title: Commission' s Recommendation for the Broad Guidelines of the Economic Policies of the Member States and the Community

text:
      EUROOPAN YHTEISÖJEN KOMISSIO
                           Bryssel, 31.05.1995
                            KOM(95) 228 lopull.
KOMISSION SUOSITUS JÄSENVALTIOIDEN JA YH
  TEISÖN LAAJOISTA TALOUSPOLIITTISISTA
              SUUNTAVIIVOISTA
 ---pagebreak---  ---pagebreak---          EUROPEAN COMMISSION
                                           -1     -
KOMISSION SUOSITUS JÄSENVALTIOIDEN JA YH-
  TEISÖN LAAJOISTA TALOUSPOLIITTISISTA
                 SUUNTAVIIVOISTA
        laadittu Euroopan yhteisön perustamissopimuksen
                 103 artiklan 2 kohdan mukaisesti
 ---pagebreak---                                         A CL       -
                                     Table of contents
I.   BROAD ECONOMIC POUCY GUIDEUNES FOR THE COMMUNITY
    AND THE MEMBER STATES
   1.   Introduction
   2. Economic policy guidelines
            Price and exchange rate stability
            Sound public finances
            Competitiveness
            Employment and the labour market
II. EXPLANATORY DOCUMENT
   1,^ introduction
   2. The economic situation and outlook
      2.1 Growth prospects
      2.2 Employment trends
      2.3 The outlook for inflation and budgetary convergence
   3. The policy objectives and risks
   4. The Policies
      4.1 Macroeconomic policies
      4.2 Policies for greater competitiveness
      4.3 Employment and labour market policies
 ---pagebreak---                                             -4fc-
          I jäsenvaltioiden ja yhteisön laajat talouspoliittiset
                                       suuntaviivat
 1. Johdanto
Kesästä 1994, jolloin edelliset laajat talouspoliittiset suuntaviivat hyväksyttiin, yhteisön
taloudellinen kasvu on vakiintunut. Kuten Yhdysvaltain dollarin heikkenemisen
aiheuttama valuuttamarkkinoiden levottomuus kuitenkin selvästi osoitti, merkittäviä
riskitekijöitä ja talouspoliittisia kysymyksiä on yhä selvittämättä. Jotta varmistettaisiin
kasvuodotusten täysipainoinen hyödyntäminen työllisyyden lisäämiseksi ja
lähentymisen edistämiseksi, talouspolitiikkojen on vastattava ilmenneen taloudellisen
kasvun tuomiin haasteisiin ja mahdollisuuksiin.
Tämänhetkiset laajat talouspoliittiset suuntaviivat, kuten ne on laadittu ja hyväksytty
Euroopan yhteisön perustamissopimuksen 103 artiklan 2 kohdan mukaisesti, luovat
puitteet talouspolitiikkojen toteuttamiselle yhteisössä ja jäsenvaltioissa.Ne vahvistavat
sekä aiemmin esitetyissä versioissa ehdotetut tavoitteet että Eurooppa-neuvoston
työllisyyden torjumiseksi esittämät johtopäätökset, etenkin Essenin huippukokouksen
hyväksymät viisi aluetta, joilla työllisyystoimia on tehostettava. Näiden yleislinjojen
täysipainoinen toteuttaminen mahdollistaa lähentymisen vahvistumisen ja hyvien kasvu
ja työllisyysodotusten toteutumisen, mikä vähentää merkittävästi työttömyysastetta.
Ensisijaista huomiota tulisi nykyisessä tilanteessa kiinnittää kahteen ongelmaan.
Ensiksikin on mahdollista, että taloudellisen kasvun aikaansaama myönteinen vaikutus
aiheuttaa "mukauttamisen laiminlyöntiä". Tämä saattaa ilmetä talousarviovajeen
syklisen paranemisen vauhdittamaan heikkenevään sitoutumiseen korjata kestävällä
tavalla julkistalouden rakenteellista epätasapainoa, tai työllisyyden alkaessa elpyä, se
saattaa heijastua haluttomuutena panna alulle ja toteuttaa niitä toimenpiteitä, jotka ovat
tarpeen työmarkkinoiden epäkohtien poistamiseksi. On oleellista että kumpikin näistä
"mukauttamisen laiminlyönnin" muodoista tehokkaasti torjuttaisiin.
Toiseksi, viimeaikaiset valuuttakurssin muutokset ovat paitsi lisänneet epätasaisen
inflaatiokehityksen riskiä myös edesauttaneet sisämarkkinoiden potentiaalista
eriytymistä vaarantaen taloudellisen yhdentymisen myönteiset saavutukset.
Valuuttakurssien
 ---pagebreak---                                              -2
vääristymät vaikuttavat kaikkiin jäsenvaltioihin haitallisesti. On selvää, että yhteisön
valuuttapolitiikkaa vakauttavien olosuhteiden luomisesta on tultava talouspolitiikan
avainkysymys tämänkaltaisten tapahtumien minimoimiseksi.
Nämä suuntaviivat vahvistavat edelleen joulukuussa 1993 ja heinäkuussa 1994
hyväksyttyjen suuntaviivojen tavoitteet: on oleellista, että yhteisö ja jäsenvaltiot
kääntävät tämän hetkisen elpymisen keskipitkän aikavälin vahvaksi, kestäväksi
kasvuksi, joka ei edistä rahan arvon alenemista, sekä työllisyyttä luovaksi prosessiksi
niin, että työttömyysaste merkittävästi alenee, ja on mahdollista saavuttaa tarvittava
lähentymisaste EMU:n kolmanteen vaiheeseen siirtymisen helpottumiseksi. Näiden
tavoitteiden saavuttaminen edellyttää vakaita, investointeja edistäviä lyhyen ja
keskipitkän aikavälin makrotaloudellisia puitteita, joille on ominaista:
             vakautta edistävä rahapolitiikka, jota ei häiritse epäsuotuisa talousarvio- tai
             palkkakehitys
             useimmissa jäsenvaltioissa julkistaloutta lujittavat kestävät ponnistelut,
             jotka ovat yhdenmukaisia niiden lähentymisohjelmien tavoitteiden kanssa
             nimellispalkkakehitys, joka tukee kestävää pyrkimystä hintatason
             vakauteen; samalla reaaliansiokehityksessä tulisi huomioida tarve edistää
             työllisyyttä lisäävien investointien kannattavuutta
Näitä puitteita täydentää oleellisesti rakenteelliset uudistukset jäsenvaltioiden talouksien
kilpailukyvyn ylläpitämiseksi ja niiden työmarkkinoiden toimivuuden kehittämiseksi.
Pitkän aikavälin kasvua ylläpitävät, työllisyyttä lisäävät ja lähentymistä voimistavat
politiikat ovat keskenään yhdensuuntaisia.
2. Talouspolitiikan suuntaviivat
Vakaa hintatasoja valuuttapolitiikka
Inflaation hidastuminen yhteisössä ja jäsenvaltioissa on edistynyt merkittävästi tämän
vuosikymmenen alusta. Yhdeksän jäsenvaltion (Belgia, Tanska, Saksa, Ranska, Irlanti,
Luxemburg, Alankomaat, Itävalta ja Iso-Britannia) inflaation odotetaan asettuvan
vuonna 1996 2 ja 3 prosentin välille vuosien 1993 ja 1994 suuntaviivojen tavoitteiden
mukaisesti. Suomen ja Ruotsin inflaatioasteen ennakoidaan nousevan ensi vuonna
 ---pagebreak---                                               -3-
 hieman tämän tason yläpuolelle. Espanjan, Italian ja Portugalin inflaation odotetaan
 puolestaan olevan noin 4Î4 prosenttia ja Kreikan inflaatioasteen ennakoidaan laskevan
 noin 9 prosenttiin.
 Hintojen vakauttamista on edelleen jatkettava. Tähän pyritään etenkin kasvattamalla
 niiden jäsenvaltioiden määrää, joiden inflaatiosuoritusta voidaan pitää tyydyttävänä.
 Niiden jäsenvaltioiden, joiden tämänhetkinen inflaatio-odotus on 2 ja 3 prosentin välillä
 olisi ylläpidettävä inflaatiopaineiden uudelleenelpymisen estämiseen tähtäävää
 politiikkaa sekä pyrkimystä kohti matalampaa inflaatiota. Muiden maiden tulisi lisätä
 ponnistelujaan merkittävästi.
 Viimeaikojen valuuttakurssimuutoksilla on ollut tärkeitä vaikutuksia inflaa-
 tiolähentymiselle. Niinpä niissä jäsenvaltioissa, joissa on esiintynyt nimellisen
valuuttakurssin efektiivistä vahvistumista, inflaatiolähentymisen odotetaan voimistuvan
ja inflaatioasteen ennakoidaan jäävän alle 3 prosentin tänä ja ensi vuonna. Näissä
jäsenvaltioissa palkkasuhdanteiden odotetaan kehittyvän myös samassa suhteessa
hintojen vakauttamistavoitteiden kanssa. On kuitenkin tarpeellista varmistaa, ettei
palkkakehitys        johda      investointien     kannattavuuden      laskuun,     etenkin
vientisuuntautuneilla sektoreilla. Toisaalta niissä jäsenvaltioissa, joissa valuutta on
heikentynyt, hintojen vakaus on vähemmän varmaa, ja näkymiä hallitsee inflaation
kiihtyminen. Näissä maissa äärimmäinen varovaisuus on tarpeen. Erityisesti vahvan
talouskasvun yhteydessä on tärkeää huolehtia siitä, että tuontihintojen nousu ei aiheuta
hinta- ja palkkainflaation noidankehää. Muussa tapauksessa saavutettu uskottavuus,
joka perustuu pyrkimykseen kohti vakauttavaa politiikkaa häviää nopeasti.
