Resolution of the European Economic and Social Committee on ‘Ukraine: One year after the Russian invasion — the European civil society perspective’

(2023/C 146/01)

Rapporteurs:

Stefano MALLIA Oliver RÖPKE Séamus BOLAND

Legal basis	Rule 52(4) of the Rules of Procedure
Adopted at plenary	23.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	160/1/4

THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE (EESC)

On Ukraine’s accession to the EU

1.

points out that Ukrainians continue to lose their lives defending democracy and the country’s determination to become an EU Member State has to be acknowledged in a tangible and meaningful manner;

2.

underlines that enlargement is a mutually beneficial process as it contributes to the EU’s stability, strengthens its geopolitical position, promotes peace, its values and the well-being of its peoples (1) and brings benefits for all through a larger single market, whereas at the same time the enlargement process will support Ukraine to strengthen democracy, the rule of law and human rights;

3.

stresses the need for EU unity as regards Ukraine’s accession process and suggests following the example of other Eastern European countries that joined the EU between 2004-2013. That calls for setting up Euro-integration working groups under the auspices of respective ministries, whereby officials would be trained on harmonisation with the EU standards, norms, procedures and EU acquis in general;

4.

notes that whilst the EU accession process must be respected, it is clear that the accession process with Ukraine (like with all Western Balkan and Eastern Partnership candidate countries) must be conducted in the most practical manner and on the basis of implementation of relevant reforms in the area of democracy, rule of law, human rights, fundamental freedoms, market economy and implementation of the EU acquis.

On a special international tribunal on crimes of aggression against Ukraine and sanctions against the Russian Federation

5.

fully supports the resolution of the European Parliament which calls for establishing a special international tribunal on crimes of aggression against Ukraine (2). Such a tribunal should be implemented in close cooperation with the International Criminal Court and the UN. The Committee also urges the EU to take the lead on international assistance in the investigation of war crimes, crimes against humanity and genocide;

6.

supports the resolution of the European Parliament on ‘Recognising the Russian Federation as a state sponsor of terrorism’ (3) and welcomes, in particular, the clause calling for the EU and its Member States to develop an EU legal framework for designation of states as sponsors of terrorism and states which use means of terrorism. The implementation of such an EU legal framework should result in significant restrictive economic, political, social and cultural measures against such countries;

7.

expresses its support for the proposal to include the Wagner Group on the EU terrorist list;

On preventing ‘Ukraine fatigue’

8.

emphasises that if Ukraine were to lose the war against Russia, it would be catastrophic for democracy worldwide. The EU must do everything in its power to prevent ‘Ukraine fatigue’. As a peace project itself, the EU has the moral obligation to support Ukraine for as long and with whatever it takes, including with humanitarian aid and infrastructure;

On Ukraine’s reconstruction and recovery

9.

points out that the EU already needs to design plans and tools needed for Ukraine’s reconstruction now. The Multi-agency Donor Coordination Platform is a strong sign that the international community stands and will continue to stand with Ukraine, but besides its focus on short-term assistance it needs to put equal attention on the long-term reconstruction of Ukraine;

10.

underlines that reconstruction and recovery plans for the Ukrainian society and territory should include fair working conditions, enforcement of labour law, promoting decent work and the right to a safe and healthy working environment, as well as training opportunities for all;

11.

underlines that the task of reconstructing Ukraine will be immense and all necessary provisions have to be put in place now so Ukrainians can return to a normal life as soon as possible once the war is over and can build a competitive economy that embraces the green, digital and just transition and generates prosperity for all Ukrainians. Furthermore, these processes should include support for the creation of jobs that Ukraine lost due to Russia’s invasion;

12.

calls for the involvement of social partners and organised civil society organisations in devising, implementing and monitoring the reconstruction and recovery plans. Such involvement will guarantee transparency and fairness and ensure that resources are deployed where they are most needed;

13.

recalls that helping Ukrainian businesses, in all of their diversity, to survive in times of war and to support them in building the basis for a thriving economy during reconstruction is in the mutual interest of the EU and Ukraine. Beyond Ukraine’s association to the Single Market Programme, there is a need to further grant Ukraine access to other key EU programmes. Continued and improved support measures are needed for businesses regarding knowledge-sharing, logistics and access to direct and indirect financing;

14.

calls for the reestablishment of social dialogue in Ukraine under martial law despite the challenges it might present. Social dialogue is at the core of International Labour Organization (ILO) conventions and the EU-Ukraine Association Agreement and it will become one of the main instruments in the consultations between the government, employers and workers on issues relating to the economic and social rebuilding of the country;

15.

welcomes the positive tripartite agreements on the labour law reforms in Ukraine and the expected improvement of legislative provisions on collective agreement, and emphasises the need to involve experts from Ukraine, the ILO and the EU in the process of implementing international labour standards and social and labour guarantees;

On support to civil society and people-to-people contacts

16.

commends the solidarity shown by civil society organisations in the EU and Ukraine, which delivered first aid and offered support to those fleeing the war;

17.

highlights the importance of setting up an EU mechanism to empower Ukrainian civil society by providing funding and facilitating its participation in EU civil society networks. Particular attention should be given to provide and coordinate financial and administrative support to the EU-Ukraine Civil Society Platform under the EU-Ukraine Association Agreement and to other Ukrainian civil society organisations, including Brussels-based umbrella networks and Ukrainian diaspora organisations;

18.

calls for expanding the budget under the Erasmus+ programme for Ukraine in 2024 to allow an additional 1 000 beneficiaries from Ukraine to benefit from the programme, thus building and strengthening bridges between the EU and Ukrainian civil society. Such traineeship and exchange opportunities within the EESC and other EU institutions would raise awareness about social and economic benefits of EU integration among Ukrainian youth.

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(1)  Article 3 of the Treaty on European Union.

(2)  European Parliament resolution of 19 January 2023 on the establishment of a tribunal on the crime of aggression against Ukraine (2022/3017(RSP)).

(3)  European Parliament resolution of 23 November 2022 on recognising the Russian Federation as a state sponsor of terrorism (2022/2896(RSP)).

Opinion of the European Economic and Social Committee on ‘Energy policy and the labour market: consequences for employment in regions undergoing energy transitions’

(own-initiative opinion)

(2023/C 146/02)

Rapporteur:

Maria del Carmen BARRERA CHAMORRO

Plenary Assembly decision	20.1.2022
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Section for Employment, Social Affairs and Citizenship
Adopted in section	30.1.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	123/43/20

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) notes that the increasing damage caused by the climate emergency and the uncertainties and crises arising from the new geopolitical and energy market situations require the European Union to radically speed up the clean energy transition and increase Europe’s energy independence from unreliable suppliers and volatile fossil fuels. It therefore welcomes the European Commission’s plans to this end (for example REPowerEU and its additional funding through the Recovery and Resilience Facility (RRF)).

1.2.

The EESC also points out that environmental (the climate emergency) and energy risks (dependence on fossil fuels) affect economic activities and all related policy measures. They have a high impact on the most vulnerable regions, economic sectors, workers and population groups, in different ways. Therefore, the EESC considers that it is necessary to focus with a specific attention on the Just Transition Regions where there is a more intensive link between the energy sector development and the labour market requirements and where specific policy actions will be needed.

1.3.

In this regard, the most robust studies show that the success of a green transition in general, and an energy transition in particular, could increase GDP (some studies estimate this increase at 5,6 % by 2050), employment levels (ILO and IRENA estimate that four times as many jobs will be created as lost) and the quality of employment, given the greater skills required. Making energy cheaper by increasing available energy sources, especially renewables, identified and incentivised through an appropriate EU green taxonomy, will improve access to these services and also production, creating more jobs. Generally, the jobs created in renewable energies are more difficult to relocate, therefore benefiting many regions, especially those with the greatest risk of depopulation. The positive health effects of working environments should also be taken into account.

1.4.

However, the EESC is very concerned about the serious negative, economic, occupational and social effects of the energy transition in the short and medium terms. These are being exacerbated by the current crisis of the war in Ukraine and the economic situation (high inflation). Rising energy prices have affected the most vulnerable households, as well as many companies across the EU. High energy bills increase companies’ costs and have an impact on their production and employment levels, forcing them into restructuring plans. This is evidence that energy policy and its changes are substantial for the adjustment and balance of the labour market actors, employees as well as employers. It is therefore necessary that the energy market has to be stabilised very soon and its future to be managed through the new rules which should integrate the double green and digital transition, resilience and competitiveness.

1.5.

In order to correct or mitigate these negative effects of the energy transition in the current context of fresh emergencies, the EESC proposes that Member States consider appropriate ways to have labour market policies better integrated into regulatory frameworks and environment and energy policies (sustainable, high-quality employment incentives as value added by the energy transition; funds for sharing the costs of restructuring processes, whether temporary or permanent; reskilling programmes to improve employability in a decarbonised economy, etc.) and into social welfare policies (securing universal access to energy services, providing access to replacement income and adequate minimum income, etc.). This integration, as part of the national measures to implement the action plan for the European Pillar of Social Rights, should always be achieved through social dialogue and collective bargaining, subject to the autonomy and diversity of the different industrial relations systems of each state.

1.6.

Given the great complexity of these challenges, the EESC proposes prioritising the connections between the issues of the energy transition, labour markets and regional development, as part of a renewed (economic, social and territorial) cohesion policy. While the relation between the EU energy policy and the labour market in a regional context is relevant for all EU regions, a specific case can be found in the Just Transition Regions, having a strong conventional energy background with an impact to connecting industries. To this end, useful indicators, such as the decarbonisation employment potential (DEP) indicator, should be taken into account. In order to effectively meet the objectives of climate policy and the energy transition, the EESC reiterates its firm belief that the Just Transition Mechanism needs to be used more effectively, taking into account a pace compatible with the situation of small and large enterprises. It is necessary to carry out under these conditions new complementary regional measures, in order to preserve as many jobs as possible and ensure that new jobs are good quality. This must always — in practice or in effect — involve social dialogue and collective bargaining, as well as social economy entities. The Commission should promote this greater social dimension. Any measures or policies considered must always be formulated in a manner that respects the features of national industrial relations systems as well as the roles, competences and autonomy of social partners.

1.7.

The EESC calls on the Commission and the Parliament, the Member States and the regions of the EU to involve the social partners and other civil society organisations in a more innovative and effective way in designing and implementing energy transition policies with high added value in terms of employment and social protection, and in monitoring and assessing them. The territorial imbalances in this area have been revealed in the relevant case studies, and the Commission and the Member States, through social dialogue and social economy involvement, are therefore called on to take measures to facilitate more balanced territorial and socioeconomic development. For example, consultation processes and, where appropriate, social compacts to ensure an economic, labour and socially just energy transition can be promoted.

1.8.

The EESC accepts the need to strengthen both public and private investment policies, as well as social compensation policies, in the current geopolitical crisis, given the negative effects on the competitiveness of large EU companies and SMEs and on the most vulnerable households. Among other mechanisms, the use of the REPowerEU plan under the Recovery and Resilience Facility (RRF) is encouraged to stabilise market conditions and ensure supply to all European citizens. This urgent need must be tackled with more economic and social investment measures (e.g. support to offset higher business costs, guarantee of resources to prevent energy poverty, etc.), but without reducing the decarbonisation targets set, because the effects of further slowing down the process would be worse than of speeding it up in the medium and long terms.

1.9.

The EESC believes that both large companies and SMEs have an important role to play in meeting the energy transition objective, using demanding conditions for promoting sustainable, high-quality employment and social protection, as well as ensuring access to energy services for all (e.g. through the prevention of energy poverty). However, in order to address the greatest difficulties faced by SMEs, the EESC calls for programmes giving SMEs access to finance to be improved, streamlined and simplified, with ongoing assistance and support services.

1.10.

The EESC also recommends strengthening the participation of prosumers (passive energy consumers who become active citizens as renewable energy producers) and citizens (energy communities) to speed up the energy transition in Europe.

1.11.

The EESC believes that territorial energy transition plans should be accompanied by appropriate arrangements or agreements for fair social consultation. Through them, creating and preserving sustainable quality employment and support for people must be necessary conditions for the design, implementation and evaluation of the measures planned, including the funds received to promote the energy transition.

1.12.

However, the actual experience of social dialogue and collective bargaining in relation to the energy transition at macro policy level is not positive. In most countries, the social partners’ involvement in devising, implementing and developing policies related to the twin (digital and green) transitions is considered insufficient.

2.   Background and main elements

2.1.

The EESC is glad that the EU, one of the biggest global emitters, has made a binding commitment to achieving climate neutrality by 2050. This pledge was renewed at COP27 (7-8 November 2022), despite the doubts of other major global emitters. However, it stresses that the effectiveness of the measures taken to decarbonise the EU’s economy and energy system in the coming years will depend not only on achieving this environmental objective, but also on whether the transformation is fair for everyone, helping to promote a sustainable and prosperous society with a modern, resource-efficient, competitive economy and a high level of quality employment.

2.2.

The EESC, in its opinion on A strategic vision on energy transition to enable the EU’s strategic autonomy (1), recognises the opportunities for prosperity created by the energy decarbonisation process. However, it also warns of the social and economic risks arising from the current energy crisis. The current problems (the war in Ukraine, the inflation crisis, etc.), which are creating additional pressure and make it difficult to meet the decarbonisation targets set, are compounded by structural problems, such as climate change, whose negative effects on the EU and its regions are becoming increasingly apparent.

2.3.

The EESC is aware that high gas and electricity prices are having severe impacts on all businesses and on the most vulnerable households. The inflationary spiral is causing industrial plants to close (e.g. Slovalco in Slovakia) and making numerous companies less competitive.

2.4.

The EESC also takes note of Eurofound’s reports (2) indicating that energy poverty has increased. While Member States have considerably stepped up efforts to introduce social measures to mitigate the socioeconomic effects of new crises and emergencies, these are proving to be insufficient — hence showing the importance of strengthening social objectives — as underlined by EEA, the design and implementation of packages of climate mitigation policies and measures need to consider the distribution of social impacts and how to make them fairer in the cases where they are unavoidable (Exploring the social challenges of low carbon energy policies in Europe, October 2021).

2.5.

In this context of fresh emergencies, the EESC calls for targeted EU and national measures to be extended and stepped up to offset the most harmful economic, social and employment impacts of meeting ambitious climate targets without questioning them. Also believes that they should be framed within cohesion policies. This emphasis on cohesion policies in the framework of EU climate policies has already been highlighted by the EESC in its opinion (ECO/579 (3)), in order to emphasise measures to help businesses adapt to the requirements of the energy transition, including the restructuring associated with this, and to prevent energy poverty.

2.6.

On a more structural level, the Fit for 55 package is aimed at revising and updating EU legislation and launching initiatives to ensure that EU policies are in line with the climate targets agreed by the Council and the European Parliament, as pledged by the European Green Deal and made binding in the EU climate legislation. The EESC therefore believes that policies to fight the climate emergency may lead to major changes in the economy, and create social disruption affecting employment and well-being (especially in certain regions) in the short, medium and long terms. Furthermore, just as there can be no social progress without robust economic performance, neither can there be any sustainable economic growth without ensuring a green and energy transition which are socially and industrially fair.

2.7.

The impacts on labour markets will be more drastic in certain sectors and regions namely those with carbon-intensive industries that could close down. The need to accelerate the energy transition must be accompanied by a just transition mechanism. Given that the positive effects of this transition will not be automatic, the EESC firmly believes that in order to ensure a successful energy transition it is essential to design and implement investment policies that are inclusive (promoting sustainable, decent jobs) and that involve society, giving a voice to employed people and their representatives at macro (EU and national), meso (sectoral) and micro (company, local unit) level.

2.8.

In these uncertain and changing circumstances, the EESC believes that the Energy Union and Green Deal frameworks are suitable but are insufficient to implement climate and energy policies that ensure social and regional cohesion through significant investment in technological innovation, the creation of sustainable, high-quality jobs, the capacity building of human capital and the generation of regional social capital. The EESC encourages the use of best practices for this purpose (4). Points out that strategies already exist, such as projects for building solar farms on former lignite mining sites in Portugal and Greece, and very strategic support for prosumers in Lithuania. The EESC notes that these experiences still do not constitute widespread or dominant practice.

2.9.

According to a report drawn up at the request of the European Parliament's Committee on Industry, Research and Energy, the cost of the lack of ambition in these EU just energy transition policies will be an estimated 5,6 % of EU GDP in 2050. The EESC agrees that avoiding this cost will require ensuring a just transition, including in terms of employment. The report recommends and assesses a number of EU measures to this end (5): — Ambitious levels of EU funding, in addition to Member States’ resources, to support innovation in clean energy technologies. The EESC has already expressed its support for this in its opinion INT/913. — EU global leadership in multilateral cooperation on the energy transition would generate EUR 94 billion per year. — The EU Taxonomy Regulation, by clarifying what responsible energy investment means and by encouraging environmental and social governance, would help increase the EU’s GDP by EUR 39 billion per year.

2.10.

The EESC believes that SMEs — not just large companies — are also an essential part of the solution for a competitive, climate-neutral, circular and inclusive economy in the EU. The right funding and support conditions need to be created and maintained. Funding must be made more accessible to SMEs, through simplified, adapted administrative procedures. Creating support services for SMEs will make it easier for them to access these measures effectively and will promote the creation of sustainable business ecosystems in all EU regions (NUTS I, II and III), not only those currently categorised as just transition regions (around 100 NUTS III and 31 NUTS II regions) (6).

2.11.

The EESC welcomes the establishment of the Just Transition Fund and the Social Climate Fund (7). However, firmly believes that these funds will not provide all the financial support needed to address the socio-economic effects and the impact on employment in a socially responsible manner. The EESC stresses that a just energy transition is not only about financing but also includes the objective of creating high-quality jobs (strengthening democratic participation — including in businesses), with respect for the autonomy and diversity of national industrial relations systems, and maintaining and further increasing the competitiveness of European businesses. The EESC calls for specific measures at all levels, including in the functioning of the European Semester, to increase the involvement of local and regional authorities and social partners. It also believes it necessary to require mechanisms to monitor and assess the proper use of funds for the just energy transition by checking that companies benefiting from this public funding are complying with the social and occupational objectives.

2.12.

The EESC requests that, when assessing the Member States’ national energy and climate plans and territorial just transition plans, the Commission strengthen employment and social targets, such as: — including active labour policies that facilitate job transitions through vocational retraining and educational investments in high-quality green jobs; — supporting people who lose their jobs due to decarbonisation with funds from states and from beneficiary companies, so that the energy transition can have a positive impact on employment; — developing the regional economic potential arising from renewable energy sources and new forms of participation in electricity production (for example, creating self-supply cooperatives with the capacity to generate surpluses for the community; promoting self-employment in renewable energy generation, etc.); — effectively combating energy poverty. Ensuring access to energy services for the whole population is enshrined in the European Pillar of Social Rights (Principle 20); The EESC considers it essential, in order to achieve these ambitious objectives, to encourage the development of territorial employment and skilling plans for the future, actively involving all stakeholders, in particular the social partners.

3.   Context and main input from international scientific evidence on the impact of a just energy transition on employment

3.1.

The EESC points out that replacing conventional fossil fuel power plants with renewable sources could affect employment in a number of ways. It could create new green jobs in the renewable energy sector while displacing jobs in other sectors. It is important to consider the potential increase in energy prices, which could stifle labour demand in energy-intensive sectors and reduce the purchasing power of private households. The data confirms that renewable energy policies create, destroy or transform jobs in industrial countries.

3.2.

The EESC notes that there is not a complete scientific consensus on the ultimate impact that the energy transition will have on employment. Some studies reveal cases where there has been no net employment growth (Poland) or very modest growth (Germany). However, the ILO estimates that the decarbonisation of the economy will lead to the loss of around 6 million jobs, although the number of jobs created will increase fourfold, from 11 to 43 million by 2030 in International Renewable Energy Agency (IRENA) countries (8). In all of the scenarios presented by the International Energy Agency (IEA), jobs in clean energy will grow, compensating for job losses in fossil fuel sectors. If net-zero emissions are achieved by 2050, 16 million workers will switch to new roles related to clean energy. The 2022 U.S. Energy and Employment Report (USEER) (9) has similar estimates: energy jobs grew 4 % due to clean energy (compared to only 2,8 % growth in overall employment).

3.3.

