20.7.2011   

EN

Official Journal of the European Union

C 213/1

(1)

On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

(2)

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on Guidelines for the employment policies of the Member States (2), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

(3)

On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

(4)

On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. It requested Member States to translate these priorities into concrete measures to be included in their Stability or Convergence Programmes and National Reform Programmes.

(5)

On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments on time for their inclusion in their Stability or Convergence Programmes and their National Reform Programmes.

(6)

On 9 May 2011, Denmark submitted its 2011 Convergence Programme update covering the period 2011-2015 and its 2011 National Reform Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

(7)

Based on the assessment of the updated Convergence Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underlying the Convergence Programme is plausible. While based on slightly more favourable growth assumptions for 2012 and beyond, it is broadly in line with the Commission services’ spring 2011 forecast. The budgetary strategy set out in the Convergence Programme aims at bringing the deficit below the 3 % reference value by 2013, in line with the Council Recommendation of 13 July 2010, and reaching the revised medium-term objective (MTO) of firstly structural budget balance not below – 0,5 % of GDP by 2015 and secondly budget balance by 2020. The adjustment path towards this objective is appropriate. Measures included in the Convergence Programme and adopted by Parliament in spring 2010 are considered adequate to underpin the budgetary targets and would represent an annual fiscal effort of around 1 % of GDP over the period 2011-2013. Denmark will reach its revised MTO within the Convergence Programme horizon. Risks to the budgetary targets are broadly balanced.

(8)

The Danish economy started slowing down in 2007 amidst a correction in the real estate market contributing to domestic banking problems, amplified by rising insolvencies and unemployment. The recession was severe, output contracted by 8 % between the autumn of 2007 and spring 2009, and the unemployment rate rose to 7,4 % in 2010. The employment rate dropped from 79,8 % in 2008 to 76,1 % in 2010, affecting young people in particular. Output started recovering in 2009, and real GDP growth reached 2,1 % in 2010. The recovery has been driven by sustained domestic demand (also on account of fiscal expansion), a strong inventory rebound and the robust recovery of Denmark's main trading partners.

(9)

Automatic stabilisers and crisis-related measures caused the general government balance to turn from a surplus of 3,2 % of GDP in 2008 into a deficit of 2,7 % of GDP in 2009. On the basis of Denmark’s notification in spring 2010 and the Commission services’ spring 2010 forecast that the budget deficit would widen beyond 5 % of GDP in 2010, an excessive deficit procedure for Denmark was opened in July 2010. Although unexpected and temporary windfall gains linked to pension yield taxation led to a stabilisation of the budget deficit at 2,7 % of GDP last year, the Commission services’ spring 2011 forecast expects the deficit to widen again to around 4 % of GDP in 2011, emphasising the need for continuous and ambitious consolidation efforts in 2012 and 2013 as planned. This implies a strict implementation of the measures adopted in the 2010 Consolidation Agreement and expenditure control as set out in the Convergence Programme to ensure the correction of the excessive deficit by 2013. When assessed against the projected rate of medium-term potential output growth and taking into account discretionary measures, expenditure projections seem to ensure an appropriate adjustment path towards the MTO. According to the Commission’s latest assessment, the risks with regard to long-term sustainability of public finances appear to be low.

(10)

A tight control to avoid recurrent spending overruns at local and regional government levels is important to achieve budgetary targets. For the past 20 years, public spending has continuously been above budgetary targets. The government has already taken some measures to address this issue and is planning to introduce a new spending control scheme, subject to independent surveillance by the Danish Economic Council, as described in the Convergence Programme.

(11)

As a result of demographic factors, the working-age population (15-64 years) will shrink by around 1,5 % between 2010 and 2025 and by close to 5 % by 2040. In the medium term, economic recovery could lead to a tightening of the labour market as witnessed during the boom years. Despite an already high labour participation rate, there is scope to further raise labour supply. Voluntary early retirement is widespread among people aged 60 to 64 resulting in an employment rate for 60-to 64-year-olds of only 40 %. Moreover, 10 % of the working age population below 40 years of age are either on disability benefits or in a flex-job (subsidised employment).