Yhdysvaltain dollarin merkittävä heikkeneminen yhdessä joidenkin jäsenvaltioiden
epävarmojen julkistaloudellisten         ja inflaatio-odotusten kanssa ovat johtaneet
merkittävään valuuttapoliittiseen epätasapainoon yhteisön sisällä. Tapahtuneet
valuuttakurssimuutokset ovat suurempia kuin mitä inflaatiotunnuslukujen perusteella
olisi odotettu, ja ne ovat johtaneet kilpailuhaittoihin maissa, jotka ovat harjoittaneet
tervettä politiikkaa, sekä lisänneet inflaatiopaineita maissa, joissa valuutat ovat
heikentyneet. Tällaiset valuuttakursseihin liittyvät vääristymät ovat vahingollisia
kaikille jäsenvaltioille; niissä maissa, joiden valuutat ovat vahvistuneet, lyhyen aikavä-
lin näkymät heikkenevät, kun taas niissä maissa, joissa valuutat ovat heikentyneet,
inflaatio-odotukset huononevat ja keskipitkällä aikavälillä vakauttamiseen tähtäävä
politiikka vaarantuu. Lisäksi sisämarkkinoiden moitteeton toiminta on vaarantunut.
Tämä tekee mahdolliseksi paitsi sen, että investointeja ohjaavat valuuttakurssien
 ---pagebreak--- hyödyntämisestä seuraavat kilpailuedut, mutta se myös mahdollisesti rohkaisee erilaisia
eturyhmiä tukemaan devalvaatiopyrkimyksiä.
Siksi kaikkien yhteisön jäsenvaltioiden on harjoitettava vakaata valuuttapolitiikkaa.
Vakaa valuuttapolitiikka paitsi edesauttaa sisämarkkinoista saatavien etujen
täysipainoista hyödyntämistä ja edistää resurssien suuntaamista yhteisön sisällä, myös
edistää vakaan hintatason toteutumista. Avainasemassa ovat tässä suhteessa talousar-
viopolitiikka sekä uskottava sitoutuminen valtiontalouden tervehdyttämiseen.
Terve julkistalous
Taloudellisen kasvun vakautumisesta huolimatta näkymät julkistalouden epätasapainon
poistamiseksi ovat edelleen epävakaita ja julkistalouden lähentyminen epäselvää.
Tämänhetkisten arvioiden mukaan nettolainauksen odotetaan laskevan noin VA
prosenttia bruttokansantuotteesta vuosien 1994 ja 1996 välillä, mistä noin puolet on
heijastumaa talousarviotasapainon automaattisten vakauttajien myötävaikutuksesta.
Budjettivakauttamisen mittavan edistymisen epäonnistuminen pitää useissa tapauksissa
yllä tilannetta, jossa valtiontaloutta rasittavat korkeat ja yhä kasvavat korkomaksut;
tämä heikentää myös hintoja ja valuuttakurssien vakautta, lisää epävarmuutta
valtiontalouden suunnasta, syö politiikkojen uskottavuutta, edistää talouspolitiikkojen
epätasapainoisia yhdistelmiä ja vaikeuttaa rahapolitiikan toimintaa. Keskipitkällä
aikavälillä jatkuva julkistaloudellinen epätasapaino toimii talouskasvun ja työllisyyden
kehittymisen vastaisesti. Terve julkistaloudellinen tilanne muodostaa positiivisen
tarjontatekijän, koska se luo mahdollisuuksia veronalennuksiin ja lisää tuottavia julkisia
investointeja. Kasvuun ja työllisyysnäkökohtiin pohjautuvat budjettivakautusperusteet
ovatkin vähintään yhtä tärkeitä kuin ne, jotka pohjautuvat tarpeeseen kehittää
velkatilanteen ja nimellisen lähentymisen pysyvyyttä. Jos budjettivajetta ei pysytytä
alentamaan kestävällä tavalla nyt, suhteellisen voimakkaan kasvun aikana, milloin se
sitten alenee?
Lähes kaikkien jäsenvaltioiden selkeä tehtävä on varmistua, että kaikki
kasvumahdollisuudet käytetään hyväksi julkistalouden vakauttamiseksi vähentämällä
rakenteellista alijäämää. Jäsenvaltioiden olisi myös pyrittävä niin pian kuin mahdollista
laskemaan budjettialijäämäänsä alle 3 prosenttiin bruttokansantuotteesta, koska
ensimmäinen askel kohti keskipitkän aikavälin tavoitetta, joka on vähentää alijäämä Oja
 1 prosentin välille bruttokansantuotteesta vuoden 1993 laajojen suuntaviivojen
mukaisesti on kolmannen vaiheen aikana erityisen tärkeää. Tällaista politiikkaa
 ---pagebreak---                                               -5-
 harjoittamalla yhteisön budjettialijäämä vuoteen 1997 mennessä on keskimäärin alle 3
 prosenttia.
 Tämänhetkisten arvioiden perusteella kaikkien jäsenvaltioiden, mukaanlukien ne joiden
 alijäämäennuste tälle vuodelle on alle 3 prosenttia (Tanska, Saksa, Irlanti ja
Luxemburg), tulisi hyödyntää kaikki                   liikkumavara, joka on tulosta
talousarviosuunnitelmat ylittävästä kasvusta tai korkotason laskusta kiihdyttääkseen
talousarviovakautusprosessia. Vaikka valuuttakurssien epävakaisuus vähentäisi talous-
kasvua tänä vuonna, pyrkimykset kohti lähentymisohjelman tavoitteita eivät saa
heikentyä.
Ennuste vuodelle 1996 osoittaa, että niihin mukauttamispyrkimyksiin perustuen, joita
julkistaloutta koskevia tavoitteita lähentymisohjelmaansa sisällyttäneet jäsenvaltiot ovat
tähän asti selvästi määritelleet, julkistalouden tervehdyttämistavoitteita ei yhtenäisesti
saavuteta. Tervehdyttämisohjelman tavoitteisiin pääsemiseksi mukautusta tarvitsevat,
tosin vaihtelevissa määrin, Belgia, Saksa, Kreikka, Espanja, Ranska ja Portugali; näillä
kaikilla alijäämän ennakoidaan jäävän suuremmaksi kuin lähentymisohjelmassa
määritellään. Tanskan, Irlannin, Alankomaiden ja Iso-Britannian puolestaan odotetaan
saavuttavan alijäämätavoitteen ensi vuoteen mennessä.
Monissa maissa menojen kasvun hillitsemisen tulisi olla suositeltavampi lähestymistapa,
koska työllisyysvaikutuksistaan huolimatta mahdollisuudet korkeampaan verotukseen ja
sosiaalimaksuihin ovat epäilemättä rajalliset. Mutta julkisten menojen ja verotuksen jär-
keistäminen voi myös myötävaikuttaa talouden ja työllisyyden kasvuun.
Erityisesti vuoden 1994 yleislinjojen mukaisesti, verorakenne olisi mukautettava
työllisyyttä tukevalla tavalla, kun taas julkiset menot olisi uudelleensuunnattava
kulutuksesta kohti tuottavuutta lisäävää varainkäyttöä; jälkimmäisen suhteen julkisten
investointien vahvistaminen ja ei-materiaaliset investoinnit henkiseen pääomaan
tulisivat olla ensisijaisessa asemassa. Myös tässä yhteydessä työvoiman käyttöön
liittyvää verotusta tulisi keventää, erityisesti palkka-ja tuottavuusasteikon alapäässä. On
kuitenkin tärkeää, että budjettialijäämien tarpeellinen leikkaaminen ei vaarannu, minkä
vuoksi olisi löydettävä korvaavia lisätuloja.
Julkistaloudelliset vaikeudet ovat edelleen luonteenomaisia jäsenvaltioiden talouksille.
Kreikassa ja Italiassa hellittämätön valtiontaloudellinen epätasapaino vaikuttaa edelleen
 ---pagebreak---  laajemmin heikentäen hintojen ja valuuttapolitiikan vakautta, edesauttaen korkojen
kohonneita riskipreemioita ja estäen lähentymiskehitystä. Jotta luottamus
talouspolitiikkojen suuntaan palautuisi, vaaditaan päättäväisiä toimenpiteitä
monivuotisissa puitteissa. Ruotsi, joka on kohdannut samankaltaisia vaikeuksia on juuri
julkistanut       monivuotisen         valtiontaloudellisen       tervehdyttämisohjelman;
mukautussuunnasta on tarpeellista pitää kiinni. Belgiassa korkea velkaantumisaste
edellyttää kattavan talouspoliittisen ohjelman (Global pian) budjettitekijän
toteuttamista, ja kehitystä on jatkettava budjetin alijäämän laskemiseksi alle 3
prosenttiin bruttokansantuotteesta myös velkaantumisasteen merkittäväksi vähentä-
miseksi.
Espanjassa ja Portugalissa          tarvitaan julkistalouden lujittamiseksi laajempaa
sitoutumista ja kunnianhimoisempia tavoitteita; kunnianhimoisemmat tavoitteet ovat
tarpeen myös Itävallassa ja Ranskassa. Itävallassa ja Ruotsissa tarvitaan
lisäponnisteluja, jotta velkaantumisaste saatetaan laskusuuntaiseksi. Lopuksi, vaikka
 Suomi ei ole vielä laatinut lähentymisohjelmaansa, ennusteiden mukaan sen valtion-
taloudelliset tavoitteet ovat kunnianhimoiset; ponnisteluja näiden päämäärien
saavuttamiseksi olisi jatkettava.
Julkistaloudellinen kehitys ja näkymät Irlannissa ja Luxemburgissa osoittavat, ettei
niiden budjettialijäämät ole edelleenkään liiallisia. Irlannin velkaantumisasteen
ennakoidaan edelleen terveessä tahdissa laskevan, kun taas Luxemburgin julkistalous
jatkaa vankkaa kehitystään.
Kilpailukyky
Kasvua, kilpailukykyä ja työllisyyttä koskevan valkoisen kirjan ehdotusten mukaisesti
jäsenvaltiot toteuttavat uudistuksia, joiden tarkoituksena on vahvistaa sisäsyntyistä
kasvua sekä kohottaa yhteisön talouksien vireyttä ja kilpailukykyä.
