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Economic divergences growing within the European Union – Sant

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Economic divergences growing within the European Union - SantThe Head of the Maltese Labour Delegation at the European Parliament Alfred Santa, has said that the fundamental problem within the European Union is that economic divergences have been growing in a Union that has convergence as one of its major aims.

Dr. Alfred Sant said that the Union still lacks 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 a national level and in a wider framework to reduce economic divergence. If we had such a policy, securing a greater degree of national ownership for country specific recommendations would be easier,” said Dr. Sant.

Dr. Sant, Shadow Rapporteur on behalf of the S&D group, was addressing the ECON committee on the discussion “European Semester for economic policy coordination: implementation of 2015 priorities” with representatives of national parliaments.

Dr. Sant remarked that the social consequences of country specific 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.”

He added that, “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.”

Dr. Sant said that 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 point made most frequently about country specific recommendations 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 Country Specific Recommendations (CSRs). Another reason could be that it is unclear whether the defining strategy behind the individual recommendations 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,” he said.

“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,” concluded Dr. Sant.

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