(12)

There has been a declining trend in productivity growth since 1995, one of the potential causes being weak education performance. Although Denmark continues to spend generously on its education system, educational outcomes are only average in several key areas and Denmark has the fourth lowest youth education attainment level in the EU. In 2009, only 70,1 % of the 20-to 24-year-old population had completed at least upper secondary education (as against an EU average of 78,6 %) (3) and the PISA results are average. The drop-out rates from youth and vocational institutions are relatively high, with almost 50 % of students in vocational youth education leaving early. In addition, 10 years after leaving primary school about 20 % of young people have not completed their education above lower secondary level. Improving the quality of the education system would also help to prevent future skills imbalances in the labour market, currently pointing to a possible surplus of unskilled workers alongside a shortage of skilled workers. Productivity growth has been particularly weak in the construction and services sectors. This is the case in particular within local services, the retail sector, wholesale trade, and personal services, where low degrees of competition in certain sectors, for example, high market entry barriers may lead to a sub-optimal allocation of resources. Zoning laws are strict, limiting possibilities for productivity enhancing economies of scale in the retail sector. In order to address the fact that open public procurement only covers around 25 % of public procurement, the government has launched a strategy aimed at increasing competition within public services by gradually increasing public procurement in municipalities and regions, and set a new target for municipalities whereby 31,5 % of all procurement should be public by 2015.

(13)

Household debt in terms of GDP is the highest in the EU. The build-up of debt levels, which has been fuelled by the housing boom between 2004 and 2007, creates potential risks for the economy and financial stability. Although these risks are mitigated by the characteristics of Denmark's sophisticated mortgage-backed bond market and a globally robust financial situation of the majority of households (with assets far in excess of liabilities), only limited measures to dampen pro-cyclical fluctuations of house prices were introduced in the aftermath of the house price correction.

(14)

Denmark has made a number of commitments under the Euro Plus Pact. To improve fiscal sustainability, an agreement has been reached to strengthen sanction legislation with regard to spending control at the local level and the government intends to present a proposal for a law on expenditure ceilings. Employment measures focus on fostering employment by prolonging working life through a retirement reform. To foster competitiveness a Competition Package with concrete initiatives is targeted primarily towards the construction and service sectors. In addition to these commitments a dowry scheme is being implemented to facilitate private resolution for distressed banks and support financial stability. Together these measures and commitments refer to the four areas of the Pact. Overall, the measures coincide with those taken to follow up on the Annual Growth Survey and make progress towards the Europe 2020 targets, most notably in the employment domain. Although a number of the announced commitments have already been introduced, important measures to improve budgetary discipline (at local level) and to foster employment should be implemented in the near future. These commitments have been assessed and taken into account in the recommendations.

(15)

The Commission has assessed the Convergence Programme and National Reform Programme, including the Euro Plus Pact commitments. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Denmark but also their conformity with EU rules and guidance, given the need to reinforce the overall economic governance of the EU by providing EU-level input into future national decisions. In this light, the Commission considers that continuous and ambitious fiscal consolidation efforts should be pursued in 2011 and beyond. Further steps should also be taken to raise labour supply through reducing early retirement and targeting particular groups, improve the quality of education, strengthen competition in key sectors and further stabilise the real-estate market.

(16)

In light of this assessment, also taking into account the Council Recommendation under Article 126(7) of the Treaty on the Functioning of the European Union of 16 July 2010, the Council has examined the 2011 update of the Convergence Programme of Denmark and its opinion (4) is reflected in particular in its recommendation 1 below. Taking into account the European Council conclusions of 25 March 2011, the Council has examined the National Reform Programme of Denmark,

1.

Implement fiscal consolidation measures in 2011, 2012 and 2013 and ensure an average annual fiscal effort of 0,5 % of GDP over the period 2011-2013 as planned and correct the excessive deficit by 2013 in line with the Council recommendation under the EDP. Thereafter ensure, as planned, an appropriate adjustment path towards the medium-term objective. Accelerate the reduction of the general government deficit if economic conditions turn out better than currently expected. Strengthen expenditure control by adopting binding multiannual spending ceilings for local, regional and central government which are consistent with the overall medium-term general budget targets.

2.

In order to strengthen employment and the sustainability of public finances, take further steps to increase long-term labour supply, by implementing the recently concluded reform on the voluntary early retirement pension (VERP) scheme, reforming the disability pension and better targeting subsidised employment schemes (the ‘flex-job’ system) towards the most vulnerable groups.

3.

Speed up the implementation of reforms to improve the quality of the education system. Reduce drop-out rates, particularly in the vocational education sector, and increase the number of apprenticeship places available.

