465. EESC Plenary meeting

Plenary session discussed and adopted the following opinions important for the employers and business:

 

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 ECO/278 Economic Recovery 

When, at the beginning of 2010, there were signs of a recovery a sovereign bond crisis erupted. High unemployment, a reduced labour force, moderate wage increases, public expenditure cuts, tax increases and the new austerity programmes will reduce possibilities for growth. Under these circumstances, the Commission should urgently estimate the contractive effects of all this and put forward proposals for counteracting measures to retain growth.

To keep the process of growth going the EESC stresses the importance of aggregate demand, and private consumption in particular. For economic support to have a substantial effect on growth it must target the lower income groups. Labour market policies should be centred round the search for new skills for new jobs. It is also necessary to increase the general level of education. An obvious policy to increase the employment rate is high-quality childcare and a parental leave long enough and sufficiently paid. When the need for unemployment support is reduced, the same public resources should reappear in family policy and skills development.

The EESC wants to underline the need to reduce the large differences in current account balances. The EESC, therefore, proposes that the Commission conducts a check on current account balances, similar to those carried out on public deficits and debt. This can be formalised by amending the Regulations governing the Stability and Growth pact. New statistics on private credits and the foreign share of sovereign debt should be included in discussions on the Stability and Growth Pact.

Investment must focus on environmental protection and measures against climate change. In a period of lacking business investments the public sector has to step in by investing in infrastructure and energy. By letting EIB issue Eurobonds, or rather EU-bonds covering all 27 Member States, new capital could be raised for the public sector without total reliance of the private financial sector. Financial resources would be attracted directly from pension funds, for instance, but also with a possibility for the placement of long-term private savings. Taxes on financial transactions and on carbon dioxide are possible new sources of public income. Apart from raising income they respectively reduce short-termism on the financial market and improve our environment.

With regard to the financial sector, it could be efficient to keep some bank capital public, in order to have some insight into the banking sector. The financial experiences of 2010 show that proposed financial supervision and regulation are not enough. Further regulation is necessary to change this behaviour and find new ways of financing public debt.

• ECO/274 EU Response on changing global economic power

Europe faces fundamental challenges in responding to the seismic changes in global economic political and trade relationships that this Recession has accelerated. In doing so it must adapt by: stimulating growth; creating more and better jobs and making the economy greener and more innovative; achieving the 2020 Strategy's 75% employment rate target and ensuring this includes at risk groups such as youth, women, middle aged and people with disabilities.

To date the European project has spent most of its energy looking inwards: building the Single Market, sorting out institutions, arguing about money, endlessly negotiating treaties. To emerge from this Recession and successfully reorganise itself to tackle the challenges of the 21st century the coming decade must be marked by Europe looking outwards. In doing so the EU must be more aware and responsive to developments being determined by especially the new interplay between the US and China and the influence of powerful groups of developing countries such as the BRICs.

If it does then as Manuel Barroso, the Commission President, points out: Europe has "the resources, the intelligence, the critical capacity, the history, the human, intellectual and cultural resources" to succeed.

 

• INT/469 Financing structure for SMEs in the context of the current financial situation

The EESC encourages the Commission to strengthen the financing instruments for SMEs by ensuring that the CIP guarantee scheme continues after the current financing period, the structural funds are readily accessible to SMEs and funding priorities are clearly stated. In the current context of diminished own funds, guarantee institutions provide their banking partners with a useful mitigation effect under Basel II. In this context mutual guarantee institutions should be encouraged.The EESC recommends the establishment of trading platforms for micro-companies and SMEs. Most Recognised Stock Exchanges have too many reporting requirements and lengthy procedures for an SME to be able to list. Furthermore, the costs are usually prohibitive including those of alternative and/or secondary listings. The establishment of regional mini-platforms co-ordinated by a European Network would create a new tool that may be used to raise new capital for small companies. This would encourage further venture capital and business angel financing. It would also help small venture capitalists to assist small businesses.SMEs, particularly micro enterprises, are experiencing greater difficulty to access finance. Also it is very unclear to the society at large where all the bail-out money for the banks has gone. It may not be opportune to make the banks publicise these figures but, on the other hand, the EESC deems it may be more appropriate for the banks to earmark an agreed percentage of the bailout funds (in those countries where they have been used) to offer credit facilities to small and micro-enterprises, particularly for innovative ventures.The EESC encourages the development of a framework that facilitates the establishment of participative and ethos microfinance institutions. This method of finance may be certainly beneficial to SMEs as it is based on risk and profit sharing, stable financing and avoiding speculation. Phenomenon such as participatory banking should be looked at seriously by the Commission. The EESC in fact calls upon the Commission to prepare a green paper on the basis of which the debate about participatory banking at a European level can be launched. Separate initiatives taken by countries such as the UK, France, Germany, Italy, Luxembourg and Malta are positive but may hinder the further integration of the financial services industry within the EU. Furthermore, separate non-coordinated initiatives may not give the most efficient outcome that this type of finance could achieve, such as risk sharing, profit sharing and a social way to finance. The encouragement of Islamic micro finance could also give rise to new entrepreneurial activities whilst assisting in fighting poverty in certain regions. In this context, a directive foreseeing, addressing and encouraging alternative methods of financing should be worked upon and should ensure that these are on a level playing field with other methods of finance such as conventional finance. 

 

• INT/518 After the crisis: A new financial system on the Internal Market

With this own-initiative opinion the Committee aims to set out possible reforms to Europe's financial system in terms of how it should be regulated and how to enhance the way it operates so as to reduce systemic risks. The financial crisis could yet flare up again with renewed vigour and intensity if rampant speculation remains unchecked and governments fail to provide the long overdue responses.

The ECB/ESCB, commercial and investment banks, mutual and cooperative financial institutions and ethical banks, insurance companies, pension funds, investment funds, private equity funds, hedge funds, rating agencies; creators, distributors and vendors of financial products and securities; stock exchanges, unregulated markets; regulators, supervisory authorities and credit rating agencies: these are the key players in the financial system that will be called on to modify their behaviour, adjust to more stringent rules, and adapt their organisations to the new tasks that will be assigned to them.

The Committee believes that work should be stepped up on shaping the post-crisis financial system, which should be transparent, socially and ethically responsible, better supervised, and innovative; its growth should be balanced, compatible with the rest of the economic system, geared towards generating medium- and long-term value and sustainable growth.

The Committee recommends greater transparency, particularly in identifying risks. OTC markets should not be open to bilateral transactions, but limited to central counterparty transactions, which by monitoring the overall level of risk can limit access to transactions for over-exposed parties. Such transactions should take place either on a single platform, or at least on a defined set of platforms, in order to increase market transparency.

Vladimíra Drbalová

International organisations and EU affairs

Member of the EESC