The European Union released the second part of European Semester Autumn Package to help member states with socio-economic issues in the bloc, revealing the need for reviving competitiveness and labour productivity to cope with international competitors despite job occupation records.
The package included recommendations for economic policy in the eurozone, an Alert Mechanism Report (AMR) for nine member states that had macroeconomic imbalances and a proposal for a Joint Employment Report (JER). The European Commission that was in charge of the package will engage in discussion with the European Council, the eurozone group and the European Parliament to ensure its recommendations are put to use.
“Our recommendations and analysis lay the ground for the major policy initiative, which the European Commission will publish in January – the competitiveness compass,” said Executive Vice-President for Prosperity and Industrial Strategy Stéphane Séjourné.
The AMR analysed macroeconomic imbalances across the bloc. It identified nine countries in need for more in-depth reviews and will publish them in 2025. The reviews will be on Cyprus, Germany, Greece, Italy, Hungary, the Netherlands, Romania, Slovakia and Sweden, but added that Estonia may also need an in-depth review as the country slipped towards more imbalances.
Overall, both the economic policy recommendation and the JER showed that the EU need to boost its competitiveness with investment to foster innovation. Despite recording a high of 75.8% of occupancy rate in the second quarter of 2024, with historic lows in unemployment, the EU still suffers from a decelerating labour productivity.
The situation needs a strong change, with Valdis Dombrovskis, Commissioner for Economy and Productivity, Implementation and Simplification, saying that “the EU is confronted with serious structural challenges which threaten our long-term prosperity. Urgent action is needed,” adding also that “the challenging global context underlines the importance of coordinating economic and social policies across EU Member States.”
Real wages are also another area in need of improvement, with slow recovery in purchasing power despite easing of inflation pressures. As Executive Vice-President for Social Rights and Skills, Quality Jobs and Preparedness Roxana Mînzatu said “despite the robust labour market outcomes, including a rebound of real wages, challenges persist in jobs distribution, especially for vulnerable and underrepresented groups, widespread skills and labour shortages, and stagnating poverty trends which call for ambitious actions.”