4.

Take steps to remove obstacles to competition, in particular in local services and the retail sector, by reviewing legislation on land use and opening up procurement in municipalities and regions.

5.

While supporting the ongoing stabilisation of the real-estate market following the recent price correction, consider preventive action to strengthen the medium-term stability of the housing market and the financial system including reviewing the functioning of the mortgage and property tax systems.

20.7.2011   

EN

Official Journal of the European Union

C 213/5

(1)

On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

(2)

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines for the employment policies of the Member States (2), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

(3)

On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

(4)

On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. It requested Member States to translate these priorities into concrete measures to be included in their stability or convergence programmes and national reform programmes.

(5)

On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments on time for their inclusion in their stability or convergence programmes and their national reform programmes.

(6)

On 29 April 2011, Estonia submitted its 2011 stability programme covering the period 2011-2015 and its 2011 national reform programme. In order to take account of the interlinkages, the two programmes have been assessed at the same time.

(7)

Estonia was particularly hard-hit by the global financial crisis, which amplified the reversal of the domestic real estate and consumption boom. The cumulative loss of GDP reached 19 % in 2008-2009 and the unemployment rate increase almost four fold to 16,8 % by 2010. However, the economy has bounced back quickly and the real GDP growth is expected to accelerate in the coming years. The recovery has been driven mainly by exports, but domestic demand is gaining ground mostly through strong investment. The improved growth outlook has provided a positive impetus to the labour market. Employment rate has risen markedly recently, although long-term unemployment remains high. While inflation accelerated compared to last year, it is expected to moderate in line with developments in the global commodity prices.

(8)

Based on the assessment of the stability programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underpinning the budgetary projections is plausible. The medium-term budgetary strategy of the stability programme is to achieve the medium-term objective, defined as structural balance, by 2013, and to maintain it throughout the rest of the stability programme period, by aiming at structural surpluses in 2013 and beyond. The headline general government budgetary position is projected to reach surplus by 2013, while in the short term the headline deficit is expected to deteriorate somewhat due to the one-off impact of environmental investments on carbon credits. The budgetary adjustment of the stability programme relies on holding back growth in government consumption expenditure. The stability programme provides some information regarding measures to reach the targeted position and the previous track record of meeting the fiscal targets mitigates the risk of missing them in the coming years. In particular, the envisaged reforms seek efficiency gains in several areas, such as education and active labour market policies. Risks to the budgetary targets thus appear to be broadly balanced. Nevertheless, it will be important for the upcoming budgets to provide the key details of measures to further enhance the efficiency of public spending, thus underpinning the implementation of the stability programme.

(9)

Long-term unemployment remains high and unemployment rates across regions have been rather diverging and persistent. Despite considerable increases since 2009, financing of active labour market policies remains one of the lowest in the EU, and results in a low share of the unemployed receiving active support. The Estonian labour market is relatively flexible, reinforced by the decision to postpone increases in the unemployment insurance benefit coverage in the Labour Law package to 2013. Despite this flexibility, Estonia has a relatively high labour tax wedge, which could have negative consequences for labour supply and demand. This problem is particularly acute in view of the high unemployment rate of the young and the low-skilled, who are exposed to a risk of poverty. Reforms envisaged to reduce social insurance contributions address the right issues, but need to take place while strengthening the budgetary position. There is potential for efficiency gains through a stricter means testing to better target other benefits.

(10)

Estonia's resource intensity is among the highest in the EU. This is partly the result of a production structure concentrated on energy-intensive sectors and industries. Another determinant is the low energy efficiency performance at sectoral level. In its national reform programme, Estonia indicates a national energy savings target of 9 % in 2016 compared to projections (16 % by 2020 in the NRP). Besides, there is little information on how and when measures will be implemented and their expected results. Hence, improving energy efficiency has further potential. Increasing energy efficiency is likely to have a positive impact on the environment and on the security of energy supply, but also to reduce inflationary pressures and improve cost competitiveness.

(11)

Notwithstanding the overall high share of people with tertiary education, further reform of the education system at all levels could help address skill gaps, a large number of schools and tertiary education institutions, and a lack of focus in professional education resulting in the high share of people with no professional qualification. Given current demographic trends, improving the quality of human capital is important for raising potential growth in the medium term. In particular, ensuring that tertiary education is aimed at fields of key importance to the economy (e.g. engineering) could support the ongoing rebalancing towards tradable sectors. Implementing the education reform would also contribute to improving public sector efficiency, as the current system of managing education is too fragmented at the local level, leading to both inefficient subsidies and low-quality services.