 Sisämarkkinoiden tarjoamien mahdollisuuksien täydelliseksi hyödyntämiseksi yhteisön
direktiivit on saatettu osaksi kansallista lainsäädäntöä tällä hetkellä 92,4-prosenttisesti;
vaihteluväli on 86,3 - 98,6 prosenttia. Edistyminen on kuitenkin tarpeen vakuutusalalla,
henkisen ja teollisen omaisuuden aloilla, julkisten hankintojen, uusien teknologioiden,
palvelujen sekä henkilöiden vapaan liikkuvuuden suhteen. Sisämarkkinoiden laa-
jeneminen televiestintään ja energia-alalle on edistynyt hitaasti, kun taas sisämarkkinat
kuljetusalalla ovat edelleen epätäydelliset. Lisäksi pitää edistyä kilpailusääntöjen lä-
 ---pagebreak---  piajamisessa, valtionapujen        vähentämisessä     sekä   julkisen    sektorin  aseman
 kaventamisessa.
 Yksityistäminen siinä määrin, kuin jäsenvaltiot näkevät sen päämääriensä mukaisena,
 voisi edelleen kehittyä jo alkaneeseen suuntaan.
     Valkoisen kirjan sisämarkkinoita koskevien toimenpiteiden toteutuminen.
  (tilanteen hajonta jäsenvaltioittain, prosentteina, 17. toukokuuta 1995)
   DK                       NL           UK              B            IRL           GR
   98.6     95.9    95.4   95.0  92.7    92.2   90.9   90.4    90.0   89.5   89.0   86.3
                                        EC-12: 92.4
  Lähde: Euroopan komissio
Yhteisön tasolla on tehty useita aloitteita. Essenin huippukokouksen suosituksen
mukaisesti kilpailuasiain neuvoa-antava ryhmä (Competitiveness Advisory Group) on
perustettu ja se laatii Cannesin huippukokoukselle kertomuksen yhteisön
kilpailukyvystä ja siihen liittyvistä kysymyksistä; lisäksi on perustettu lainsäädäntöä ja
hallintoa yksinkertaistava ryhmä (Group for Legislative and Administrative
 Simplification). Yleisen kilpailukyvyn parantamiseksi yhteisön tasolla on tarkasteltu
useita kysymyksiä mukaanlukien PK-yritysten rahoituksen kehittäminen, työvoiman
joustavuuden edistäminen sekä ammatillisen koulutuksen tason parantaminen.
Yhteisön talouden vireyden kannalta on oleellista, että materiaaliset ja ei-materiaaliset
investoinnit edistyvät. Tämä koskee erityisesti investointeja koulutukseen sekä
ammatilliseen koulutukseen sekä yhteisön infrastruktuuriin joita tulee kehittää
vastaamaan 2000-luvun tarpeita. Yleiseurooppalaiset verkot tulisi toteuttaa ja
tietoyhteiskuntaa koskeva toimintaohjelma tulisi saattaa päätökseen. Lisäksi suurempi
koordinaatio jäsenvaltioiden välillä on oleellista tiede- ja kehitysaloitteiden aktiiviseksi
edistämiseksi. Samansuuntaisesti yhteisötason ja jäsenvaltioiden yhteensovitetut
ponnistelut ovat olennaisia rakennuspuita toteutettaessa potentiaalista työpaikkojen
lisääntymistä j a kasvua.
 ---pagebreak---  Työllisyys ja työmarkkinat
Mikäli taloudellinen elpyminen jatkuu odotettuna, se poistaa syklisen työttömyystekijän
vuoteen 1997 mennessä. Tästä huolimatta työttömyyden merkittävän ja progressiivisen
vähenemisen jatkumiseksi on tarpeen päästä voimakkaaseen taloudelliseen kasvuun ja
lisätä kasvukapasiteettia kattavalla, integroidulla ja johdonmukaisella pyrkimyksellä
aikaansaada rakenteellinen muutos koulutusalan järjestelmissä, työoikeudessa,
työsopimuksissa, sopimusneuvottelujärjestelmissä, sekä sosiaaliturvajärjestelmissä koko
työmarkkinoiden toiminnan kehittämiseksi.
Valkoisen kirjan mukaisesti Essenin huippukokous määritteli tässä hahmoteltuun
suuntaan vaikuttavien toimenpiteiden joukosta seuraavat viisi ensisijaista kohtaa:
•      työvoiman työllisyysmahdollisuuksien parantaminen edistämällä ammatilliseen
       koulutukseen suuntautuvia investointeja
•      työllisyyttä tukevan kasvun lisääminen
•      muista kuin palkkakustannuksista johtuvien kustannuksien vähentäminen
•      työmarkkinapolitiikan tehokkuuden parantaminen
•      niiden toimenpiteiden kehittäminen, joilla autetaan työttömyydestä erityisesti
       kärsiviä ryhmiä
Jäsenvaltioita kehotetaan toteuttamaan toimenpiteitä, jotka on mukautettu niiden omiin
erityisoloihin ja laatimaan monivuotiset toimintaohjelmat toimenpidepyrkimysten
selvittämiseksi. Erilaisia toimenpiteitä on jo toteutettu, mutta kattavampia ja
määrätietoisempia ponnisteluja tarvitaan.
Aktiivinen ja tehokkaampi työmarkkinapolitiikka tarjoaa kolme pääasiallista kanavaa
työllisyyden lisäämiseen tähtäävän päämäärän saavuttamiseksi.
i)   ne parantavat työvoiman työnsaantimahdollisuuksia edistämällä ammatilliseen
     koulutukseen suuntautuvia investointeja erityisesti PK-yrityksissä, nostaen näin
     henkisen pääoman tasoa, mikä parantaa kilpailukykyä ja potentiaalista
     suorituskykyä sekä työvoiman joustavuutta ja uusia mahdollisuuksia
ii) ne lisäävät työllisyyttä tukevaa kasvua seuraavin keinoin vaikuttamatta negatiivi-
     sesti itse kasvuvauhtiin
 ---pagebreak---       työmarkkinaosapuolet selvittävät aiheellisin tavoin voitaisiinko työllisyyttä edistää
      kilpailukykyä vaarantamatta niin, että tuottavuusetu suunnataan sellaisten
      innovatiivisten työjärjestelyjen kuten työajan vähentämisen ja uusien
      työaikamallien sekä työn ja vapaa-ajan välisen suhteen uudistamisen
      edesauttamiseksi
 -   työllisyyttä lisäävät aloitteet muista kuin palkkakustannuksista johtuvien
      kustannuksien vähentämiseksi erityisesti palkka- ja tuottavuusasteikon alapäässä
      haittaamatta työmarkkinoiden muita osa-alueita; makrotaloudelliselta kannalta
      tähän täytyy päästä sellaisin keinoin jotka eivät vaaranna talousarvioalijäämien
      vähenemistä eivätkä yritysten kilpailukykyä. Siksi uudistukset mukaan lukien,
      aiheelliseksi katsottaessa, tarvitaan vaihtoehtoisia sosiaaliturvajärjestelmän
      rahoituslähteitä
iii) ne edistävät ihmisten työllistettävyyttä, kun uusia työpaikkoja on saatavilla
              parantaen työmarkkinapoliittista tehokkuutta edistämällä joustavuutta
              koskien ammatillista ja maantieteellistä liikkuvuutta (erityisesti jo
              työllistettävissä olevat työntekijät)
              kehittäen toimenpiteitä, joilla autetaan työttömyydestä eniten kärsiviä
              ryhmiä erityisillä uudelleenkoulutusohjelmilla, joissa keskityt ään
              syrjäytymisestä kärsiviin kohderyhmiin
Työmarkkinapolitiikat, jotka myötävaikuttavat näiden kolmen kanavan hyödyntämiseen
eivät vain täydennä korvaamattomalla tavalla makrotalouden politiikkoja ja
rakennepolitiikkoja kilpailukyvyn alueella, vaan myös edesauttavat koheesion
ylläpitämistä ja vahvistamista, sekä yhteisön sisäistä sosiaalista konsensusta siinä
pitkässä ja vaikeassa prosessissa, jolla pyritään työttömyyden torjumiseen.
Edistääkseen nyt toiminnassa olevan työn tehokkuutta ja lisätäkseen yksittäisten
poliittisten toimien yhdenmukaisuutta komissio esitti maaliskuun 8. päivänä 1995
neuvostolle tiedonannon, missä se ehdottaa perustamissopimuksen 103 artiklan
huomioon ottaen toimintasuunnitelman toteuttamista työllisyystrendien ja
työllisyyspolitiikkojen valvomiseksi.
Jäsenvaltioiden on nyt tärkeää antaa pikaisesti monivuotiset toimintaohjelmansa, jotka
muodostavat kiintopisteen työpaikkoja luovien politiikkojen jatkuvalle valvomiselle.
 ---pagebreak---                                        - 10-
Näiden ohjelmien olisi oltava keskinäisesti yhdensuuntaisia laajojen talouspoliittisten
suuntaviivojen määrittelemien makrotaloudellisten puitteiden kanssa.
 ---pagebreak---                                                _ y\ o          ex-
                                il. Explanatory document
This explanatory document reviews the economic situation and outlook, the progress
made in implementing the previous Broad Guidelines and the current stance of
economic policy. In accordance with what was announced in the Communication to
the Council on the Follow-up to the Essen European Council on Employment1,
employment trends and policies are given greater prominence.
On the basis of the analysis outlined in this explanatory document, the Commission is
recommending a new set of guidelines for the economic policies of the Member States
and of the Community which are firmly oriented towards achieving economic
convergence and fostering job creation. These guidelines confirm the thrust of those
adopted in December 1993 and July 1994, but take into account the fact that the
economies of the Community are now at a much more advanced stage of the recovery
and that a number of risks are appearing on the way to transforming the current
recovery into strong medium-term growth.
