EU auditors: Member states did not address recommendations to reach Europe 2020 targets

EU auditors: Member states did not address recommendations to reach Europe 2020 targets
Credit: ECA

EU member states did not make enough efforts to act on country-specific recommendations made by the Council of the EU, according to a new report issued last week by the European Court of Auditors (ECA).

The performance audit deals with the effectiveness of the country-specific recommendations that were issued to the member states as part of the so-called European Semester, an annual cycle of economic and fiscal coordination in the EU set up in 2010.

The auditors assessed whether the Commission’s application of procedures to strengthen surveillance of member state policies had been effective and checked the application of these procedures in detail for Austria, Belgium, Finland, Hungary, Italy and the Netherlands.

“We focused on the achievement of the Europe 2020 strategy targets and the implementation of the country-specific recommendations made between 2011 and 2018,” explained Alex Brenninkmeijer, the ECA Member responsible for the report and a former Dutch Ombudsman. Europe 2020 was a 10-year strategy to make the EU a smart, sustainable and inclusive economy by 2020.

The main finding in the report concerns the low implementation rate of the recommendations. Only 26 % of the recommendations were either fully or substantially implemented, while 44 % saw some progress and there was limited or no progress for the remaining 30 %.

Moreover, the Commission did not use all its powers to step up recommendations in cases where there had been no substantial progress over a number of years.

That said, progress towards achieving the Europe 2020 targets had been generally positive for the EU overall and mixed across member states. At EU level, six out of eight targets set for 2020 in key domains – one on employment, three on energy and two on education – are likely to be met. However, those regarding poverty alleviation and research will not be achieved due to slow progress.

The number of people at risk of poverty in the EU rose from 116 million in 2008 to 122 million in 2012, and started falling after 2012, to 109 million in 2018. The Europe 2020 target is 96 million by 2020. The auditor found cases where the worsening situation in certain member states and the impact of the financial crisis would have warranted more recommendations for direct poverty alleviation measures.

The spending on Research and Development (R&D) of the EU as a whole rose to 2.12 % of member states’ combined GDP but lags behind other advanced economies and differs widely by country. Some member states only spend as little as 0.5 % of their GDP on research. The Europe 2020 target is 3 %.

“The Commission should strengthen the focus on the low rate of implementation of recommendations in general. In the past 10 years, more attention could have been given to areas such as poverty alleviation and R&D,” Brenninkmeijer underlined.

Despite a Commission decision in 2015 to make recommendations more focused, certain recommendations made in recent years still refer to a mix of issues and unrelated policy dimensions. Furthermore, they are insufficiently linked to the use of EU funds to support member states’ reforms.

Member states are not spared audit critique. They did not make enough efforts to act on recommendations made by the Council between 2011 and 2018. Their reform programmes did not always provide clear explanations of how proposed reforms and measures are meant to address recommendations and EU objectives.

Member states’ responsibility

How does the audit team explain the low or partial implementation rate of the country-specific recommendations? “The main responsibility lies with the member states to implement reforms on time. Their justifications may vary from political choices, budgetary constraints or other explanations,” the audit team replied to The Brussels Times.

The impact of the financial crisis in 2008 was the main factor which delayed progress in the early years. “However, the main thrust of recommendations on poverty alleviation was mainly long-term measures relating to employment or education. Post-crisis, one would have expected more recommendations on short-term, direct poverty alleviation.”

While the auditors support the Commission in promoting growth, skills training and job creation, they think that a better mix of long-term indirect measures and short-term poverty alleviation support could have been made. “We see for example many more forms of direct social support in response to the COVID-19 crisis being implemented across various member states.”

The country-specific recommendations are by their nature very general, the audit team says. If member states fail to address the recommendations, the Commission may issue “further recommendations to take specific measures”. Apparently, this option was hardly used by the Commission.

Based on the audit findings, ECA recommended among others the Commission to strengthen the focus of the European Semester on its social and R&D dimensions, to improve the monitoring of the country-specific recommendations and to strengthen the link between EU funding and the recommendations.

Asked if the Commission accepts the audit findings, a Commission spokesperson told The Brussels Times (4 September) that further progress can and should be made on the implementation of the country-specific recommendations.

“Between 2011 and 2019, around 70 % of the recommendations have seen at least some progress. It shows that reform efforts were made by the members states although it takes more time.”

The spokesperson referred to the new Recovery and Resilience Facility which is set to provide a major new incentive to implement reforms in the framework of the European Semester and beyond. The Facility will provide financial support to the member states with the aims of mitigating the economic and social impact of the coronavirus pandemic.

The Commission does not share ECA’s conclusion that there was insufficient focus on poverty alleviation but assures in its reply to the report that it will “fully address the socio-economic consequences of the COVID-19 crisis and is committed to lifting people out of poverty by addressing the causes of poverty risks”.

The audit was started and completed before the outbreak of the pandemic and does not take into account any policy developments or other changes in response to the pandemic. But ECA member Brenninkmeijer stresses that the audit findings and recommendations nonetheless are as important as before the pandemic. Perhaps even more in a post-crisis perspective.

“This is because our main conclusion is that the way country-specific recommendations are formulated by the Commission and Council and implemented by the member states must be reformed. In addition, the report comes at the end of the 10-year term of the Europe 2020 strategy and the start of a new strategic horizon. This means that our audit brings together lessons learned.”

M. Apelblat
The Brussels Times

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