy and published it in the 2017 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to Luxembourg in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Luxembourg, but also their compliance with EU rules and guidance, given the need to strengthen the EU’s overall economic governance by providing EU-level input into future national decisions.

               (14)In the light of this assessment, the Council has examined the Stability Programme and is of the opinion
                  10
                that Luxembourg is expected to comply with the Stability and Growth Pact,

               HEREBY RECOMMENDS that Luxembourg take action in 2017 and 2018 to:

               1.Strengthen the diversification of the economy, including by removing barriers to investment and innovation. Remove regulatory restrictions in the business services sector.

               2.
                     Ensure the long-term sustainability of the pension system, limit early retirement and increase the employment rate of older people.

               Done at Brussels,

                     For the Council

                     The President

                     (1)
                  OJ L 209, 2.8.1997, p. 1.

                     (2)
                  COM(2017) 515 final.

                     (3)
                  P8_ TA(2017)0038, P8_ TA(2017)0039, and P8_ TA(2017)0040.

                     (4)
                  COM(2016) 725 final.

                     (5)
                  COM(2016) 728 final.

                     (6)
                  2017/C92/01

                     (7)
                  SWD(2017) 81 final.

                     (8)
                  Article 23 of 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.

                     (9)

                        COM(2014) 494 final.

                     (10)
                  Under Article 5(2) of Council Regulation (EC) No 1466/97.


               EUROPEAN COMMISSION
            Brussels, 13.5.2015
            COM(2015) 271 final
            Recommendation for a
            COUNCIL RECOMMENDATION
            on the 2015 National Reform Programme of Portugaland delivering a Council opinion on the 2015 Stability Programme of Portugal

               Recommendation for a

               COUNCIL RECOMMENDATION

               on the 2015 National Reform Programme of Portugal

                  and delivering a Council opinion on the 2015 Stability Programme of Portugal

               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
                  3
               ,

               Having regard to the resolutions of the European Parliament
                  4
               ,

               Having regard to the conclusions of the European Council,

               Having regard to the opinion of the Employment Committee,

               Having regard to the opinion of the Economic and Financial Committee,

               Having regard to the opinion of the Social Protection Committee,

               Having regard to the opinion of the Economic Policy Committee,

               Whereas:

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

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

               (3)On 8 July 2014, the Council adopted a recommendation on Portugal’s National Reform Programme for 2014 and delivered its opinion on Portugal’s updated Stability Programme for 2014. On 28 November 2014, in line with Regulation (EU) No 473/2013
                  5
               , the Commission presented its opinion on Portugal’s draft budgetary plan for 2015
                  6
               .

               (4)On 28 November 2014, the Commission adopted the Annual Growth Survey
                  7
               , marking the start of the 2015 European Semester of economic policy coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the Commission adopted the Alert Mechanism Report
                  8
               , in which it identified Portugal as one of the Member States for which an in-depth review would be carried out.

               (5)On 18 December 2014, the European Council endorsed the priorities for boosting investment, accelerating structural reforms and pursuing responsible growth-friendly fiscal consolidation.

               (6)On 26 February 2015, the Commission published its 2015 country report for Portugal
                  9
               . This assessed Portugal’s progress in addressing the country-specific recommendations adopted on 8 July 2014. The country report also includes the results of the in-depth review under Article 5 of Regulation (EU) No 1176/2011. The Commission’s analysis leads it to conclude that Portugal is experiencing excessive macroeconomic imbalances which require decisive policy action and specific monitoring. It is true that considerable progress has been achieved through the adjustment programme, both as regards economic adjustment and policies. Despite this, significant risks remain, linked to the high levels of internal and external indebtedness across various sectors, and these deserve close attention. There are also strong deleveraging pressures in a context of low growth, low inflation and high unemployment.

               (7)On 28 April 2015, Portugal submitted its 2015 National Reform Programme and its 2015 Stability Programme. To take account of their interlinkages, the two programmes have been assessed at the same time.

