Transcript Is the European Semester a Success

The European Union and North America: An Inevitable Partnership?
ECSA-C 11th Biennial Conference
Comparing the Economic Governance in the New
EU Member States - Is the European Semester a
Success or Failure?
Visnja Samardzija and Ivana Skazlic
Institute for Development and International Relations IRMO, Zagreb, Croatia
▪ The paper has been generated from the project “Policy
Observatory in Croatia (POLO-Cro28)”, IRMO, Zagreb
▪ Funded by the European Commission through the
ERASMUS + programme, Jean Monnet Support to
Institutions (2015-2018)
Key points
▪ What are the main EU approaches to economic governance in
the period after the crisis?
▪ To which extent was the implementation of European Semester
successful in new Member States?
▪ To which extent it resulted in the desired impact on growth and
stabilization of economies?
▪ How are the new EU member states meeting their country
specific recommendations (CSR)?
▪ Mixed experiences of Croatia, Czech Republic, Hungary, Slovakia
and Slovenia
The reasons behind the European Semester
▪ the main instrument of economic policy coordination at EU
level
▪ annual cycle of policy guidance, coordination and
monitoring, as a response to the crisis
▪ supports implementation of Europe 2020 Strategy and
ensures compliance with economic and fiscal rules in the
context of the Stability and Growth Pact (SGP) and the
Macroeconomic Imbalance Procedure (MIP)
▪ in operation since 2011 – legal basis Art. 121 of the TFEU +
specific provisions of the ‘Six pack’ legislation
Three components of the European
Semester
European Semester
EUROPE 2020 STRATEGY
(thematic surveillance)
Education
Employment
Environmental and
climate protection,
energy efficiency
R&D
Fighting poverty and
social exclusion
STABILITY AND GROWTH PACT
(fiscal surveillance)
Preventive arm
Deficit <3% GDP
Debt <60%
Debt >60% which
is decreasing
Source: European Commission, 'Six pack' and 'Two pack' Regulative
Corrective arm
Excessive Deficit
Procedure
MACROECONOMIC IMBALANCE PROCEDURE
(macroeconomic surveillance)
Preventive arm
1. Alert
Mechanism Report
2. In-Depth
Reviews
Corrective arm
Excessive
Imbalance
Procedure
The European Semester at a glance
▪ European Semester introduces ex-ante annual coordination
of national economic policies during 6-month period
▪ The Commission conducts in-depth analysis of economic
programs and structural reforms of every MS, issues CSRs
and monitors their implementation on annual basis
▪ Participation in the European Semester is mandatory for all
EU Member States!
▪ During a remaining 6-month period of a ‘National
Semester’ the MS implement commonly agreed policies
▪ Sanctions
The European Semester for Economic Policy Coordination:
Main steps and actors
Sept
European
Commission
Council Eurogroup
Oct.
Opinion on
DBPs
Nov.
Presentation of
AGS, AMR and EA
recommendation
s
Surveillance and implementation f
CSRs
Assessment of DBPs
Feb.
Mar.
In-depth review of imbalances
Assessment of implementation of
CSRs
Apr.
May.
Debate
/resolution on
Semester and
CSRs
Jun.
Assessment of NRPs
and SCPs
Draft CSRs
Conclusions on AGS and
AMR and adoption of EA
recommendations
Implementation of CSRs
Submission of DBPs by Oct
Article 13 conference
European
Parliament
Jan.
Adoption of CSRs
Policy guidance
based on AGS
and AMR
European Council
Member States
National
Parliaments
Dec.
Endorsement of
CSRs
Submission of NRPs
and SCPs
EPW / Article 13 Conference
Debate
/resolution(s) on
the AGS
Economic dialogues with other EU Institutions and member states
Source: Hagelstam, K. (2015) At a glance The European Semester: Main steps at the EU level. Economic Governance Support Unit, European Parliament
Jul.