(12)

Estonia has made a number of commitments under the Euro Plus Pact. These contain measures to address public finance sustainability, employment, and competitiveness. On the fiscal side, the Pact commits to achieve budget balance by 2013 and a surplus in 2014; to include a public sector budget balance requirement in the state budget base law; as well as first steps to reform special pension schemes. In order to promote employment, some tax incentives are envisaged. For competitiveness, measures focus on innovation, higher education, and public service reform. The Pact commitments reflect the agenda presented in the national reform programme. The objectives set out in the Pact would benefit from further measures to strengthen labour market policies, as well as addressing resource efficiency and the energy market. The Euro Plus Pact commitments have been assessed and taken into account in the recommendations.

(13)

The Commission has assessed the stability programme and national reform programme, and the Euro Plus Pact commitments. It has taken into account not only their relevance for sustainable fiscal and socio-economic policy in Estonia but also their conformity with EU rules and guidance, given the need to reinforce the overall economic governance of the EU by providing EU-level input into future national decisions. It considers that while measures to reach the targeted budgetary position would have to be specified in forthcoming budgets, the track record of the Estonian authorities mitigates the risk of missing the fiscal targets. Further steps should be taken to strengthen labour market policies and provide better incentives to work, to enhance human capital through a large scale education reform as well as addressing resource efficiency and the energy market.

(14)

In light of this assessment, the Council has examined the 2011 stability programme of Estonia and its opinion (3) is reflected in particular in its recommendation 1 below. Taking into account the European Council conclusions of 25 March 2011, the Council has examined the national reform programme of Estonia,

1.

Achieve structural surplus by 2013 at the latest, while limiting deficit in 2012 to at most 2,1 % of GDP, keeping tight control over expenditure and enhancing the efficiency of public spending.

2.

Take steps to support labour demand and to reduce the risk of poverty, by reducing the tax and social security burden in a budgetary neutral way, as well as through improving the effectiveness of active labour market policies, including by targeting measures on young people and the long-term unemployed, especially in areas of high unemployment.

3.

Ensure implementation of planned incentives to reduce energy intensity and improve the energy efficiency of the economy, targeted on the buildings and transportation sectors, including by ensuring better market functioning.

4.

While implementing the education system reform, give priority to measures improving the availability of pre-school education, and enhance the quality and availability of professional education. Focus education outcomes more on labour market needs, and provide opportunities for low-skilled workers to take part in lifelong learning.

20.7.2011   

EN

Official Journal of the European Union

C 213/8

(1)

On 26 March 2010, the European Council agreed to the Commission’s proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.

(2)

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines for the employment policies of the Member States (2), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

(3)

On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

(4)

On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council’s conclusions of 15 February and 7 March 2011 and further to the Commission’s Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. It requested Member States to translate these priorities into concrete measures to be included in their stability or convergence programmes and national reform programmes.

(5)

On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments in time to be included in their stability or convergence programmes and their national reform programmes.

(6)

On 3 May 2011, France submitted its 2011 stability programme update covering the period 2011-2014 and its 2011 national reform programme. In order to take account of the interlinkages, the two programmes have been assessed at the same time.

(7)

France was relatively less affected than other Member States by the economic and financial crisis, with a decline of 2,7 % in GDP in 2009, partly due to sizeable economic stabilisers and the resilience of household consumption. The banking sector also proved to be resilient. In 2010, the economy recovered and, overall, GDP growth came out at 1,5 %. However, the economic crisis has substantially impacted France's public finances. Due to the automatic stabilisers and discretionary fiscal stimulus, the general governement deficit rose from 3,3 % of GDP in 2008 to 7,5 % in 2009. Similarly, the crisis has exacerbated the insufficient utilisation of labour and the structural weaknesses of the French labour market, where there was a relatively high level of unemployment of 9,7 % in 2010. In addition, the trade balance of goods has gradually deteriorated during the last decade, highlighting the challenges of French companies in terms of cost and non-price competitiveness.

