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Brussels, 17 January 2013

(OR. fr)

EUCO 13/13



Speech by Herman Van Rompuy,
President of the European Council,
at the European Economic and Social Committee

It is always a great pleasure, indeed an honour, to come to the Economic and Social Committee, and I am delighted to have this opportunity to talk with you at the beginning of the new year.

The Economic and Social Committee brings together all of Europe's social partners, but also a large number of civil-society organisations representing all walks of life – whose active civic engagement I wish to acknowledge. As such, the Committee is particularly well placed to reflect and reconcile a rich diversity of approaches and perspectives.

That is vital if we are to address the challenges ahead and pave the way to our Union's future – particularly at the present moment, when all efforts are focussed on economic recovery.

2013 has started on a hopeful note for the euro area. All the signs are that the worst is now well and truly behind us. We are in the process of overcoming what has been nothing short of an existential crisis for the euro area. A crisis that made people fear for their savings, then fuelled fundamental doubts about the survival of our currency itself. What could be more damaging to confidence, in households and businesses alike?

For the first time in months, financial stability has returned. For the first time in months, the atmosphere is calmer and new horizons are opening up.

Without wanting to paint an overly idyllic picture – as you are well aware, things are far from rosy – I would like to come back to one important point: the stabilisation of the euro area, which has been our priority for these last three years. There is a simple reason for that: without stability, there could be no growth, no job creation, and our social model itself would be in danger.

From that perspective, 2012 will be seen as a turning-point. A vast amount of work has been done over the last 12 months, in the Member States, in the euro area, and in the Union. Only once the dust has settled will we fully appreciate how far we have come.

Two guiding principles have informed all the decisions we have taken: greater responsibility and greater solidarity. The two are inseparable.

Greater responsibility for national governments, particularly in the conclusion of the Treaty on Stability, Coordination and Governance, which entered into force just under two weeks ago, and in the courageous and voluntary implementation of structural reforms that are as tough as they are necessary.

And greater solidarity, particularly with the establishment of a permanent rescue fund, the European Stability Mechanism, to protect our economies from large-scale economic or financial shocks.

Together with a stronger Economic and Monetary Union, thanks not least to progress on economic coordination and banking union, these steps have made a substantial contribution to restoring confidence in the resilience and integrity of the euro area.

We have moved forward under pressure from the financial markets, but even without that pressure, all of these reforms would have been inevitable one way or another, with or without the euro. The structural reforms would have become necessary sooner or later, as would the strengthening of our monetary union. That's because markets may not always be rational, but there are objective factors that we cannot ignore: the issues of debt sustainability, competitiveness, demographic change, and so forth.

It simply is not possible to accumulate a double-digit deficit in a country's budget or current account and not suffer any consequences – that amounts to putting people's future in hock! Had we reacted in good time, ten years ago, we could have avoided a great deal of difficulty and suffering.

I am aware of the colossal strain of adjustment. The efforts are already beginning to show results. But I'm not going to start spouting the statistics, however encouraging they may be, that provide monthly confirmation that the situation is improving (and I hardly dare use that word). In several countries, even those under pressure from the markets – from Greece to Portugal, from Ireland to Italy to Spain – budgetary positions are looking healthier, the burden of debt is decreasing in many cases, and exports are picking up. On the financial side, spreads are coming down, financial fragmentation within the euro area is easing, and access to credit is gradually improving.

This return to stability is essential to the recovery, but the fact is that it will be some time before the real impact on the economy and employment is felt. There is always a delay between the return of stability and the resumption of growth. And that is followed by a second delay between the resumption of economic growth and improvements in employment.

Ladies and gentlemen, we must focus all our efforts on shortening those delays. In other words, speeding up the recovery and speeding up the rebound in employment. We must examine all ideas and proposals to that end – and I would be happy to receive your Committee's input on this.

The essential point is that we must persevere in our efforts. In a globalised world, we cannot allow ourselves to ease back. The consequences would be grave. That goes for Europe as a whole, but also for each and every country, with no exceptions. Our competitiveness is under constant pressure. And not just from emerging powers such as China. The United States, for example, is witnessing a spectacular reduction in energy costs thanks to new discoveries, and is effectively on the verge of reindustrialisation. That is why we must continue to work untiringly on the core drivers of our competitiveness, using the tools we have put in place over the last few years. But we must ensure that the load is shared as fairly and equitably as possible, to preserve social cohesion.

While reforms are under way in all Member States and we are all working together to rebuild growth and employment, the European Union and particularly the euro area are also involved – and have been for some months now – in another large-scale project that is closely linked to those efforts. It is a longer-term project, but its impact is already being felt. I am, of course, talking about strengthening our Economic and Monetary Union.

The crisis has reminded us in the clearest possible terms that having a genuine economic union involves far more than merely sharing the same currency. To resolve the problems behind the current difficulties, we therefore need closer alignment of our financial frameworks and our economic and fiscal policies.

This project, launched in June by my three successive reports to the European Council, is making determined progress. The plans for banking union, which will enable us to assess the risks of bank failures better and reduce the cost to Europe's taxpayers, have already reached an advanced stage. In December, at the last European Council meeting, we also agreed to explore ways of coordinating our economic and fiscal policies even more closely.

