Thanks to the debacle over the Stability and Growth Pact budgetary rules last November and the failure to agree a European Constitution in December, 2003 was not a good year for the grand European project. The negative political fall-out from these two events should force a rethink of some key principles. Recent developments show, yet again, little regard for the smaller states: while evidently possessing less economic weight, their opinions do count and their citizens deserve equal consideration. This must be recognised in an enlarged Union more heavily weighted towards smaller countries.
Above all, there needs to be a sharper focus on essential objectives and priorities, particularly how the European Union can become the world’s ‘most competitive economy’ by 2010 – the so-called Lisbon agenda. UNICE, the EU’s employers’ organization, had stated in its 2003 Autumn Report that Europe has “still failed to be its own engine for growth and again looks to the USA to provide the stimulus”. The productivity growth gap between the US and EU is estimated at 9% (measured on persons employed) or 4.5% (based on hours worked).
As far as pay negotiations across Europe are concerned, there seems to be a growing tendency to set moderate basic rises – and to protect the lowest paid by setting guaranteed minimum increases – while allowing greater scope for supplements to be negotiated locally as circumstances permit. In addition, many agreements now contain ‘let out’ clauses for companies in financial difficulties. In some cases bargaining systems themselves are undergoing reform as, for example, in Germany and Portugal, so as to allow greater flexibility in implementing agreements at local level.
In the social area, the Wim Kok Employment Task Force report on concrete measures to modernise labour markets has had widespread support. The social partners have plenty of scope to act on their own initiative and must not simply wait until government machines roll into action.
The most recent “Eurobarometer” survey reveals declining public confidence in economic prospects in 2004, and in national governments and parliaments. People are rejecting rhetoric and want to see better and bolder economic management leading to tangible results such as more jobs and rising living standards. They regard many other issues as peripheral.
For all the above reasons, the new Irish Presidency of the European Union is welcome. Ireland is placing the economy – and the need to raise Europe’s competitiveness – at the top of the agenda during its term of office ending mid-2004. This is a critical moment, particularly since the tentative European recovery could be stopped in its tracks by the appreciating value of the Euro. Ireland will also try not to get too much involved with enlargement issues, although another attempt at forging consensus on the European Constitution cannot be ruled out.
EU news in detail
The EU Economic and Financial Affairs Council adopted the pension funds Directive. Pensions achieved greater prominence on many bargaining agendas. Every EU country has taken recent measures (or plans to do so) aimed at reforming their state pensions, introducing supplementary pensions and supporting financial sustainability, both of state and company pensions. At national level, reform has met with stiff opposition in France, Italy and Austria, but equally consultation in the Nordic countries and Germany has allowed the relatively smooth implementation of changes.
In November last year the European Commission presented a new draft Directive on cross-border mergers, which includes rules on employee participation in company decision-making bodies. In general, the measure aims to facilitate mergers of private and public companies – especially smaller firms not wishing to incorporate as a ‘European Company’ by approximating the cross-border procedures to those used for ‘domestic’ mergers between firms governed by laws of the same member state. This is the first draft Directive to be presented under the Commission’s action plan to simplify company law.
Following a report on the implementation of current EU legislation on working time, the European Commission has announced that it is to undertake a consultation exercise on how the 1993 Directive should be revised. The consultation document will focus on the issue of the so-called ‘opt-out’, under which individuals may agree to work longer than 48 hours a week, and on the definition and calculation of working time. The Commission’s report found that not all the guarantees laid down in the Directive are being effectively met. For example, workers are frequently asked to sign an opt-out agreement at the same time as signing their employment contract.
At a recent meeting the Commission decided to challenge in the European Court of Justice the decision of the Council of Finance Ministers not to sanction France and Germany for running a budget deficit (above 3% of GDP for a third consecutive year) in breach of the Growth and Stability Pact contained in the European Treaty. The purpose of a court ruling would be to establish that Treaty rules cannot be ignored or changed.
EAPM update
As previously reported, Filippo Abramo of Italy succeeded Switzerland’s Christoph Schaub as EAPM President at the end of June 2003. The Secretariat of the EAPM passed at the same time from CIPD to DGFP in Germany with Hans Böhm as Secretary General. In 2007 the Secretariat will pass to ANDCP in France.
An eighth rotational group has been set up with Malta and Estonia as members. New group members are expected in the near future.
The 22nd EAPM Congress will take place in Dublin, Ireland, from 11-13 May 2005, the 23rd congress will be held in Vienna in 2007 and the 24th in the Netherlands possibly jointly with Belgium.
