The Commission has launched the 2024 European Semester cycle of economic policy coordination.

The Autumn package draws on the Autumn 2023 Economic Forecast which showed that the EU economy continues to be resilient in the face of the multiple shocks endured in recent years, but that it has lost growth momentum in 2023 in a context of high inflation and tighter financing conditions, with only a moderate uptick in growth expected in 2024.

The EU is facing a number of important structural challenges, including low productivity growth, the green and digital transitions, ageing and social inclusion, that need to be tackled in order to stay on the path of sustainable competitiveness. Disruptive geopolitical events have also demonstrated the need for the EU to remain competitive in a global market, while ensuring that no one is left behind.

Economic policy coordination through the European Semester will help Member States achieve these objectives by setting priorities and providing clear and well-coordinated policy guidance for the coming year.

Recommendation for euro area economic policy for 2024

The euro area recommendation presents tailored policy advice to euro area Member States on topics that affect the functioning of the euro area as a whole. This year the focus lies on policy responses to the challenges of high inflation and competitiveness.

Euro area Member States should:

• adopt coordinated prudent fiscal policies and wind down energy support measures, with a view to enhancing public finances’ sustainability and avoiding fuelling inflationary pressures
• ensure high and sustained levels of public investment and promote private investment through the acceleration of the implementation of the Recovery and Resilience Facility and Cohesion Policy programmes
• support wage developments that mitigate the loss in workers’ purchasing power, taking into account competitiveness dynamics
• monitor risks related to tightening financial conditions, while completing the Banking Union
• enhance competitiveness by improving access to finance, progressing in the Capital Markets Union and ensuring that public support to strategic sectors remains targeted and does not create distortions in the level playing field of the Single Market

Proposal for a Joint Employment Report

The proposal for a Joint Employment Report (JER) confirms that the EU labour market is resilient. Overall, the EU employment rate reached 74.6% in 2022. It rose further to 75.4% in the second quarter of 2023, well surpassing pre-pandemic levels. At the same time, EU unemployment decreased to a historic low in 2022 (6.2%), a trend that continued in the second quarter of 2023 (6%). Nevertheless, disparities exist across Member States, regions, and sectors.

Despite nominal wage increases, real wages in 2022 fell, to various degrees, in almost all Member States. This highlights the importance of well-balanced wage setting mechanisms, including strong social dialogue and effective collective bargaining, in line with national practices. Adequate minimum wages can help protect the purchasing power of low-wage earners and decrease in-work poverty, while sustaining demand and strengthening incentives to work. Sizeable labour and skills shortages are posing bottlenecks to economic growth. If not adequately addressed, they risk hampering the green and digital transitions.

This edition of the JER is the first to report on progress towards the 2030 EU and national employment, skills and social targets. While the EU is well on track towards its headline employment target of 78% by 2030, significant progress is still needed to reach the other two headline targets on adult learning and poverty reduction. This report also has a stronger country-specific focus in line with the principles of a Social Convergence Framework. Member States’ labour market, skills and social challenges are analysed to identify potential risks to upward social convergence that require deeper analysis.

Next steps

The Commission invites the Eurogroup and the Council to discuss the 2024 Autumn Package and to endorse the guidance offered. The Commission also looks forward to engaging in a constructive dialogue with the European Parliament on the contents of this package and each subsequent step in the European Semester cycle, as well as further engagement with social partners and stakeholders.

Background

The European Semester provides a framework for coordinating economic and employment policies of the Member States. Since its introduction in 2011, it has become a well-established forum for discussing EU countries' fiscal, economic and employment policy challenges under a common annual timeline.

The Recovery and Resilience Facility is the centrepiece of NextGenerationEU, with €723.8 billion in loans and grants to support reforms and investments undertaken by EU countries. Its aim is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.