EU investment and reform: the key role of the social partners and civil society in inclusive policy making

Stakeholders want systematic consultation as a driver of growth-led approaches

Strengthening national ownership requires both the close involvement of national parliaments, regional and local authorities, the social partners and civil society, and clearer provisions in EU and national procedures. Together, this will ensure that the new EU economic governance framework and the future European Semester are implemented as effectively as possible. It will also guarantee transparent and inclusive policy making.

The EESC and the three rapporteurs for this opinion - Gonçalo Lobo Xavier, Javier Doz Orrit and Luca Jahier - called for a formal, permanent and structured consultation process. In this process, national governments will work closely with authorities at all levels and in partnership with trade unions, employers, civil society organisations and other competent bodies throughout the cycle of preparing, implementing, monitoring and evaluating the political process.

The opinion drew on follows an annual consultation exercise, carried out in 26 of the 27 Member States and based on the active involvement of 77 EESC members and, through them, a large number of civil society organisations, social partners, institutions and bodies.

Reflecting public priorities

“The purpose of the opinion is to encourage European organised civil society to think about and formulate recommendations on the reform and investment proposals and their implementation in the Member States. It also seeks to make the EU’s economic governance more transparent, democratic, effective and resilient to further crises, and to involve organised civil society more closely,” said Gonçalo Lobo Xavier.

During the consultations, in most Member States organised civil society stressed its support for both the country-specific recommendations’ focus on the green and digital transition and for using the substantial EU funds channelled to Member States’ economies to stimulate a just transition.

However, organised civil society in several countries voiced concerns about the slow going when it comes to implementing reforms. They pointed out that some governments are not going far enough in implementing these reforms, which makes them less effective. "Concerns remain about whether the proposed national reforms are sufficient and about the tendency for some governments to repeat recommendations from one cycle of the European Semester to the next, causing slow and uneven implementation", explained Javier Doz Orrit.

Guidance on fiscal-structural plans

Under the proposals, each Member State would draw up a national, medium-term fiscal-structural plan. The fiscal adjustment period could be extended if underpinned by specific reforms and investments.

Organised civil society has flagged up a number of positive and negative aspects concerning these plans and their potential effectiveness in encouraging reforms and investments. The rapporteurs agreed that the degree of involvement of the national authorities, social partners and civil society organisations in the development of the plans will be key to ensuring that they are genuinely effective.

In particular, civil society organisations call for a focus on the effectiveness and efficiency of public investment and highlight the need to strike a balance between control and overly strict management. It was also pointed out that the plans need to be realistic in terms of assessing the success of the reforms and investments envisaged.

The rapporteurs echoed input from stakeholders, who had argued that the plans should be flanked by the creation of new instruments. These instruments should be based on a broad consultation (in particular with organised civil society), consensus and steps to ensure that the plans are aligned with social and environmental goals.

“The flexibility introduced in the new economic governance framework should be used appropriately. The expected reforms should also facilitate and promote further smart private investment at national level. However, this will not be sufficient to support the massive transformational and strategic investments needed in the future,” commented Luca Jahier.

Suggestions for improvement

The opinion demonstrates that the consultation exercise with civil society organisations in many Member States was sporadic, weak, ineffective, last-minute and of varying quality.

The recommendations outlined in the opinion, reflecting feedback received from these organisations, made a number of points. These include:

• multiplying the channels for discussion, even the most formal ones, through permanent working groups. These groups can facilitate dialogue between the social partners, civil society organisations, local and regional authorities, the government and the European Commission;
• organising consultations at least twice in each six-monthly process, with the last meeting taking place just before the government adopts the final document;
• ensuring that all draft laws are subject to mandatory public consultation. Amendments tabled in the course of the legislative process should include a statement of reasons and an impact assessment;
• ensuring that consultations are conducted with as broad a group as possible and take various forms, including open public consultations where documents are discussed and consultative and advisory bodies;
• establishing that all Member States must publish regular reports each year on the consultation process, forward them to the European Commission and national parliaments and make them publicly available;
• making the new flexibility introduced in the economic governance review more effective as regards encouraging the needed reforms and investments. There would be three conditions for this: (i) having enough fiscal space at national level, allowing for a sufficient level of investment, including social investment; (ii) a threshold for disbursing all existing EU funds, and (iii) a more robust process which will tap the potential of the planned national ownership;
• calling for clear criteria on what should be included in green and social investments in future. This will guide Member States in formulating their fiscal-structural plans;
• reiterating its call for the European Commission and the co-legislators to define new financial instruments at EU level to support the financing of strategic common goods, by 2026 at the latest. These instruments include the newly announced EU sovereign funds, new own resources, own fiscal (financial) capacity and the next Multiannual Financial Framework. The EIB should also play a stronger role in leveraging private investments and improving private-public partnerships.