(8)

Based on the assessment of the updated stability programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underpinning the budgetary projections is favourable, especially as expected growth levels remain well above the potential growth in later years. After a better-than-expected deficit of 7 % of GDP in 2010, the stability programme plans to bring it down to 3 % of GDP in 2013, which is the deadline set by the Council for correcting the situation of excessive deficit, and to continue consolidation thereafter. Starting from a debt of 82 % of GDP in 2010, the debt ratio is set to increase until 2012 (86 %), after which it will decline slightly. The deficit and debt adjustment paths are subject to risks, which include the possibility of a macroeconomic scenario that could turn out to be less favourable, the fact that the measures are not sufficiently specified to reach the targets from 2012 onwards, and the fact that targets have often been missed in the past, notwithstanding the better-than-expected outcome in 2010. Therefore, it cannot be ensured that the excessive deficit will be corrected by 2013 unless further measures will be taken as needed. The medium-term objective of a balanced budget in structural terms will not be reached within the stability programme period. The average annual fiscal effort over the 2010-2013 period as recalculated by the Commission services according to the commonly agreed methodology is slightly below what was included in the Council Recommendation of 2 December 2009 (‘above 1 % of GDP’).

(9)

Implementation of fiscal consolidation remains a major challenge. Avoiding expenditure slippages by means of a strengthened fiscal effort based on fully specified measures is vital to re-establishing a sustainable fiscal position, especially since the 2013 target does not provide any safety margin below the 3 % of GDP threshold. Moreover, as specified in the 2011-2014 Multiyear Public Finance Planning Act voted in December 2010 it would be appropriate to use all windfall revenues to accelerate the deficit and debt reduction. According to the Commission's latest assessment, the risks with regards to long-term sustainability of public finances appear to be medium. To improve the long-term sustainability of public finances, France adopted a new pension reform in 2010. The planned measures, including the gradual increase in the minimum retirement age from 60 to 62 and in the statutory retirement age from 65 to 67, as well as the phasing out of early retirement schemes, should have an impact on the low employment rate of older workers. Moreover, the pension system is expected to be in balance by 2018. A deficit is likely to appear thereafter unless further measures are taken. The latest pension reform has also created a new public body, the ‘Comité de pilotage des régimes de retraite’, which is in charge of presenting annual assessments of the budgetary situation of pension accounts and, if there is any likelihood of a deterioration, of proposing corrective measures.

(10)

The current employment protection legislation is still too strict: the conditions for economic dismissals are subject to legal uncertainty. This is leading to labour market outcomes where workers on indefinite labour contracts (the majority of the labour ‘stock’) benefit from a relative degree of security and workers on temporary labour contracts (the majority of the inflow into the labour market) are exposed to uncertainties. Hence, the share of temporary contracts is significantly higher for young workers, and there are few transitions from temporary contracts to permanent contracts. This segmentation also applies to access to vocational training. There is consequently a high turnover and a limited accumulation of human capital in these workers. Young workers and the low-skilled are therefore exposed to disproportionate risks in the labour market. The aim of the Renewal of Social Dialogue Act and of the 2008 Labour Market Modernisation Act was to modernise social dialogue and to address the issue of labour market dualism. The latter Act notably introduced a new procedure for terminating permanent contracts by mutual agreement (rupture conventionnelle) which is now increasingly used.

(11)

The French unemployment rate was slightly above the EU average in 2010 and long-term unemployment is on the rise (3,9 % in 2010 versus 2,9 % in 2008). In this context, public employment services should play an important role in supporting the unemployed in their search for a job. In France, the new one-stop shop public employment service Pôle Emploi has so far shown mixed results. In 2009-2010, in the context of the crisis and of a significant increase in the number of job seekers, its main objective was mainly focused on the merger of the two pre-existing administrative entities. Outsourcing of placement services has so far yielded mixed results in achieving the return to work targets set by Pôle Emploi. At the same time, Pôle Emploi resources dedicated to individualised support of job seekers remain underdeveloped (71 full-time equivalents per 10 000 unemployed, which is significantly below the levels recorded in some peer countries).

(12)

The French current account deficit has gradually deteriorated during the last decade, reflecting the decline in the trade balance of goods, partly due to a decrease in labour cost competitiveness after the single minimum wage was reintroduced in the 2003-2005 period (the previous reform of the 35 hours working week had resulted in five different minimum levels). Some improvements have been made to the indexation procedure (creation of an advisory commission of independent experts, elimination of discretionary hikes) leading to a moderation of the increase in the minimum wage. As a result, the proportion of employees that are paid the minimum wage has decreased substantially, enabling better wage differentiation. The French minimum wage is still among the highest in the EU when compared to the median salary even if the tax-wedge is much lower than for the average salary due to cuts in employers’ social security contributions.