The EESC notes a number of imbalances. New clean energy jobs are not always in the same place as the jobs they are replacing and require new skills. Therefore, national legislation and energy policies should focus on training to ensure that the transition is successful and benefits the majority insofar as possible. In addition, the proportion of women in the workforce in the renewable energy industry is 32 %, which is higher than in other parts of the energy sector, although it is only 21 % in the wind power sector, showing that gender stereotypes persist in this field. National legislation and its implementation policies must therefore emphasise gender equality objectives in these new jobs.

3.4.

The EESC considers it essential to recognise that the energy transition is not only a matter of technology and public and private investment, but also a profound global social challenge. Therefore, the participation of users from civil society and producers from the world of work (businesses and workers, directly and through their representatives) must be ensured and promoted. The climate must be taken into account in all types of policies and decisions. Furthermore, the EESC believes that policies and decisions should be designed through processes and, where appropriate, consultation agreements between the authorities at all levels and the social partners, underpinned at all times by respect for the autonomy and diversity of national industrial relations systems and other organisations representing civil society, in order to bring about an inclusive energy transition for workers, consumers and the general public.

3.5.

The EESC points out that, when reviewing the scientific literature and experience from actual cases — some successful, some unsuccessful — it is clear there is no single, predetermined transition pathway and that the way in which energy transitions affect employment and workplaces depends on the social conditions under which technologies are introduced and under which the changes associated with the transition are made. Data from case studies of companies (e.g. Renault, Siemens Energy (10)) shows that, when employees were involved, adopting changes led to positive results (more vocational training, greater productivity and higher product quality).

3.6.

However, the conclusions on social dialogue and collective bargaining in relation to the energy transition at macro policy level are not positive. In most countries, the social partners’ involvement in devising, implementing and developing policies related to the twin (digital and green) transitions is considered insufficient. On the basis of the experience of some countries, this shortcoming may stem from two basic challenges faced by the social partners: — notwithstanding the existence of considerably diverse institutional frameworks, in all of them there is a lack of measures to promote social dialogue and collective bargaining in shaping social and labour rights linked to the just energy transition (e.g. Italy, Spain, Poland, Germany, etc.); — the insufficient ability of the social partners to properly participate in discussions on the future of work in the energy transition, to formulate priorities and to effectively deliver on their agendas, despite national legislation, such as Spain’s, promoting social consultation agreements for a just energy transition (Law 7/2021).

4.   General comments

4.1.

The EESC takes note of the analyses showing that both EU policy and legal instruments can be important in addressing the challenges of the energy transition from an economic and social perspective that is fair in labour terms. However, it also considers that existing instruments (such as the European Works Councils Directive or the Directive establishing a general framework for informing and consulting employees) that are implemented in all the Member States should be effectively applied and enforced. The Committee calls for the most appropriate reforms to be encouraged and adopted at the various appropriate levels to strengthen social dialogue and include collective bargaining more in these just energy transition processes, with good balances fostered in terms of creating sustainable jobs and protecting workers, while maintaining an adequate economic and business environment in all Member States and regions, with due respect for the autonomy of the social partners.

4.2.

Experience also shows that economic changes and changes to employment structures resulting from energy transitions can be successful or unsuccessful in terms of just social and occupational transition, depending on whether the volume of employment has largely been preserved by shifting employment from jobs that are unsustainable due to their carbon footprint to other, sustainable jobs. The interaction between energy and employment policies also has an impact on the wider regional environment or context, creating opportunities and risks (for example feed-in tariffs and rising energy prices that put industrial jobs at risk, like in Germany and Spain). The EESC notes that, according to some regional experiences, such as in the mining basin of northern Spain, the new jobs created by the energy transition are significantly fewer and less well paid than the previous jobs.

4.3.

In terms of a more global assessment, the EESC notes that, according to the most robust studies, around 45 % of the world's energy workers are in highly skilled jobs, compared to nearly 25 % of workers in general. However, this is not an option everywhere, and more effort needs to be made to ensure a just and people-centred transition for the workers concerned to prevent decarbonisation from leading to net unemployment, like in Poland.

4.4.

The EESC firmly believes that, in line with the IRENA and ILO reports (11), the potential of renewable energies to generate sustainable, decent work is a clear indication that there is no need to choose between environmental sustainability and job creation. Both can and should go hand in hand, by creating the right legal, political and financial conditions, requiring due accountability for all companies receiving funds and ensuring the involvement of all stakeholders (regions, social partners and the public) in their governance.

5.   Specific comments

5.1.

The EESC notes that the energy industry will have an increasingly strategic position in the economy because it is a key driver for all sectors. However, against the current backdrop of crisis and changes, it entails a number of imbalances and risks, which need to be addressed through appropriate investments, coherent policies and new governance structures, in order to ensure the involvement of the territorial economy, civil society and social partners. Territorial energy transition plans should be accompanied by appropriate arrangements or agreements for fair social consultation, in which the creation and preservation of sustainable quality employment and support for people are necessary conditions in the design, implementation and evaluation of the measures planned.

5.2.

The EESC points out that one of the key governance arrangements for implementing and monitoring the progress of socially just transitions is the European Semester. The EESC has previously stated that the implementation of the European Pillar of Social Rights in the European Semester cycle, together with its monitoring via the social scoreboard, is a step in the right direction (12). It considers, however, that greater emphasis should be placed on the interaction between environment and labour policies in order to help ensure that high-quality sustainable jobs are ultimately created and help secure sufficient income for those who lose their jobs and cannot find another one. It is necessary to enhance the role of the regions and their social capital, smart specialisation and a human capital agenda.

5.3.

The EESC reiterates the need to implement the relevant EU and Member State acquis in the area of labour law and social security. Along the lines that the EESC has already set out previously, by proclaiming the European Pillar of Social Rights (the Social Pillar/EPSR), at the Gothenburg Summit in November 2017, the European Parliament, Council and Commission reaffirmed their commitment to work towards a fairer and more equal Europe. The Pillar should serve as a compass for renewed upward convergence towards improved working and living conditions and to guide reforms in labour markets and social policies (13).

5.4.

The EESC notes that there are significant differences in the legislation implementing the European Climate Law. Some legislation, such as France’s, emphasises this aspect of involving businesses and workers’ representatives in the interaction between the green transition and socio-occupational issues, whereas other legislation, such as Italy’s and Spain’s, and that of all the just transition regions of Eastern European countries, hardly mentions these obligations and rights. For example, the EESC highlights France’s successful experience (Law No 2021-1104), which led to the notion of ‘green transition challenges’ being laid down in the Labour Code, including powers for sector agreements, systems for forward-looking job and skills management, powers to address the challenges specific to the green and energy transition (Article L 2242-20), and trade unions’ right to issue environmental and public health warnings (L 4133-L 4133-4). Therefore, with due respect for the autonomy and diversity of the different European industrial relations systems, the EESC calls on the Commission to promote initiatives for the exchange of good practices between the different Member States and regions.

5.5.

The EESC stresses that the main prerequisite for a successful transition lies in a proactive and inclusive approach that ensures and promotes specific labour and welfare policies. An important feature of successful policies is that they are tailored to the actual needs of the labour market, above all but not only in the regions that are most affected by the transition from fossil fuels to renewable energy or that they seize the opportunities on offer in resource-rich regions. Though useful, the Just Transition Fund (JTF) has its limits, which need to be rectified, and is not an all-encompassing answer to the challenges of just transition, but can be supported by additional policy measures at MS level.

5.6.

With a view to improving the relationship between environment policies and energy transition policies and labour market and social protection policies, the EESC calls for greater attention to be paid to the sustainable employment indicators available for the design and implementation of the envisaged JTM. The Decarbonisation Employment Potential (DEP) indicator at the different NUTS level should be taken into account. In order to obtain data on the employment impact of the new energy crisis, the Eurofound European Restructuring Monitor (14) offers a significant number of recorded experiences.

5.7.

The EESC also calls for the Just Transition Mechanism (JMT) to be implemented faster and better (15). The EESC welcomes the deployment of EUR 55 billion by 2027 in the regions most affected by the energy transition, in order to achieve the objective of leaving no one behind. This is to offset the socioeconomic effects of the transition to a climate-neutral economy through three pillars: a new Just Transition Fund (over EUR 25 billion in investments), the InvestEU Just Transition Scheme (EUR 15 billion for the private sector) and the new Public Sector Loan Facility (which will draw on EUR 18,5 billion of public investment).

5.8.

When formalising the territorial energy transition plans, the EESC considers it appropriate to promote not only transition agreements (regional social consultation) but also collective bargaining best practices and the involvement of workers in a socially just energy transition. In this regard, it should be borne in mind that a shift towards more renewable energy sources will improve environmental quality by reducing emissions of air pollutants, which will benefit health and labour productivity.

5.9.

The EESC deems it essential to ensure that the EU’s green dimension and the energy transition create positive synergies with inclusive transition to help businesses succeed, increase sustainable, high-quality employment opportunities for workers, and improve well-being among the public in an ecosystem that respects the planet.

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(1)  OJ C 75, 28.2.2023, p. 102.

(2)  https://www.eurofound.europa.eu/publications/customised-report/2022/the-cost-of-living-crisis-and-energy-poverty-in-the-eu-social-impact-and-policy-responses-background

(3)  OJ C 323, 26.8.2022, p. 54.

(4)  See OJ C 47, 11.2.2020, p. 30 and OJ C 62, 15.2.2019, p. 269.

(5)  https://www.europarl.europa.eu/RegData/etudes/STUD/2021/694222/EPRS_STU(2021)694222_EN.pdf

(6)  https://ec.europa.eu/eurostat/web/nuts/background

(7)  OJ C 152, 6.4.2022, p. 158.

(8)  https://irena.org/-/media/Files/IRENA/Agency/Publication/2019/Jan/IRENA_Gender_perspective_2019.pdf

(9)  https://www.energy.gov/policy/us-energy-employment-jobs-report-useer

(10)  https://www.europarl.europa.eu/RegData/etudes/STUD/2022/733972/IPOL_STU(2022)733972_EN.pdf

(11)  https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_823807.pdf

(12)  EESC opinion on Additional considerations on the Annual Sustainable Growth Survey 2022 (OJ C 75, 28.2.2023, p. 35).

(13)  EESC opinion on Decent minimum wages across Europe (OJ C 429, 11.12.2020, p. 159).

(14)  https://www.eurofound.europa.eu/observatories/emcc/european-restructuring-monitor

(15)  https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/finance-and-green-deal/just-transition-mechanism_en

Opinion of the European Economic and Social Committee on supporting labour market developments: how to maintain employability, boost productivity and develop skills, especially in SMEs

(own-initiative opinion)

(2023/C 146/03)

Rapporteur:

Mariya MINCHEVA

Referral	Bureau decision, 18.1.2022
Legal basis	Article 52(2) of the Treaty on the Functioning of the European Union
Plenary Assembly decision	20.1.2022
Legal basis	Rule 52(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	Employment, Social Affairs and Citizenship
Adopted in section	30.1.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	153/2/2

1.   Conclusions and recommendations

1.1.

The European labour market is transforming and is facing new challenges, deriving from — the acceleration of technological progress and sustainable smart growth, coupled with climate change, demographic change and ageing, migration, and the digital and green transitions. This transformation requires good understanding of what type of skills are needed for future labour market transformations, including in SMEs, in order to maintain sustainable employability, contribute to a high level of productivity and to reduce labour shortages.

1.2.

Skills development and effective implementation of the right and access to lifelong learning must be an integral part in broader economic growth strategies and recovery and resilience plans. The technological revolution is having a strong impact on the nature of work and jobs, and is accelerating trends in employment restructuring. Thus employability is directly linked to the capacity to upskill and reskill workers at enterprise level in order to be able to manage changes and people’s attitudes towards new skills and opportunities and motivation to develop them.

1.3.

Different factors, such as the aging society and demographic trends, pose a number of challenges in terms of managing transitions in the employment lifecycle. They relate to fair and equal treatment of different generations, motivation and equal access for training and skills development, and upskilling and reskilling opportunities in order to contribute to increasing productivity levels, improving individual professional capacities, managing generational differences, and cooperation and mutual support between generations in the workplace. Adult learning is essential for upskilling adults and can generate a range of personal, societal, economic and social benefits.

1.4.

The European Economic and Social Committee (EESC) shares the view that ‘The EU needs a skills revolution to ensure people can thrive’ (1) and calls for the mobilisation of efforts and effective joint action by institutions, businesses, social partners and stakeholders under the Pact for Skills and the realisation of the ambitious goals set out in its programme. In this context, the EESC welcomes the European Commission’s proposal for 2023 to become the European Year of Skills (2).

1.5.

The social partners are key actors in developing the human potential to achieve sustainable development and maintain employability skills. Their role in a sound and effective collective bargaining process is critical to bridge the gap between employees’ aspirations towards their professional careers and companies’ needs, as well as the recognition of skills, but also to improve the link between education systems, VET systems and employment services with policies on development of innovation, industry, trade, and technology. Social dialogue and collective bargaining are powerful tools for achieving these goals. Civil society organisations are well placed to offer non-formal and informal learning environments as well as meaningful engagement for corporate volunteers to develop key competences. Respective civil society organisations also have an important role to play, especially those operating in the field of social entrepreneurship or with various vulnerable groups in society.

1.6.

New forms of employment, duly protected, deriving from the changes of the nature of work, can offer various opportunities for people to engage in entrepreneurship, to diversify their incomes, and to take up occupations and activities that were not previously available to them. Maintaining employability in these conditions requires appropriate regulation, including through collective bargaining, a professional vocational training system that is able to develop entrepreneurial and professional skills according to labour market needs; a new type of motivational mindset, and the right legal and economic culture.

1.7.

Digital transformation can be a challenge for maintaining employability and successful labour market realisation for large parts of our society. It may pose a risk of widening inequalities due to differences in education and vocational training, including basic and functional literacy, age barriers, and access to modern technologies and the extent to which they are used depending on skills and incomes. The capacity to constantly update digital skills according to labour market changes and introduction of new technologies will undoubtedly be among the most important challenges in the future. In this respect, the EESC welcomes the wide scale investments envisaged in the National Recovery and resilience plans to support the increase in digital skills (3).

1.8.

To be successful, the green transition will require people with the right skills and working places with the right working environment and green production systems. Social partners have a key role to ensure a just transition in a number of economic sectors, where existing jobs will undergo radical transformation. There are four groups of skills that are considered especially important for green occupations: engineering and technical skills; science skills; operation management skills; and monitoring skills. The EESC supports the actions already undertaken at EU level to promote learning on environmental sustainability and the green transition in the EU (4) and calls for practical solutions to be offered to EU citizens and businesses.

1.9.

Future labour market needs will increasingly require advanced, higher-order cognitive skills, making it possible to operate and take decisions in an unpredictable, non-routine and dynamically changing environment. ‘Meta-skills’, which increase and accelerate the acquisition of other skills and are a catalyst for faster learning and successful lifelong development, are key to maintaining employability in modern conditions.

1.10.

The role of systems in acquiring, forecasting and classifying skills is becoming key against the backdrop of dynamically changing labour market needs. At the same time, the design and implementation of tools to anticipate skills needs in individual countries needs to be improved and all stakeholders should be actively involved and make full use of the results of this process.

1.11.

Putting skills and qualifications at the heart of the European political debate should stimulate:

1.11.1.

mobilisation of governments, business, social partners and stakeholders to develop and implement modern, comprehensive skills strategies at national and sectoral level; creation of more and better learning and development opportunities; attracting and retaining of talent to develop key digital, green and cognitive abilities, soft skills, the capacity to manage changes and unlocking of more public and private investment;

1.11.2.

use of artificial intelligence in skill-matching systems and awareness-raising of existing good practices in this area. These can be systems that function both in public employment services and in the private sector;

1.11.3.

acceleration of processes in modernising and integrating vocational education and training, increasing its attractiveness, quality, flexibility and adaptability to the needs of different ages and categories of workers, the needs of the labour market and the need to build key competences in order to ensure a sound competitive environment, sustainability and the transition to a green and digital economy;

1.11.4.

creation of conditions for and motivation of young people to participate in the labour market through career guidance, in order to give them access to good working conditions and a genuine career development.

1.12.

SMEs should be encouraged to work in networks that interact, to cooperate in sharing the costs for research into skill needs and pool their capacities to respond to the challenges of the twin transitions and skills development. Key to their sustainable functioning are the conditions of the local community in which they operate, regional employment systems, the support of local administrations, and their access to new technologies, innovation and the services of Centres of Vocational Excellence.

1.13.

Skills anticipation needs to be widely developed by economic actors and their stakeholders. Support for SMEs is needed to facilitate the development of their human capital training and development policy. In particular, dual training schemes and work-based learning are particularly adapted to the needs of SMEs. In this respect, the social partners have a fundamental role to play in this regard in the framework of social dialogue in their sectors of activity.

2.   General comments and background

2.1.

The COVID-19 pandemic has put us in a new context that has led to changes in society’s behaviour, attitudes and culture. Consumer expectations and behaviour have changed (more online communication and interaction), as have business models and work organisation (more remote and hybrid ways of working). The green and digital transitions pave the way to adapting the existing education and training systems and practices so that they are able to provide the right knowledge, skills and competences.

2.2.

Skills, qualifications and employment, the changing nature of work and the development of an inclusive labour market have been the subject of numerous EESC opinions (5), which are still relevant today. The aim of this opinion is to analyse what type of skills are needed for future labour market transformations, how to maintain employability and contribute to boost productivity, and to explore effective strategies to improve labour force development and reduce labour shortages, including for SMEs.

2.3.

Skills development strategies must be made part of national growth policies and plans in synergy with industrial research and economic development. Member States should encourage the development of high value-added sectors, help workers and businesses to manage change and be able to keep pace with innovation in the technological, digital and green fields. This will require further investment in resources and planning in terms of an education and training system that is able to meet the new challenges and that can eliminate the mismatch in the labour market.

2.4.

The EESC believes that maintaining sustainable employability is a multifaceted issue, where the main challenges relate to the changing nature of work, jobs and occupations, the need for effective implementation of the right to lifelong learning and development, digitalisation, the growing role of human potential and labour productivity, changes in work organisation, demographic change and the need to ensure new patterns of work-life balance with flexible working time, and promote active aging policies (6). There is a need for a supportive environment, so that people understand and are well aware of the importance of training for their professional lives, and are able and motivated to use all opportunities for lifelong learning, regardless of their stage of life. In this context, the capacity to maintain employment is directly linked to attitudes towards and the ability to develop new skills in line with labour market dynamics.

2.5.

Social partners are key actors when it comes to developing and maintaining employability skills. They are best placed to support the convergence between the aspiration of the employee in their professional career and the skills needs of the companies. Their role, in particular through a sound and effective collective bargaining structure, is essential in the process of recognition of skills. The EESC considers that in order to improve the overall outcome in the labour markets, the coordination between education systems, VET systems and employment services with policies on the development of innovation, industry, trade, and technology, and also macroeconomic policies, must be strengthened. This could be especially effective at the local levels.

2.6.

Changes in the nature of work are also leading to the development of new and flexible forms of employment relationships and non-standard employment models that change the way in which the European labour market is structured. New forms of work, duly protected, can open up new opportunities for people to engage in entrepreneurship, to diversify incomes, and to take up occupations and activities that were previously unavailable to them. On the other hand, new forms of work should provide a guarantee of access to social protection, as this is directly linked with the financial sustainability of social protection systems. Maintaining employability under these conditions requires appropriate regulation (including through collective bargaining), a new type of motivational mindset, the right legal and economic culture, and a willingness to develop entrepreneurial and professional skills that respond to changing circumstances.

2.7.

The uptake of digital technologies and their impact on the nature and organisation of work may pose serious challenges in maintaining employability and successful labour market outcomes. Digitalisation may lead to a risk of the widening of existing inequalities due to huge differences in education, including basic and functional literacy, age barriers, and access to modern technologies, as well as the extent to which they are used depending on skills and incomes. As the emerging generation is largely digital and older people tend to prefer analogue ways of working, the different generations can be beneficial to each other. The EESC welcomes the massive investments in digital skills via the National Recovery and Resilience Plans.

2.8.

Green skills are the knowledge, abilities, values and attitudes needed to live in, develop and support a sustainable and resource-efficient society (7). The green transition will require changes in production processes and business models and will inevitably change the skills required and the tasks involved in many existing occupations, and will call for upskilling and reskilling programmes for workers. To be successful, the green transition will require people with the right skills. The EESC acknowledges the policy response to this end and calls for practical solutions to be offered to EU citizens and businesses.

