Page 205 - ePaper
P. 205
Chapter 4
Restoring Convergence
between Member States
in the EU and EMU ( )
1
1. Introduction of political integration. The means to set reviewed, as they are seen as potential
up such a fiscal capacity is the subject drivers of the divergent socioeconomic
4
Over the past two decades, significant of quite some discussions ( ), as intended performance observed since the onset of
convergence has occurred between by the Blueprint’s subtitle ‘Launching a the crisis.
European Member States in terms of European debate’.
employment and social outcomes. How- Two major concerns are then addressed:
ever, since the onset of the crisis, much This chapter reviews literature on the firstly, the extent to which cross-border
of this progress has been reversed, pos- identification of relevant key channels effects arising from labour markets are
ing serious new policy challenges for and the developing theory that the cur- likely to intensify in the future and how
the countries concerned and the EU as rent EMU-architecture can, in the face they are likely to impact upward con-
a whole ( ). of (asymmetric) shocks, drive short-run vergence across the EU and, secondly,
2
divergence in socioeconomic performance the potential for a fiscal capacity to not
These recent developments suggest a and, in the long-run, increase the persis- only stabilise economies hit by tem-
need to refocus many current employ- tence of such adverse developments. In porary asymmetric shocks, but also
ment and social policy instruments at particular there is a growing awareness mitigate such cross-border effects. The
national and EU levels, and have intensi - among policy makers that cross-border analysis concludes by looking at the
fied the pressures for further structural effects will increasingly affect domestic extent to which national and EU labour
reform within the EMU. In November stabilisation and upward convergence, as market and social policies can strengthen
2012, the Commission published the European economies become more inte- upward socioeconomic convergence and
Blueprint for a Deep and Genuine Eco- grated, which calls for a markedly stronger labour market resilience, in terms of:
3
nomic and Monetary Union (), with a coordination of structural reforms (see,
view to complementing the already for instance, Draghi 2014). • the routes available at national level
ambitious reforms underway with the to strengthen the contribution of
creation of a banking union, deepen - Stylised facts are first presented on socio- employment and social policies, with a
ing the fiscal and economic union and economic convergence in Europe since view to better stabilising the economy
strengthening its social dimension. The the mid-1990s, including a comparison and reinforcing long-term growth;
Blueprint underlined that the creation with the United States, with a focus not
of an EMU-wide fiscal capacity should only on employment and productiv- • the European level routes that could
be considered as a longer-term step to ity trends, but also on unemployment, contribute, such as strengthened
improve the stabilisation of EMU econo- household incomes, poverty and inequal - labour mobility, targeted or reinforced
mies, in particular in the case of asym- ities. Trends in nominal unit labour costs, cohesion funds, common benchmarks,
metric (temporary) shocks, as well as the human capital formation and indebted- and, in the longer term, the develop-
need to proceed in parallel with a process ness in the run-up to the crisis are also ment of an EMU-level fiscal capacity.
( ) By Olivier Bontout. With contributions from
1
Guy Lejeune and Eric Meyermans. ( ) See for example Allard et al. (2013), Pisani et
4
( ) See European Commission (2012a, 2013a, al. (2013) as well as CEPS (2014) and Dolls
2
2014a). et al. (2014) both prepared for the European
( ) See European Commission (2012b) Parliament and Clayes et al. (2014).
3
203
Restoring Convergence
between Member States
in the EU and EMU ( )
1
1. Introduction of political integration. The means to set reviewed, as they are seen as potential
up such a fiscal capacity is the subject drivers of the divergent socioeconomic
4
Over the past two decades, significant of quite some discussions ( ), as intended performance observed since the onset of
convergence has occurred between by the Blueprint’s subtitle ‘Launching a the crisis.
European Member States in terms of European debate’.
employment and social outcomes. How- Two major concerns are then addressed:
ever, since the onset of the crisis, much This chapter reviews literature on the firstly, the extent to which cross-border
of this progress has been reversed, pos- identification of relevant key channels effects arising from labour markets are
ing serious new policy challenges for and the developing theory that the cur- likely to intensify in the future and how
the countries concerned and the EU as rent EMU-architecture can, in the face they are likely to impact upward con-
a whole ( ). of (asymmetric) shocks, drive short-run vergence across the EU and, secondly,
2
divergence in socioeconomic performance the potential for a fiscal capacity to not
These recent developments suggest a and, in the long-run, increase the persis- only stabilise economies hit by tem-
need to refocus many current employ- tence of such adverse developments. In porary asymmetric shocks, but also
ment and social policy instruments at particular there is a growing awareness mitigate such cross-border effects. The
national and EU levels, and have intensi - among policy makers that cross-border analysis concludes by looking at the
fied the pressures for further structural effects will increasingly affect domestic extent to which national and EU labour
reform within the EMU. In November stabilisation and upward convergence, as market and social policies can strengthen
2012, the Commission published the European economies become more inte- upward socioeconomic convergence and
Blueprint for a Deep and Genuine Eco- grated, which calls for a markedly stronger labour market resilience, in terms of:
3
nomic and Monetary Union (), with a coordination of structural reforms (see,
view to complementing the already for instance, Draghi 2014). • the routes available at national level
ambitious reforms underway with the to strengthen the contribution of
creation of a banking union, deepen - Stylised facts are first presented on socio- employment and social policies, with a
ing the fiscal and economic union and economic convergence in Europe since view to better stabilising the economy
strengthening its social dimension. The the mid-1990s, including a comparison and reinforcing long-term growth;
Blueprint underlined that the creation with the United States, with a focus not
of an EMU-wide fiscal capacity should only on employment and productiv- • the European level routes that could
be considered as a longer-term step to ity trends, but also on unemployment, contribute, such as strengthened
improve the stabilisation of EMU econo- household incomes, poverty and inequal - labour mobility, targeted or reinforced
mies, in particular in the case of asym- ities. Trends in nominal unit labour costs, cohesion funds, common benchmarks,
metric (temporary) shocks, as well as the human capital formation and indebted- and, in the longer term, the develop-
need to proceed in parallel with a process ness in the run-up to the crisis are also ment of an EMU-level fiscal capacity.
( ) By Olivier Bontout. With contributions from
1
Guy Lejeune and Eric Meyermans. ( ) See for example Allard et al. (2013), Pisani et
4
( ) See European Commission (2012a, 2013a, al. (2013) as well as CEPS (2014) and Dolls
2
2014a). et al. (2014) both prepared for the European
( ) See European Commission (2012b) Parliament and Clayes et al. (2014).
3
203