Implementation of country-specific
recommendations (CSRs) by EU Member States,
2012–2014
Source: Gern, K.-J., Jannsen N., Kooths, S. (2015) Economic policy coordination in the euro area under the European Semester. Kiel
Institute for the World Economy. Available at: http://www.europarl.europa.eu/committees/en/ECON/home.html
Implementation of country-specific recommendations (CSRs) by EU Member
States, 2015
Source: Hradiský, A. (2016) At a glance Implementation of 2015 CSR. Economic Governance Support Unit, European Parliament
Addressing the weaknesses of implementation:
Streamlined European Semester (2015)
- improving frameworks and mechanisms
- publishing CSRs for the euro area at the begining of
the cycle;
- lowering the number and scope of CSRs; focus on
priorities
- greater emphasis on employment and social
performance;
- enhancing a democratic dialogue
- supporting reforms from ESI Funds and technical
assistance
Examples of five new EU Member States
▪ Croatia, Czech Republic, Hungary – non Eurozone members
▪ Slovakia, Slovenia – Eurozone members
▪ New EU members, 5th and 6th enlargement
▪ Similar economic and social challenges, geographical
proximity
▪ Covered by or passed through Excessive Deficit Procedure
The government deficit as proportion of GDP in
selected EU Member States(in %)
Source: Eurostat data
General government gross debt as proportion of GDP in selected EU
Member States (%)
Source: Eurostat data
Excessive Deficit Procedure (EDP) in selected EU
Member States – an overview
EU MS
Czech
Republic
Hungary
Slovakia
Slovenia
2009
EDP
opened
EDP
opened in
2004
EDP
opened
EDP
opened
Croatia
2010
2011
2012
2013
2014
EDP closed
2015
2016
EDP closed
EDP closed
EDP
opened
EDP still
ongoing
EDP still
ongoing
NOTE: In 2016 the EDP covers 9 countries. The EDP was closed for 17 countries in the past years, while 2 countries are not covered by EDP at all.
Source: European Commission
The status of selected new EU Member States under the
Macroeconomic Imbalances Procedure of (MIP) 2012-2016
Year
No imbalances
Imbalances*
2012
Czech Republic
Slovakia
Czech Republic
Slovakia
Czech Republic
Slovakia
Czech Republic
Slovakia
Czech Republic
Slovakia
Hungary
Hungary
Slovenia
Hungary
2013
2014
2015
2016
Hungary
Hungary
Slovenia
Slovenia
Excessive
imbalances*
Excessive imbalances
procedure
-
Slovenia
-
Croatia
Slovenia
Croatia
-
Croatia
-
-
NOTE: In 2016, out of 18 countries identified for in-debt review, 12 countries experience imbalances. EIP has not been initiated yet
Source: http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm
Number of CSRs under the SGP, MIP and Europe
2020 processes, in 2015
Source: Bénassy-Quéré , A. (2015) Economic policy coordination in the euro area under the European Semester. Available at:
http://www.europarl.europa.eu/committees/en/ECON/home.html
Comparative overview of CSRs under European Semester in
five selected countries (2015)
Country-specific recommendations 2015
Croatia
Czech
Republic
Hungary
Slovakia
Slovenia
Shaded cells in the table mark the field for which the selected Member State received recommendations.
Source: European Commission, http://ec.europa.eu/europe2020/pdf/csr2015/csr2015-overview-table_en.pdf
Administrative
modernization
and rule of law
Social inclusion Administration
Poverty and
social inclusion
Education
Education and
skills
Innovation and
business
environment
Product and services
market
Services and
network
industries
Wage-setting
Labor taxation
Labor market
Labor market
Housing and
private debt
Financial
sector
Banking and
access to
finance
Healthcare
system
Pension system
Taxation
Public finances
EU
Member
State
Public finances and welfare
systems
Implementation of the 2015 CSRs under the European
Semester in five selected Member States
EU/Country
level
Full/Substantial
Some Progress
Progress
No/Limited
Progress
Not yet
Assessed
Total
Total CSR to
EU-28
4
42
49
7
106
Czech Republic
0
3
1
-
4
Croatia
0
1
5
-
6
Hungary
0
1
3
1
5
Slovenia
1
2
1
-
4
Slovakia
0
1
3
-
4
Source: Hradisky, Martin (2016). European Parliament. Economic Governance Unit. At a Glance. Implementation
of the 2015 County Specific Recommendations. March 4, 2016
Conclusions
▪ Accomplishment of the European Semester: contribution to predictability
and transparency of economic policies in the EU
▪ CSRs - the most important part for delivering reforms, but implementation is
modest / low
▪ Eurozone members - stronger CSRs implementation
▪ Better implementation while under a financial assistance program; due to
market pressure and/or due to high unemployment
▪ Normalisation of situation often „softens” reforms
▪ Political will of national authorities to implement reforms depends on
eventual domestic consequences
▪ Implementation of CSRs varies with the electoral cycle
Conclusions
▪ Impact of recent modifications of the European Semester? Not visible
yet…
▪ Support for facilitating implementation of reforms through EU Funds
and technical assistance
▪ Existing shortcomings are strong argument for further improvements
of the European Semester in order to increase efficiency
▪ Need to identify more clearly articulated priorities at European level,
raise awareness