Growth rates in the Eurozone remain low and even if some industrial indicators have recently been better than anticipated, the recovery is still considered fragile.
The European semester is designed to coordinate economic developments across member states with the aim of reinforcing growth. This aim has been emphasized for the 2015 programme when the so-called country-specific recommendations were published last May. This year too, the Commission has set about streamlining the process by which CSRs are formulated and implemented.
The point made most frequently about CSRs is that they are implemented in a ragged fashion, or even not implemented at all. One reason for this, we are told, is that national governments and national parliaments do not assume ownership of the CSRs. Another reason could be that it is unclear whether the defining strategy behind the individual CSRs is to bolster the European economy as a whole, or that of the country to which the CSR is addressed.
The time may have come to critically evaluate the formulation and impact of CSRs with the aim of making them more effective and acceptable as policy tools. This is not only because the outcomes in growth terms have up to now hardly been satisfactory.
Also, the agents who propose or draft recommendations are not necessarily or always reliable and faultless.
For instance CSRs are all too often based on the oversimplified view that structural reforms have a mechanical and automatic impact on jobs and growth, so that if all countries reform their labour markets at the same time, the extra demand created by the new jobs created will have a spillover effect across the Eurozone.
This is incorrect.
Moreover, the social consequences of recommendations have been in practice ignored. There has been an overemphasis on so-called reforms of the labour markets, which have failed to make a significant impact on employment levels in many countries. Meanwhile they eroded labour rights and encouraged precarious employment.
Reform of labour markets cannot any longer be put forward as the leading structural reform. There needs to be greater focus on the elimination of hidden monopolies, restriction and digitalisation of government bureaucracy, modernising legal systems, and incentivising those who produce.
The fundamental problem is that economic divergences have been growing in a Union that has convergence as one of its major aims. The conclusion has to be that unfortunately, we still lack the tools that would counter the growing gaps between north and south. Moves towards greater union would be counterproductive in the absence of a policy that is functioning successfully at CSR level and in a wider framework to reduce economic divergence.
If we had such a policy, securing a greater degree of national ownership for CSRs would be easier.