               (8)Portugal is currently in the corrective arm of the Stability and Growth Pact. In its 2015 Stability Programme, the government plans to correct the excessive deficit by 2015, in line with the deadline set by the Council. It sets out to reduce the headline deficit to 2.7% of GDP in 2015 and gradually further to 0.6% of GDP in 2018. According to the Stability Programme, the government plans to meet the medium-term objective - a structural deficit of 0.5 % of GDP - in 2016. The government debt-to-GDP ratio is expected to decrease to 124.2 % in 2015 and further to around 112.1 % in 2018. The macroeconomic scenario underpinning these budgetary projections is plausible for 2015 and 2016, but rather optimistic for 2017 and 2018 for which some risks have also been identified by the Portuguese Public Finance Council. Based on the Commission's 2015 spring forecast, a timely and durable correction of the excessive deficit by 2015 is not yet ensured, but within reach. At the same time, the fiscal effort is below what is recommended by the Council. Assuming that the excessive deficit is corrected, Portugal would be subject to the preventive arm of the Pact as of 2016. Balance-improving measures to support the planned deficit targets from 2016 onwards have not been sufficiently specified and appear to be insufficient in size. Therefore, there appears to be a risk of a significant deviation from the required adjustment towards the medium-term objective in 2016 and further structural measures will be needed. Based on its assessment of the Stability Programme and taking into account the Commission's 2015 spring forecast, the Council is of the opinion that there is a risk that Portugal will not comply with the provisions of the Stability and Growth Pact.

               (9)Fiscal consolidation must be underpinned by increased efficiency and quality of public expenditure at all levels of public administration and further reforms of the system for managing public finances. In particular, further efforts are necessary to ensure strict expenditure control by enforcing the commitment control law and strengthening accountability. The Law on the single wage scale was published in September 2014 and has been applied since January 2015; implementation of the Decree-law on the single supplements scale is under preparation. The restructuring of state-owned enterprises has not been completed. There has been limited progress in developing new comprehensive measures as part of the ongoing pension reform. Portugal has undergone a comprehensive reform of its tax system in the past two years, targeting corporate income tax, personal income tax and environmental taxation. The overall impact of this reform should be evaluated. There is ample scope for further reforms to modernise the revenue administration and to further improve taxpayer compliance.

               (10)The collective bargaining system has recently undergone several reforms, though not all of them promote the alignment of wages to productivity at sector and firm level. The challenge of the system is to allow firms to adjust to specific circumstances. This includes effective use of existing provisions for firms to derogate from sectorial collective agreements under specific circumstances. Despite the freeze in recent years, the minimum wage has risen significantly faster than the average wage in nominal terms since 2008 (by 18.5% vs. 3.5% between 2008 and 2014) and the proportion of workers covered by the minimum wage has risen from 5% in 2005 to 12.9% in 2014.

               (11)Significant progress has been made regarding the deployment of active labour market policies and the reform of public employment services. However, challenges remain as regards reaching the young people who are neither in employment nor in education or training. There is a need to increase the digitisation of services in charge of labour market matching. Ensuring adequate coverage of social assistance, including the minimum income scheme, also remains a key challenge. Some progress has been made in improving the quality and labour-market relevance of education. Portugal has reformed curricula and teachers’ statutes in order to improve the quality of education. The use of the monitoring tool and the diversification of pathways with new vocational education and training programmes should address early school leaving and help improve performance rates. Recent reforms are designed to upgrade the vocational education and training system, but making it more attractive to students remains a challenge. Fostering knowledge transfers between higher education, privatesector firms and research organisations also represents a challenge.

               (12)The high debt of Portuguese firms still weighs on their performance and impedes new investments, and households’ indebtedness declined markedly. Following up on the Comprehensive Assessment exercise, the central bank stepped up its monitoring of banks’ liquidity and capital position, and also assessed banks’ recovery plans. The ratio of non-performing corporate loans remains high (above 18 %) and is a burden on banks’ balance sheets. The corporate income tax reform initiated in 2014 strengthens the limits for the deductibility of net financial expenses, but the high debt bias in corporate taxation could be further addressed. The corporate restructuring platforms/processes PER and SIREVE are being re-designed, with an enhanced focus on helping firms to stay in business rather than go into liquidation. Deleveraging figures for 2014 show substantial progress in implementing measures to reduce corporate debt overhang. The strategic plan for corporate debt restructuring, published in May 2014, is gradually taking shape in legislation through various measures. There is also progress in widening the range of financing alternatives available to non-financial firms by encouraging equity investments. The Development Finance Institution, formally established in September 2014, intends to address market failures that hamper SMEs’ access to finance.

