The economic recession forced the European Union (EU) to introduce new safeguards aimed at avoiding similar catastrophes in the future. One of these instruments is the European Semester for economic policy coordination, introduced in 2010 as part of the EU’s Economic Governance. It helps the EU to remedy economic challenges in the Member States and coordinates economic policies for the EU as a single economic bloc.

The annual process makes it possible for the European Commission to review the economic performance of the Member States and recommend specific action through Country Specific Recommendations (CSRs). The last part of the cycle concerns what is referred to as the National Semester. At this stage, Member States will be expected to present measures, within their national budgets, which reflect the policy direction agreed with the Commission.

The ongoing European Semester is the fourth of its kind, starting with the publication of the 2014 Annual Growth Survey in November 2013. The main priority of the AGS mirrored the major challenge of the period; sustaining and improving the positive signs of recovery after six years of economic turmoil.

Therefore it produced the following five major policy objectives: differentiated and growth-friendly fiscal consolidation; restoration of normal lending to the economy; promotion of growth and competitiveness; reduction in unemployment and the social consequences of the crisis; and, modernisation of public administration.

The heads of state or government endorsed the priorities for 2014 at the December 2013 European Council meeting. The leaders of the Member States were summoned again last month to adopt the priorities derived from the AGS. Despite the signs of positive recovery, the Council conclusions make it clear that growth is still mild and fragile. Although the Council recognised the fact that unemployment is no longer increasing, it still concluded that the current levels of unemployment are unacceptable.

The meeting also reflected on the manner the recession has disrupted the Member States’ progress towards the goals of the Europe 2020 Strategy for smart, sustainable and inclusive growth. Actually, the strategy will be reviewed in 2015, in spite of the EU’s pressure on the Member States to design their National Reform Programmes (NRPs) on the basis of the existing goals.

The submission of NRPs to the Commission by the Member States is the next step in the cycle of the European Semester. Malta is in the process of finalising its NRP for submission, following consultation with the relevant stakeholders and approval by the government. The economic plans presented in the programme are then complemented by the Commission’s proposed CSRs following the Spring Economic Forecast.

As part of the consultation process preceding Malta’s submission of the NRP a joint meeting was held last Friday with stakeholders of the Malta-EU Steering Action Committee (MEUSAC) and of the Malta Council for Economic and Social Development (MCESD) with the participation of the Minister for Finance, Prof. Edward Scicluna.

One of the underlining principles of this year’s NRP is the Commission’s clearance that following Malta’s remarkable improvement in its annual growth rate and the increase in its employment rate, Malta’s macroeconomic challenges are no longer considered as imbalances in terms of the Macroeconomic Imbalances Procedure.

The draft programme emphasises the government’s priority to implement what are referred to as supply-side policies. Such policies are aimed at increasing the number of female participants in the labour market and decreasing the number of potential employees who are dependent on welfare benefits by joining the labour market. On the other hand, the government is committing itself to the implementation of extra structural reforms in the areas of public finances, education, energy and the fight against poverty.

Ryan Spagnol is an Executive – EU Policy and Legislation within MEUSAC