Europe 2020 falling by the wayside of the Juncker recovery plan?

23. February 2015.

The Juncker plan for the recovery of the European economy and the future of the Europe 2020 Strategy, currently facing revision, were the issues covered at the European Economic and Social Committee (EESC) plenary session, held in Brussels on February 18 and 19. The open question remains how much the European Commission is committed to the goals of Europe 2020 and whether the Strategy is doomed to fade out just as the Lisbon Strategy did, writes EESC member Marina Škrabalo for

The Juncker Plan – Priorities for economic recovery

Providing “as much as” 45 minutes for the representatives of social partners and civil societies from all the Member States, Jean Claude Juncker, the President of the European Commission stemming from the European People’s Party, made a courteous appearance before the EESC plenum and encouraged the members to continue monitoring and commenting upon EU policies and regulations. Juncker also used the opportunity to send out a message on what his Commission should and wishes to do about the recovery of EU Member States. Apart from boasting the Commission’s shrinkage of the legislative portfolio by almost two thirds with an intention to finish the job, he referred to his “A new start for Europe” program.

In his EESC presentation, Juncker stressed five issues: the economic and monetary union, the Digital Agenda, the energy union, TTIP and the new investment plan, all pointing to a focus on large-scale systemic innovations with the goal of fostering economic recovery. “The main problem of Europe is its enormous investment straggle when compared to the U.S., with investments down as much as 20 per cent since 2007. We need to use existing budgetary funds prudently, but also encourage Member State governments to invest, especially those who think we are not ambitious enough”, said Juncker. He went on to stress that the new investment plan is expected to inject 315 billion Euros into the speaking of the European economy through public investments that will incentivize additional private investments.

Speaking of the example of the Digital Agenda for Europe, he stressed that Europe does not use the single market enough to foster economic development: “We are the prisoners of a nationally-focused mindset, which is why we are lagging behind the rest of the world. In Europe, we have hundreds of operators and an inadequately regulated market, as opposed to the United States and China, who have unified regulatives. We are too preoccupied with national sovereignty and it is keeping us back, even though there is a prospect of opening numerous new workplaces and creating a surplus value exceeding 100 billion Euros in two years”. With this in mind, he elaborated on his expectations from the Transatlantic Trade and Investment Partnership (TTIP) with the U.S., calling it a generator of new investments and “a great opportunity for Europe to bring two economic blocks together, of course without compromising European values and standards”.

“Fighting unemployment as the first step in fighting poverty”

However, this general statement on the TTIP has not been elaborated upon in the following discussion. Regarding energy policy, Juncker stated that it has become much more important than 20 years ago and is becoming weaponized: “for example, if Russia was to use energy supply against us, we must be flexible and prepared for the future”. When asked about the unmentioned re-industrialization of Europe, Juncker replied that his Commission’s goal is to raise the portion of industrial production in Europe’s GDP to 20 per cent.

When faced with the questions and criticisms of EESC members – especially those from the trade union group – about austerity policies, Juncker admitted that he himself feels responsible for the excessive austerity policies and that this Commission will get involved more intensely in resolving the problems of excessive debt and revisions to the Troika’s policies, with structural reforms remaining the main policy direction: “Austerity policies have led us to excessive austerity in States included in financial recovery programs. During my pre-election campaign, I have criticized the Troika’s functioning and its lack of democratic legitimacy which needs to be revised. I will not speak about Greece, since I have revealed that the previous Commission has not discussed Greece much, since it trusted the Troika completely. Obviously, errors were made”, said Juncker, all the while not elaborating upon the general statement that structural reforms must be carried out.

To the objection that his program makes no mention of battling poverty, Juncker replied that “battling poverty begins with battling unemployment” and went on to add that the Commission is working on defining a new aggregate indicator of a minimum acceptable life standard to supplement the current indicators. “I am ready to promote the idea of a minimum income across the EU, based on the data we will get from Eurostat next week – although we do not have the power to force anyone to accept this, we can try to convince the Member States”. Juncker also announced the introduction of a unified tax base for companies, joking at his own expense since he was the Prime Minister of a well-known tax haven in the heart of Europe: “Do not think I am evading anything because I come from Luxembourg, I can speak about taxes in any of the official EU languages!”.

The Europe 2020 development Strategy –cancel or renew?

Another importan subject for the EESC members was the Europe 2020 development strategy, enthusiastically approved ten years ago as the necessary leverage to achieve global competitiveness of Europe, based on “sustainable, smart and inclusive growth”. This growth was meant to balance ecological, social and economic objectives – reduce the number of persons living in poverty by 20 million, ensure employment for 75% of the EU population, increase the proportion of the highly educated to 40 per cent, reduce greenhouse gas emission by 20 per cent and increase the share of renewable energy sources by 20 per cent while increasing energy efficiency. When asked about the future of the Strategy, Juncker announced that the Commission will be discussing it this Fall, with consultations held with a multitude of stakeholders and invited the EESC to take part in devising ways of reforming the Strategy, which came as an encouragement amidst fears that the Commission had given up on the Strategy.

The thematic discussion on the Europe 2020 Strategy opened a multitude of questions; Guntram Wolff, director of the Bruegel Institute, warned that results are falling significantly behind the goals that the Strategy had envisioned, making it necessary to consider its future seriously: “employment is at 68 per cent; investments into research and development are still at no more than two per cent of GDPs, and should be at least at three. Instead of decreasing, poverty rates are increasing. Europe still has no globally positioned universities and the development regarding climate change is largely a reflection of a diminishing industry. However, the major problem with this strategy is not its goals, but the lack of implementation mechanisms at the European level”.”

Wolff cited the example of labour markets with highly uneven labour prices and few good practices – the Belgian being one of them – where the national-level competitiveness body periodically aligns the costs of labour with the European mean cost. In total, the battle against poverty should be one of the key priorities, but the EU does not have the adequate mechanisms to carry it out and is largely dependent on the Member States’ resources.

How to achieve recovery?

During a rather sombre discussion, Italian trade unionist Stefano Palmieri, author of EESC’s comprehensive November 2014 analysis on the achievements of Europe 2020, strongly advocated a concept of integral development, firmly linking economic competitiveness with public investments into education and social cohesion: “the Bruegel Institute has produced a big comparative research on investments into education and development in the 28 Member States, showing that the states that cut public funds are the ones that also cut investments into research and development. Does this mean that we are cutting our capacities when we cut expenses?”.

“How are we supposed to recover if we reduce the chances of growth in the industries that we used to be the global leaders in, especially if we cut investments into education and universities to boot? The Europe 2020 Strategy can and must be a new generator of development. Mr. Juncker has said it himself: we will ensure it happens only if we make battling poverty one of our genuine priorities – we need to devise the means and instruments. We need adequate investments. We need to revise and reinforce the strategy, not bury it”, stated Palmieri.

After the discussion, the EESC adopted an opinion ordered by the new Latvian Presidency of the Council of the EU on the subject of advances made in implementing the Europe 2020 Strategy, focusing primarily on the relationship between the Juncker investment plan and the Strategy’s goals and advocating firmer links between governance mechanisms – the European Semester with national reform programs and structural funds with the new European Fund for Strategic Investments. The latter’s governing structure is just being developed and was presented by the European Commission’s vice-president Jyrki Katainen in Zagreb on February 23. An important idea in this EESC opinion is the proposal for the separation of long-term social investments, especially those into education, from the excessive deficit calculation. The reporter for the opinion, Etele Barath from Hungary, reported the EESC’s main message to Jucnker’s Commission that Europe 2020 should not be given up on but revitalized instead.