(13)

France has one of the highest tax and social security burdens on labour in the EU, while the tax on consumption remains relatively low. Moreover, environmental tax revenues as a share of GDP are also below the EU average. Rebalancing the tax system, including for example by switching taxation from labour towards consumption and the environment, is likely to have a beneficial effect on jobs as well as on environmental objectives.

(14)

Tax and social security exemptions (including niches fiscales) in France are very high. In addition, understanding and exploiting the benefits of the system requires firms and households to invest in extensive expertise. While tax expenditures are used to implement a given economic policy, there has not been so far a systematic assessment whether they have managed to fulfil the objectives pursued although a review is planned to be carried out in 2011 according the 2009-2012 Multiyear Public Finance Planning Act. In the past, their substitutability with public expenditures has allowed the French authorities to formally meet existing spending rules, although further shifts are no longer possible as stated in Article 9 of the 2011-2014 Multiyear Public Finance Planning Act. A discretionary increase in tax revenue (mainly through the reduction of tax expenditures) by around 0,75 % of GDP over the period 2011-2013 is foreseen by the French authorities. The precise tax expenditures to be abolished have only been partly identified as from 2012.

(15)

Competition in the retail sector is still hampered by administrative restrictions on the opening of large retail outlets, and a ban on resale below cost. In the services sector, there are still barriers to competition for several regulated professions, which could be tackled either by reviewing the entry conditions, or by gradually doing away with certain quotas (numerus clausus) and the exclusive rights that these professions hold.

(16)

France has made a number of commitments under the Euro Plus Pact. On the fiscal side, France has undertaken to swiftly implement the 2010 pension reform. With a view to strengthening fiscal sustainability, France will also change its constitution to introduce binding multiannual budget planning. To increase labour participation, various measures are being considered to increase active labour market policies (e.g. apprenticeship to ease the school-to-work transition of younger workers, additional childcare facilities by 2012 to improve female employment prospects, strengthening of the public employment services for jobseekers). The competitiveness measures focus on improving the higher education system and promoting research and development (R&D) and innovation (investissements d'avenir), as well as reducing the administrative burden by implementing a comprehensive programme of administrative simplification. These commitments refer to three of the four areas of the Pact, leaving out the financial sector. Although they are taken in those areas where the main challenges lie, many of them (particularly those concerning fiscal governance or support to higher education and R&D) are confirmations of existing public policies/reforms. The reform agenda does not seem fully consistent with the extent of the macroeconomic challenges faced in the labour market or the business environment. In addition, the envisaged constitutional reform is subject to political uncertainty. These Euro Plus Pact commitments have been assessed and taken into account in the recommendations.

(17)

The Commission has assessed the stability programme and national reform programme, including Euro Plus Pact commitments for France. It has taken into account not only their relevance to sustainable fiscal and socio-economic policy in France but also their conformity with EU rules and guidance, given the need to reinforce the overall economic governance of the EU by providing EU-level input into future national decisions. In this light, the Commission considers that the fiscal consolidation strategy needs to be made more specific, for 2012 and beyond, in order to ensure that the excessive deficit is corrected by 2013 and the debt is brought onto a downward path. Any windfall revenues should be used to accelerate the deficit and debt reduction, as specified in Article 11 of the 2011-2014 Multiyear Public Finance Planning Act. A shift from labour towards environmental and consumption taxes, and a streamlining of tax expenditure, would bolster fiscal and environmental objectives and improve the business environment. Further steps in 2011-2012 should focus on adapting the employment protection legislation to reducing the dualism of the labour market, and on strengthening public employment services in order to provide comprehensive support to jobseekers. Existing policy on minimum wage moderation should be pursued. Competition should be fostered in regulated professions and retail trade.

(18)

In light of this assessment, also taking into account the Council Recommendation under Article 126(7) of the Treaty on the Functioning of the European Union of 2 December 2009, the Council has examined the 2011 update of the stability programme of France and its opinion (3) is reflected in particular in its recommendation 1 below. Taking into account the European Council conclusions of 25 March 2011, the Council has examined the national reform programme of France,

1.