               (13)There is scope to strengthen measures to increase the efficiency and quality of the justice system, in particular as regards the evaluation of courts’ activities and the use of online tools, and to conduct surveys of court users or legal professionals. According to the 2015 EU Justice Scoreboard, proceedings in civil and commercial cases continue to be lengthy (386 days). The number of enforcement cases is still falling slightly, while disposition time remains long (1045 days in 2014). Reforms relating to the tax and administrative courts are proceeding at a slower pace than other judicial reforms. The rise in the number of insolvency cases has highlighted the need to step up resources and training for firstinstance courts in this field. The liquidity of businesses continues to be aggravated by long delays in payments, in particular by the public sector. No new measures have been taken or commitments made to tackle these late payments. There is insufficient transparency as regards private-public partnerships at local and regional government levels and in the area of concessions at all levels. The prevention of corruption is hampered by the ineffective application of the existing legal framework, where monitoring, implementation and the enforcement of sanctions need improvement.

               (14)The new transport regulatory authority is not yet operational. Liberalisation measures in port concessions, railways and metropolitan public transport are slow, thus failing to stimulate investment. There has been limited progress in implementing the longterm transport plan and the timetable for reform of the ports sector. Delays have been experienced in transport concessions for the metropolitan areas of Lisbon and Porto. Moreover, limited progress has been made in port concession renegotiations and in the railways sector. The merger between the railway (REFER) and the road (EP) infrastructure operators intended to improve the financial sustainability of the new road and railway infrastructure body is still ongoing. Staff numbers have been reduced in the state-owned enterprises in the transport sector.

               (15)In the context of the European Semester, the Commission has carried out a comprehensive analysis of Portugal’s economic policy and published it in the 2015 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to Portugal in previous years. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Portugal but also their compliance with EU rules and guidance, given the need to strengthen the overall economic governance of the European Union by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations 1 to 5 below.

               (16)In the light of this assessment, the Council has examined Portugal’s Stability Programme, and its opinion
                  10
                is reflected in particular in recommendation 1 below.

               (17)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 4 below.

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

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

               1.Ensure a durable correction of the excessive deficit in 2015 by taking measures as necessary. Achieve a fiscal adjustment of 0.6% of GDP towards the medium-term objective in 2016. Enforce the commitment control law to better control expenditure. Improve the medium-term sustainability of the pension system. Safeguard the financial sustainability of state-owned enterprises. Further improve tax compliance and the efficiency of the tax administration.

               2.Promote the alignment of wages and productivity, in consultation with the social partners and in accordance with national practices, taking into account differences in skills and local labour market conditions as well as divergences in economic performance across regions, sectors and companies. Ensure that developments relating to the minimum wage are consistent with the objectives of promoting employment and competitiveness.

               3.Improve the efficiency of public employment services, in particular by increasing outreach to non-registered young people. Ensure effective activation of benefit recipients and adequate coverage of the minimum income scheme.

               4.Take measures to reduce the corporate debt overhang, to address the corporate nonperforming loans ratio in banks and to reduce the debt bias for corporates under tax provisions. Improve the efficiency of debt restructuring tools for viable companies by introducing incentives for banks and debtors to engage in restructuring processes at an early stage.

               5.Accelerate measures and increase transparency as regards concessions, including in the transport sector, and private-public partnerships at local and regional level.

               Done at Brussels,

                     For the Council

                     The President

                     (1)
                  OJ L 209, 2.8.1997, p. 1.

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

                     (3)
                  COM(2015) 271.

                     (4)
                  P8_TA(2015)0067, P8_TA(2015)0068, P8_TA(2015)0069.

                     (5)
                  OJ L 140, 27.5.2013, p. 11.

                     (6)
                  C(2014) 8812 final.

                     (7)
                  COM(2014) 902.

                     (8)
                  COM(2014) 904.

                     (9)
                  SWD(2015) 41 final.

                     (10)
                  Under Article 5(2) of Council Regulation (EC) No 1466/97.