1. Introduction
The economic outlook for the Community continues to be favourable. The recovery,
which had just become visible a year ago when the 1994 Broad Guidelines were
adopted, has gathered strength and its pattern - exports and investment continue to be
the most dynamic components - remains conducive to sustained medium-term growth.
Notwithstanding the negative effects of the recent foreign exchange turmoil, growth is
expected to remain satisfactory also in 1996. The recent episode of exchange rate
instability has certainly affected business confidence negatively, but the fundamental
factors determining growth remain favourable.
Progress has taken place in achieving the degree of nominal convergence necessary for
the transition to EMU. But more needs to be done and, in certain cases, progress has
been disappointing relative to what could have been achieved in the current favourable
economic environment. The recent instability of foreign exchange markets, even if its
origin lays to a great extent outside the Community, highlights the lack of convergence
which still characterises the economic performance of several Member States, and
especially the lack of credibility of their budgetary consolidation plans.
     "Follow-up to the Essen European Council on Employment" Com (95) 74 final of 8 March 1995
 ---pagebreak---                                          -11
Given that employment always responds with a lag to a recovery in economic activity,
the improvement in the economic situation is not yet contemporaneously reflected in a
similar upturn in labour market conditions, even though the reduction of
unemployment in this cycle is expected to be much more pronounced than that seen in
the early 1980s. Employment, which declined again in 1994, is now projected to
increase this year and in 1996 by about one per cent a year, with the rate of
unemployment also starting to decline.
Under these circumstances, economic policy must be resolutely oriented towards the
twin objectives achieving economic convergence and fostering job creation. This
means achieving strong, non-inflationary and more employment-creating rates of
growth.
2. The economic situation and outlook
2.1 Growth prospects
Economic growth in the Community is projected to average 3.1 per cent in 1995 and
2.9'per cent in 1996, up from an estimated 2.7 per cent last year. Thus, the recovery
which commenced towards the second half of 1993, is now being transformed into
robust economic growth so that, by 1996, real output in the Community will be almost
 10 per cent above the 1991 level.
The economic expansion has been, and is expected to continue to be, sustained by
strong exports, investment spending and, to a lesser extent, private consumption
growth. Buoyant world trade conditions are expected to sustain Community exports
which should increase, in real terms, by 7.5 and 6.5 per cent, respectively, during this
year and next. Investment spending, which is estimated to have grown by 2.4 per cent
in 1994, is projected to increase by 6.3 per cent this year and by just below 6 per cent
in 1996. Finally, private consumption, is projected to expand by 2.1 per cent this year
and by 2.5 per cent in 1996. This pattern of growth - with investment growing at a
brisk pace - corresponds closely to what is necessary to create the conditions for a
 long period of strong growth.
 The recent weakening of the dollar in the foreign exchange markets and the substantial
 depreciations experienced by some European currencies are having a twofold effect on
 ---pagebreak---                                             12-
 Community growth prospects.          On the one      Table 1
 hand, overall growth is slowed down as                 Economic growth in the Community
                                                              (percentage change in real GDP)
 Community exports become, on average, more                       1993       1994      1995       1996
 expensive on world markets and as business          B             -1.7       2:3       2.7        2.6
 confidence is negatively affected by the            DK             1.5       4.4       3.3        2.9
                                                     D            -1.1        2.9       3.0        2.6
 uncertainty induced by exchange rate instability.
                                                     GR           -0.5        1.2       1.6        1.8
 On the other hand, the exchange rate                E            -1.1        2.0       3.1        3.4
                                                     F            -1.5        2.7       3.1        2.9
 movements within the Community may result in
                                                     IRL           4.0       6.3        6.9       5.5
 short-term differential effects on the growth       I            -0.7       2.2        3.3       3.4
prospects of countries whose currencies have         L             2.1       3.0        3.3       2.9
                                                     NL            0.3       2.5       3.2        2.8
depreciated compared with those which                             -0.1       2.7       2.7        2.5
                                                     A
appreciated.                                         P            -1.2       1.1       3.0        3.2
                                                     FIN          -1.6       3.9       5.3        4.2
                                                     S            -2.6       2.2       2.8        3.0
The fundamental factors which shape economic         UK            2.0       3.8       3.1        2.8
growth in the Community, however, remain EC                       -0.5       2.7       3.1      - 2.9
                                                     Source: Commission Spring 1995 economic forecasts
favourable.       World trade is expected to
continue expanding strongly while labour
productivity and investment profitability trends within the Community are
encouraging. As a result, most Member States are expected to show satisfactory
ratés of economic growth (see Table 1), with Ireland projected to post remarkably fast
rates of output and employment growth throughout the period.
2.2 Employment trends
Following three years of net job losses, employment in the Community is projected to
expand again in 1995 and 1996. Employment in the Community declined by a
cumulative 3.9 percentage points over the period 1992-1994: 5.8 million jobs were
lost. 1995-96 should see an increase in employment of about one per cent a year
which implies the net creation, over the two years, of about 3 million jobs. Given that
in 1995-96 the active population will increase by about 1.4 million persons, the
expected job creation will allow a net reduction of unemployment by approximately
1.6 million.
This year and next employment is expected to rise in all the Member States, with
particularly strong rates of increase in Denmark, Spain, the Netherlands, Sweden, the
United Kingdom, and especially so in Luxembourg, Finland and Ireland (see table 2).
 ---pagebreak---                                                                     -13
In recent years, labour productivity growth evolved in a way similar to that of all
previous cyclical episodes: it decelerated substantially during the recession (see
table 3) and accelerated at the beginning of the recovery (3.2 per cent in 1994). For
1995 and 1996, however, the forecasts suggest a return to the trend of the last twenty
years (about 2 per cent). In the present forecast the Community economy is therefore
expected to show an employment content of growth which is not inferior, but also not
greater, than that of the last twenty years.
Table 2
                                      Employment and Unemployment
                                            (percentage change and per cent of the labour force)
                                        Employment growth                                        Unemployment rates
                                1994                 1995                1996             1994         1995         1996
          B                      -0.7                   0.7                1.0             10.0          9.6         9.1
          DK                     -0.1                   2.3                1.1             10.2          8.6         8.0
          D                      -0.9                   0.7                0.9              8.4          7.8         7.3
         GR                       1.3                   1.0                1.0              9.6          9.6         9.5
          E                      -0.9                   1.5                2.0            24.1          23.7        22.8
         F                        0.1                   1.1                1.0             12.5         12.1        11.5
         IRL                      2.6                  2.7                 2.6             15.1         14.1        13.1
         1                       -1.6                   0.3                0.8             11.4         11.4        10.9
         L                        2.6                  2.8                 2.7              3.5          3.6         3.4
         NL                      -0.0                   1.3                1.9              7.7          7.6         7.2
         A-                       0.2                   0.5                0.4              4.0          3.9         3.8
         P                       -0.1                   0.4                0.7              6.9          6.7         6.3
         FIN                     -0.8                   3.0                2.5             18.5         16.3        14.6
          S                      -0.9                   2.0                1.8              7.8          7.2         6.5
         UK                       0.3                   1.2                1.1              9.4          8.3         7.8
         EC                      -0.5                   1.0                1.1             11.2         10.7        10.1
Source: Commission Spring 1995 economic forecasts
N.B. At the beginning of 1995 Eurostat has significantly revised its unemployment figures
Employment in the manufacturing sector, where productivity increases are particularly
strong, declined by about 2.5 per cent last year, but is now expected to recover to a
projected growth of 0.5 per cent in 1995 and 1.1 per cent in 1996. The expansion in
employment in this sector as well suggests that the recovery has given way to a
sustained growth process.
The projected increases in employment will produce a decline in the unemployment
rate from a peak of 11.2 per cent of the labour force in 1994 to 10.1 per cent in 1996.
Large declines in unemployment in the period 1994-1996 are projected to take place in
Finland (3.9 percentage points), Denmark (2.2 points) and Ireland (2 points).
 ---pagebreak---                                                                       - 14
High unemployment, however, is projected to continue to mark the labour market
 experience of Spain, Ireland, Finland; in Italy and France unemployment is expected
to remain between 10.5 and 11.5 per cent in 1996; in Belgium and Greece
unemployment is projected to remain between 9 an 9 Vz per cent; finally, with regard
to the remaining eight Member States, the rate of unemployment is expected to range
from a low of 3 lA per cent in the case of Luxembourg to a high of 8 per cent in the
case of Denmark.
Table 3
                                               Labour Productivity Growth
                                                        (annual percentage changes)
                      1961-73          1974-90            •91           '92           •93         '94  •95 '96  1991-96
     B                    4.3               2.0           2.1           2.3          -0.3         3.1  1.9  1.6   1.8
     DK                   3.2               1.4           2.9           1.2           2.2         4.5  1.0  1.8   2.2
     D*                   4.0               1.9           2.5           3.9           0.7         3.8  2.3 1.8    1.7
     GR                   8.1               1.4           5.6          -0.6         -1.5         -0.1  0.6 0.7    0.8
     E                    6.5               2.7           1.8            1.9          3.3         2.9  1.6  1.4   2.1
     F                    4.7               2.2           0.7           2.2         -0.3          2.6  1.9 1.8    1.5
     IRL                  4.3               3.8           2.9           4.5           3.3         3.6  4.1 2.9    3.6
     1                    5.5               2.0           0.4            1.8          2.2         3.8  3.0 2.6    2.3
     L                    3.0               1.3          -1.0           0.0           0.0         0.4  0.4 0.1      0
     NL                   3.9               1.7           0.9           0.4           0.5         2.5  1.9 0.9    1.2
   _A                     5.0               1.5           0.9           0.0           0.4         2.5  2.2 2.1    1.4
 " P                      6.6               3.4           1.3            1.7          0.8         1.3  2.5 2.5    2.8
     FIN                  4.5               2.6          -2.0           3.7           5.0         4.7  2.3 1.6    2.5
     S                    3.5               1.1           0.4           3.2           3.2         3.1  0.9 1.2    2.0
     UK                   2.9               1.6           1.1           1.6           3.7         3.4  1.8 1.7    2.2
     EG*                  4.4               2.0           1.5           2.3           1.5         3.2  2.1 1.8    2.1
Source: Commission Spring 1995 economic forecasts ' For the averages until 1991 Germany = West Germany
While employment trends and the pace of the reduction of unemployment correspond
closely to expectations, unemployment continues to be a major policy concern.