Ensure the recommended average annual fiscal effort of more than 1 % of GDP over the period 2010-2013 and implement the correction of the excessive deficit by 2013, in line with the Council recommendations under the EDP, thus bringing the high public debt ratio on a downward path, and ensure adequate progress to the medium-term objective thereafter; specify the necessary corresponding measures for 2012 onwards, take additional measures if needed and use any windfall revenues to accelerate the deficit and debt reduction as planned; continue to review the sustainability of the pension system and take additional measures if needed.

2.

Undertake renewed efforts, in accordance with national practices of consultation with the social partners, to combat labour market segmentation by reviewing selected aspects of employment protection legislation while improving human capital and upward transitions; ensure that any development in the minimum wage is supportive of job creation.

3.

Encourage access to lifelong learning in order to help maintain older workers in employment and enhance measures to support return to employment. Step up active labour market policies and introduce measures to improve the organisation, decision-making, and procedures of the public employment service to strengthen services and individualised support provided to those at risk of long-term unemployment.

4.

Increase the efficiency of the tax system, including for example through a move away from labour towards environmental and consumption taxes, and implementation of the planned reduction in the number and cost of tax and social security exemptions (including ‘niches fiscales’).

5.

Take further steps to remove unjustified restrictions on regulated trades and professions, in particular in services and the retail sector.

20.7.2011   

EN

Official Journal of the European Union

C 213/12

(1)

On 26 March 2010, the European Council agreed to the Commission's proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe's potential for sustainable growth and competitiveness.

(2)

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on Guidelines for the employment policies of the Member States (1), which together form the ‘integrated guidelines’. Member States were invited to take the integrated guidelines into account in their national economic and employment policies.

(3)

On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

(4)

On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth.

(5)

On 3 May 2010, Greece presented an encompassing adjustment programme supported by financial assistance provided by the euro-area Member States and the IMF amounting to EUR 110 billion. The accompanying Memorandum of Understanding and its successive supplements lay down the economic policy conditions on the basis of which the financial assistance is disbursed.

(6)

The key elements of policy conditionality have been enshrined in Council Decision 2010/320/EU of 10 May 2010 (2), and its subsequent amendements (3), addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit under the provisions of Articles 136 and 126(9) of the Treaty.

(7)

On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments in time to be included in their Stability or Convergence Programmes and their National Reform Programmes. Greece is expected to submit an updated Stability Programme and specific Euro Plus Pact commitments and actions for 2011 based on the updated economic adjustment programme.

(8)

Over the last decade, Greece's growth performance was based on unsustainable drivers: consumption and residential investment booms were accompanied by high real wage increases and rapid credit growth; low real interest rates associated with the adoption of the euro and financial market liberalisation fed the boom. The 2008-2009 global crisis exposed the vulnerabilities, including: unsustainable fiscal policies, partly hidden by unreliable statistics and temporarily high revenues; rigid labour and product markets; and loss of competitiveness and rising external debt. Though not in the beginning, the banking sector was affected by the economic and confidence crisis. The extent of the deterioration in the fiscal position was revealed late due to grave deficiencies in Greece's accounting and statistical systems. This delayed the implementation of corrective measures. As concerns about Greek fiscal sustainability arose and global risk aversion heightened, market sentiment vis-à-vis Greece worsened sharply in early 2010. In April 2010, Greece asked for international financial assistance as it was confronted with sizeable financing needs and not able to access international capital markets.

(9)

Greece committed itself to implementing the economic and financial adjustment programme with the aim of correcting fiscal and external imbalances and restoring confidence in the short-term. In the medium-term, it should lay the foundations for a growth model that relies more on investment and exports supporting growth and employment. The adjustment programme foresees comprehensive action on three fronts: (i) a frontloaded fiscal consolidation strategy, supported by structural fiscal measures and better fiscal control; (ii) structural reforms in the labour and product markets to address competitiveness and growth; and (iii) efforts to safeguard banking system stability.

(10)

The Commission has assessed the draft National Reform Programme. It has taken into account not only its relevance for sustainable fiscal and socio-economic policy in Greece but also its conformity with EU rules and guidance, given the need to strengthen the overall economic governance of the EU by providing EU level input into future national decisions. In this context, the Commission stresses the urgency of implementing the planned measures to comply with Decision 2010/320/EU,

20.7.2011   

EN

Official Journal of the European Union

C 213/14

20.7.2011   

EN

Official Journal of the European Union

C 213/16

1.