2.9.

Irreversible demographic trends, a shrinking labour force and increased longevity make it necessary to promote new work organisation policies, inter-generational exchange programmes, new work-life patterns with negotiated flexible work time, and measures which can contribute to better labour productivity and promote active aging. In the context of employability, many problems and challenges arise in managing the transitions in work-related lifecycles. They concern fair and equal treatment of generations in the labour market, the culture relating to the understanding of age, management of generational differences, management of social capital. Access to equal opportunities for all to lifelong learning helps to maintain employability and contribute to increased productivity at all stages of life, enhance cooperation and support between generations in the workplace.

2.10.

Attracting migrants with particular skills is also an important part of any future skills supply chain. The Commission Communication on ‘Attracting skills and talent to the EU’ is a positive step in this direction.

3.   Skills needed for future transformations in the labour market

3.1.

Skills are central to the ability of societies, companies and individuals to thrive in an increasingly interconnected and fast-changing world. The future of work will be different for people with different levels of education and qualifications. Demand for low-skilled jobs will gradually decrease, while quite a number will be preserved. Some of the job tasks that are linked to physical or manual, numerical and customer service skills are most at risk of transforming or dropping out, due to the uptake of automation and intelligent systems. Still, craftsmen or artistic professions will remain and their upskilling is essential for participation in economic and social development. Due to the digital and green transitions, the demand for high levels of education and qualifications will grow significantly, while medium-skilled jobs will remain temporarily stable, but many of them will be transformed in line with labour market needs.

3.2.

The role of systems in acquiring, forecasting and classifying skills is becoming key against the backdrop of dynamically changing labour market needs. The EESC welcomes the trend towards the creation and development of European taxonomies and dictionaries of skills and competences such as ESCO, Digital competence framework (DigComp 2.2), DigCompEdu, e-Competence Framework, DISCO, EU Occupations, GreenComp etc. These make a major contribution to the transparency of skills required in the labour market, to the portability of qualifications and the introduction of a competency-based approach to education, training and human resource development. At the same time, we support the view (8) that the design and implementation of tools to anticipate skills needs in individual countries is not at the required level and not all stakeholders are actively involved or make full use of the results of this process.

3.3.

The social partners have an essential role in defining skills development strategies in the light of data from professional and territorial observatories. It is therefore essential to involve the social partners from the start of process to prevent a mismatch between the real needs of employers and employees in Europe.

3.4.

Digital skills will undoubtedly be among the most important skills in the future. In all sectors of the European economy, there is a significant increase in the need for specialised and highly developed digital skills.

3.5.

There is also an increased need for STEM skills (science, technology, engineering, mathematics) and interdisciplinary skills combinations — ‘hybrid skills’, ‘transversal skills’ and ‘inter-functional skills’. Professional expertise, research and foresight skills, skills for sophisticated analysis and interpretation of complex information and technological skills will be increasingly valued. The Green General Skill index (9) identifies four groups of skills that are especially important for green occupations: engineering and technical skills; science skills; operation management skills; and monitoring skills.

3.6.

Future economies and labour market needs will increasingly require advanced, higher-order cognitive skills, making it possible to operate and take decisions in an unpredictable, non-routine and dynamically changing environment. Most often, these are analytical, creative, innovative, non-standard, systemic, conceptual, strategic, abstract, autonomous and critical-thinking skills. ‘Meta-skills’, which increase and accelerate the acquisition of other skills and are a catalyst for faster learning and successful lifelong development, are key to maintaining employability in modern conditions.

3.7.

Machines and algorithms will not replace the need for ‘soft skills’ in the labour market. The future of work and changing job profiles will require a multitude of socio-communicative and behavioural skills, the most sought after of which will be emotional intelligence, empathy, relationship-building, networking, effective communication, assertiveness, teamwork, styling, business etiquette, intercultural tolerance, negotiation, conflict management, etc.

3.8.

Many inter-functional and behavioural skills relating to personal effectiveness are also at the forefront of labour market demands. The skills most in demand in this context are entrepreneurship and teamwork, decision-making and problem-solving skills, result orientation, multitasking, flexibility and adaptability, sense of initiative, resourcefulness, responsibility, self-monitoring, foresight, attention to detail, dealing with uncertainty, tension and stress, time management, etc.

4.   Labour force development for an inclusive labour market and high productivity

4.1.

In order for the European labour market to meet the challenges ahead, it must first and foremost be inclusive, ensure a level playing field and create conditions for investment in well- functioning employment systems which could contribute to increased productivity and guide efficient training and skilling policies, together with robust active labour market policies. In spite of the different traditions and practices across the Member States, the EESC believes that there is a need for:

4.1.1.

optimising systems for monitoring, analysing and forecasting skills needs in the labour market;

4.1.2.

stepping up the involvement of social partners and all stakeholders, paying particular attention to the ability of enterprises to develop internal procedures to identify skills gaps and training needs, and to apply measures for upskilling and reskilling their own workforce;

4.1.3.

applying modern approaches and information technologies to strengthen, systematise across sectors and regions and make accessible analytical data on skills in order to provide training and qualifications relevant to labour market needs; for example, talent intelligence platforms can integrate different information about workers on the one hand (their skills, abilities, experience, desire for professional development, demographics, training needs, development opportunities) and employers’ needs on the other;

4.1.4.

together with the social partners, carrying out a strategic assessment of the challenges and implications for jobs, occupations, qualifications, activities and skills related to the transition to a green and digital economy, and develop both appropriate forms of qualification and reskilling and also investment in skills development and support for people affected by change or transitioning to green jobs;

4.1.5.

analyse the barriers faced by young people to acquiring STEM qualifications and skills, and carry out targeted actions to increase the attractiveness of STEM education and careers among girls and women;

4.1.6.

take measures to create agile, resilient and future-proof VET systems which can attract young people and support their entry to a changing labour market and ensure that adults have access to vocational programmes tailored to their needs and adapted to the twin green and digital transitions;

4.1.7.

to ensure a more active strategic role for the social partners in accelerating the cycle of the creation and offering of new qualifications, in the updating of curricula, and in funding mechanisms and quality audit. Particular attention should be paid to micro-credentials, their quality standards and the possibilities for their recognition and inclusion in networks of broader qualifications; and expanding the practice of setting up sectoral committees, also at territorial level, with the involvement of social partners and educational institutions, to address skills mismatches and to flexibly create micro-credentials that closely match companies’ training needs;

4.1.8.

encourage the use of collective bargaining to ensure access to lifelong learning and facilitate inclusion in the labour market, including through: individual learning accounts, exploring the possibilities for paid training leave, according to national practices and a minimum number of hours of training per year; providing incentives for upskilling and reskilling; recognition of qualifications across EU Member States; development of corporate knowledge management systems; conclusion of mentoring contracts with retired experienced employees, etc.;

4.1.9.

develop policies ensuring equal access to learning and development opportunities. This implies:

4.1.9.1.

implementing the three steps set out in the 2016 EU Recommendation on ‘Upskilling Pathways: New Opportunities for Adults’ — skills assessment, provision of an individualised learning offer, and validation and recognition of skills acquired;

4.1.10.

paying particular attention to those categories of workers who are most often excluded from training but who, for that very reason, need it most: the low-skilled; people over 45 years of age; people with disabilities; women returning to work after prolonged absences due to family and care responsibilities; migrants and refugees. The role of civil society organisations and social enterprises is key in assisting these vulnerable groups with their training needs.

5.   Challenges for SMEs in developing skills needed for future transformations in the labour market

5.1.

Micro, small and medium-sized enterprises make up 99 % of all businesses in the EU. Around 24 million SMEs generate more than EUR 4 trillion in added value and employ over 90 million people, representing a crucial source of entrepreneurial spirit and innovation, which are key to the sustainable development and competitiveness of European industry (10). The importance of SMEs has always been recognised, but COVID-19 has made it apparent how vulnerable to external impacts they are, especially in the context of a crisis which has put a huge number of SMEs in a precarious financial situation and millions of jobs at risk.

5.2.

SMEs face the same challenges as everyone else, but have specific problems relating to better market access and financing, innovation uptake, digitalisation, the transition to climate-neutral business models and the shift from linear to circular production.

5.3.

Due to limited resources, insufficient expertise and their regional location, the vast majority of SMEs have serious difficulties in attracting talent, and in selecting, training, developing, motivating and retaining staff. Only around 40 % of SMEs have written strategies and policies for human resources management. Due to their difficulties in compensating for the absences of staff on external training, as well as their limited financial capacity, SMEs have a lower percentage than the EU average in the use of face-to-face forms of vocational training.

5.4.

The vast majority of SMEs operate in specific market niches and/or non-traditional economic sectors, where the nature of the work requires specific professional skills that need to be acquired and developed in real practical environments. Limited human resources often mean that jobs require broader specialisation and transferable hybrid skills linked to the need to combine a wider range of functional duties.

5.5.

The specific skills needs of SMEs relate mainly to technological entrepreneurship, identification of business opportunities, risk assessment and management, funding sources, development of company strategies, business projects and plans, implementation of innovative business models, use of digital technologies, digital branding and digital marketing, acting in line with the established regulatory framework, staff administration, the green economy and use of renewable energy sources, and the circular economy.

5.6.

Given the technical nature of professions in a large number of SMEs that possess unique know-how, especially in niche markets, on-the-job training provides an appropriate response to their skills needs. Similarly, on-the-job training is needed to meet the challenges of the digital and green transformations. This type of training facilitates skills development in SMEs thanks to the simplified possibility it offers of organising in-house training and transferring knowledge within the company. In order to address the problem of maintaining production levels when workers are absent to attend training courses, employers should have recourse to appropriate forms of training and ad hoc instruments, such as sharing of training programmes at sectoral or territorial level fostering synergies between SMEs, and have access to targeted financial support measures.

5.7.

Skills anticipation needs to be developed widely by economic actors and their stakeholders. The social partners, through social dialogue in occupational branches and sectors, have a key role to play to this end.

---

(1)  European Skills Agenda for sustainable competitiveness, social fairness and resilience, COM(2020) 274 final.

(2)  See the 2022 State of the Union Address by President Ursula von der Leyen https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_22_5493

(3)  https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/assets/thematic_analysis/scoreboard_thematic_analysis_digital_skills.pdf

(4)  GreenComp: the European sustainability competence framework

Council Recommendation of 16 June 2022 on ensuring a fair transition towards climate neutrality (2022/C 243/04).

Council Recommendation of 16 June 2022 on learning for the green transition and sustainable development (2022/C 243/01).

(5)  Labour Market Observatory (LMO) study on ‘The work of the future, ensuring lifelong learning and training of employees’ (2022); Future of work — acquiring of appropriate knowledge and skills to meet the needs of future jobs (2017); Sustainable funding for lifelong learning and development of skills, in the context of a shortage of skilled labour (2019); The changing world of work and the longevity/ageing population — The preconditions for ageing workers to stay active in the new world of work (2019); Digitalisation, Al and Equity — How to strengthen the EU in the global race of future skills and education, while ensuring social inclusion (2019); Vocational training: the effectiveness of systems to anticipate and match skills and labour market needs and the role of social partners and different stakeholders (2020); Proposal for a Council Recommendation on vocational education and training (VET) for sustainable competitiveness, social fairness and resilience (2020); How to promote, based on education and training, from a lifelong learning perspective, the skills needed for Europe to establish a more just, more cohesive, more sustainable, more digital and more resilient society (2020); An SME Strategy for a sustainable and digital Europe (2020); Industrial ecosystems, strategic autonomy and well-being (2021); Blended learning (2021), Higher education package (2022), etc.

(6)  https://www.eurofound.europa.eu/observatories/eurwork/industrial-relations-dictionary/active-ageing

http://erc-online.eu/wp-content/uploads/2017/03/With-signatures_Framework-agreement-on-active-ageing.pdf

(7)  United Nations Industrial Development Organisation.

(8)  See i.e. Skill needs anticipation: systems and approaches. Analysis of stakeholder survey on skill needs assessment and anticipation. ILO — Geneva, 2017, ISBN: 978-92-2-130248-3 (https://www.cedefop.europa.eu/files/2223_en.pdf).

Council Resolution on a new European agenda for adult learning 2021-2030 (2021/C 504/02).

(9)  http://www.nber.org/papers/w21116

(10)  https://www.europarl.europa.eu/factsheets/en/sheet/63/small-and-medium-sized-enterprises

Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 260/2012 and (EU) No 2021/1230 as regards instant credit transfers in euro

(COM(2022) 546 final — 2022/0341 (COD))

(2023/C 146/04)

Rapporteur:

Christophe LEFÈVRE

Referral	European Parliament, 21.11.2022 Council of the European Union, 16.11.2022
Legal basis	Article 114 of the Treaty on the Functioning of the European Union
Section responsible	Single Market, Production and Consumption
Adopted in section	27.1.2023
Outcome of vote (for/against/abstentions)	64/0/1
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	146/1/1

1.   Conclusions and recommendations

1.1.

The EESC welcomes this regulation on instant credit transfer in euro, as in recent years, the Committee has provided an opinion on retail payments (1) and one on the European economic and financial system (2) to contribute to the single financial market, simplify cross-border operations, and secure financial operations between consumers, businesses and SMEs.

1.2.

The EESC is of the opinion that the reachability of service for European consumers and businesses is crucial for the success of instant payments (IPs) in the EU. The more payment service providers (PSPs) (3) will start offering IPs, the more successful IP in the EU will become. IPs will be available to all citizens and businesses holding a bank account in the EU and in EEA countries. The proposal aims to ensure that IPs in euro are affordable, secure and processed without hindrance across the EU.

1.3.

The EESC is of the opinion that the sending bank should not request a fee for checking the match between the international bank account number (IBAN) and the beneficiary’s name but that it should be included in the price of the IP itself. The EESC recommends the requirement for PSPs not to charge more for IPs in euro than for regular credit transfers in euro, especially if the IBAN check regime is extended to all Single Euro Payments Area (SEPA) payments.

1.4.

The EESC would like the IBAN check not to be limited to IPs but also extended to classic credit transfers until they are provided by PSPs.

1.5.

E-money institutions (EMIs) and payment institutions (PIs) are for the time being excluded from the scope of this regulation. This exemption should be withdrawn once these institutions are granted access to the payment systems, after the modification of the Settlement Finality Directive (98/26/EC) (4). Non-bank PSPs should be covered by the regulation as long as their offer of payment services includes operating a payment account and execution of credit transfers. Until that date, it is necessary to clarify how IBAN check and liability rules are applied when these third parties are used to initiate IPs.

1.6.

However, as this regulation modifies Regulation (EU) No 260/2012 of the European Parliament and of the Council (5), it must be clarified that investment services are excluded from Directive 2015/2366 of the European Parliament and of the Council (6) (Payment Service Directive 2, article 3(i)).

1.7.

The EESC considers that the European Commission should: — make the service enabling customers to be notified when a mismatch is detected between the payee’s name and IBAN mandatory and without specific fee; — ensure that when a mismatch is detected during the IBAN check processing by the receiving bank, this bank informs the sending bank of the situation; — ensure that when a mismatch is detected and the consumer decides nevertheless to confirm the IP, the sending bank is no longer responsible if the beneficiary is not the right one; — propose targeted measures to improve the fight against fraud as IBAN will only affect the authorised push payments (APP).

1.8.

To avoid differing interpretations of the application of sanctions, the EESC recommends including and explaining in the regulation provisions to ensure the uniform application of EU law: — how PSPs operating in several countries should assess such situations and what steps PSPs should take; — how such information will be shared within the EU; — how the issue of compensation for damages will be dealt with in such cases; — to refer to just one list of persons or entities subject to EU sanctions that is adopted by way of Council Regulations under Article 215 TFEU and that should be made available to PSPs immediately. This information should constitute the official list of persons or entities subject to EU sanctions (restrictive measures).

1.9.

The European Commission should set out the explanatory part of the regulation in detail so that it covers the general EU position and provides an interpretation of the sanctions applicable to goods and services regarding sanctions that apply to the import, export, transport, prohibition, etc. of certain goods, etc.

1.10.

PSPs could monitor sanctions more effectively by having internal monitoring lists and the right to refer to other countries’ lists (US, UK, etc.), thus reducing reputational and correspondent banking risks (current market practice). The specific measures here include: — establishing internal monitoring lists, which would normally include entities involved in sanctions violations or sanctions risks, dual-use items, etc.; — using the list provided by the national competent authority (NCA) in accordance with the EU anti-money laundering (AML) legislation.

1.11.

The EESC supports the idea to allow EMIs and PIs to participate in payments systems as direct participants and also sees potential in expanding the EC’s proposal on IPs to the EU seven non-euro Member States which are part of the Single European Market.

2.   The Commission proposal

2.1.

IPs are a form of credit transfer whereby funds pass from the payer’s account to the payee’s in a matter of seconds, at any time, day or night, on any day of the year. This distinguishes IPs from other credit transfers, which are processed by payment service providers PSPs only during business hours, with the funds credited to the payee only by the end of the following business day.

2.2.

In the EU, the architecture for IPs in euro already exists. It comprises several payment systems offering instant settlement, and the SEPA instant credit transfer scheme (SCT Inst. Scheme).

2.3.

In its Communication of 24 September 2020 (7), the Commission announced proposed legislation requiring PSPs in the EU to offer IPs in euro by end-2021. Moreover, in its Communication of 20 January 2021 (8), the Commission reiterated the importance of its retail payments strategy and of digital innovation in finance. Subsequently, it included an initiative on IPs in its work programme for 2022 (9).

2.4.

The proposal to make IPs in euro will be available to all citizens and businesses holding a bank account in the EU and in EEA countries, whether the account is held in Euro or in another EU currency. The proposal aims to ensure that IPs in euro are affordable, secure, and processed without hindrance across the EU. This proposal will support innovation and competition in the EU payments market, in full conformity with existing rules on sanctions and fighting financial crime. It will also contribute to the Commission’s wider objectives on digitalisation and open strategic autonomy. This initiative aligns with the Commission’s priority of delivering an economy that works for people and creates a more attractive investment environment.

3.   General comments

3.1.

In recent years, the EESC has provided an opinion on payments (10) and one on the European economic and financial system (11) to contribute to the single financial market, simplify cross-border operations, and secure financial operations between consumers, businesses and SMEs.

3.2.

At the end of 2022, a little more than 13 % (12) of all credit transfers in euro were instant, also: — 1 in 3 EU PSPs do not offer IPs in euro; — in the Euro Zone, 70 million payment accounts do not allow their holders to send money and receive IPs in euro; — up to 9,4 % of cross-border euro IPs are rejected by payment providers because of inefficient sanction screening.

3.3.

Analysis of the European Commission demonstrates up to EUR 200 billion currently locked in the financial system are released on any given day for productive use, resulting in economic benefits in the range of EUR 1,34 to EUR 1,84 billion per year. That evaluation does not consider the increasing inflation in Europe of 10 to 30 % in some countries resulting from the Russian war in Ukraine and the COVID-19 pandemic.

3.4.

For consumers, businesses, SMEs and retailers, IP results in a more secure transaction as the money is received immediately. In an additional choice of payment, i.e. in cross-border European payments, cost savings on payment guarantees that are not needed improved cash-flow management.

3.5.

IPs will also increase the choice of means of payment in physical shops (a so called Point-of-Sale, PoS). In physical shops for the time being payments are only possible in cash or by card. For cross-border transactions only international card schemes are used in practice. With this legislation it will be possible to use IPs for cross-borders payments.

3.6.

The EESC welcomes: — a requirement for PSPs providing a regular euro credit transfer service to offer sending and receiving of IPs in euro; — a requirement for sanctions screening in the form of very frequent checking of clients against EU sanctions lists (as is already done in certain Member States for domestic payments), rather than for each individual transaction; — a requirement for PSPs to provide a service enabling customers to be notified when a mismatch is detected between the payee’s name and the payment account identifier, which is usually the IBAN, as supplied by the payer.

3.7.

The EESC recommends the requirement for PSPs not to charge more for IPs in euro than for regular credit transfers in euro, especially if the IBAN check regime is extended to all SEPA payments.

4.   Specific comments

4.1.

As this regulation modifies Regulation (EU) No 260/2012, it has the same scope. Nevertheless, it is unclear whether these new rules also apply to investment services. Those services are excluded from Directive (EU) 2015/2366 (PSD2 article 3(i)). It would be useful to clarify this exclusion. Checking the match between the IBAN and the beneficiary’s name is a task for the receiving bank for which it has to invest. But this bank does not know who the sender is and has no relationship with him or her. Consequently, this bank cannot request a fee from the sender. The sending bank could request a fee from the sender but that would be illogical as the work is done mostly by the receiving bank. The EESC is of the opinion that the sending bank should not request a fee for this service but — if at all- this should be included in the price of the IP itself, and not charged separately as a per transaction fee, because then it could have an adverse effect on the willingness of payers to use the service and hence on the safety of transactions for the payers. — The EESC has also doubted whether the IBAN check is a purely optional service to which the consumer has to opt-in for each transaction or for all its transactions. In some situations (e.g. a mobile payment) it can be very complicated to manage and can also worsen the service convenience for the payer — he or she would be compelled to make a decision each time when the credit transfer is initiated and unnecessarily click more times than needed. — The EESC would like the IBAN check not to be limited to IPs but also extended to classic credit transfers until they are provided by PSPs. — EMIs and PIs are for the time being excluded from the scope of this regulation. This exemption should be withdrawn once these institutions are granted access to payment systems, after the modification of the Settlement Finality Directive. Non-bank PSPs should be covered by the regulation as long as their offer of payment services includes operating a payment account and execution of credit transfers. Until that date, it is necessary to clarify how IBAN check and liability rules are applied when these third parties are used to initiate IPs.

4.2.

The EESC is of the opinion that for the success of IPs in the EU the reachability of service for European consumers and businesses is crucial. Therefore, the more PSPs will start offering IPs, the more successful IP in the EU will become. Thus, the EESC supports the idea to allow EMIs and PIs to participate in payments systems as direct participants and also sees potential in expanding the EC’s proposal on IPs to the EU seven non-euro Member States which are part of the Single European Market.

4.3.

The EESC considers that, in addition to the proposed regulation, the European Commission should: — enable customers to be notified by instant electronic notification, when a mismatch is detected between the payee’s name and IBAN or any other identifier used, as supplied by the payer. This service must be mandatory and without specific fee; — ensure that when a mismatch is detected during the IBAN check processing by the receiving bank, then this bank informs the sending bank of the situation. Thus, the sending bank informs its consumer of this mismatch and the payment transaction is suspended; — ensure that when a mismatch is detected and the consumer decides nevertheless to confirm the IP, it is completely clear to the consumer that if they have not indicated the right beneficiary the sending bank is no longer responsible if the beneficiary is not the right one; — propose targeted measures to improve the fight against fraud as IBAN will only affect the authorized push payments (APP). This can be done in coordination with the development of the Request to Pay Scheme set up by the European Payment Council which is also the manager of the SCT Instant Payment scheme.

5.   Sanctions

5.1.

A very high proportion of cross-border payments in euro are unjustifiably rejected by PSPs due to problems in verifying the application of penalties. The public authorities responsible for enforcing sanctions provide PSPs with information on the companies subject to sanctions by virtue of control or ownership. Unfortunately, it is not uncommon for public authorities in different countries to have different interpretations of the criteria or the reasons for a change of ownership and to give different opinions on the application of sanctions to such undertakings. As a result, a company may be sanctioned in one country but not in another. Therefore, it would be important to: a) include and explain in the regulation provisions to ensure the uniform application of EU law: — how PSPs operating in several countries should assess such situations and what steps PSPs should take; — how such information will be shared within the EU; — how the issue of compensation for damages will be dealt with in such cases. b) set out the explanatory part of the regulation in detail so that it covers the general EU position and provides an interpretation of the sanctions applicable to goods and services, such as use by the EU in the case of goods and services. Sanctions that apply to the import, export, transport, prohibition, etc. of certain goods.

5.2.

PSPs could monitor sanctions more effectively by having internal monitoring lists and the right to refer to other countries’ lists (US, UK, etc.), thus reducing reputational and correspondent banking risks (current market practice). The specific measures here include: — establishing internal monitoring lists, which would normally include entities involved in sanctions violations or sanctions risks, dual-use items, etc.; — using the list provided by the national competent authority (NCA) in accordance with the EU anti-money laundering (AML) legislation.

5.3.

The European Union may have a different interpretation than non-EU countries regarding sanctions. In order to be compliant with internal and foreign policy, the EESC recommends that the Member States be required to ensure that supervisory authorities make information on persons or entities designed in relation to EU restrictive measures adopted by way of Council Regulations under Article 215 TFEU available to PSPs under their supervision immediately. This information should constitute, the official list of persons or entities subject to EU sanctions (restrictive measures). This list should be provided by the national competent authority (NCA) in accordance with the EU anti-money laundering (AML) legislation.

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(1)  OJ C 220, 9.6.2021, p. 72.

(2)  OJ C 341, 24.8.2021, p. 41.

(3)  A PSP is a provider of payment services as defined in Annex I to Directive (EU) 2015/2366 (PSD2), such as a credit institution, payment institution or electronic money institution.

(4)  OJ L 166, 11.6.1998, p. 45.

(5)  Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009 (OJ L 94, 30.3.2012, p. 22).

(6)  Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).

(7)  COM(2020) 592 final of 24 September 2020.

(8)  COM(2021) 32 final of 19 January 2021.

(9)  COM(2021) 645 final of 19 October 2021.

(10)  OJ C 220, 9.6.2021, p. 72.

(11)  OJ C 341, 24.8.2021, p. 41.

(12)  https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer

Opinion of the European Economic and Social Committee on the proposal for a Regulation of the European Parliament and of the Council on data collection and sharing relating to short-term accommodation rental services and amending Regulation (EU) 2018/1724

(COM(2022) 571 final — 2022/0358 (COD))

(2023/C 146/05)

Rapporteur:

Marinel Dănuț MUREȘAN

Referral	European Parliament, 21.11.2022 Council of the European Union, 1.12.2022
Legal basis	Article 114 of the Treaty on the Functioning of the European Union
Section responsible	Section for the Single Market, Production and Consumption
Adopted in section	27.1.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	190/0/4

1.   Conclusions and recommendations

1.1.

The proposed Regulation responds to the call from all honest stakeholders for the short-term rental (STR) market to be regulated, and is in line with the other EU Regulations.

1.2.

The European Economic and Social Committee (EESC) recommends that the mechanisms proposed in the Regulation be rolled out with a view to developing fairer competition for STR activities and a safer, more transparent supply of STR services which are fit for purpose, and that national and local authorities be equipped with efficient tools for adapting STR activities to local circumstances and needs in various parts of the EU.

1.3.

The Regulation does not specify who and what has to be declared when registering on the national digital registry, and there are specific situations applying to: — information about hosts (property owner, representative of the property owner, tenant/sublessor, company acting as intermediary, company managing or providing upkeep for accommodation units); — information about the accommodation units (run fully or only partly as an STR, with services available for a fee, common services, etc.); — the maximum number of people allowed to occupy a unit (to avoid exceeding the unit’s capacity).

1.3.1.

The process of registering on the national digital registry — with a uniform format at EU level — needs to be made more straightforward and flexible so as to make it as easy as possible in all situations to comply with the rules, to ensure that the data are processed properly and efficiently and to ensure that the rules are complied with; this will help avoid instances of hosts avoiding registering on the national digital registry.

1.4.

The EESC proposes that the Commission recommend in the Regulation that national and/or local authorities carry out periodic impact assessments on STR activities, with regard to: — the actual local tourism potential; — the impact on the life of local residents; — the social impact in terms of rented accommodation; — the impact on the local housing market; — the social impact in terms of cost of living in the local area; — the impact on employment; — the impact on pollution; — the impact on respect for local traditions; — the impact on businesses affected directly and indirectly in the local area.

1.4.1.

This will enable the authorities to take action in good time and avoid situations reaching crisis point.

1.5.

The Regulation does not impose authorisation criteria on national and local authorities after registration on the national digital registry: it gives them leeway to tailor these criteria to the local situation, but it does recommend that the authorisation procedure avoid imposing artificial restrictions and hindering the normal operation of STR activities. We feel that a system of insurance policies taken up by hosts for their units covering the bulk of risks arising from STR activities could replace the requirements for authorisation, as insurance companies would verify that the hosts comply with the rules when evaluating the policy.

1.6.

The Regulation is not overly stringent regarding the information that hosts must provide when registering on the national digital registry or that platforms must report to the authorities. A standardised approach steered by the European institutions, as specified, regarding the level of information required for all STR activities would therefore help national and local authorities to take decisions in line with the interests of the communities concerned, facilitate data sharing between authorities, bolster the level of compliance with the rules and enable the authorities to take appropriate action based on analyses at EU and local level.

1.7.

Nonetheless, we propose that the Commission recommend that national and/or local authorities monitor the impact of STR activities, with regard to: — the drastic reduction in the number of long-term rentals available for purposes other than tourism; — the limited number of rental options open to people with low incomes, due to rents being driven up by high demand in the STR market; — it has changed the living conditions of local residents owing to noise pollution caused by tourists, inappropriate behaviour on the part of tourists and tourists failing to abide by the rules in place to ensure that temporary and permanent residents can get along (respecting local traditions, ensuring that public areas and rubbish collection and sorting sites are kept clean and tidy); — the additional measures that must be taken to protect historical, architectural and natural sites; — the effects on the labour market as a whole.

1.7.1.

The proposal will pave the way for an open discussion on these challenges, which can only be to the advantage of everyone involved in STR activities. The measures taken will not distort the market or result in a significant number of people dodging compliance with the rules, and the local community will directly improve the smooth integration of STRs.

1.8.

The EESC recommends that this Regulation require online platforms to provide clients with relevant information about the host’s registration on the national digital registry or with a general presentation of the unit, as well as with information on the level of responsibility of the hosts and the platform, measures taken to ensure appropriate health and safety conditions for clients, specific requirements to be met by clients both within the unit and in public areas, and various local traditions which are important for all market players, for the community and for local authorities.

1.9.

The Regulation stipulates that it will be implemented at national level two years after being adopted. We feel that it will be much easier to set up an online platform after that period owing to data interoperability and sharing, with manual data collection no longer necessary. Consequently, the EESC recommends that manual collection of data be made optional for the administrators of online platforms operating as businesses, micro and small enterprises. However, the EESC recommends that it be stipulated that national and local authorities must monitor compliance with data reporting/transmission by all platforms acting as intermediaries for or facilitating STR services, with penalties enforced in the event of failure to report data or reporting of inaccurate data on the part of online platform administrators or other types of platform facilitating STR services.

1.10.

The EESC recommends that the Regulation stipulate that the EU institutions will inform all STR stakeholders, either directly or via the national and local authorities, about any major ongoing or anticipated events relating to STR activities which might have an impact on the economy, society, environment or public safety of specific areas. This would help to take action in good time, preventing serious and damaging events (such as economic crises, major social crises, major social unrest, increased poverty and homelessness, a major impact on the environment or impact on public health) or any other event which would force the authorities to take action affecting STR activities.

2.   General comments

2.1.

Short-term accommodation rentals are growing rapidly in the EU, largely driven by the platform economy. They represent about one quarter of all tourist accommodation in the EU, with the number of such properties increasing significantly across the entire EU. This Commission proposal is a key element of the Transition Pathway for Tourism, published in February 2022. It was announced in the Commission’s SME Strategy of March 2020, with the aim of promoting the balanced and responsible development of the collaborative economy in the single market.

2.2.

The proposed new framework aims to: — harmonise registration requirements for hosts and their short-term rental properties, where such requirements are introduced by national authorities; — clarify the rules ensuring that registration numbers are displayed and checked; — streamline data sharing between online platforms and public authorities; — allow the reuse of data in aggregate form; — establish an effective implementation framework.

2.3.

The proposed Regulation is consistent with other legal instruments: — the Digital Services Act; — the Services Directive; — the e-Commerce Directive; — the Platform to Business Regulation; — the Data Act proposal; — the General Data Protection Regulation; — the Single Digital Gateway Regulation; and comes under the rules of the DAC7 Directive (1).

2.4.

The Regulation aims to establish a harmonised and uniform framework for short-term accommodation rental services with regard to data generation and data sharing across the European Union, to avoid a proliferation of diverging data requirements and requests in the single market.

2.5.

The proposed Regulation also supports online platforms in terms of standardising and simplifying registration and data transmission procedures and ensuring that the exchanged data is interoperable, by creating a harmonised framework and reducing fragmentation, semantic ambiguities and administrative burdens.

2.6.

The Regulation requires hosts to register in advance in a national digital registry, which will help customers of online STR platforms to access more transparent and accurate information, increase the legal certainty of traded services, facilitate the sharing of useful information and contribute to the smooth management of such services in different areas.

2.7.

This Regulation provides a common framework at EU level for information and data processing, providing national and local authorities with the data traceability they need in order to develop and maintain STR rules and to comply with the rules and adopt informed policy responses, in accordance with existing EU legislation.

2.8.

The Regulation takes into account the financial and administrative difficulties that micro and small enterprises operating online platforms may encounter in adapting these platforms to the requirements of the Regulation related to the automatic interoperability of data sharing, providing alternative solutions that do not involve significant costs.

3.   General and specific comments

3.1.

The Regulation complies with the EU Regulations listed; it supports the development of fairer and more balanced competition in this important and dynamic business sector and imposes a more appropriate level of compliance with legal (tax) provisions on the part of all service providers in the STR market (hosts), while still driving the development of various businesses in the EU.

3.2.

The EU and national institutions must monitor and regulate this constantly evolving sector, in order to integrate STR service activities smoothly into the overall environment, thereby actively contributing to the sustainable development of the local business environment in line with the social taxonomy.

3.3.

The Regulation does not impose specific authorisation criteria on national and local authorities: it gives them leeway to tailor these criteria to the local situation, allowing for the local rental market, the overall social situation, the relationship with local residents and environmental and business issues in the districts concerned. However, it does recommend that the authorisation procedure avoid imposing artificial restrictions and hindering the normal operation of STR activities.

3.3.1.

The Regulation is not overly stringent regarding the information that hosts must provide when registering on the national digital registry or that platforms must report. This means that there are both opportunities and risks for national and local authorities in terms of how they manage the volume of data acquired from hosts when they register and are authorised to operate and from platforms when they report the data required. These data have to be used efficiently, without undermining the development and operation of STR activities. The Commission does however recommend that the level of information required be standardised, in order to facilitate the vital sharing of information between authorities.

3.4.

The European institutions, together with national and local authorities, should regulate the conditions for STR activities to operate and develop, fostering compliance with a social, economic, environmental protection, and site and nature conservation taxonomy to ensure that STR activities are integrated smoothly into the local area.

3.5.

Since the clientele of these platforms is made up of EU and non-EU citizens travelling for various reasons in addition to tourism, it is important that the roll-out of this Regulation promotes and maintains a level playing field with reasonable prices and a balanced range of accommodation (including traditional forms such as hotels, bed and breakfasts and hostels, and non-traditional forms such as private hosts), without reducing the supply of STRs or making this accommodation more expensive.

3.6.

This Regulation should require that any specific additional or compliance rules introduced by national and local authorities be imposed on hosts gradually and in a timely manner. This would avoid reducing the supply of STRs in the respective markets and ensure that this supply is not steered towards less official forms of STRs, which would affect the market of direct and indirect jobs generated by STRs, STR businesses themselves and the related businesses in this sector, and hosts’ voluntary compliance with legal requirements.

3.7.

The rapid development of tourism and of specific online platforms has created new opportunities for hosts and for clients and tourists. However, alongside the great business opportunities for the communities concerned, it has also led to a number of challenges: — it has drastically reduced the number of long-term rentals available for purposes other than tourism; — it has curtailed the rental options open to people with low incomes, since rents have been driven up by high demand in the STR market; — it has changed the living conditions of local residents owing to noise pollution caused by tourists, inappropriate behaviour on the part of tourists and tourists failing to abide by the rules in place to ensure that temporary and permanent residents can get along (respecting local traditions, ensuring that public areas and rubbish collection and sorting sites are kept clean and tidy); — it has meant that additional measures must be taken to protect historical, architectural and natural sites; — the pool of potential employees which is both limited and expensive.

3.7.1.

The EESC is concerned about this situation which has arisen in certain parts of the EU and is aware that this is not the aim of the Regulation proposed by the Commission. The EESC calls for these major civic and social aspects to be factored into the rules.

3.8.

The EESC points out that the Regulation does not specify who and what has to be declared when registering on the national digital registry, and that there are specific situations applying to: — information about hosts (property owner, representative of the property owner, tenant/sublessor, company acting as intermediary, company managing or providing upkeep for accommodation units); — information about the accommodation units (run fully or only partly as an STR, with services available for a fee, common services, etc.); — the maximum number of people allowed to occupy a unit (to avoid exceeding the unit’s capacity).

3.8.1.

All these points must be clarified in advance and the information sent to the authorities responsible for operating and managing the national digital registry. This will ensure that the information is processed properly and efficiently, that the rules are complied with and that information sharing is as consistent as possible, with uniform implementation across the EU.

3.9.

However, the EESC notes that the regulation allows the national and local authorities to decide on the criteria for authorising STR units. This may be efficient and ensure that the criteria are a good fit for specific local circumstances, preventing the authorities tying the authorisation process up in too much red tape.

3.10.

The Regulation does not set specific requirements for online platforms as regards the level of information to be provided to the clients about the accommodation units or by the hosts or about the level of responsibility of the various parties, nor does it specify the requirements regarding the information that must be disclosed to clients regarding the conditions applying when they rent the unit — the Regulation leaves it to the platform or national and local authorities to decide on these matters. A uniform level of compliance ensuring that clients are provided with useful information about the accommodation, about the health and safety requirements and about the responsibility of the various parties and the requirements to be met by the clients both within the accommodation unit and in public areas would be useful for market players, for the local area and for the local authorities.

3.11.

The Regulation complies with EU legislation, and it will not be implemented at national level for another two years. We feel that it will be much easier to set up an online platform after that period owing to data interoperability and sharing, with manual data collection no longer necessary. Consequently, through this Regulation, it should be recommended that manual collection of data be made optional for the administrators of online platforms operating as businesses, micro and small enterprises, and that national and local authorities monitor compliance with data reporting/transmission by all platforms acting as intermediaries for or facilitating STR services.

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(1)  Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (OJ L 104, 25.3.2021, p. 1) has extended the EU’s framework on the automatic exchange of information in the field of taxation. Member States had to incorporate this directive into their national laws by 31 January 2022 and have to apply the new provisions from 1 January 2023.

Opinion of the European Economic and Social Committee on the proposal for a Directive of the European Parliament and of the Council concerning urban wastewater treatment

(COM(2022) 541 final — 2022/0345 (COD))

(2023/C 146/06)

Rapporteur:

Stoyan TCHOUKANOV

Referral	European Parliament, 19.1.2023 Council, 24.1.2023
Legal basis	Articles 192(1) and 304 of the Treaty on the Functioning of the European Union
Section responsible	Agriculture, Rural Development and the Environment
Adopted in section	3.2.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	198/1/4

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) supports the Commission’s vision to bring the EU rules for urban wastewater up to date and ready for the next two decades, by addressing not only wastewater treatment, but also energy and circular economy aspects, as well to improve governance.

1.2.

The EESC recognises clean water as a strategic resource for ensuring the functioning of our society and a resilient EU economy, as well as for environmental and human health, and thus considers that it needs to be treated with corresponding care. Some 60 % of EU river basin districts are cross-border and require transboundary cooperation. The recent ecological disaster of the Oder river should be used as a warning example of failed cooperation and lack of transparency.

1.3.

The EESC maintains that pollution must always first and foremost be addressed at source, but recognises urban wastewater treatment as an important last filter to protect receiving waters with benefits for the environment, human health and society.

1.4.

Micropollutants, such as pharmaceutical residues, are of increasing concern for water quality. The EESC therefore welcomes the proposal for selected urban wastewater treatment plants to install additional treatments for their removal and highlights the need for considerable efforts to ‘break’ the old standards through new innovative treatment methods.

1.5.

To ensure the implementation of the ‘polluter pays’ principle, and ensure the affordability of water services, the EESC strongly supports the proposal for an Extended Producer Responsibility that would require producers to cover the cost of removing micropollutants resulting from their products from wastewater, but exemptions must be strictly limited for it to be efficient.

1.6.

If the Directive is extended to cover agglomerations from 1 000 p.e. there must be room for decentralised solutions through small sized plants with special attention regarding functionality.

1.7.

Sewer overflows are a hotspot for pollution, including antimicrobial resistance genes, microplastics and toxic substances that put at risk aquatic life, human health and the status of recreational waters. The Directive should introduce a cap on their occurrence and reporting to the public should give the full picture of the pollutant load carried by overflows. Urban run-off, in the form of polluted rainwater (including snow) from the urban landscape, e.g. roads, should be collected and properly treated before being discharged into receiving waters.

1.8.

Climate change is affecting the water cycle, with predicted increased occurrences of heavy rains as well as drought. Preventive measures, such as blue-green solutions that capture and retain rainwater e.g. via green roofs or raingardens, decrease the load on sewers (thereby reducing the risk of sewer overflows) and bring many co-benefits for the urban landscape.

1.9.

The EESC is concerned that water and sanitation are public services, but are sometimes provided by private companies. Rules and regulations need to be in place to ensure that public services are not run for profit and that revenues are invested in maintenance and improvement of the services.

1.10.

The EESC highlights that water is a vital but increasingly scarce resource. Two thirds of European citizens consider water quality and/or quantity in their country to be a serious problem (1). For a successful implementation of SDG 6 ‘Ensuring access to water and sanitation for all’ and for avoiding future crises, these concerns need to be treated with due urgency. Ensuring water affordability should be a priority for all Member States.

1.11.

The EESC also calls on the European institutions to start addressing water as a priority and develop an ‘EU Blue Deal’: a radical effort to anticipate needs, to preserve water resources and adequately manage related challenges through a comprehensive and coordinated roadmap, setting ambitious targets and actions linked to agreed milestones. The EESC will make concrete proposals towards an EU Blue Deal in the course of 2023.

2.   Commission proposal

2.1.

The scope of the directive is proposed to be extended to cover agglomerations from 1 000 population equivalents (p.e.) meaning that small towns will also be obliged to collect and treat urban wastewater, and can seek EU funding to do so. The Commission will develop new standards for decentralised facilities and Member States will need to ensure better monitoring and inspection of such facilities.

2.2.

Sewer overflows and urban run-off have been identified as important remaining sources of untreated urban wastewater and Member States will be required to set up integrated management plans for urban wastewater to reduce pollution from these sources. Priority should be given to preventive measures, such as blue-green solutions, and optimisation of existing systems using digital techniques.

2.3.

To curb emissions of nutrients, new limits for nitrogen and phosphorus removal will be introduced, as a first step for larger facilities above 100 000 p.e. and then for medium-sized facilities above 10 000 p.e. in areas where eutrophication remains an issue. There will also be a requirement to remove micropollutants for all large plants and medium-sized plants where the environment or human health is at risk. With the aim of curbing the load of non-treatable substances, which will enhance possibilities for circularity, there are new obligations for Member States to address non-domestic discharges to sewer at source.

2.4.

To cover the cost of the required upgrade and monitoring to remove micropollutants, and to incentivise the development of more environmentally friendly products, an Extended Producer Responsibility will be introduced requiring producers of pharmaceuticals and products under EU cosmetics rules to contribute financially.

2.5.

A new target of energy neutrality for the wastewater sector by 2040 has been introduced, meaning that the energy consumed by the sector at national level should be equivalent to the amount of renewable energy it produces.

2.6.

The proposal sets 2040 as the deadline for full compliance, with interim deadlines to ensure progress.

3.   General comments

3.1.

Clean water is one of our most precious resources, crucial for the functioning of ecosystems and our society as well as for socioeconomic activity. Agriculture, energy production, and the tourism sector are all heavily dependent on access to clean water. The United Nations recognises access to clean water and sanitation as a basic human need for health and well-being among the Sustainable Development Goals (2). Yet freshwater is under pressure from a range of activities, and this pressure is predicted to increase following climate change.

3.2.

The Urban Waste Water Treatment Directive is the key piece of EU legislation that aims to protect the environment from the adverse impacts of untreated wastewater. In force for more than 30 years, since its adoption the quality of European rivers, lakes and seas has greatly improved, although two thirds of surface water bodies are still not in good status. EU countries have set up collecting systems and wastewater treatment plants with the help of EU funding. There is a high level of compliance with the directive across the EU, with 98 % of wastewater collected and 92 % satisfactorily treated, according to the current coverage of the directive.

3.3.

The ongoing revision has the potential to bring the directive up to date by addressing remaining sources of untreated wastewater and new pollutants, as well as improving the energy and circular economy aspects of wastewater treatment in line with the Green Deal and the digitalisation of Europe. However, the EESC calls on the European institutions to include wastewater in a larger vision, start addressing water as a priority and develop an ‘EU Blue Deal’: a radical effort to anticipate needs, to preserve water resources and adequately manage related challenges through a comprehensive and coordinated roadmap, setting ambitious targets and actions linked to agreed milestones. The EESC will make concrete proposals towards an EU Blue Deal in the course of 2023.

3.4.

Large investments are needed in the water sector. The OECD estimated that all Member States except Germany need to increase spending by at least 25 % to comply with the requirements of the existing Directive (3). This estimate, however, does not take into account the cost of sewer maintenance. The new rules will require additional investments and it is crucial that financing is broadened from water tariffs and the public budget to also include those sectors that contribute to the pollution of urban wastewater in order to keep access to water and sanitation affordable for households.

3.5.

Wastewater treatment comes at a cost and requires input in the form of resources and energy. Pollution must always first and foremost be addressed at source and be prioritised over end-of-pipe solutions. Policy measures should therefore as far as possible restrict the emission of harmful substances into the environment and society in the first place. Urban wastewater treatment acts as a last filter to protect receiving waters and to meet the objectives of EU water legislation. The EESC is therefore calling for more synergy with urban development strategies (Urban Agenda for the EU, Ljubljana Agreement, different thematic partnerships, etc.).

3.6.

More efforts should be invested to favour citizen empowerment on issues related to the collection, treatment and management of urban wastewater. The general public should not only be involved in the implementation of the treatment of wastewater in terms of information but also in terms of participation: mechanisms should be in place in all Member States for citizens to report back observed failures in the collection and/or treatment of urban wastewater with specific attention paid to illegal industrial discharges.

3.7.

There is big potential for Europe to become a leader in providing solutions for the wastewater treatment sector, from advanced treatment technologies, to energy solutions. Development of the wastewater sector is a possibility for innovation and technology and an opportunity to export knowledge and attract young entrepreneurs.

4.   Specific comments

4.1.

Urban wastewater is a footprint of society and our consumption and production patterns. It contains a complex mix of domestic discharges, run-off from streets and buildings, and industrial and other non-domestic effluents that need proper treatment to not pose a threat to human health and the environment or affect recreational waters. Working conditions and health and safety for the workers involved in the urban wastewater system should be a key priority.

4.2.

The overall target for 2040 with interim targets sets out a clear path for wastewater treatment for the next two decades. However, we have limited understanding of the risks to aquatic life presented by mixtures of chemicals in surface waters, and many of these chemicals come from products used in our own homes. Furthermore, the construction, maintenance and operation of waste water collection and treatment come at high financial and greenhouse gas emission cost. Reviews and evaluations of key parts of the Urban Waste Water Treatment and Sewage Sludge Directives present the opportunity to modernise and improve coherence across the sector and help deliver on the ambitions of the European Green Deal.

4.3.

Antimicrobial resistance is a growing concern for society, and urban wastewater, whether treated or not, is a hotspot for it spreading (4). Antimicrobial resistance is driven not only by excessive antibiotic use, but also by other antimicrobial agents, such as fungicides, antiviral agents, parasiticides, as well as some disinfectants and antiseptics, all of which are used in the urban environment especially in hospitals. If action, such as curbing excessive use of antimicrobial agents, is not taken, 10 million people yearly are projected to die from antibiotic-resistant infection by 2050, a UN report warns (5).

4.4.

Urban run-off is a major pathway for toxic, non-biodegradable and emerging contaminants to enter aquatic ecosystems, including plastic debris, hydrocarbons, detergents, hormones, solvents, pathogens, pesticides, heavy metals and engineered nanomaterials (6). Despite being polluted, urban run-off is often handled as clean rainwater due to lack of monitoring and not treated before it is discharged to receiving waters. This represents a major risk to ecosystems; as an example, acute mortality has been observed in salmon linked to a toxic substance (6PPD-quinone) in car tyres (7).

4.5.

Sewer overflows are a hotspot for micropollutants, antimicrobial resistance (8), microplastics and trash to enter receiving waters. They represent a threat to the environment and human health but also for the tourism sector, which depends on clean recreational waters. The load of rainwater to sewer can be reduced by the introduction of blue-green solutions that retain water and let it infiltrate into the ground, including green roofs, removal of impenetrable surfaces and rain gardens. Not only are they a cost-efficient way to retain rain water, but they also come with many co-benefits for the urban landscape, including reducing the risk for flooding, reducing heat islands and increasing biodiversity and well-being in the city. Achieving the transition to more efficient sewage treatment and a circular economy requires changes not only in regulatory and institutional approaches, but also in how we as citizens appreciate our individual and collective responsibilities towards sewage management.

4.6.

The EESC supports the introduction of mandatory integrated urban wastewater treatment plans with the objective of reducing sewer overflows and pollution from urban run-off. But while the intention of the urban wastewater management plans is good, they risk becoming empty shells as the content and objective (of reducing combined sewer overflows to 1 % of dry weather flow) are only indicative. Proper rainwater management is crucial not only to prevent pollution of receiving waters but also to adapt cities to a changing climate where both intense rain events and prolonged heat waves will be part of the new normal, as extreme weather events and other climate hazards are increasing in frequency and severity across Europe.

4.7.

Advanced (‘quaternary’) treatment has been shown to decrease the load of a wide range of harmful substances to receiving waters (9). The new requirements for large and selected medium-sized plants to monitor and remove micropollutants are therefore welcome. However, attention should be paid to the cost and removal effects obtained by different techniques, such as ozonation or activated carbon. Adequate financing for the R & D of the new technologies and EU-harmonised education schemes for operational staff will help prevent and treat new pollutants.

4.8.

The introduction of Extended Producer Responsibility is a big step forward for the ‘polluter pays’ principle and a welcome response to the finding by the European Court of Auditors that the cost of pollution is still largely borne by taxpayers (10). It is also in line with the integration of the PPP into environmental legislation, reinforcing the environmental liability regime at EU level, and better protecting EU funds from being used to finance projects that should be funded by the polluter.

4.9.

Eutrophication remains an issue in the EU, with more than 30 % of rivers, lakes and coastal waters and 81 % of EU marine waters affected and little progress over the last decade (11). It is therefore positive that provisions have been brought up to date and harmonised to ensure that all large plants will have to reduce nutrients by 2035, and medium plants discharging into areas sensitive to eutrophication by 2040. Although the deadlines are very ambitious with regard to the challenges and their implementation, the investment capacity of the sector and the lifetime of the existing assets, many Member States already have such nutrient removal requirements in place and the EESC welcomes the harmonisation across the EU.

4.10.

Small agglomerations have been identified in the evaluation of the UWWTD as representing a significant share of the remaining sources of untreated wastewater and exerting pressure on water bodies (12). While it would be positive if more wastewater was treated, the proposal comes with several challenges, as the construction of new sewage pipes represents a significant cost in sparsely populated areas and needs to be accomplished with intensive financial support. Decentralised solutions and well-functioning individual systems should be promoted. Dry (composting) toilets reduce the consumption of drinking water for flushing and can promote circular economy by returning human faeces to the soil without complex, expensive and energy-intensive collection, pumping and treatment systems. The WHO has developed such guidelines for the safe re-use of wastewater, excreta and greywater (13).

4.11.

Leakage from sewage pipes is an often overlooked and largely unreported source of untreated wastewater that puts groundwater at risk. This can represent a significant share of the pollution load from urban systems on the environment (14). The problem is likely to increase as the sewage network is ageing. Proper monitoring and quantification of sewer leakage is needed and should be included as a requirement in the Directive.

4.12.

Wastewater treatment requires considerable amounts of energy and can often make up a significant share of municipalities’ electricity bills. At the same time, wastewater contains energy in various forms, including chemical, kinetic and thermal, that should be harvested to decrease dependency on fossil fuels in line with EU objectives. It is positive that energy efficiency is being addressed with the objective of reaching energy neutrality for the sector by 2040.

4.13.

The wastewater sector has large potential to become resource-factories. There are already wastewater treatment plants in the EU that are energy-positive thanks to energy-saving technologies and renewable energy production, e.g. via anaerobic digestion of the sewage sludge and subsequent utilisation of the produced biogas (15). A further potential is the dual use of areas of treatment structure by covering with photovoltaic plants which should be promoted.

4.14.

Ten million people still lack access to sanitation in the EU. It is therefore welcome that the proposal requires Member States to improve access to sanitation, in particular for vulnerable and marginalised groups, including providing public toilets free of charge by 2027. However, the requirement should be strengthened by requiring Member States to ensure access to sanitation for all at early stage of urban planning and consider the affordability and social aspect of water services. This includes the long lifecycle of waste water collection and treatment assets and their inherent inflexibility for adaptation or upgrading.

4.15.

With a view to ensuing the affordability of water services, exemptions from the Extended Producer Responsibility schemes must be strictly limited. Preferably, the exemption for products placed on the market at less than 2 tonnes per year should be deleted as some substances are potent even at low quantities, and as a minimum it should be clarified that the 2 tonnes refer to the EU market and not the national level. It should also be ensured that the EPR covers online retailers.

4.16.

The cost of wastewater treatment makes up a significant share of water bills, but many water users are not aware of the service that wastewater treatment provides, nor the extent to which wastewater treatment is performed well in their area. The new provision on the reporting of information to the public is therefore welcomed as it would ensure that up-to-date information is disseminated on the percentage of wastewater treated (and not treated) in the area, as well as the load of pollutants discharged by urban wastewater treatment plants and individual systems and also via sewer overflows and urban run-off.

---

(1)  European Water Association (EWA), Water Manifesto.

(2)  United Nations, Sustainable Development Goals, Goal 6: Ensure access to water and sanitation for all.

(3)  OECD, Financing Water Supply, Sanitation and Flood Protection.

(4)  UNEP, How drug-resistant pathogens in water could spark another pandemic.

(5)  UNEP, Environmental Dimensions of Antimicrobial Resistance.

(6)  Lapointe et al., Sustainable strategies to treat urban runoff needed, Nature Sustainability 5, 2022, pp. 366-369.

(7)  Tian et al., A ubiquitous tire rubber–derived chemical induces acute mortality in coho salmon, Science, Vol. 371, 2021, pp. 185-189.

(8)  EAWAG, Monitoring antibiotic resistance in wastewater.

(9)  Wilhelm et al., Does wastewater treatment plant upgrading with activated carbon result in an improvement of fish health?, Aquatic Toxicology, Vol. 192, 2017, pp. 184-197.

(10)  ECA, Special Report 12/2021, The Polluter Pays Principle: Inconsistent application across EU environmental policies and actions.

(11)  European Commission, Report on the implementation of Council Directive 91/676/EEC.

(12)  European Commission, Evaluation of the Council Directive 91/271/EEC.

(13)  WHO, Guidelines for the safe use of wastewater, excreta and greywater.

(14)  Nguyen & Venohr, Harmonised assessment of nutrient pollution from urban systems including losses from sewer exfiltration: a case study in Germany, Environmental Science and Pollution Research, Vol. 28, 2021.

(15)  See for example Marselisborg WWTP — from wastewater plant to power plant.

Opinion of the European Economic and Social Committee on the proposal for a Directive of the European Parliament and of the Council amending Directive 2000/60/EC establishing a framework for Community action in the field of water policy, Directive 2006/118/EC on the protection of groundwater against pollution and deterioration and Directive 2008/105/EC on environmental quality standards in the field of water policy

(COM(2022) 540 final — 2022/0344 (COD))

(2023/C 146/07)

Rapporteur:

Arnaud SCHWARTZ

Referral	European Parliament, 19.1.2023 Council, 24.1.2023
Legal basis	Article 192(1) of the Treaty on the Functioning of the European Union
Section responsible	Agriculture, Rural Development and the Environment
Adopted in section	3.2.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	156/01/06

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) strongly supports the European Commission’s proposal to add a number of crucial water pollutants to the lists of priority substances for surface and groundwater, which will be used to assess chemical status under the Water Framework Directive. Member States will have to monitor their presence in water and make sure that quality standards are not surpassed. The proposal is several years overdue and is a welcome attempt to bring chemical water status assessment up to date.

1.2.

The EESC points out that clean water is fundamental for our society and the environment, as well as for socioeconomic activities. A strong water protection framework, focusing on pollution reduction at source, will bring benefits for ecosystems, recreational water users and industry, and ensure clean and affordable drinking water.

1.3.

While there are costs associated with the initiative, for example for wastewater treatment, the EESC stresses that benefits associated with unpolluted water outweigh them, for example by avoiding exposure to harmful chemicals and less need for treatment to reach drinking water standards. Changing use-patterns of harmful substances, with the objective of reducing their presence in water, can also bring co-benefits such as reduced exposure to harmful pesticides for workers in the agri-food sector.

1.4.

More should be done for health and safety in the workplace. The EESC asks for specific guidelines to be developed for industries that use water with different substances in the production processes.

1.5.

The EESC recommends that the Member States do more to collect, organise and interpret water data and put environmental data needs at the top of their priorities. Reducing data delays and ensuring specific indicators across the Member States is important.

1.6.

More than 60 % of European waters still do not have good chemical status under the Water Framework Directive (1), but this does not give the full picture of the issue as current assessment doesn’t take into account effects of chemical mixtures that can occur even when pollutants are present at ‘safe’ levels. More should be done to evaluate and monitor the impact of the combined substances on the environment and human health.

1.7.

Banned pesticides are still present in European waters. The EESC stresses that monitoring measures, including ending illegal use and derogations, must remain in place in the Member States where excessive amounts are detected, even if those substances have been de-listed as priority substances at EU level.

1.8.

Water is a vital but an increasingly scarce resource. Two thirds of European citizens consider water quality and/or quantity in their country to be a serious problem (2). For a successful implementation of SDG 6 ‘Ensuring access to water and sanitation for all’ and for avoiding future crisis, these concerns need to be treated with due urgency. Facilitating access to adequate resources, equipment and human resources should be a priority for Member States alongside consolidation of the control institutions and increasing the number of control inspectors.

1.9.

The EESC also calls on the European institutions to start addressing water as a priority and develop an ‘EU Blue Deal’: a radical effort to anticipate needs, to preserve water resources and adequately manage related challenges through a comprehensive and coordinated roadmap, setting ambitious targets and actions linked to agreed milestones. The EESC will make concrete proposals towards a EU Blue Deal in the course of 2023.

2.   Context

2.1.

The revision of the lists of surface and groundwater pollutants, presented in the Commission’s proposal for a Directive amending the Water Framework Directive (WFD), the Environmental Quality Standards Directive (EQSD) and the Groundwater Directive (GWD), aims to address two main problems: — The lists of priority substances are incomplete and out of date and do not offer adequate protection of ecosystems and human health from risks posed by water pollution. — The large variation in pollutants and quality standards set at national level is too large. Data reporting is burdensome as it is not adapted to today’s technology. The procedure for reviewing the lists of priority substances is excessively lengthy.

2.2.

For surface water, the revision proposes to add 24 individual substances (pesticides, pharmaceuticals and industrial chemicals) and a group of 24 per- and polyfluoroalkyl substances (PFAS) to the list of priority substances for surface water as well as to amend the environmental quality standard (EQS) for 16 substances already listed and remove four substances deemed to no longer pose an EU-wide threat. Additionally, a threshold value for pesticides is introduced in line with the provisions for groundwater.

2.3.

For groundwater, it is suggested that a group of 24 PFAS, two antibiotics and a range of pesticide metabolites be added to Annex I to the GWD with EU-wide thresholds. Additionally, a threshold value for pharmaceuticals is introduced. One pharmaceutical is added to Annex II GWD, which means that the Member States need to consider setting a national threshold.

2.4.

The Commission will develop a methodology to monitor microplastics and antimicrobial resistance genes with the aim of listing them as pollutants in the future.

2.5.

In order to improve the monitoring of groundwater pollutants, the ‘watch list’ procedure has become mandatory for groundwater monitoring.

2.6.

Standards for pollutants regulated at river-basin level have been harmonised and will be included in the assessment of chemical status.

2.7.

Member States are required to monitor estrogenic substances using effect-based methods over a period of two years in parallel to conventional chemical monitoring of three estrogenic substances. The definition of environmental quality standard in the WFD is amended to include effect-based trigger values used for effect-based monitoring.

3.   General comments

3.1.

More than 20 years after the adoption of the Water Framework Directive, water pollution remains a wide-spread issue in Europe, with negative influence on aquatic life, recreational use of water and drinking water provision. It also constitutes a concern for agriculture and industry. Two thirds of surface water bodies and one quarter of groundwater bodies in Europe still do not have a good chemical status (3), but this is only assessed against a small subset of pollutants and does not reflect the full extent of water pollution.

3.2.

Water pollution comes at a large cost for society, estimated at EUR 22 billion annually, only taking nutrient pollution into account (4). Even if the ‘polluter pays’ principle is enshrined in the EU Treaties, it is still not well implemented, meaning that the cost of pollution is largely born by taxpayers (5). Exposure of humans and the environment to harmful substances comes at a great cost, and remediation and treatment of contaminated water is costly. All efforts must therefore be directed towards preventing pollution at source.

3.3.

The threat of chemical cocktail effects on aquatic life and human health is a well-recognised issue and the deficiencies of the current monitoring and reporting framework was one of the key points for the ongoing revision to solve. Findings and recommendations from the scientific community, e.g. in the framework of the EU’s SOLUTIONS and NORMAN projects, should be taken into account.

3.4.

The review of the lists of surface and groundwater pollutants should be done every four and six years respectively. The current revision is overdue as the last revisions were in 2013 and 2014 for surface and groundwater pollutants respectively. This means that the new priority substances will only form part of the chemical status assessment of the 4th cycle river basin management plans, with a proposed compliance date of 2033. Given the dire state of European water quality, and the fact that the proposed substances are already proven to be of EU-wide concern for water, the EESC strongly urges that measures be taken without delay to decrease the concentration of these and other pollutants in all EU waters. The EU must respond faster to scientific knowledge on water pollution and must translate it into legal action and solutions. Access to justice in environmental matters is also essential, the Members States and European Union should ensure efficient and faster judicial and administrative procedures (6).

3.5.

The EESC supports the addition of new pollutants to the list of priority substances for surface and groundwater. The lists not only require Member States to reduce the release of these substances into the environment but also trigger measures under other Directives (7). However, if the lists are not up to date or are too narrow, environmental action may be limited. Likewise, pollutants have largely been added as individual substances, without taking into account chemical mixture effects.

3.6.

The EESC welcomes the fact that PFAS have been added as a group of 24 substances with a threshold value for the group, and also welcomes the introduction of a threshold value for pesticides in surface water and a threshold value for pharmaceuticals in groundwater. While some of these threshold values might be too high to be protective, this is in line with the ambition of the Chemicals Strategy for Sustainability to regulate substances as a group. However, such threshold values should also be developed for other substance groups, including bisphenols, pyrethroids and neonicotinoids.

3.7.

Even though pesticides are banned, they can continue to be present in the environment, where they exert a threat to aquatic life and human health, either via legal exceptions, illegal use or because the substance is hard to degrade. The vast majority of pesticides detected in water in some Members States are not authorised, including DDT, lindane, atrazine and endosulfan (8). It is crucial that the monitoring and efforts to reduce their presence continue.

3.8.

It is also proposed to delete Article 16 of the WFD on the grounds that it has become obsolete. This, however, is only partly correct because the deletion would result in an elimination of the 20-year deadline for the phasing out of priority hazardous substances. The phasing out obligation, one of the main objectives of the WFD, is only enforceable if it is linked to a clear deadline. Already under the existing WFD the phasing out obligation has widely been disregarded; the less concrete it becomes the more authorities will try to ignore it. This would constitute a serious weakening.

3.9.

Citing the ‘one substance, one assessment’ approach under the Chemicals Strategy for Sustainability, the proposal assigns a central role to the European Chemicals Agency (ECHA) to take over a set of responsibilities from DG ENVI and the JRC in identifying water pollutants and their associated quality standards. Given that ECHA primarily deals with chemicals regulated under the Regulation on the registration, evaluation, authorisation and restriction of chemicals (REACH), which does not include pesticides and pharmaceuticals, the EESC urges the ECHA to strengthen their (legal and technical) capacity on pharmaceuticals and pesticides to be equipped to deal with their new tasks. The EESC also recommends that the ECHA in this context cooperate with skilled partners, including at the regional level, e.g. universities and their laboratories.

3.10.

More should be done for health and safety in the workplace, e.g. in the agri-food sector. In this regard the EESC is asking for specific guidelines to be developed for industries that use water with different substances in the production processes.

4.   Specific comments

4.1.

The EESC welcomes the fact that monitoring data and the resulting status should be made available to the European Environmental Agency and the public at least once a year, instead of every six years, as was previously the case. This will provide a more up-to date picture of the state of Europe’s waters and the progress towards achieving the goal of the WFD.

4.2.

The EESC welcomes the provision to use effect-based methods for the monitoring of estrogenic substances. This will capture the effect of all estrogenic substances with similar effects and not only from the three estrogenic substances monitored using conventional chemical techniques. While the inclusion of trigger values in the definition of environmental quality standard opens the possibility for the introduction of effect-based monitoring of mixture effects in the future assessment of chemical status, the Commission should be empowered to come forward with delegated acts to require further use of effect-based monitoring.

4.3.

The quality standards for glyphosate have been set before the final opinion of the Scientific Committee on Health, Environmental and Emerging Risks (SCHEER) has been issued, without any indication that they will be revised following the final scientific opinion, meaning that input from civil society in the SCHEER consultation is not being taken into account. The SCHEER should also take into account the views of civil society (9) on this final opinion. It is not too late because the process for the revision of the Environmental Quality Standards (EQS) for glyphosate is still ongoing, as required by the Water Framework Directive. And this should form the basis of the Commission’s proposal for the establishment of threshold values in surface waters.

4.4.

The EESC considers that no individual EQS for pesticides should be higher than the proposed ‘total pesticides’ parameter (0,5 μg/L) (10). Therefore, the proposed EQS for inland surface water not used for drinking water abstraction (86,7 μg/L) should not be used. Instead, based on a precautionary approach, the EESC advises that the proposed EQS for surface water used for drinking water abstraction (0,1 μg/L) should cover all inland surface water. The EQS for ‘other surface water’ should be consequently amended to 0,01 μg/L following the practice to use one order of magnitude lower thresholds for ‘other surface water’ compared to ‘inland surface water’.

4.5.

The individual threshold for pesticides in groundwater is based on what was possible to analyse with analytical techniques in the 1990s (11). Technical progress has been made since then and it is now possible to detect lower concentrations. In surface water, lower threshold values are already set for several pesticides. The EESC regrets the fact that the Commission has not reviewed the individual threshold value for pesticides in the revision of surface and groundwater pollutants. In groundwater, an arbitrary threshold of 0,1 μg/L for plant protection products is applied, based on analytical techniques, there are now improved techniques that allow scientific information to be available to establish thresholds based on the actual risk associated with the different substances.

4.6.

There is a continued lack of indicators to monitor the health of groundwater systems, such as temperature, despite the fact that science already provides robust funding for establishing relevant criteria. The EESC wonders why the Commission has not included such relevant criteria in its proposal. Such criteria should be added in the Annex I GWD in line with recital 20 and Article 4(5) of the GWD and comply with the groundwater-related requests in the resolution of the European Parliament concerning the implementation of water legislation (17.12.2020).

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(1)  EEA, Report No 7/2018, European waters: Assessment of status and pressures 2018.

(2)  European Water Association (EWA), Water Manifesto.

(3)  EEA, Report No 9/2021, Drivers of and pressures arising from selected key water management challenges: A European overview.

(4)  European Commission, Green taxation and other economic instruments — Internalising environmental costs to make the polluter pay.

(5)  ECA, Special Report 12/2021, The Polluter Pays Principle: Inconsistent application across EU environmental policies and actions.

(6)  EESC opinion Application of the Aarhus Convention — Access to Justice in Environmental Matters (OJ C 123, 9.4.2021, p. 66).

(7)  For example, Plant Protection Products Regulation (PPPR) authorisations must be reviewed if Water Framework Directive chemical status is at risk.

(8)  PAN Europe and Ecologistas en Acción, Ríos hormonados: Contamination of Spanish Rivers with Pesticides.

(9)  Joint NGO analysis of the Commission's proposal for a revised list of priority substances for surface and groundwater.

(10)  COM(2022)540.

(11)  See remarks from the EMA in Guideline on assessing the environmental and human health risks of veterinary medicinal products in groundwater and from the EEA in ETC/ICM Report 1/2020: Pesticides in European rivers, lakes and groundwater — Data assessment.

Opinion of the European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on ambient air quality and cleaner air for Europe

(COM(2022) 542 final — 2022/0347 (COD))

(2023/C 146/08)

Rapporteur:

Kęstutis KUPŠYS

Referral	European Parliament, 19.1.2023 Council, 24.1.2023
Legal basis	Articles 192(1) and 304 of the Treaty on the Functioning of the European Union
Section responsible	Agriculture, Rural Development and the Environment
Adopted in section	3.2.2023
Adopted at plenary	22.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	145/9/12

1.   Conclusions and recommendations

1.1.

Clean air is a fundamental human right, therefore the EESC strongly welcomes the proposal for a revision of the Ambient Air Quality Directives (AAQDs). The Committee recommends fully aligning the EU air quality standards (including for ozone, in the form of limit values) with the updated World Health Organization (WHO) Global Air Quality Guidelines by 2030 at the latest, and defining a strong enabling framework based on limit values, enforcement mechanisms and clear management rules. Reducing air pollution has large co-benefits for climate mitigation, energy security and biodiversity, and it increases the resilience of populations for pandemics.

1.2.

The EESC welcomes the approach taken by the Commission to focus on ‘benefit-to-cost’, but regrets that the ratio, and not the maximum protection of human life and health indicators, is considered the most important indicator to be taken into account in this revision. This leads to ‘closer alignment’, rather than to ‘full alignment’ as the preferred policy option. With the exception of nitrogen dioxide, the proposal seems to seek an alignment with the WHO Guidelines from 2005 and not the latest ones, published in September 2021.

1.3.

Clean air standards form a legal framework, but reducing emissions lies in the remit of other legislative packages. The Committee is confident that the AAQDs limits and rules, ambitiously set and enforced in a timely manner, together with effective sectoral measures, will lead to bold actions at national and local levels.

1.4.

Citizens should act too and learn about the link between their lifestyle, actions, consumption patterns, and pollution levels. Better informed people are much more motivated to act, and long-term behavioural change can be achieved more easily. Therefore, the EESC calls for funding increase for citizen science projects related to pollution under the Horizon Europe programme.

1.5.

The Committee strongly supports the right to compensation for people who have suffered health damage from air pollution and penalties for natural and legal persons within the Member State that violated the rules.

2.   Background

2.1.

Ambient (outdoor) air pollution is the number one environmental cause of health impacts in the EU, with estimates of more than 300 000 premature deaths per year (1). The WHO says that air pollution in both cities and rural areas was estimated to cause 4,2 million premature deaths worldwide per year (2). This is due to the cumulative effects of air pollution on public health. For instance, exposure to fine particulate matter (PM) of 2,5 microns or less in diameter (PM2,5) causes many health problems including cardiovascular and respiratory disease and cancers. Air pollution also damages our environment, causing acidification, eutrophication and crop losses.

2.2.

Exceedances of air quality limit values are registered widely across the EU (3), with concentrations well above the latest WHO recommendations (4).

2.3.

The AAQDs (Directive 2008/50/EC of the European Parliament and of the Council (5) on ambient air quality and cleaner air for Europe and Directive 2004/107/EC of the European Parliament and of the Council (6) on arsenic, cadmium, mercury (Hg), nickel and polycyclic aromatic hydrocarbons in ambient air) set rules for air pollution management and EU air quality standards for 12 air pollutants: sulphur dioxide (SO2), nitrogen dioxide (NO2)/nitrogen oxides (NOx), particulate matter (PM10 and PM2,5), ozone (O3), benzene (C6H6), lead (Pb), carbon monoxide (CO), arsenic (As), cadmium (Cd), nickel (Ni), and benzo(a)pyrene (C20H12).

2.4.

The Fitness check (7) concluded that the current AAQDs helped to reduce air pollution. There are 70 % fewer early deaths attributable to air pollution compared to the 1990s. Yet, ambient air in our continent is still too polluted, to the detriment of people’s health and the environment.

2.5.

As for their harm to human health, the most impactful pollutants in Europe are PM2,5, NO2 and ground level ozone. The European Union wants to achieve zero pollution at the latest by 2050, in synergy with climate-neutrality efforts. In the meantime, the current revision of AAQDs aims to, inter alia: — introduce stricter air quality standards, more closely aligned with the new WHO guidelines; — support the right to clean air and improve access to justice; — establish more effective penalties and compensation regimes when air quality rules are breached; — strengthen air quality monitoring and modelling rules to support preventive action and targeted measures; — clarify the requirements for the definition, adoption and implementation of lawful and effective air quality plans, aiming at both preventing and remedying violations of the legislation; — improve access to and the quality of public information.

3.   General comments

Path to Zero Pollution

3.1.

The right to clean air is an internationally recognised fundamental human right (8). Therefore, the EESC strongly welcomes the proposal for a revision of the AAQDs. EU air quality legislation has proved to be a key and fundamental tool to drive air pollution reduction in the EU.

3.2.

The level of alignment of EU air quality standards with the most recent WHO Guidelines is a matter of political choice and depends on ambitions at state and city levels. Three scenarios (and corresponding policy options) had been examined by the Commission and described in its Impact Assessment Report (9). The choice among them is political, and not ‘purely scientific’. The three options are distinguished by different levels of ambition: ‘full alignment’ (I-1), ‘closer alignment’ (I-2) and ‘partial alignment’ (I-3).

3.3.

The EESC welcomes the approach taken by the Commission to focus on ‘benefit-to-cost’, but regrets that the ratio, and not the maximum protection of human life and health indicators, is considered the most important indicator to be taken into account in this revision, thus leading to Policy option I-2, the ‘closer alignment’. With the exception of NO2, the proposal indeed aims at alignment with the WHO Guidelines from 2005, and not the new ones, published in 2021.

3.4.

The EESC urges, by the earliest possible deadline, assessment of the progress and review of the targets, fully aligning the EU air quality standards with the updated WHO guidelines by 2030 at the latest. This alignment should be accompanied by a strong enabling framework, relaying on limit values, enforcement mechanisms and clear management rules.

Limitations of current proposal

3.5.

Regretfully, most Member States still do not comply with the existing EU air quality standards, and are not taking effective action to improve air quality — as testified by the number of ongoing infringements procedures. Thus, the revision was expected to not only set the right level of ambition, in coherence with science, so to stimulate more decisive initiatives, but to also improve implementation and enforcement rules, in order to better assist and guide Member States and competent authorities.

3.6.

The Committee calls for the removal of potential loopholes from the legislation, related to human health and environmental protection. Articles 16 and 17 contain the rules for deducting winter sanding/salting and natural sources of air pollution from compliance obligation. In the Committee’s view, this approach contradicts the objectives of the legislation. Natural and human-made sources combine and amplify the effect of pollutants. By neglecting natural air pollution sources, we would continue putting people’s lives in danger.

3.7.

Similarly, in Article 29, Member States are set to establish effective, proportionate and dissuasive penalties for ‘natural and legal persons’ within the Member State that violated the rules. This is a step in the right direction that the Committee strongly supports, as it is extremely important to have a working sanctions regime to address non-compliance, together with the provisions in Article 28 on the right to compensation for people who have suffered health damage (even partially) from air pollution. The Committee calls for a clear, strictly rational link to be established between the pollutant source and the polluter, which clarifies responsibilities and their related penalisations; it also demands further clarification of the provisions on air quality plans and the remedies (including financial penalties) linked to failures to comply with air quality standards by the deadlines.

3.8.

Special emphasis should be put on ozone. According to the EEA’s estimation, 24 000 premature deaths per year are due to ozone exposure (10). Ozone is a pollutant that is not directly emitted by primary sources. It is formed through a series of complex reactions in the atmosphere driven by the energy transferred to nitrogen dioxide molecules when they absorb light from solar radiation (11). The health effects of ground-level ozone (‘toxic’ ozone) are well-identified: recent epidemiologic research has demonstrated that ozone exposures are associated with increased mortality and morbidity (12) and to serious damage to nature and crops. No effective actions are in place yet to swiftly reduce the emissions of ozone precursors such as methane, despite the recent publication of EU Methane Action Plan under the Global Methane Pledge. However, the Committee welcomes the intention to explore, during the National Emissions reduction Commitments Directive review in 2025, the possible inclusion of methane among the regulated pollutants.

3.9.

In Article 13 the Commission is proposing to turn into ‘limit values’ almost all air pollutants currently subject to ‘target values’, except for ozone, which is still covered by only ‘target values’. This exemption is justified by ‘the complex characteristics of its formation in the atmosphere which complicate the task of assessing the feasibility of complying with strict limit values’.

3.10.

In the Committee’s view, such ‘target values’ will not sufficiently incentivise Member States and competent authorities to decrease ground-level ozone — one of the three most serious pollutants. Solutions do exist to reduce toxic ozone. Reducing ozone precursors such as NO2, non-methane volatile organic compounds (VOCs) and methane emissions, will contribute to decreasing ozone concentrations. Improving vehicle emissions standards, reducing the use of or banning solvents, paints or sprayers with high VOCs content, effectively lowering methane emissions from energy, waste and agriculture (the largest contributor) are efficient ways to consequently decrease ground-level ozone. These known tools should be entirely exploited. The Committee recommends fully aligning EU ozone standards, in the form of ‘limit value’, with the 2021 WHO Global Air Quality Guidelines.

3.11.

On top of the Commission’s proposal, additional monitoring sites for Ultra Fine Particles (UFP), black carbon and ammonia should be introduced. The proposed density is not enough to serve the development of epidemiological studies. The monitoring sites must be planned in such a way that their data are sufficient to adequately inform local health authorities of the health risks posed by local pollution, including emerging pollutants of concern, especially with regard to vulnerable populations and highly polluted areas.

Specific sectorial measures

3.12.

With regard to Article 10 of the proposal, the Committee suggests that each Member State should establish at least one monitoring ‘supersite’ for each city with more than 250 000 inhabitants in an urban background location. Member States that do not have cities with more than 250 000 inhabitants must establish at least one monitoring ‘supersite’ in an urban background location.

3.13.

Besides purely medical guidance, the WHO recommends protecting nature, preserving clean air and investing in clean energy to ensure a quick and healthy energy transition, which will also bring co-benefits in the fight against climate change. The WHO also recommends building healthy and liveable cities: promoting cleaner and active mobility, such as public transport, cycling and walking; stopping using taxpayer’s money to subsidise the fossil fuels that cause air pollution; and promoting healthy diets.

3.14.

These points of action should guide European decision-making too. The European Green Deal and the relevant initiatives as broad as Fit for 55 or REPowerEU should be adopted and implemented in light of public health and environmental protection (13), serving climate change mitigation and adaptation, security of energy supply and geopolitical considerations.

3.15.

That is why the EESC sees room for further improvement in the proposal. The shortcoming of the Commission proposal lies clearly in the field of not looking beyond what is technically quantifiable today. Impacts from policy actions are modelled up to maximum technically feasible reductions, with the baseline scenario already underestimating the potential. Additional strong sectoral legislation (e.g. in transport, domestic heating and the agri-food sector) would undoubtedly help in delivering cleaner air: — Regulating all pollutants that harm human health, the environment and climate; — Establishing strict emission limits for stoves and boilers, as part of the EcoDesign standards revision; — Ensuring that the agri-food sector is also contributing to the achievement of WHO Guidelines levels by 2030, especially cutting ammonia and methane emissions; — Promoting public transport and disincentivising the use of personal cars; — Reducing EU vehicle emission limits to the globally lowest level possible (and acting as soon as possible) while phasing out internal combustion engines; — Improving testing, approval and certification of vehicles; — Monitoring emissions on the road, e.g. by remote sensing technology; — Harmonising the European framework (14) for low-emission/zero-emission zones and introducing a single EU-level portal for vehicle check and registration for entering such zones.

3.16.

Clean air rules form a legal framework, but reducing emissions lies in the remit of other legislative packages. In the Committee’s view, the low-emission/zero-emission zone concept offers a perfect ‘best practice’ example. For instance, there may well not have been a Low Emission Zone (LEZ) in Brussels if there were no norms to enforce measures to reach these goals. Later on, as more and more cities reach the norms, the guiding targets need to be updated on the basis of scientific data to continually improve air quality.

3.17.

The process described above creates a virtuous cycle of actions and consequences. The AAQDs limits and rules, ambitiously set and enforced in a timely manner, together with effective sectoral measures, will lead to bold actions being taken at national and local levels. It will make ambitious clean air targets easier to achieve. All feasible opportunities of this chain of actions are, in the Committee’s view, not fully taken into account in the impact assessment and in the proposal. If it were present in the initial planning of the proposal, then the ‘full alignment’ (I-1) option might have been chosen as the way forward, not the less ambitious I-2 of ‘closer alignment’.

Increasing public awareness

3.18.

Despite improvement since the 1990s, air quality is still a serious concern for European citizens. Most Europeans (more than 80 %) think that health conditions such as respiratory diseases, asthma and cardiovascular diseases, are serious problems in their countries resulting from air pollution (15).

3.19.

While a majority of Europeans do not feel well-informed (60 %), nearly half of the respondents to the survey hold the view that air quality has deteriorated in the last 10 years (47 %). Despite the fact that the number of people exposed to heavily polluted air has steadily declined, those who are exposed still suffer huge health problems and do not experience any tangible evidence that the ambient air quality has improved.

3.20.

It is not clear yet how much citizens would be ready to do, proactively, in order to improve, directly or indirectly, the quality of ambient air. However, awareness raising has twofold effects:

3.20.1.

First, Europeans should learn about the link between their lifestyle, actions, consumption patterns and pollution levels. Such clear linkage would result in better public acceptance for the introduction of policy measures, related to behaviour change.

3.20.2.

Second, the effectiveness of such policy measures would be much higher and bring cumulative results if citizens learn about the outcomes of their behavioural change. Ambient air quality improvements can be clearly seen by the ‘naked eye’, especially in the urban environment, however, scientific data, presented in an interactive and easy-to-grasp way, can facilitate a virtuous circle. Better informed people are much more motivated to act and long-term behavioural change can be achieved more easily.

3.21.

Citizen science acts as a decisive factor in forming public opinion on all pollution related issues and their impacts on citizens’ lives. The EESC points out the success of initiatives like ‘CurieuzeNeuzen’ (16), which acted as a catalyst for public acceptance of LEZs in several cities in Belgium, and calls for stepping up funding under the Horizon Europe programme for citizen science projects related to pollution.

4.   Specific comments on air pollutants of emerging concern

Ultra-fine particles

4.1.

Ultra-fine particles are particles with a diameter of 0,1 μm (100 nm) or less. These particles result from natural or anthropogenic sources such as combustion activities. Despite growing evidence of the impact of UFP on health, these pollutants are not regulated by the current AAQDs. The EESC notes an increasing ambition to transform the existing health impact knowledge into policy recommendations, however, there is a need to gather additional information on the matter.

4.2.

Therefore, the EESC calls for additional targeted action via the Horizon Europe programme, to fund research on UFP in a systematic way. Despite the lack of specific indicators on UFP, it may be worth starting a public awareness campaign to inform European citizens about ‘emerging’ risks from this underexposed pollutant class.

Black carbon

4.3.

Black carbon (BC) are fine particles generated by the combustion of fossil fuels or biomass. BC has adverse effects on health, provoking heart or lung diseases, but it is also a climate change accelerator, as 1 ton of BC has a global warming effect up to 1 500 times stronger than 1 ton of CO2.

4.4.

The Committee takes into account the references to studies, provided by the WHO (17), that find statistically meaningful health impacts from exposure to black carbon at levels of 1,08 to 1,15 μg/m3. However, the WHO does not endorse these levels in its good practice recommendation. In the Committee’s view, this should not act as an excuse to not take any action on black carbon. Similarly, actions to reduce levels of UFP like on PM2,5 and PM10, should be taken. Waiting for another three or five years of evidence from some EU-funded research projects or for another WHO guidance document means thousands of citizens’ lives will be lost and the climate crisis will be accelerated.

Ammonia

4.5.

Ammonia (NH3) is an inorganic compound of nitrogen and hydrogen. High levels of ammonia damage the lungs and are a cause of mortality. NH3 is an important contributor to excess levels of secondary PM. It also deteriorates our environment and damages biodiversity through acidification and eutrophication. Reductions of ammonia can be achieved in the agri-food, transport and ‘solvent and product use’ sectors.

4.6.

No WHO recommendations for ammonia concentrations in ambient air related to health impacts exist. Yet, its health and environmental impact is well-documented (18), as ammonia emissions contribute to the formation of secondary PM2,5, for which WHO Air Quality Guidelines exist. Experts have suggested a long-term critical level for vegetation (higher plants) at 3 μg/m3.

4.7.

The recent proposal to revise the Industrial Emissions Directive (IED) (19) and its higher ambition of reducing industrial emissions and expanding its scope to the EU’s largest livestock farms, can significantly contribute to ammonia emissions reductions, since the principal source of NH3 emissions is agriculture, and roughly ¾ of emissions in the EU are caused by manure management from livestock farming (20). However, the IED should be implemented in a proportionate and cost-effective manner to avoid an additional increase in production costs in the agri-food sector (21).

4.8.

To ensure individuals’ livelihoods health and well-being, the EESC maintains that a robust support mechanism for vulnerable individuals and industries is also necessary to make the practical solutions on NH3 emissions in livestock farming available ‘on the ground’. This support should include funding for known technological advancements and further research. Overall, livestock farming undertakings should be encouraged to make environment and health-friendly changes while maintaining the critical function of the supply of goods for the population (22).

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(1)  EEA, Health impacts of air pollution in Europe.

(2)  WHO, Ambient (outdoor) air pollution.

(3)  EEA, Europe's air quality status 2022.

(4)  WHO, Global air quality guidelines.

(5)  Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality and cleaner air for Europe (OJ L 152, 11.6.2008, p. 1).

(6)  Directive 2004/107/EC of the European Parliament and of the Council of 15 December 2004 relating to arsenic, cadmium, mercury, nickel and polycyclic aromatic hydrocarbons in ambient air (OJ L 23, 26.1.2005, p. 3).

(7)  CIRCABC, Air Policy.

(8)  United Nations General Assembly Resolution A/76/L.75 and NAT/824.

(9)  European Commission, Air quality — revision of EU rules.

(10)  EEA, Health impacts of air pollution in Europe.

(11)  WHO, Global air quality guidelines.

(12)  EPA, Health Effects of Ozone in the General Population.

(13)  Particular attention should be given to the new vehicle emissions standards Euro 7, as road transport is the main cause of the ambient air pollution in urban territories. The failure to meet expectation on Euro 7 is expressed by many stakeholders (e.g. Transport & Environment).

(14)  The EESC notes that the sustainable and smart mobility strategy (COM(2020) 789 final) includes the Commission’s commitment to launch a dedicated study on solutions to enable more effective and user-friendly ‘urban vehicles access restriction schemes’, while respecting the principle of subsidiarity.

(15)  Eurobarometer, Attitudes of Europeans towards Air Quality. In COM(2021) 44 a link between cancer and pollution is taken into account. The EESC finds it necessary to add a question regarding attitudes to cancer (and also diabetes and dementia) as a consequence of air pollution to the future Eurobarometer surveys.

(16)  CurieuzeNeuzen in Vlaanderen. Similar campaigns were led by civil society groups in Germany, Ireland, Italy, Lithuania, Poland, Slovakia and several other EU countries.

(17)  UNEP, Health effects of black carbon.

(18)  UNECE, Towards Cleaner Air, Scientific Assessment Report 2016.

(19)  Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

(20)  76,2 per cent in 2020, according to the National air pollutant emissions dashboard.

(21)  EESC opinion on Revision of the Industrial Emissions Directive (IED) and of the Regulation on the E-PRTR (OJ C 443, 22.11.2022, p. 130).

(22)  EESC opinion on Revision of the Industrial Emissions Directive (IED) and of the Regulation on the E-PRTR (OJ C 443, 22.11.2022, p. 130).

Opinion of the European Economic and Social Committee on the communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions: Communication on orientations for a reform of the EU economic governance framework

(COM(2022) 583 final)

(2023/C 146/09)

Rapporteur:	Krister ANDERSSON
Co-rapporteur:	Dominika BIEGON

Referral	European Commission, 19.12.2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted in section	1.2.2023
Adopted at plenary	23.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	202/3/7

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) very much welcomes the Commission Communication outlining orientations for a reform of the economic governance framework.

1.2.

The EESC agrees with the Commission on the need for a swift agreement ahead of the Member States’ budgetary processes for 2024. As pointed out by the Commission, there is an urgent need for strong budgetary and structural policy coordination as well as for effective economic and fiscal surveillance, fostering inclusive growth and helping the European Central Bank (ECB) to attain its agreed goals.

1.3.

The EESC agrees with the Commission that there has been a lack of prudent policies by Member States in good times (1), while at the same time fiscal rules have restricted fiscal room for manoeuvre during economic downturns in some Member States.

1.4.

The EESC acknowledges the Commission’s plan to maintain reference values. The 3 % of GDP deficit criterion has a political and market signal effect. Overall, the EESC stresses that fiscal structural plans have to ensure that debt-to-GDP ratios are put on a downward path or stay at prudent levels.

1.5.

The EESC supports the Commission’s proposal to no longer apply the rigid 1/20th rule since it could overburden high-debt Member States, with a negative impact on growth and debt sustainability itself. The mid-term four-year evaluation period to reference fiscal adjustments, extendable for three additional years where necessary, also seems to be proportionate.

1.6.

The EESC welcomes the Commission’s focus on net primary expenditure as the main evaluation parameter of the new economic governance.

1.7.

The EESC points out that fiscal policy is the classic domain of parliamentary politics, since it affects the entire structure of state expenditure and revenue. For a reformed framework to be successful, ownership of the process is key.

1.8.

The EESC maintains that a sound reform of European economic governance is urgently needed in the interest of people, firms and governments. It is therefore important to develop further measures that could be taken to enhance ownership of the rules, thereby ensuring that all governments are committed to a revised framework.

1.9.

The EESC considers it paramount that the forthcoming legislative proposals establish minimum standards of national parliamentary oversight and organised civil society involvement with regard to the drafting of national medium-term fiscal structural plans.

1.10.

The EESC underlines the need for proper rules ensuring strong enforcement. In the exceptional cases where sanctions are considered, they must be effective and implemented in a transparent manner. The rules must be applied equally to all Member States in order to maintain credibility.

1.11.

The EESC welcomes the fact that increased quality and quantity of public investments is outlined as a factor for consideration in the process of achieving debt sustainability. The EESC also welcomes the extension of the adjustment path which may be granted for a maximum of three years.

1.12.

To achieve the EU climate targets, the capital stock needs to be completely overhauled and public and private investments expanded. In the past, the EESC has called for measures to close the massive investment gap (2). The Committee underlines that further initiatives might be necessary to make sure that sufficient private and public capital is mobilised for the green transition and social cohesion.

1.13.

To ensure transparency and facilitate effective monitoring of the implementation of the medium-term fiscal-structural plans, Member States are required to submit annual progress reports and to detail the implementation status of reforms and investments. These reports and the Commission and Council evaluations carried out in the context of annual surveillance should be made publicly available.

2.   Background

2.1.

The European Commission Communication (3) lays down general principles for a reformed EU economic governance framework. In order to improve the current framework, the Commission initiative aims to strengthen debt sustainability and foster a sustainable and inclusive growth through investment and reforms.

2.2.

Net primary expenditure, meaning the expenditure under government control, will qualify as the main indicator considered by the Commission. Net primary expenditure will also be the basis for setting the fiscal adjustment paths and for carrying out annual fiscal surveillance, with the aim of simplifying the current rules.

2.3.

Moreover, the Commission will develop a reference fiscal adjustment path for each Member State over a four-year period, based on a methodology established to analyse and assess debt sustainability. The adjustment path should ensure that the debt ratios of Member States with specific debt challenges will be on a downward path, ensuring that the deficit remains below the 3 % of GDP laid down in the Treaty rules.

2.4.

The Commission will constantly monitor the implementation of the plans, requiring Member States to submit annual progress reports concerning the application of their plans in order to make the monitoring activity more effective and transparent. The excessive deficit procedure (EDP) will remain, while the debt-based EDP will be reinforced and triggered when a Member State with debt above 60 % of GDP deviates from the agreed expenditure path.

2.5.

The medium-term approach embraced by the Commission will allow to differentiate between Member States based on their debt sustainability challenges. Considering the burden on Member States with high debt, the current debt ratio reduction benchmark (the so called 1/20th rule) will be replaced by a more risk-based surveillance to avoid adverse consequences on growth and debt sustainability itself.

2.6.

The Commission intends to reinforce enforcement mechanisms as a necessary counterpart of a risk-based surveillance. Enforcement tools will include: (i) effective financial sanctions, which will be de-constrained and made more likely by lowering their amount; (ii) reputational sanctions in case of EDP or other deviations; (iii) macroeconomic conditionality for EU financing.

3.   General comments

3.1.

The EESC very much welcomes the Commission Communication outlining orientations for a reform of the economic governance framework. At the same time, the EESC notes that many details still have to be defined, which only allows for a preliminary assessment.

3.2.

The EESC agrees with the Commission on the need for a swift agreement ahead of the Member States’ budgetary processes for 2024. As pointed out by the Commission, there is an urgent need for strong budgetary and structural policy coordination as well as for effective economic and fiscal surveillance, fostering inclusive growth and reducing social and economic imbalances in coordination with the institutional action of the European Central Bank to attain its agreed goals.

3.3.

The EESC appreciates the Commission’s holistic approach centred on national medium-term fiscal-structural plans covering fiscal, reform and investment objectives within a single venue. Such plans give Member States more flexibility in a fair manner and within a risk-based framework to be evaluated in the mid-term.

3.4.

The EESC supports the ambition and key elements of the Commission initiative aimed at improving national ownership, simplifying the framework, moving towards a greater medium-term focus, combined with stronger and more coherent enforcement (4).

3.5.

The EESC agrees with the Commission that there has been a lack of prudent policies by Member States in good times (5), while at the same time fiscal rules have restricted fiscal room for manoeuvre during economic downturns in some Member States. The EESC observes that years presenting positive growth performance should be associated with a reduction of the debt-to-GDP ratio, creating room for fiscal flexibility to be used in recession years. At the same time, when Member States face stagnation or deep recessions, fiscal leeway is needed. The EESC considers that the Commission’s proposal is a step in the right direction enabling Member States to conduct credible counter cyclical policies in the future.

3.6.

The EESC acknowledges the Commission’s plan to maintain reference values, since clear numerical goalposts have a political and market signal effect. The 3 % of GDP deficit threshold is indeed firmly established in the Treaty, is well known, and is uniformly applicable to all EU countries. The EESC agrees with the Commission that fiscal-structural plans have to ensure that debt-to-GDP ratios are put on a downward path or stay at prudent levels.

3.7.

According to the EESC, short-term deviations from the threshold may be required in order to meet massive investment needs currently associated with the green and digital transition or in order to allow for an adjustment path that does not jeopardise growth.

3.8.

The EESC considers the medium-term framework presented by the Commission to be reasonable and able to distinguish between the Member States’ very different debt ratio levels, allowing modular approaches targeted at heterogenous national situations where debt-to-GDP ratios might vary from under 60 % to over 150 %. In this respect, the EESC supports the Commission’s proposal to no longer apply the rigid 1/20th rule since it could overburden high-debt Member States, with a negative impact on growth and debt sustainability itself. The mid-term four-year evaluation period to reference fiscal adjustments, extendable for three additional years where necessary, also seems to be proportionate considering the current and foreseeable economic and international conditions.

3.9.

The EESC welcomes the Commission’s focus on net primary expenditure as the main evaluation parameter of the new economic governance. In this respect, the EESC calls for national medium-term fiscal-structural plans to embrace targeted, strategic and well-devised public investments in line with EU priorities. Such investments should form a larger share of government spending, encouraging inclusive and sustainable growth.

3.10.

The EESC agrees with the Commission that the quality of public spending needs to be improved. Growth enhancing reforms and investments should be favoured at national level, while pursuing a credible debt reduction pathway after the pandemic and in times of international tensions.

3.11.

The EESC supports the Commission’s proposal that robust escape clauses are needed to address exceptional situations where the endorsed adjustment path could not realistically be adhered to. Strict adherence to the agreed multiannual net primary expenditure path would allow fiscal policy to be countercyclical, demonstrating decreasing debt-to-GDP ratios in good times and allowing for the necessary policy response in hard times (6), enabling protection of the most vulnerable.

3.12.

The EESC points out that fiscal policy is the classic domain of parliamentary politics, since it affects the entire structure of state expenditure and revenue. For a reformed framework to be successful, ownership of the process is key. The EESC considers it paramount that the forthcoming legislative proposals establish minimum standards of national parliamentary oversight and organised civil society involvement with regard to the drafting of national medium-term fiscal-structural plans. Parliaments and organised civil society as well as regional and local authorities should be effectively involved since ownership of the medium-term fiscal-structural reform plans will be strong only if all relevant stakeholders are adequately engaged (7). National parliaments should hold governments accountable for the fiscal and reform policies they pursue.

3.13.

In the event of a change of government, amendments to the medium-term structural plans must be possible as long as medium-term stability is not jeopardised. If governments introduce new discretionary revenue measures, while at the same time preserving overall debt sustainability an adaptation of the expenditure path should be possible without having to go through the whole validation process of the structural-fiscal plans again.

3.14.

The EESC notes that if the Commission’s proposals were implemented, the Commission itself would have more influence on Member States’ fiscal policy (8). At the same time, country-specific recommendations become more binding, since lack of implementation could lead to cuts in EU funding and a more restrictive adjustment path. The importance of the European Semester would also increase. It is therefore important to boost the engagement of national parliaments and civil society organisations, so that the ownership of the rule-based system is enhanced. The oversight and scrutiny function of the European Parliament is important, especially for enforcement and corrective measures. At the same time, the principle of subsidiarity and the division of competences in the Treaties must be respected.

3.15.

The EESC supports the Commission’s initiative to make financial and reputational enforcement mechanisms more effective in case of deviations. Given the increased flexibility Member States would enjoy in implementing their fiscal, investment and structural reforms within national fiscal-structural plans, the applicable rules should be effectively enforced in case of non-compliance. Thus, the consolidation of public finances in good time would be encouraged, making debt more sustainable.

3.16.

The EESC underlines the need for proper rules ensuring strong enforcement. In the exceptional cases when sanctions are considered, they must be effective and implemented in a transparent manner. The rules must be applied equally to all Member States in order to maintain credibility. Possible social consequences and effects on debt sustainability developments should be part of the enforcement analysis.

4.   Specific comments

4.1.

Since net primary expenditure plans are proposed to become the main evaluation parameter, the EESC underlines the need to have clear and transparent rules for calculating primary expenditures. Discretionary revenue measures, as well as cyclical unemployment expenditures, must therefore be objectively and clearly defined, and agreed by all Member States.

4.2.

While the exclusion of cyclical unemployment expenditures in the expenditure plans may be understandable, it must not prevent Member States from addressing any need to improve the functioning of the labour market in order to reduce structural unemployment since such costs, even though not excluded, may add substantially to higher growth and employment in the medium term, thereby improving debt sustainability. At the same time, good medium-term working conditions have to be promoted. It is important that the rules are clear and robust, making sure that any kind of ‘creative accounting’ is not pursued by Member States.

4.3.

The EESC welcomes the fact that increased quality and quantity of public investments is outlined as a factor for consideration in the process of achieving debt sustainability. The EESC also welcomes the extension of the adjustment path, which may be granted for a maximum of three years, provided Member States underpin their plans with a set of reforms and investments that support sustainable growth and debt sustainability.

4.4.

To achieve the EU climate targets, the capital stock needs to be completely overhauled and public and private investments expanded. In the past, the EESC has called for the introduction of a golden rule of public investments to make sure that the massive investment gap is closed. This is not part of the Commission proposal. Still, the Commission’s proposal entails important elements to strengthen public investments. However, it is not really possible to quantify the public investments that will be created since much will depend on the negotiations between the Commission and the Member States on the fiscal-structural plans. Therefore, the EESC underlines that further initiatives might be necessary to make sure that sufficient private and public capital is mobilised for the green transition and social cohesion.

4.5.

Because of the risk-based approach proposed by the European Commission, the debt sustainability analysis (DSA) will become crucial in the future EU economic governance framework. The EESC points out that calibrating the details of the debt sustainability analysis, including whether or not climate-related risks are included in the DSA, is a highly political question and should be debated thoroughly with competent stakeholders. The final parameters of the DSA must be decided in a democratic and transparent manner. Independent fiscal institutions could play an important role in assessing the appropriateness of underlying assumptions by participating in the debate and giving information to national parliaments.

4.6.

To ensure transparency and facilitate effective monitoring of the implementation of the medium-term fiscal-structural plans, Member States are required to submit annual progress reports and to detail the implementation status of reforms and investments. These reports and the evaluations carried out by the Commission and Council in the context of annual surveillance should be made publicly available.

4.7.

The EESC deems that the envisaged increased attention to flow-related variables in the Macroeconomic Imbalance Procedure (MIP) needs to be specified and quantified during the next steps of the economic governance reform, making it symmetric, operational and transparent.

4.8.

The EESC underlines the importance of establishing and developing an appropriate process for the first screening of imbalances in the Alert Mechanism Report (AMR) and to determine whether imbalances exist in the in-depth reviews (IDRs). Recommendations should be assessed with respect to European growth drivers and their impacts on economic development. The meaning of the need for more forward-looking surveillance with a view to swiftly detecting and addressing emerging imbalances need to be spelled out in detail.

4.9.

The EESC emphasises the importance of robust rules, which are able to function in changing economic conditions, and the need for commitment and ownership by Member States. In order to increase investments and productivity levels across the EU, the fiscal framework reform must not be delayed.

4.10.

The EESC maintains that a sound reform of the European economic governance is urgently needed in the interest of people, firms and governments. It is therefore important to develop further measures that could be taken to enhance ownership of the rules, thereby ensuring that all governments are committed to a revised framework.

4.11.

The EESC notes that many of the procedures envisaged in the Commission’s proposal need to be worked out in detail. The EESC hence looks forward to expressing its views and advising on more detailed proposals during 2023.

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(1)  COM(2022) 583 final, page 3.

(2)  EESC opinion on reshaping the EU fiscal framework for a sustainable recovery and a just transition (OJ C 105, 4.3.2022, p. 11).

(3)  COM(2022) 583 final.

(4)  COM(2022) 583 final, page 1.

(5)  COM(2022) 583 final, page 3.

(6)  COM(2022) 583 final, page 16.

(7)  The EESC notes the criticism of poor involvement of civil society in the regulation on the Recovery and Resilience Facility.

(8)  The EESC recognises that for a monetary union to be viable, certain fiscal conditions and stability are required.

Opinion of the European Economic and Social Committee on the communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank: Annual Sustainable Growth Survey 2023

(COM(2022) 780 final)

(2023/C 146/10)

Rapporteur-general:

Gonçalo LOBO XAVIER

Referral	European Commission, 19.12.2022
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Economic and Monetary Union and Economic and Social Cohesion
Adopted at plenary	23.2.2023
Plenary session No	576
Outcome of vote (for/against/abstentions)	196/2/4

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) welcomes the key policy priorities of the 2023 Annual Sustainable Growth Survey (ASGS) delivering on the four dimensions of competitive sustainability. It is clear that, considering the current situation and scenarios, in the short term vulnerable households should be supported to protect them from the worst effects of the energy crisis, while energy efficiency should still generally be promoted in the European Union. The EESC believes that medium and long-term policies should accelerate the digital and green transitions. It also thinks that the Union needs to balance the demand for energy supply, while preserving energy for the winter and avoiding higher costs. It is crucial to support measures that will boost efficiency in all areas. This must be done while preserving the integrity of the single market and ensuring macroeconomic financial stability and coherent fiscal and monetary policies.

1.2.

The EESC is aware that in 2023 the European Semester cycle will be dominated by the efficient implementation of the Recovery and Resilience Plans (RRPs). These plans will place strong emphasis on the Member States’ policy agendas, which must provide an opportunity to boost their economies. The EESC welcomes the European Commission’s efforts to organise dialogues with the Member States in early 2023. These dialogues may consist of an in-depth discussion between the Commission and the Member States to influence the country-specific recommendations (CSRs). In this regard, the EESC believes that these dialogues will promote better implementation of the RRPs and help to ensure that any concerns are better addressed and identified through the CSRs.

1.3.

The EESC urges fair working conditions, effective competition and better consideration of civil society concerns in order to improve the functioning of the single market. This is even more important in light of the war and energy crisis. The EESC supports the call for action to be taken to enhance the single market. The EESC believes that the recent shocks underline the importance of strongly coordinating sound fiscal policies and of building fiscal buffers during good times to be used during downturns, while simultaneously addressing social deficits as they can compromise economic growth in the medium term. Fiscal policies should aim to achieve prudent medium-term fiscal positions and ensure fiscal sustainability through gradual consolidation and sustainable growth-enhancing investment and reforms.

1.4.

The EESC calls for better coordination between Member States and brave decisions that create incentives to avoid the EU’s energy dependency, especially on Russia. Such dependency could compromise the Union’s interests and must be addressed with courage.

1.5.

The EESC calls for a moderate, realistic and balanced approach while addressing inflation in order to involve everyone in the search for a solution that will benefit the whole Union. The Competition Authorities must be rigorously active in ensuring price transparency and being alert for any possible market failures. Governments must be careful to ensure their pronouncements are based on the best empirical analysis, avoiding unsubstantiated criticism of commercial actors as it can lead to conflict between citizens, companies and social partners. The EESC also believes that the problem can only be solved if governments, businesses and organised civil society work together. The EESC believes that Member States must demonstrably relentlessly focus on efficiency and fairness in using financial and other public resources available. This is critical to securing new and quality investments.

1.6.

The EESC will continue to argue that consultation of organised civil society (OCS — social partners and civil society organisations), the European Parliament and national parliaments must play a bigger role throughout the European Semester cycle in order to strengthen national ownership. The EESC believes that both the Semester process and the implementation of the RRPs would benefit from better and more organised participation from the organisations involved in the EESC. A ‘touch of realism’ is needed when talking about policy implementation.

1.7.

The EESC is also aware of the need to invest in skills and the industrial agenda in order to really take advantage of existing European assets, namely investment in innovation and science that must be exploited for the benefit of citizens.

1.8.

The EESC urges the Commission to communicate better with citizens. A strong, reliable and common speech on the challenges and how the Union is mobilised to work to overcome these challenges is fundamental for citizens and will avoid misunderstandings about the European project. Investing in better communication (and the EESC is not talking about advertising) could be an interesting change in the rhetoric against the European project and should be a priority. In this regard, the EESC also welcomes the Commission’s initiative to present this year a Communication on strengthening social dialogue in the EU and a proposal for a Council Recommendation on the role of social dialogue at national level. Better communication with and consultation of organised civil society are essential and go hand in hand.

2.   Background

2.1.

It is no secret that Europe is going through the most difficult period in the last 70 years. It is facing multiple complex economic and social challenges with Russia’s war of aggression against Ukraine, which continues to drain the European economy, with soaring energy bills, high inflation rates, supply shortages, higher debt levels and rising borrowing costs. It is therefore time to make decisions to determine the future of one of the most successful global projects for social, economic and cultural progress.

2.2.

On 22 November 2022, the Commission adopted the 2023 European Semester Autumn Package to propose ways of jointly overcoming these challenges and strengthening our economies in the long term, through the coordination of economic, fiscal, labour and social policies. The purpose is to ensure adequate, affordable energy supplies, preserve economic and financial stability and protect vulnerable households and businesses, stimulate growth and the creation of quality jobs, and complete the twin transition.

2.3.

The Annual Sustainable Growth Survey 2023 outlines the policy priorities in the coming year and sets an agenda for strengthening this coordination in order to mitigate the negative impact, address the current challenges and increase social and economic resilience while fostering sustainable and inclusive growth, in line with the UN Sustainable Development Goals. With a view to fostering competitive sustainability, the four priorities are promoting environmental sustainability, productivity, fairness and macroeconomic stability.

2.4.

The economic and employment policy agenda should focus on supporting citizens and companies to face the challenges created by the increase in energy costs and supply, and, at the same time, to pursue efforts to foster sustainable growth and the green and digital transition, as well as to increase social fairness and economic resilience.

2.5.

Under this principle, proposals for country-specific recommendations (CSRs) are expected in spring 2023, with the country reports focusing on: — a succinct, but holistic overview of economic and social developments and of challenges facing Member States; — an overview of the state of implementation of the national Recovery and Resilience Plans; — continuing to take a modest approach to the CSRs.

2.6.

Regarding the euro area, the Commission has identified five recommendations for 2023: (a) coordinate fiscal policy; (b) sustain public investment; (c) monitor wage and social policies; (d) improve the business environment; (e) preserve macro-financial stability.

3.   Specific comments

3.1.   The European Semester and the involvement of organised civil society

3.1.1.

The European Semester is still the principal, well-established framework for more effective coordination policies between Member States. Such coordination has paid off, as EU post-COVID recovery has been the fastest since the post-war boom and our labour markets have proved resilient, with record high employment. As part of the European Semester and the implementation of the Recovery and Resilience Facility (including its additional REPowerEU strand), the EESC will continue to be at the core of the transformation process to achieve competitive sustainability. In line with this, the EESC will continue to advocate that consultation with OCS play a bigger role throughout the European Semester cycle in order to take into account the various interests in society and to strengthen national ownership.

3.1.2.

The EESC is currently carrying out a consultation exercise with OCS in the Member States in order to obtain their recommendations in this respect (1). Therefore, the EESC welcomes the Commission’s initiative, announced in July 2022 (2), to present this year a Communication on strengthening social dialogue in the EU and a proposal for a Council Recommendation on the role of social dialogue at national level.

3.1.3.

The EESC encourages the European Commission to expand and provide a clear framework for the existing forums under the European Semester to inform and involve the social partners and civil society organisations throughout the Semester cycle, so that they genuinely become relevant players in the coordination of fiscal, economic, social and employment policies at EU level.

3.2.   Geopolitical crisis — war in Ukraine

3.2.1.

The fallout of Russia’s invasion of Ukraine presents the EU economy and society with multiple new economic difficulties, affecting its overall economic and social stability and energy supplies. The EU must continue to pursue both competitive sustainability and social and economic resilience together. In the immediate future, support measures are required to cushion the impact of Russia’s aggression against Ukraine on Europeans and EU firms, in particular small and medium-sized enterprises (SMEs) and low and middle-income earners.

3.2.2.

The energy crisis, in particular, is the most relevant factor: combined with a very high level of inflation, it will have a major impact in the long term. In this regard, the EESC emphasises the need for immediate action to prevent the situation from worsening further in the short and medium term, while also managing the green transition fairly. In many countries, energy production is not at the same level as energy consumption.

3.2.3.

The EESC believes that the possibility of increasing production and taking advantage of the given conditions and resources available in some countries, such as solar, wave and wind energy, has yet to be explored by some governments, which have not yet put in place plans to produce energy from their own resources. One of the reasons for this is the over-complex or ill-conceived legislation and excessive bureaucracy that still exist in many Member States. This does not facilitate the production of green energy, despite the enormous potential. We must dare to make the necessary collective efforts. This requires investment, especially from the private sector. However, public investment will continue to play a major role in achieving the targets of the Green Deal as well as in safeguarding our future prosperity and competitiveness and enhancing the EU’s strategic autonomy. This should also be reflected in the cohesion policy.

3.3.   Inflation

3.3.1.

The high level of inflation, triggered in particular by sharply rising energy prices, is having a very negative impact on workers and businesses, financial stability, purchasing power parity and economic and social stability. Inflation in the world and in the EU is a complex phenomenon, in terms of both its origin and its solutions. Its most immediate and important factors are the supply bottlenecks in the process of rapid recovery from the pandemic recession, in a context of expansionary monetary policy, combined with the energy crisis triggered by the Russian invasion of Ukraine. Inflation affects all economic actors and social groups, especially the weakest and most disadvantaged. Workers and consumers are seeing their purchasing power decline and many companies are seeing their profit margins reduced. Only speculators and certain economic sectors, such as the energy sector, are seeing their profits rise sharply. In order to cope with inflation, Member States have adopted different approaches to control it, such as support to avoid price increases in the food sectors, efforts to keep wages in balance, combined with economic policies. We are still far from reaching our goals and from a solution that would safeguard economic and social welfare.

3.3.2.

The Competition Authorities must be rigorously active in ensuring price transparency and being alert for any possible market failures. Governments must be careful to ensure their pronouncements are based on the best empirical analysis, avoiding unsubstantiated criticism of commercial actors as it can lead to conflict between citizens, companies and social partners.

3.3.3.

The fight against inflation must be the top priority of a coordinated European economic policy between the EU institutions and national governments. The European Central Bank (ECB) and national central banks, in tightening monetary policies, must take into account that the inflationary process is not caused by excess demand and prevent their decisions from leading to a new recession. The EESC encourages the ECB to lower core inflation without compromising the EU’s economic recovery. Because of the aforementioned risks, the ECB should proceed cautiously in normalising monetary policy (3). The EU and national governments must put in place measures to help the most disadvantaged sectors of the population and the hardest hit companies. Tripartite consultation, social dialogue and collective bargaining must become key instruments to address the inflationary crisis through fair burden sharing and to design measures to overcome it in the various sectors of the economy. The EESC is therefore in favour of measures such as an energy price brake in order to moderate inflationary tendencies.

3.4.   The EU’s environmental objectives/Energy crisis

3.4.1.

The EESC continues to advocate what it has been advocating in recent months: despite the new crises, we cannot abandon the objectives set at EU level: decarbonisation and environmental sustainability. We must strengthen businesses and workers and empower all citizens to face the difficulties in order to pursue our long-term environmental objectives.

3.4.2.

The EESC is therefore in favour of measures to coordinate energy prices in order to moderate inflationary tendencies. Lower energy prices should be one of the priorities of EU economic policy. The EESC supports the capping of electricity and gas prices and points out that in previous opinions and resolutions it has called for urgent reform of the marginal auction system in the wholesale electricity market, due to its inherently inflationary nature. Investment in green energy is fundamental to achieving this purpose.

3.4.3.

The Commission presented the REPowerEU Plan to make the EU independent of Russian gas and oil supply, and the EESC welcomed it and agreed with the four-pillar approach focusing on energy saving, diversifying gas imports, and replacing fossil fuels by accelerating renewables and financing solutions (4). At the same time the EESC calls for security of supply to be guaranteed at an ‘affordable as possible’ cost for both consumers and industry. The EESC points out that Member States’ modification of their national Recovery and Resilient Plans in order to submit a dedicated REPowerEU chapter is an additional opportunity for them to consult organised civil society and to take its views into account.

3.4.4.

The EESC stresses that further initiatives might be necessary to ensure that sufficient private and public capital is mobilised for the green transition. Moreover, the EESC believes that better coordination of the use of existing financial funds must be a priority. The communication process on this issue would be very useful in mobilising citizens towards a common goal.

3.5.   Social and economic crisis/Lack of skills and qualified people

3.5.1.

Although the unemployment rate in the EU is only 6 %, we are still faced with the difficulty of finding people with the necessary skills to bring about the reconstruction and resilience of our economy and to achieve our twin transition objectives. There is a significant shortage of skilled people for many key jobs in some countries, not least because many young people are leaving their countries to work elsewhere. In addition to the key training to be promoted, we lose a significant proportion of skilled employees once they are trained. In order to strengthen the EU’s autonomous strategy, we want to get back some of the production lines in Europe, but we do not have the skilled people to work in these factories in Europe. This situation must be addressed on an ongoing basis.

3.5.2.

The EESC emphasises that providing high-quality jobs is one the best ways to attract highly qualified people. In addition, providing fair living wages, ensuring formal working relationships to avoid precarious working conditions, offering extensive upskilling programmes, providing excellent health and safety conditions and striving for gender balance, together with adequate social protection at national level, are not only goals in themselves, but are also the basis for favourable economic and political development. Moreover, the EESC calls for the responsible use of balanced and combined policies (between public and private training systems to make better use of available financial resources) in the context of training and upskilling.

3.6.   Public and private debt and investments

3.6.1.

The EU faces an urgent and growing need for public and private investment to achieve the objectives of the Green Deal and the digital transformation, to accelerate the energy transition and to meet the new challenges of strategic autonomy. On the one hand, the Union has to overcome the investment deficit of the last decade, and on the other hand, the majority of Member States have to reduce their public deficit and debt. This must be done in a very balanced but decisive way.

3.6.2.

At the same time, the Committee believes that it is essential, before any extraordinary increase in EU resources for public investment and the promotion of private investment, that all existing resources in the various programmes — Structural and Cohesion Funds, RRF, InvestEU, etc. — should be fully utilised. To this end, the greatest possible degree of flexibility in their use — in terms of both objectives and implementation deadlines — should be provided, always compatible with rigorous monitoring of their proper implementation. The EESC believes that the idea of common projects between Member States could be an interesting idea to stimulate investment and structural reforms.

3.6.3.

The EESC underlines that progress is needed in completing the Capital Markets and Banking Union to guarantee a well-functioning financial sector and markets, which are crucial to fund the very large investments needed for the green and digital transitions. Deepening the Capital Markets Union and the Banking Union while also establishing the sustainable finance agenda would consolidate funding channels, promote investment efforts and increase resilience.

3.6.4.

Both the COVID-19 crisis and the Russian invasion have had a significant negative impact on external balance. The EESC calls for an increase in investment as the main driver of the EU’s competitiveness.

3.6.5.

The EESC believes that Member States should be more efficient in using the resources already available before asking for new ones. Furthermore, the EESC calls for greater flexibility in the use of EU financial funds in order to redirect them if they cannot be used for the purposes for which they were originally intended or if social, economic, environmental or defence challenges require adaptation. Where necessary, the EU should also create the appropriate conditions and instruments to increase public investment and facilitate greater mobilisation of private investment. This must be done in pursuit of common strategic and autonomy objectives, and without undermining or unbalancing the functioning of the EU single market. Moreover, the EESC stresses the need for more efficiency in the use of the financial resources allocated: Member States must commit to explaining where and how these financial resources are spent. The EESC also points to efficient collecting of revenues in the context of fiscal sustainability. For example, aggressive tax planning and fraud also cause severe damage to public budgets. All in all, sustainable and inclusive growth is the best basis for fiscal stability. Notwithstanding the above, the completion of the Green Deal Industrial Plan and the objective of achieving strategic energy and industrial autonomy, while respecting the fundamental principles of the single market, will require additional European funding, as proposed in an EESC resolution adopted in May 2022 (5).

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(1)  The results will be summarised and clear recommendations formulated in an own-initiative opinion to be presented to the plenary in April 2023.

EESC own-initiative opinion — The EESC's recommendations for a solid reform of the European Semester (ECO/600), to be presented for adoption in April 2023.

(2)  Review report on the implementation of the Recovery and Resilience Facility — 29.7.2022.

(3)  EESC opinion — Additional considerations on the Euro area economic policy 2022 (OJ C 75, 28.2.2023, p. 43).

(4)  EESC opinion — REPowerEU Plan – adopted on 21.9.2022 (OJ C 486, 21.12.2022, p. 185).

(5)  OJ C 323, 26.8.2022, p. 1

Corrigendum to the subheading ‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 14.12.2022-15.12.2022’ in Section I (Resolutions, recommendations and opinions), under the heading ‘EUROPEAN ECONOMIC AND SOCIAL COMMITTEE’

( Official Journal of the European Union C 140 of 21 April 2023 )

(2023/C 146/11)

On the cover page and on page 1, the subheading:

for:	‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 14.12.2022-15.12.2022’

read:

‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 24.1.2023-25.1.2023’

Corrigendum to the subheading ‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 14.12.2022-15.12.2022’ in Section III (Preparatory acts), under the heading ‘EUROPEAN ECONOMIC AND SOCIAL COMMITTEE’

( Official Journal of the European Union C 140 of 21 April 2023 )

(2023/C 146/12)

On the cover page and on page 28, the subheading:

for:	‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 14.12.2022-15.12.2022’

read:

‘575TH PLENARY SESSION OF THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, 24.1.2023-25.1.2023’