Current and projected trends suggest the need to ensure that the rate of economic
growth remains strong over many more years so as to make possible the recovery of
the ground lost during the recession and to set in train reductions in unemployment
below the level achieved at the peak of the previous cycle.
2.3 The Outlook for Inflation and Budgetary Convergence
Of all areas of convergence in the Community, most progress has taken place with
regard to inflation. Measured by the private consumption deflator, the Community
average rate of inflation declined to 3.2 per cent in 1994, from a peak of 5.6 per cent
 ---pagebreak---                                             -15
  in 1991, and is expected to remain at its 1994 level during this year and in 1996. The
 guidelines goal of the Community achieving a rate of inflation of between 2 and 3 per
 cent by 1996, as a first step towards price stability, will therefore not be fully met.
 In 1994, ten Member States had inflation at or below 3 per cent while the remaining
 had inflation in excess of 3 per cent. Changes in the country composition of these
 groups are projected to take place in 1995 and in 1996, with Ireland's and Austria's
 inflation falling below 3 per cent this year and easing to 2.7 per cent in 1996 in Ireland
 while stabilising at somewhat below 3 per cent in Austria; Sweden's and Finland's
 inflation accelerating to around 3.3 per cent next year; and the UK's staying flat at 3
 per cent this year and next.
                                                       Table 4
Price convergence appears secure in the group                             Inflation
                                                                       (percentage change,
of Member States which are seeing effective                       private consumption deflator)
exchange rate appreciations. Inflation in eight                   1993       1994       1995        1996
Member States (Belgium, Denmark, Germany,              B              2.6        2.4        1.9         2.4
                                                       DK             1.0        1.7        2.3         2.7
France, Ireland, Luxembourg, the Netherlands,
                                                       D              3.8        2.7        2.3         2.5
Austria) is expected to be below 3 per cent this       GR           13.6        10.9        9.6         8.9
year and next.                                         E              5.6        5.1        4.9        4.5
                                                       F              2.2        1.8        1.9         2.1
                                                       IRL            1.6        3.0        2.9        2.7
In Portugal and Finland, which have also seen          1              5.1        4.7        5.2        4.5
                                                       L              3.6        2.2        2.3        2.5
recently effective exchange appreciations,
                                                       NL             2.1        2.2        1.8        2.2
inflation prospects are less encouraging. In           A              3.5        3.3        2.8        2.9
                                                       P              7.9        5.1        4.5        4.5
Portugal, after a significant decline from the
                                                       FIN            3.9        1.6        1.7        3.3
level of 1993 and a smaller one from last year,        S              5.8        3.0        3.2        3.2
inflation is expected to stabilise at 4.5 per cent     UK             3.4        2.5        3.0        3.0
this year and next. In Finland, on the other           EC             4.0        3.2        3.2        3.2
hand, inflation is forecast to accelerate              Source: Commission services Spring. 1995 forecasts
markedly next year.
The inflation outlook remains uncertain in the Member States which have experienced
currency depreciations in recent months (Italy, Greece, Sweden, Spain and the UK).
While, it may be argued, the inflationary consequences of the depreciation would not
emerge until actual output rises above potential, uncertainty about the exact level of
the output gap, and the possibility that potential output may have declined during the
recession, would suggest that the risk for an acceleration of inflation dominates the
outlook.
 ---pagebreak---                                                                            16
 Greece, Spain, Italy and Portugal are recording and are expected to record, a less
 satisfying, albeit to different degrees, price convergence in the Community, and
 Sweden's inflation is not expected to post any deceleration over the forecast period.
 Inflation in the UK is projected to remain stable at 3 per cent in 1995 and 1996.
 However, there is considerable uncertainty about the inflation outlook in view of the
 fact that, in addition to recent exchange rate developments, the UK will have had four
years of strong economic growth by 1996 and the level of excess capacity will have
narrowed substantially. In the UK, but also in Finland and Sweden where monetary
policy pursues an inflation target, vigilance is an essential ingredient of the policy
stance.
Table 5
                                Nominal effective exchange rate changes
                                                       (relative to 19 industrial partners)
           Annual percentage changes                                                    Cumulative changes since 1991
                 1992           1993            1994           1995*                              1992             1993   1994  1995*
  B                   2.3            0.8              1.6            5.3        B                   2.3              3.1   4.8  10.3
  DK                  2.8            2.1              0.1            5.3        DK                  2.8              4.9   5.0  10.5
  D                   3.3            2.7              0.1            6.8        D                   3.3              6.1   6.3  13.4
  GR ^               -7.7           -9.6            -7.1            -3.3        GR                 -7.7           -16.6  -22.5 -25.0
  E                  -1.8         -13.1             -6.7            -2.1        E                  -1.8           -14.7  -20.4 -22.1
  F                   3.6             1.9             0.6            4.0        F                   3.6              5.5   6.1  10.4
  IRL                 2.8           -5.9              0.3           -0.4        IRL                 2.8             -3.3    -3   -3.5
  I                  -2.7         -16.9             -4.6          -14.3         I                  -2.7           -19.2  -22.9 -33.9
  NL                  2.4            3,0              0.4            5.2        NL                  2.4              5.5   6.0  11.4
  A                   2.6            2.4             0.0             4.9        A                   2.6              5.1   5.0  10.1
  P                   3.6           -7.6            -4.7             2.8        P                   3.6            -4.3   -8.7   -6.2
  FIN              -12.7          -14.8              7.5             9.3        FIN              -12.7            -25.7  -20.1 -12.6
  S                   1.3         -19.3             -1.2            -4.7        S                   1.3           -18.2  -19.1 -22.8
  UK                -3.6            -9.0             0.2            -4.0        UK                -3.6            -12.3  -12.1 -15.6
  EC                  2.2         -13.1             -2.2             1.4        EC                  2.2           -11.2  -13.2 -12.0
Source: Commission Services * on the assumption that exchange rates wiU remain constant at their April 1995 level
A notable feature of the inflation performance since 1993 is that, despite the seventy
of the recession, the average rate of inflation in the Community has remained at over 3
per cent.               Certainly a large number of countries are currently experiencing a
satisfactory price performance, but in about a third of the Member States, inflation still
gives cause for concern. In addition, no further progress in lowering inflation is
projected for this year and next.
 ---pagebreak---                                            -17
The apparent stickiness of inflation could reflect the influence of several, reinforcing,
factors. On the one hand, the amount of spare capacity created during the recession
may be smaller than currently estimated. This could be the result of measurement
errors or of an acceleration in the scrapping of obsolete capacities. On the other
hand, the credibility of announced monetary and, above all, fiscal policies may still be
too low and unable to affect significantly expectations about future inflation. In
addition, in some Member States currency depreciations have contributed to sustaining
inflation. Finally, it is possible that non-competitive conditions continue to prevail in
several Community countries despite the efforts to implement the internal market.
An implication of these considerations is that further reductions in inflation will require
measures which foster the credibility of policies, which improve the adaptability of
workers in a changing economic environment, and which also foster competition. In
particular, it is important to strengthen the credibility of the low inflation targets, so
that they can be incorporated into pay trends, and of the budgetary consolidation
programmes.
Budgetary convergence in the Community continues to be elusive. Table 6 shows
that, for the Community as a whole, the net borrowing of the general government,
which-péaked at 6.3 per cent of GDP in the recession year 1993, is currently estimated
to decline gradually to 4.5 per cent of GDP in 1995 and to 3.9 per cent by 1996.
Between 1994 and 1996, the largest reduction in the deficit is projected to take place
in Finland and Sweden (4.6 and 4.5 percentage points in terms of GDP, respectively),
followed by the UK (4 points), Denmark (2.8 points), and Greece (2.3 points). In
addition to these five countries, five more, Belgium, Spain, France, Italy and Portugal,
are expected to register deficit reductions ranging between one and two percentage
points of GDP, with Spain and France envisaged to make the greatest degree of
progress amongst this group. No significant change is expected in relation to the five
remaining Member States which, with the Netherlands and Austria, includes the three
countries which were below the reference value of 3 per cent of GDP in 1994, namely
Germany, Ireland and Luxembourg. On the basis of the present forecasts seven
Member States will have a general government deficit at or below the reference value
of 3 per cent of GDP by 1996.
The forecasts are based on the assumption of unchanged policies; however, not all
Member States have announced their concrete budgetary intentions for 1996. An
implication of this assumption for the projected fiscal adjustment is provided by the
 ---pagebreak---                                                                    18
  decomposition of the change in net borrowing into a cyclical and a discretionary part.
  Table 7 shows that over a three-year period of strong economic growth (1994-96)
  only small reductions in the structural deficits are expected to take place. The 1.6
  point in terms of GDP cumulative decline in Community net borrowing between 1994
  and 1996 reflects only 0.8 of one per cent of GDP discretionary deficit reduction.