Although the final responsibility for decisions on the conclusion of monetary agreements with third countries lies with the EU Council, the ECB would not encourage the overseas countries and territories (OCTs) associated with euro area Member States to introduce the euro as their official currency. In the case of Saint-Barthélemy, the ECB has no objections to the draft decision, given that Saint-Barthélemy, which is part of France, has been using the euro since 1999. In order to accommodate France’s intention that the euro be maintained in Saint-Barthélemy after 1 January 2012, when this collectivity will cease to be part of the territory of the EU (2), a solution addressing the changed circumstances is necessary under EU law. Against this background, the conclusion of a monetary agreement with the French Republic, acting for the benefit of Saint-Barthélemy, is a satisfactory solution, because it would enable France to continue to apply to Saint-Barthélemy the necessary EU law provisions needed for the use of the single currency in the following areas: monetary, banking and financial legislation; measures necessary for the use of the euro; the prevention of money laundering and the prevention of fraud and counterfeiting of cash and non-cash means of payment; rules on medals and tokens and on statistical reporting requirements.

2.

From the scope of the mandate for negotiations set out in the draft decision, the ECB understands that, unlike the agreements concluded with third countries such as the Principality of Monaco, the Principality of Andorra, the Republic of San Marino and the Vatican City State, this monetary agreement does not authorise Saint-Barthélemy to issue its own euro coins. Whilst the ECB welcomes this approach, this should be made explicit for reasons of legal certainty and transparency, at least in the preamble of the draft decision.

3.

The ECB reiterates that any transfers, including specific financial assistance for banks and other financial institutions, which are needed to maintain or restore financial stability in Saint-Barthélemy, shall be borne by the Treasury of the French Republic.

4.

The ECB understands that all the tasks falling within the Eurosystem’s competence, including monetary policy operations and the collection of statistics, will be carried out by the Banque de France via the Institut d’Émission des Départements D’Outre-mer (IEDOM).

5.

The ECB also understands that the monetary agreement does not intend financial institutions located in Saint-Barthélemy to have direct access to payment and settlement systems within the euro area and that any such connection will continue to be made via the respective French authorities.

6.

The ECB is of the firm view that its role in negotiating monetary agreements with an OCT should be precisely the same as its role negotiating monetary agreements with third countries. Against this background, the text of the draft decision should clearly and unambiguously provide that the ECB’s agreement is required on issues falling within its field of competence.

7.

The ECB notes that several important issues are not covered by the draft decision and these should be addressed as follows:

Where the ECB recommends that the proposed decision is amended, specific drafting proposals are set out in the Annex accompanied by explanatory text to this effect.

20.7.2011   

EN

Official Journal of the European Union

C 213/21

20.7.2011   

EN

Official Journal of the European Union

C 213/23

20.7.2011   

EN

Official Journal of the European Union

C 213/24

20.7.2011   

EN

Official Journal of the European Union

C 213/27

1.

On 13 July 2011, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertakings Bain Capital Investors, LLC (‘Bain Capital Investors’, USA) and OCM IMC Holdings, L.P., ultimately controlled by Oaktree Capital Group, LLC (‘Oaktree’, USA) acquire within the meaning of Article 3(1)(b) of the Merger Regulation joint control of the undertaking International Market Centers, LP (‘IMC’, USA).

2.

The business activities of the undertakings concerned are:

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of the EC Merger Regulation. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under the EC Merger Regulation (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 22964301), by email to COMP-MERGER-REGISTRY@ec.europa.eu or by post, under reference number COMP/M.6287 — Bain Capital/Oaktree/International Market Centers JV, to the following address:

20.7.2011   

EN

Official Journal of the European Union

C 213/28

1.

On 12 July 2011, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertaking Thermo Fisher Scientific, Inc. (‘Thermo Fisher’, USA) acquires within the meaning of Article 3(1)(b) of the Merger Regulation control of CB Diagnostics Holding AB, the holding company and sole owner of Phadia Holding AB (‘Phadia’, Sweden) by way of purchase of shares.

2.

The business activities of the undertakings concerned are:

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope the EC Merger Regulation. However, the final decision on this point is reserved.

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 22964301), by e-mail to COMP-MERGER-REGISTRY@ec.europa.eu or by post, under reference number COMP/M.6293 — Thermo Fisher/Phadia, to the following address: