A3-0333/94

Resolution on the Commission's Annual Economic Report for 1994

The European Parliament,

-having regard to the Commission's Annual Economic Report for 1994 (COM(94)0090 - C3-0232/94),

-having regard to the Commission report on Progress in economic and monetary convergence (SEC(93)1755),

-having regard to the statement by the Commission before the Parliament on 23 March 1994 that its Annual Economic Report for 1994 could be considered as the Commission's preparatory work for the broad guidelines of economic policies in accordance with Article 103 of the EC Treaty,

-having regard also to Articles 102a and 103(1), which require Member States to co-ordinate their economic policies and to conduct them with a view to advancing the objectives set out in Article 2,

-having regard of the resolutions of 10 March 1994 on employment in Europe and on the social policy implications of EMU, and of 19 April 1994 on the broad guidelines for economic policies,

-having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinion of the Committee on Social Affairs, Employment and the Working Environment (A3-0333/94),

A. whereas Community output in 1993 declined by 0.3% in real terms;

B.whereas this was only the second real decline in GDP in the EC's history;

C.whereas this slump contrasted with an improving performance in 1993 in the world economy, including that of the United States;

D.whereas the EC slump led in 1993 to:

(a)a stalling of real convergence in the EC,

(b)a rise in the debt/GDP ratios in all Member States, with the EU average increasing to 65.9% in 1993 from 60.9% in 1992,

(c)a rise in the interest payments burden on national budgets to an average of 5.6% of EC GDP,

(d)the loss of a record 2.4 million jobs,

(e)the rise of unemployment to 10.5% in 1993 from 9.4% in 1992 (excluding the five new German Länder), representing a total of 18 million unemployed persons in the Union,

E.whereas the EU's high unemployment level partly reflects its traditional difficulties in creating jobs; since 1960 employment in the EC has risen by only 6%, as compared to 84% in the United States and 46% in Japan,

F.whereas, despite the recession, nominal unit labour costs increased by 2.7% in 1993,

G. aware, nonetheless, that:

(a)general wage trends moderated substantially, with the average increase in nominal wages per head falling to 4.1% in 1993 from 7% in 1992,

(b)real wages increased one percentage point below productivity in 1993,

(c)inflation rates fell across the Community, with the average inflation rate decreasing to 3.8% in 1993 from 4.6% in 1992,

(d)short-term interest rates fell in most countries,

(e)public investment did not decline, remaining at 3% of GDP;,

(f)the situation as regards demand, despite signs of recovery, remains very lacklustre,

H.whereas persistently low convergence and high unemployment threaten the prospects for economic and monetary union,

I.considering that higher convergence and lower unemployment depend ultimately on economic growth, not least through a credible single market and structural reforms in the Member States;

J.whereas the single market, despite its inauguration on 1 January 1993, remains incomplete and that many Member States are only beginning to consider important structural reforms,

K.whereas the Union, through the Maastricht Treaty and the Edinburgh and Copenhagen Growth Initiatives, has an important role in both respects,

L.whereas this role entails: enforcing EU law, establishing guidelines of the economic policies of the Member States and the Union, planning trans-European networks, enhancing the effectiveness of EU-wide investment, bolstering EU cohesion, and monitoring national economic and monetary policies;

M.whereas, to be effective, this role must be accompanied by efforts in the Union in general to overcome popular ignorance about EU law and in the Member States in particular to improve the functioning of labour markets;

N.whereas it must be accompanied also by a common commercial policy that promotes fair trading conditions by strengthening multilateral trade tools and promoting sustainable growth;

O.whereas, without these measures, and despite the Commission forecast of EU GDP growth of 1.3% in 1994, the Union will continue to face the prospect of relative economic decline;

COMBATING UNEMPLOYMENT

1.Calls on the Community and the Member States to give absolute priority to employment creation, realising that external factors can have a limited, if positive, effect;

2. Calls on the Council to adopt the outstanding measures of the 1985 White Paper;

3.Calls on the Member States to implement all relevant EU legislation, not least that relating to company law, public procurement and the free movement of labour;

4.Calls on the Commission systematically to enforce EU law, which is being undermined by, among other things, the fact that only about 110 of the 218 White Paper measures have been implemented in national law by all Member States;

5.Calls on the Commission and the Member States to improve public access to, and information about, EU legislation, particularly as it affects small and medium-sized enterprises;

6.Urges the Commission and the Council, in collaboration with the Parliament, to agree on market-opening measures in the regulated sectors of energy, telecommunications and postal services;

CONVERGENCE

7.Underscores that these single market measures will ultimately facilitate real and nominal convergence in the EU; underlines that real and nominal convergence in the EU are virtually impossible without sufficient and sustainable growth;