1 Table 6
                                        General government deficit
                                                         (per cent of GDP)
                                   1993                         1994        1995  1996
          B                         6.6                           5.3         4.2   3.9
          DK                        4.5                           4.0         1.9   1.2
          D                         3.3                           2.5         2.1   2.4
          GR                       13.2                          12.5       11.3  10.2
          E                         7.5                           6.6         6.0   4.8
          F                         6.1                           6.0         4.9   3.9
          IRL                       2.4                           2.3         2.8   2.6
          1                         9.6                           9.0         7.9  -8.1
          L                        -2.1                          -2.3        -1.4  -1.5
          NL                        3.3                           3.1         3.2   2.5
          A                         4.1                           4.0         4.6   3.9
          P                         7.0                           5.8         5.6   4.7
          FIN                       7.8                           5.6         5.0   1.1
 •-*"    s                         13.4                         10.4          9.1   5.8
          UK                        7.8                           6.9         4.8   2.9
          EC                        6.3                           5.5         4.5   3.9
 Source: Commission Spring 1995 economic forecasts, (-) indicates a surplus
The persistence of fiscal disequilibrium has contributed significantly to the growth in
the general government indebtedness in the Community. At the beginning of the
present decade the ratio of general government debt to GDP in the Community was
 55.8 per cent; as can be seen in table 8, it grew to 66.2 per cent in 1993, and it is
currently expected to grow to 70.4 per cent of GDP by 1996. In 1996, four Member
 States (Germany, France, Luxembourg, and the UK) are projected to have a debt ratio
below the 60 per cent of GDP mark. Of the remaining Member States, the debt ratio
is projected to increase in six (Greece, Spain, Austria, Portugal, Finland, Sweden),
while in another five (Belgium, Denmark, Ireland, Italy, the Netherlands) it is
projected to decline. Despite the good growth prospects, these trends suggest that
substantially more ambitious fiscal plans than those currently contemplated are
necessary in order, in several cases, to stabilise the debt ratio and to place it
unambiguously on a downward path.
 ---pagebreak---                                                                   19
From a medium-term perspective, covering the period 1993-1996, in four Member
States (Belgium, Denmark, Ireland, the Netherlands) the debt ratio is projected to
decline, with the largest decline projected to take place in Ireland (16.2 percentage
points in terms of GDP), followed by Belgium and Denmark (4.9 points) and by the
Netherlands (4.3 points).
Table 7
     Changes in the actual and cyclically adjusted general government deficit
                                                        (per cent of GDP)
                     Changes in the actual deficit                      Changes in the cyclically-adjusted deficit
               1993          1994           1995          1996          1993           1994        1995          1996
  B             -0.1          -1.3           -1.1          -0.3          -2.4           -1.0        -0.8           0.1           B
  DK             1.6          -0.5           -2.1          -0.7           1.2            0.8        -1.3          -0.4           DK
  D              0.4          -0.8           -0.4           0.3          -1.4           -0.7        -0.3           0.3           D
  GR             0.9          -0.7           -1.2          -1.1           0.2           -0.8        -1.1          -0.9           GR
  E              3.3          -0.9           -0.6          -1.2           0.9           -1.3        -0.2          -0.7           E
  F              2.2          -0.1           -1.1          -1.0           0.5            0.1        -0.7          -0.5           F
  IRL            0.0          -0.1            0.5          -0.2          -0.8            0.5         1.2          -0.2           IRL
  1              0.1          -0.6           -1.1           0.2          -1.2           -0.4        -0.6           0.8           1
  L*            -1.3          -0.2            0.9          -0.1          -2.0           -0.4         1.1          -0.3           L
  NL            -0.6          -0.2            0.1          -0.7          -2.2           -0.2         0.7          -0.4           NL
  A              2.1          -0.1            0.6          -0.7           0.9            0.1         0.7          -0.6           A
  P              3.7          -1.2           -0.2          -0.9           2.1           -1.7         0.1          -0.4           P
  FIN            1.9          -2.2           -0.6          -3.9           0.1           -0.6         1.9          -2.4           FIN
  S              5.6          -3.0           -1.3          -3.3           2.4           -2.0         0.0          -1.9           S
  UK             1.7          -0.9           -2.1          -1.9           1.4           -0.1        -1.6          -1.6           UK
  EC            1.2          -0.8           -1.0          -0.6          -0.4           -0.5        -0.5          -0.3            EC
Source: Commission Spring 1995 economic forecasts, (-) indicates a reduction, (+) indicates an increase in the respective deficits
* Luxembourg has a surplus, thus a (-) indicates an increase, (+) a reduction in its surplus.
In France the debt ratio is projected to increase to 52.8 per cent of GDP by 1996,
while in the UK it is projected to stabilise at 51.5 per cent of GDP this year and next.
In Germany, the sharp rise in the debt ratio this year is a reflection of the take-over by
the general government of off-budget liabilities related to unification.
In Greece and Italy a rise in the debt ratio by 1 and 5 points, respectively, is projected
between the period 1993-1996. In Italy the debt ratio is expected to have peaked in
 1994 and relative to this mark a modest adjustment is projected for this year and next.
In Greece, where the debt ratio is also already very high, debt convergence will be
worsening this year and next.
 ---pagebreak---                                                                        20-
  Finally, worsening convergence on the basis of the debt criterion is also expected to
 take place in Spain and Portugal, where the debt ratio is projected to rise by 5.3 and by
 4.1 points, respectively, between 1993 and 1996 and to reach 65.2 and 70.7 per cent
 of GDP, respectively, in 1996.
 Table 8
                                           General government gross debt
                                                               (per cent of GDP)
                                        1993                         1994                 1995                        1996
              B                           137.2                       136.1                134.3                       132.3
              DK1)                         80.3                        75.6                  76.1                        75.4
             D                             48.2                        50.1                  58.2                        58.1
             GR                           115.2                       114.1                115.3                       116.2
             E                             59.9                        62.3                  64.6                        65.2
             F                             45.8                        48.5                  51.2                        52.8
             IRL                           97.0                        89.8                  84.6                        80.8
             1                           119.4                        125.4                124.9                       124.4
             L                               6.9                         7.2                  7.6                         7.8
             NL                            81.4                        78.1                  78.1                        77.1
             A                             62.8                        64.5                  66.2                       67.4
             P                             66.6                        69.2                  70.5                       70.7
             FIN                           57.1                        60.1                  64.4                       64.6
             S                             76.2                        79.1                  84.6                        85.7
             UK                            48.5                        50.1                  51.5                       51.5
             EC                            66.2                        68.1                  70.3                       70.4
Source. Commission Spring 1995 economic forecasts
1) Government deposits with the central bank, government holdings of non-governmental bonds and public enterprises related debt amounted
to 23.4% of GDP in 1994
2) The sharp increase in the German debt ratio in 1995 is mainly caused by the take-over by the government of off-budget unification-related
liabilities, the most important of which is the debt of the "Treuhandanstalt"
Worrying trends have also emerged in the debt ratio in the three new Member States.
While the large increases occurring over the period 1993-1996 reflect to a
considerable extent the impact of the recession, it is also clear that adjustment plans of
greater ambition are necessary in order to halt the rise, and to ultimately reverse
direction, in the path of the debt ratio. In May 1995 Austria presented a convergence
programme and Sweden is expected to do so in June.
It is possible that the persistence of fiscal imbalances in the Community countries, and
the failure to decisively advance fiscal consolidation in periods of strong economic
growth, reflect also the importance of budget institutions and procedures in the
determination of fiscal deficits as well as the nature of political discourse. In several
Community countries the rules according to which budgetary policy is approved and
 ---pagebreak---                                              21
  amendments to budget plans are admissible, play a key role in fiscal outcomes.        It is
  also possible that the form the commitment to fiscal consolidation takes may not be
 conducive to fiscal discipline; for example, it may be appropriate to combine improved
 budget procedures with numerical fiscal targets in order to enhance the probability that
 fiscal programmes are actually implemented as planned.
 The importance of these considerations has now become more pronounced, both
 because it is necessary to explore all avenues to strengthen fiscal discipline in the
 Member States and in order to increase the probability that fiscal convergence criteria
 are met by the largest possible group of countries prior to the move to stage III of
 EMU.
 The forecast for 1996 indicates that, on the basis of the adjustment measures which
 have been clearly specified so far among those Member States which have set fiscal
 targets in their convergence programmes, the fiscal objectives will not be uniformly
respected. Adjustment to achieve the deficit target of the convergence programme is
required, albeit of different magnitude, in the cases of Belgium, Germany, Greece,
 Spain, France, and Portugal; in all these cases, the projected deficit is larger than that
set in the convergence programme.         On the other hand, Denmark, Ireland, the
Netherlands, and the UK are expected to meet the deficit objectives by next year. Of
the new Member States, Austria has recently submitted a convergence programme and
 Sweden is expected to do so in June. In both cases more ambitious targets would be
required to ensure that fiscal convergence is secure.         Finally, in Finland where a
substantial fiscal consolidation effort is under way, policies should ensure that the
projected reduction of the deficit in 1996 is in fact realised.
3. The policy objectives and risks
The Broad Guidelines of December 1993 and July 1994 have laid out the broad thrust
of the policies needed to achieve economic convergence and to foster job creation.
The 1995 Broad Guidelines should confirm these objectives.                In addition, the
recommended policies should take account of the risks and concerns characterising the
current economic outlook.
The Community economy is still broadly expanding at the pace forecast a few months
ago, even if growth prospects have become somewhat less favourable.                    The
improvement in the consumer and business confidence indicators stalled at the
beginning of this year, even before the recent period of exchange rate instability.       In
 ---pagebreak---                                             -22
 addition, a new period of weakness of the US dollar vis-à-vis the European currencies
would create an atmosphere of greater uncertainty that might jeopardise the projected
 positive growth.     On the other hand, it should be stressed that, as already noted, the
 main factors affecting growth prospects - notably world trade and investment
profitability - remain good and that a rate of growth stronger than the one now
projected cannot be ruled out.         Economic policy must therefore act to prevent
developments that might jeopardise the continuation of the growth process.
The first risk to be considered is that of a renewed resurgence of inflation. As regards
the consequences of the recent currency movements for inflation two different groups
of countries may be identified: on the one hand the countries whose currencies
appreciated in effective terms and who are therefore likely to "import" price stability
and on the other hand the ones whose currencies devalued (especially Italy) and whose
inflation, all other things held equal, will tend to increase.  Overall, this risks making
inflation performances more divergent than prior to the recent exchange market
episodes.
