The Autumn Package, published on Tuesday, kickstars the 2024 European Semester cycle on economic policy coordination and comprises most notably its annual Annual Sustainable Growth Survey (ASGS) and the Council’s and European Commission’s draft Joint Employment Report. The two documents argue that:

• that the EU economy remains resilient despite a slowdown and that risks related to high debt and price divergences remain relevant. It emphasises that with the general escape clause under the Stability and Growth Pact expiring at the end of 2023, fiscal policy needs to support monetary policy in reducing inflation and safeguard fiscal sustainability, while providing sufficient space for additional investments and supporting long-term growth. “Besides the need to maintain a prudent fiscal strategy, public investment needs to be maintained and, where needed increased, to support long-term growth and the green transition. To that end, governments should sustain a high level of public investment to support the green and digital transition, strengthen productivity and resilience. This will require improvements in the quality and composition of public finances on both the revenue and expenditure side, for instance by optimising the tax mix”, the reports read.
• fiscal emergency measures taken to respond to the energy price shock should be wound down as soon as possible. They underline that “protracted non-targeted fiscal support to households and firms is not the right tool in the current situation, as it increases inflationary pressures and contributes to prolonged tight monetary policy.” Instead, support to vulnerable households should be provided in a targeted manner through established social protection systems and social safety nets.
• the EU labour market “continues to perform strongly overall despite slower economic growth, even though regional disparities persist, with some population groups benefiting less.” The reports put forward that the EU employment rate reached “a record level of 75.4% in Q2-2023, while the unemployment rate fell to 6.0%, which is the lowest rate ever recorded for the EU.”

The reports conclude that policy actions at the appropriate levels should be geared towards increasing labour market participation to improve employment and social outcomes. This, according to the reports, includes reinforced active labour market policies, access to quality and affordable early childhood education and care, as well as long-term care, tax and benefit systems that support working (including by shifting taxation from labour to environmental and climate objectives), adequate working conditions and possibilities for managed legal migration, while ensuring labour and social protection rights.

The repors also conclude that despite marked wage increases in the EU in 2022 and the beginning of 2023, these remained below the high inflation rates and resulted in reduced purchasing power, affecting lower incomes the most. They find that real wages in the EU decreased by 3.7% in 2022, increasing the risk of in-work poverty. In future, “wage developments will need to strike a balance between recouping the lost purchasing power of workers, avoiding second-round effects on inflation and safeguarding the EU’s competitiveness”, the reports sum-up.

CESI Secretary General Klaus Heeger said: “As CESI, we welcome the four priorities of promoting environmental sustainability, productivity, fairness, and macroeconomic stability. We contrinue to stress that fairness for citizens and workers and their families is, however, not possible without adequate investments in public services and public administrations, including in their personnel. From education to healthcare and employment services, public services are the backbone of societies and economies too. I look forward to an adjusted macroeconomic governance framework that will keep clear budgetary deficit rules but will at the same time enable Member States to invest in the resilience of their public sector, especially also in anti-cyclical ways.”

He added: “We welcome in particular the suggestion to increasingly shift taxation from labour to environmental and climate objectives, and more generally to effectuate improvements in the public finances on the revenue side, for instance by optimising the tax mix. If fiscal support for social fairness, in particular energy subsidies for citizens, will be phased out, it will be important that taxes are allocated, collected and redistributed in a fairer manner than before. Strong corporate shoulders that have been benefitting during the recent crises should contribute more to fight poverty in societies.”