8.Is concerned, nonetheless, by the general convergence trends in the EU last year, when on average budget deficits rose to 6% of GDP from 5% in 1992;

9.Notes that these trends, by continuing to undermine the objective of higher national savings, price stability, and sustainable growth in the medium term, highlight the need for more budgetary consolidation in the Union as a whole;

10.Considers that the quest for nominal convergence must be supplemented by a concerted effort by the Member States towards social convergence, to be defined by representative indicators of trends in the social situation in the Member States (unemployment, wages, social protection, social rights, etc.);

11.Believes that they also highlight the importance of the 1993 White Paper on growth, competitiveness and employment and of the 1992-93 Edinburgh and Copenhagen Growth Initiatives;

WHITE BOOK/EDINBURGH-COPENHAGEN GROWTH INITIATIVES

12.Supports the White Paper's call for the creation of more flexible labour markets, for an increase in R&D and investment profitability, and for the early development of trans-European energy, transport and telecommunications networks,;

13.Supports the commitment at the Edinburgh and Copenhagen Summits to coordinated infrastructure spending and employment creation; regrets, however, that these commitments in principle were not followed up by sufficient deeds;

14.Supports, in this context, the establishment of an ECU 8 billion temporary lending facility under the European Investment Bank and an ECU 2 billion investment fund;

15.Calls, therefore, on the Member States to take measures in their labour markets in order to increase labour mobility and training;

16.Asks the Member States, to that end:

(a)to reduce non-wage labour costs (eg. by reforming social security finance systems),

(b)to facilitate flexible work arrangements,

(c)to exploit the possibilities for ecological and social services employment, not least in peripheral regions;

17.Calls, similarly, for the development of an EU market for training, in which the Commission, through the dissemination of information and the coordination of cross-border projects, would have a role;

18.Underscores the compelling need to improve both the coordination of national R&D policies and the links among companies, universities and research centres engaged in R&D;

19.Believes that such improvements, coupled with the establishment of a genuine single market, will help European industry to overcome its chief weakness in R&D: a comparative slowness to translate the results of research into marketable and competitive products;

20.Calls on the Council and the Commission to adopt a coherent approach to trans-European networks;

21.Calls for the rapid implementation of the Edinburgh and Copenhagen growth initiatives;

TRADE POLICY

22.Hopes that the conclusion in December of the GATT Uruguay Round, and indeed the creation of the World Trade Organization, will bolster growth and employment in Europe;

23.Believes, nonetheless, that EU trade policy must continue, through the World Trade Organization and WTO-sanctioned tools, to open foreign markets as widely as the EU's and to counter unfair trade practices;

24.Welcomes, therefore, the EU foreign ministers' decision in December to strengthen Europe's trade defense in line with GATT rules;

25.Urges that minimum social imperatives such as a ban on child labour should be respected in international trade;

MONETARY POLICY

26.Welcomes the decline in short-term interest rates in most Member States in 1993 but believes they will generally have to fall further for an early recovery to be ignited; calls, therefore, for even lower rates, achieved on a sound basis, in 1994;

27.Calls, meanwhile, on the European Monetary Institute actively to strengthen monetary policy coordination, to harmonize monetary policy instruments and to prepare for the use of the ECU;

28.Calls on the Commission and the Council to consider other tasks it could assign the EMI under Article 109f of the EC Treaty to facilitate the transition to stage III of EMU;

29.Urges the Council, if it plans to maintain the wide bands in the exchange rate mechanism, to consider alternatives to exchange rate targeting as a means to economic and monetary convergence;

1994 BROAD ECONOMIC POLICY GUIDELINES/FORECASTS

30.Believes, then, that the prime aim of the 1994 Broad Economic Policy Guidelines should be a substantial increase in employment over the medium term through:

(a)the removal of structural obstacles to growth,

(b)the establishment of a coherent macroeconomic framework,

(c)the full implementation of the Edinburgh and Copenhagen Growth Initiatives;

31.Believes these measures, which in turn require a more credible single market and budgetary and wage trends that do not conflict with the stability objective, will help to create the conditions for lower interest rates, more investment profitability and higher national savings;

32.Believes this pattern of growth, in which investment will grow faster than consumption, will enhance the prospects of sustainable EU growth;

33.Will, until these measures are undertaken, remain sceptical not just of the Commission's forecast of EU GDP growth of 1.3% in 1994, 2.1% in 1995 and at least 3% in 1996, but of the prospects for long-term employment growth;

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34.Instructs its President to forward this resolution to the Council, the Commission and the Member States.