Inflationary pressures may appear due to the fact that the economy's actual rate of
growth may approach to or exceed the potential rate of growth, especially in 1996,
which would cause capacity constraints leading to inflationary tensions. This risk will
be less apparent if business investment in the Community increases significantly over
the next few years. Furthermore, there may be a danger that wage settlements will be
higher than currently forecast and put upward pressure on prices and/or lead to
reduced investment profitability.       This danger could also arise from a desire to
compensate, too rapidly and at the expense of growth and employment, for the low
increases or, in some cases, actual declines in real wages during the 1993-94 period of
sluggish economic growth and of rising unemployment.           Some countries are already
expected to record inappropriately high wage increases in 1995-96.
The second, and more worrying, concern is that budgetary positions in several
Member States remain unsatisfactory.         Increased consolidation efforts are therefore
necessary and the elimination of structural budgetary deficits must be tackled now,
during the recovery, when the Member States can also take advantage of the
functioning of automatic stabilisers.     In addition, with the still high levels of public
debt, several Member States continue to be very vulnerable to interest rate shocks that
are possibly associated with uncertainties about fiscal, exchange rate and price
 ---pagebreak---                                               23
 developments and could in those countries effectively eliminate the budgetary gains
 likely to occur during the recovery.
 Finally, as already put forward in the Commission's 1995 Annual Economic Report,
 the favourable economic conditions created by the recovery may give rise to
 "adjustment neglect". This could take the form of a less determined commitment by
 the public authorities to tackle the structural causes of the high budget deficits as the
 recovery makes a positive cyclical contribution to tax receipts and to the budget
 balance. Furthermore, the efforts aimed at the removal of labour market rigidities
 may seem less urgent in the short term when employment is starting to rise again and
 unemployment is falling. Such a relaxation in consolidation and reform efforts would
 seriously put at risk the successful transformation of the recovery into a sustained and
job-creating growth process, would contribute to an unbalanced policy mix and would
increase the risk of a new recession.
Strengthening convergence and sustaining economic growth will require that the
opportunities emerging in the present recovery are wisely taken advantage of. It is
clear that an important contribution to inflation convergence will be made by wage
developments.
If nominal wage increases begin to accelerate with the consolidation of economic
growth, especially before unemployment declines substantially, also giving rise to an
acceleration of inflation, the Member States may have to undergo another deflationary
cycle; at current levels of unemployment, such an episode they can ill afford.
Moderate wage growth will also contribute to fostering investment. The recent
recovery of private investment is a reflection of the propitious economic prospects and
of a wage growth inferior to labour productivity increases. The strength of investment
expenditure, if sustained, will contribute to raising potential output and to fostering job
creation.
A wise use of the recovery will require that the Member States, first and foremost,
consolidate their public finances.         Sustainable fiscal positions are a necessary
condition to support economic growth and durable employment creation. It is evident
that the policies which are required to sustain long-term economic growth, foster job
creation and reduce unemployment, and strengthen convergence are mutually
consistent.
 ---pagebreak---                                             -24
 Recent developments in the foreign exchanges indicate how important stability of
 exchange rates within the Community is for furthering economic integration and
 completing the single market.          Exchange rate changes can lead to resource
misallocation when investment decisions, made on the expectation of depreciation-
induced competitiveness gains, prove ultimately obsolete when competitiveness is
eroded either as a result of nominal exchange appreciation or because of higher
inflation. Furthermore, the possibility of exchange depreciation undermines wage and
price discipline since losses in competitiveness can be, temporarily at least, recovered
through exchange devaluations; as a result, reductions in inflation and price stability
become difficult to achieve.     Finally, as devaluations offer a prospect of temporarily
improving competitiveness, they raise the possibility of practising beggar-thy-neighbor
policies, which are not compatible with the completion of the internal market.
4. The Policies
The principal task of economic policy at this stage of the cycle is to ensure that the on-
going recovery translates into non-inflationary, employment-creating, growth. In view
of the risks impinging upon the economic outlook, and the progress yet to be
accomplished in convergence, macroeconomic and structural policies should be
directed towards securing price stability, fostering fiscal           consolidation, and
strengthening the dynamism and competitiveness of the Community.
4.1 Macroeconomic policies
The main task of macro-economic policies will be to maintain a stable framework
which will prevent the appearance of the tensions which have contributed to the
recession of 1992-93 and which will foster a continued steady increase in potential
output.   As the previous sections have underlined, key developments give cause for
concern on both counts.        At the same time, with the consolidation of economic
growth and the approach to stage III of EMU, the challenges confronting the Member
States have become more pronounced, while the diverging trends which have emerged
as a result of exchange rate changes have also raised important questions about the
appropriate economic policies.
Securing and furthering the progress made on inflation, and sustaining economic
growth is a crucial challenge for monetary and exchange rate policy in the current
cycle. A necessary contribution to the task of defending price stability in this context
will have to be provided by fiscal consolidation policies. While in virtually all Member
 ---pagebreak---                                             25
 States such policies are required, these are especially urgent in those Member States
 where fiscal deficits and rising debt burdens, and the associated inflation and exchange
 market developments, place the greatest burdens on the conduct of monetary policy
 and where the risks of a substantial acceleration of inflation are greatest.        Equally
 necessary will be policies encouraging non-inflationary wage developments and, over a
 longer-term horizon, increased competition in product markets.
 Stability of exchange rates within the Community is essential for the proper
 functioning of the internal market.      In Member States where fiscal positions are
diverging and which have experienced exchange depreciations (Greece, Spain, Italy,
and Sweden) it is essential that a bold and credible efforts are undertaken to foster
fiscal consolidation.     More generally, credible fiscal consolidation measures will
contribute to reducing exchange rate instability.       This will contribute not only to
resolving concerns about competitive disruptions of the internal market, but it will also
create the conditions for reductions in interest rates, and it will ultimately facilitate the
implementation of the fiscal adjustment programme.
Budgetary policy directed towards consolidation will play a crucial role in reducing
the risks of an acceleration of inflation, of exchange rate instability, and of further
worsening fiscal imbalances.
Fiscal consolidation is necessary not only in order to foster stable inflationary
expectations but also to sustain the progress made in reducing inflation.             This is
particularly important in Member States with persistent fiscal imbalances and persistent
inflation (Greece, Italy, Spain). Failure to make decisive progress in redressing the
fiscal imbalances, especially in an environment of strong economic growth, will
increase uncertainty about the intentions of the fiscal authority. This uncertainty has
been contributing to raising real interest rates and to, in turn, making fiscal
consolidation more difficult to achieve in several Member States.
Incomplete credibility of the fiscal consolidation plans may also be reflected in
exchange rate instability, higher real interest rates and increases in interest rate
differentials vis-à-vis other countries.   Domestic and international investors holding
government debt require an increase in the rate of return, or a strong exchange rate, to
compensate for the increased risk, a combination of circumstances which is inimical to
both economic growth and to fiscal adjustment.             The instability characterising
 ---pagebreak---                                             26-
exchange rates in Greece, Spain, Italy and Sweden is partly a reflection of the
continuing lack of resolution of the fiscal difficulties.
Over the medium term, fiscal consolidation will contribute to raising the level of
national saving and will, through this channel, contribute to increasing the level of
potential output.
Respecting the fiscal convergence criteria remains an area where sustained efforts will
have to be expended. According to the Spring 1995 forecast, seven Member States
are expected to have deficits below the 3 per cent of GDP mark in 1996 (Denmark,
Germany, Ireland, the Netherlands, Finland, and the UK; Luxembourg is expected to
have a surplus). In these Member States the efforts to consolidate the public finances
must be pursued with determination. In Belgium, France, and Austria, attaining the
reference value for the deficit in 1996 would be within reach, provided that the
adjustment effort gains renewed momentum. While no forecasts exist for the outer
years, it is clear that for the remaining Member States the objective to respect the
fiscal convergence criteria by 1999 must, even more than today, become a principal
policy objective.
The policy mix required in the individual Member States reflects the uneven
distribution of policy risks.  The Member States whose currencies have experienced
depreciations over the recent months will likely see an increase in the inflationary
pressures while the interest rate implications of the exchange rate instability will
undoubtedly make budgetary consolidation more difficult.       In general, these countries
had already unsatisfactory starting positions.      The depreciations will lead to higher
import costs and, through the effects on export growth and economic activity in
general, will contribute to narrowing the output gap.
In these Member States the policy mix must be resolutely oriented towards containing
the inflation risks and towards stepping up the efforts to consolidate budgetary
positions.   In these countries it will be particularly important to prevent, through the
instruments available in each country, that the increase in imports costs may lead to a
price and wage inflation spiral.
In the Member States whose currencies have experienced appreciations, inflationary
risks will be generally contained.   However, given that the success of these countries
in containing inflation owes much to the external constraint, it will be important to
 ---pagebreak---                                              27
make sure that pay trends do not lead to reductions in investment profitability. There
are indications that this may be happening in Germany.
Investment profitability must still increase substantially in most countries if investment
is to expand to the extent necessary to ensure sustained growth in the medium term.
In some cases, the stability of exchange rates could only be maintained at the cost of
increases in the interest rate differentials with Germany. This suggests that markets
still perceive some risks in the budgetary positions of these countries. Determined
corrective action could bring substantial benefits through the reduction, or the total
elimination, of these differentials.
4.2.       Policies for greater competitiveness
Structural measures aimed at promoting the competitiveness, dynamism and overall
productivity of the Member States' economies are essential to the achievement of the
Community's twin policy objectives of strong, employment-creating growth and
enhanced nominal convergence. Such measures are particularly important at the
present time to strengthen economic growth, but also given the renewed anxiety about
inflation especially in those Member States which have witnessed substantial
depreciations of their currencies.
The 1993 White Paper advocated reforms directed towards increasing the endogenous
growth forces of the Community's economy as the means to securing the basis for its
long-term prosperity. A variety of proposals aimed at making the Community
economies more dynamic were subsequently incorporated in the 1993 and 1994
Guidelines exercises. Such proposals, which were to be carried out at both the
Community and individual Member State levels, were essential to the quest to promote
the productivity and competitiveness necessary to underpin stronger growth and
employment creation.