When considering these matters, we must never lose sight of the social dimension of our economic policies. We must remember that the Treaty on the Functioning of the European Union (specifically, Article 9) sets out clear objectives for us, namely: "the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health." Financial stability, growth and employment are the necessary means to reach these ends. Stability is not an end in itself, but a means to an end. As such, all of our work is intrinsically social.

Here too we can observe a frequent paradox of European integration, namely that while we may set ourselves common targets, on the whole the responsibilities for meeting them are national ones, and the coordination mechanisms for achieving them remain insufficient.

This has recently been illustrated at an economic and fiscal level. In response, we have significantly enhanced economic governance over the past two years. We can undoubtedly draw inspiration from the progress made to continue to enhance governance in social matters. The "social dimension" is far from being a new concept. It is already an important component of many of our policies and instruments. The EU has already set itself clear targets in the framework of the Europe 2020 Strategy, and thanks to the "European Semester" we are in a position to better monitor their implementation (here I am thinking in particular about the monitoring of the EU's priority targets and country-specific recommendations). We can go further, however.

In this context I would like to draw attention to the fact that in December the European Council asked me to come up with specific proposals regarding the social dimension of our Economic and Monetary Union.

Without claiming to be exhaustive, certain dimensions of this social policy spring to mind straightaway:

Firstly, employment. The Commission recently submitted its quarterly analysis of employment and the social situation, which shows that the EU's predicament is serious. There are almost 27 million people out of work in the EU, 10 million more than in 2008. What is more, the divergence between unemployment rates in Member States has never been so marked. On the one hand we have Austria, with an unemployment rate of 4.5 %, and on the other Spain, where it is more than 26 %. This is an indicator of the quality of past policies at national level. There has been an increase in long-term unemployment, which has particularly damaging social consequences, and an explosion in youth unemployment, which affects nearly 24 % of young people and is putting a whole generation at risk. As a result, a growing number of people are simply leaving the labour market, abandoning any training and running the risk of marginalisation (this figure may be as high as 13 % for 15‑24 year‑olds). This is a human tragedy and a social emergency.

We must reverse this trend quickly and sustainably by marshalling all our resources. To this end, at last June's European Council we committed to a Compact for Growth and Jobs, which includes in particular a plan for a Youth Guarantee ensuring that every young person is in employment, vocational training or education at all times. Nevertheless, we must take further steps, by developing effective flexicurity systems that provide career security and ensure lifelong training and retraining. We must also promote mobility, enabling workers to go right where the jobs are, in order to minimise problems with matching workers up to jobs and to fill posts that remain vacant and are thus lost despite being within our reach.

To achieve this, we urgently need to improve the coordination of our employment policies, to ensure mutual recognition of qualifications and to make sure our fiscal adjustments are implemented as fairly as possible.

The second issue is life-long education and training, which play a key part in tackling unemployment and are also the basic source of our economic progress, as well as an important factor in social mobility, which we are particularly keen to promote. We set ourselves clear targets in the Europe 2020 Strategy:

to reduce school drop-out rates to below 10 %;

and to boost the quality and accessibility of higher education ensuring that 40 % of an age bracket completes it.

We must not lose sight of these targets, and must make better use of our resources in order to achieve them. The EU may recommend, encourage, guide and coordinate, but the actual responsibility lies primarily with Member States.

Regarding the vast issue of health, something that affects all EU citizens, I continue to be struck by the differences between the countries of Europe. For example, a basic health indicator such as child mortality varies by a factor of 1 to 4 in the European Union. Even more worrying, these gaps are no longer shrinking, but have been widening since 2008 owing to the effects of the crisis. Beyond EU legislation in the area of public health and consumer protection, it is imperative that we reflect together on how to address these challenges.

Another dimension is our ageing population. We are all aware of the demographic issues at stake and the burden that an ageing Europe is placing on our social security systems. Of course we need to safeguard the funding and viability of our pension systems, but we also need to guarantee European workers a decent retirement. This is a key component of the generation pact. I am convinced that there is scope for us to discuss these matters further and to set reference points that will help us progress towards systems which are fair both socially and between generations.

The final aspect of the Economic and Monetary Union's social dimension is exclusion and poverty, which our treaties require us to eradicate. Too many Europeans are at risk of poverty or social exclusion. This is unacceptable. Our economic policy as a whole and our social policy in particular can no longer ignore this state of affairs. Member States set themselves national targets in the framework of the Europe 2020 Strategy; in many cases these are likely to fail unless corrective action is taken promptly.

For each of these areas, the primary responsibility lies with national governments, but they cannot act on their own. We urgently need to reflect on how to tackle these challenges together. We need to think not only about fundamentally reforming economic governance, but also about developing our "social governance". To do this, we need to agree not only on targets, but also, in certain cases, on how to implement them. At EU level we can use existing tools as a basis, invent others and maybe have contractual arrangements for certain reforms - this is a new idea I am working on that I will report on at the June European Council - to meet both competitiveness and social targets.

I believe this is the cornerstone of the mandate given to me at the December European Council, to be fulfilled in close collaboration with the President of the Commission. In preparation for the June 2013 European Council we must hold a debate on the social dimension of the Economic and Monetary Union and I hope most fervently that the European Economic and Social Committee will contribute by giving its opinion on these issues. A social Europe also means a Europe of social dialogue, within the Union and within the Member States. The method used also forms part of the social dimension of the Economic and Monetary Union.

Your expertise on these issues is precious. I am counting on you.

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