Efforts at enhancing productivity and employment growth can only be successful if
carried out in the context of a flexibly functioning economy which is capable of
exploiting the opportunities generated by a rapidly changing technological and social
environment. In this regard efforts are being undertaken to:
      exploit the opportunities associated with the internal market, an open world
      trading system and to safeguard the Community's competitiveness;
      accelerate the realisation of the Trans-European networks;
 ---pagebreak---                                                            28
       push through rapidly the Action Plan concerning the development of the
       information society;
       exploit the growth and employment potential offered by SMEs;
       and actively promote Community initiatives in Research and Development
       (R & D) and call for a greater degree of co-ordination of Member States' R & D
       policies.
 In relation to the internal market, strong efforts have been undertaken to transpose the
relevant directives into Member States' legislation. However, transposition has been
slow in the key sectors of insurance, company law, intellectual and industrial property,
public procurement, new technologies and services,financialservices, and freedom of
movement.
The Essen European Council stressed the intention of the Council to pay particular
attention in the future to the competitiveness of the European economy. In this
connection the Commission has established a high-level group to deal with
competitiveness and to submit appropriate reports on these matters2. This the
Commission duly followed through on with the formation of the Competitiveness
Advisory Group at the beginning of 1995. The high-level Legislative Administrative
Simplification Group ("Deregulation Group") has begun its work. It has stressed the
need to monitor Community and national law for over-regulation and it requested the
"Deregulation Group" to submit a report by June 1995.
Initiatives in the area of the Trans-European networks in.the transport, energy and
environmental spheres have also been receiving a lot of attention. The Group of
Personal Representatives of Heads of State or Government (the Christophersen group)
submitted their report to the December 1994 European Council. It confirmed that the
eleven priority projects decided upon at the Corfu European Council in June 1994 and
the three new projects concerning the Nordic Member States and Ireland had already
been started or were in a position to commence shortly.
In relation to the establishment of the information society, this has been the object of
an Action Plan adopted by the Commission in July 1994, which encompassed all
      See also "An Industrial Competitiveness Policy for the European Union", Communication from the Commission to
     the Council, COM(94) 319 final, September 14, 1994 and two companion documents: "Report on the
      Implementation of the Council Resolutions and Conclusions on Industrial Policy", SEC(95) 437 final, March 22,
      1995 and "Action Programme and Timetable for Implementation of the Action Announced in the Communication on
     an Industrial Competitiveness Policy for the European Union", COM(95) 87 final, March 30,1995.
 ---pagebreak---                                              29
 aspects addressed in the report of the Bangemann group.           In its November 1994
 meeting this Council discussed the Commission's liberalisation timetable.            The
 December European Council emphasised that the Commission's Action Plan and the
 conclusions of the Ministers for Industry and Telecommunications had set the agenda
 for the development of an information society. With regard to developments in 1995,
 as a follow-up to the G-7 ministerial meeting of February 1995, the Group of
 Commissioners on the Information Society was established.
Raising the productivity of the Community's economy using these initiatives has the
potential to contribute to strengthening employment creation.       There is no necessary
contradiction between productivity growth and employment creation.
However three conditions must be met to ensure that the relative price mechanism
makes possible a redistribution of productivity gains between sectors, enabling sectors
with low productivity growth to create new jobs and to maintain similar wages for
similar work:
      relative prices must continue to change without artificial rigidities, and the
      increased competition and flexibility on all markets should help this;
      sectoral changes need to be socially acceptable, with market mechanisms being
      complemented by forward looking active policies and social dialogue;
      the overall macroeconomic rate of growth must be strong enough to allow for a
      positive balance between job creation and job destruction across sectors.
4.3 Employment and labour market policies
The economic recovery, if it progresses as predicted, could absorb by 1997 the cyclical
component of unemployment.           This component is estimated at about 3 million
unemployed or only 2 percentage points of the present eleven per cent rate of
unemployment in the Community. To absorb 3 million unemployed is indeed a first
important step and an essential one towards the achievement of the White Paper
objectives. Nevertheless-, in order to reduce, in a significant and progressive manner,
the remaining 9 per cent of unemployment, it is necessary not only to achieve a strong
and sustainable medium-term growth process, brought about by investment in order to
create the necessary working posts, but it is also necessary to implement more active
and more efficient labour market policies which may need to bring about significant
changes in the areas of educational systems, labour law, work contracts, wage
settlement arrangements and the social security systems.
 ---pagebreak---                                              30-
To this end, the Essen European Council, identified the following five priorities:
 1) Improving the employment opportunities for the labour force by promoting
      investment jn vocational training,
2)    Increasing the employment intesiveness of growth,
3) Reducing non-wage labour costs,
4)    Improving the effectiveness of labour market policies,
5)    Improving measures to help groups which are particularly hard hit by
      unemployment.
Active and more efficient labour market policies contribute to the goal of increasing
employment through three main channels:
i)    reinforce the growth potential itself by an improvement in the quality of human
      capital;
ii)   make growth more employment-creating without, however, negatively affecting
      the growth process itself; and finally
iii) facilitate, to the extent that the new jobs will become available, the absorption of
      those unemployed who are still easily employable as well as to help the long-term
    -unemployed and particular disadvantaged groups who cannot easily occupy the
      available working posts and who risk being affected by social exclusion.
Labour market policies in the above three areas constitute not only an indispensable
complement to macroeconomic policies and to structural policies in the area of
competitiveness but they also contribute to maintaining and reinforcing cohesion and
social consensus inside the Union in the long and difficult process of absorbing
unemployment.
i)    As regards the improvement of the quality of human capital, it is a matter of
      strengthening the systems of professional training, in particular that of the young,
      and to promote continuous training of the workforce in order to prepare and
      adapt the latter to social and technological change in a world of free trade and in a
      process of strong structural adjustment. These policies will improve the flexibility
      of the labourforce, individual opportunities, and the comparative advantage of the
      European economy in comparison with other geographical regions of the world
      [Essen priority n° 1J.
 ---pagebreak---                                               31
     These policies will increase the growth potential of the European economy and,
     like the policies for competitiveness, will generate their full benefit from the point
     of view of both their costs and their creation of employment, if simultaneously the
     effective rate of economic growth can develop without encountering the obstacles
     of inflation and of capacity constraints.
ii)  The contribution of the medium-term growth process to the reduction of
     unemployment is indispensable, but it must be complemented by a large effort,
     targeted and concrete, to increase the employment content of growth [Essen
     priority n° 2].    Actions in three areas, which must not hold back the growth
     process itself, are necessary in this regard:
     •    the examination, by the social partners, of whether a reorganisation, a
          reduction and/or new patterns of working time could lead to increases in the
          employment content of growth without reducing the competitiveness of firms.
          In particular, the de-coupling of the working time of individuals from that of
          the enterprise may open promising opportunities: the existing capital stock -
          equipment, premises, etc. - could be better exploited with significant
          productivity gains which may be used to encourage different working patterns
          among the employees. Development of part-time and other atypical forms of
          employment may also help.          Progress in this area might also require a
          revision of existing regulations [Essen priority n° 2].
     •    increasing the incentives to- employment by reducing non-wage labour costs,
          especially at the lower end of the wage and productivity scale, without
          harming other parts of the labour market; from a macroeconomic point of
          view this must be achieved in ways which do not compromise the reduction
          of budgetary deficits nor the competitiveness of enterprises.           Reforms,
          including where appropriate alternative financing sources for social protection
          systems, are therefore required [Essen priority n° 3J;
     •    easing the development of new employment opportunities and activities, e.g.
          those linked to the service society and environmental sustainability [Essen
          priority n° 2J.
iii) The task of facilitating the absorption without tensions of the unemployed and the
     new entrants to the labour market, when the economy makes available the new
     working posts, concerns firstly the efficiency of labour and manpower offices and
     the promotion of flexibility in the areas of professional and geographical mobility
 ---pagebreak---                                             32-
      [Essen priority n°4].     An important part of the non-cyclical component of
      unemployment could be progressively integrated into working life by reasonable
      efforts in these areas provided that the recovery can be transformed into the
      medium-term growth and employment creation process described by the White
      Paper and aimed at by the present economic policy guidelines.
      Nevertheless, to significantly reduce the hard core of structural unemployment -
     which could represent about half of the 9 per cent of non-cyclical unemployment -
     different and much greater efforts will be necessary. It is a matter not only of
     strengthening the link between the granting of social allowances and the
     availability of the unemployed to accept work, but especially of reinforcing active
     labour market policies aimed at improving the "employability" of long-term
     unemployed workers by giving access to specific training and of concentrating the
     latter on particularly disadvantaged groups i.e. women, young people and older
     citizens who risk to being affected by social exclusion [Essenpriority n°5]. .
     These relatively expensive policies also only achieve their full benefit if labour,
     which in this way is rendered employable, has the opportunity in practice to find a
    job. Nevertheless, these policies must not only be evaluated in terms of their
     immediate economic benefit; taking into account the inevitable and necessary time
     to significantly reduce the hard core of structural unemployment, these policies
     must also act to safeguard the existing human capital of the unemployed in order
     to prevent social exclusion and to maintain social cohesion.
In order to better organise the implementation of the priorities identified by the Essen
European Council, the Commission, on 8 March 1995, presented a Communication to
the Council in which it suggests the implementation, in the context of Article 103 of
the Treaty, of a surveillance procedure with regard to employment trends and policies.
                                            •
                                        •        •
                                            •
Bearing these considerations in mind, the Commission is proposing the present broad
economic policy guidelines for the Community and the Member States which confirm
the medium-term framework of those of June 1994, and assert the policy priority of
reducing unemployment.
 ---pagebreak---                                     - 33-                      ISSN 1024-4492
                                                     KOM(95) 228 lopullinen
                                                 ASIAKIRJAT
FI                                                                         10
                                         Luettelonumero : CB-CO-95-270-FI-C
                                                         ISBN 92-77-89590-X
Euroopan yhteisöjen virallisten julkaisujen toimisto
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