MBB circular on EU policy and legislation 06/2019

New European Commission Political Guidelines – Part 2

As discussed in the previous circular, the European Parliament has recently elected a new President for the European Commission, Ms. Ursula Von der Leyen, who will replace outgoing president Jean-Claude Juncker shortly.

After outlining the plans for a European Green New Deal, this brief provides an overview of another important priority for the new European Commission– the Economy. Below are some actions expected at European level in this area.

Economic and Monetary Union (EMU)

The EMU is a longstanding project that since 1992 has been tasked with converging the economies of member states through the coordination of economic and fiscal policies, a common monetary policy, and a common currency – the euro. However, there are still pending reforms required to ensure the Eurozone can prevent or weather future crises. For this reason the incoming Commission will work on (i) introducing a Budgetary Instrument for Convergence and Competitiveness for the euro area to support member states’ growth reforms and investment; and (ii) strive to complete the Banking Union that would include a common backstop to the Single Resolution Fund and a European Deposit Insurance Scheme. These are sensitive and controversial topics at EU level that do not have a unanimous support of member states, and therefore difficult negotiations can be expected to move forward.

Tax legislation

The European Commission has been insisting for many years that tax legislation needs reforming to adapt to business realities of the twenty first century, including complex international supply chains as well as the digital dimension. Discussion on tax legislation at EU level has always been controversial due to diverse financial impact it will have on member states as well as ongoing discussions taking place at the international OECD level. Nevertheless, the Commission is expected to continue prioritising the introduction of a Common Corporate Tax Base (CCTB) and a Common Corporate Consolidated Tax Base (CCCTB), as well as a Digital Services Tax. On the latter, the Commission indicated it would be willing to await the outcome of OECD discussions for an international solution until 2020, but in the absence of which, will proceed with its own proposal for Europe.

Social legislation

The Commission strongly believes in Europe’s social market economy model and intends to be strong on its social agenda to ensure that citizens have adequate income and social protection. In this respect, it will build on the European Pillar of Social Rights’ objectives and follow-up with several initiatives that include (i) a framework to ensure that every EU citizen has the right to a fair minimum wage; (ii) improve labour conditions for workers in the collaborative economy, particularly platform workers; (iii) the introductions of a European Unemployment Benefit Reinsurance Scheme; and (iv) oversee the implementation of the Work-life Balance Directive, adopted at EU level in April 2019.

  1. On the framework to secure the right to a fair minimum wage for all citizens, it is still unclear which instrument the European Commission intends to use, considering that the EU does not have a competence in the area of wages. However, while the Commission will not be establishing a fixed EU minimum wage, it could propose parameters for a minimum wage that reflects a certain percentage of the national medium income.
  2. The collaborative economy provides ample opportunity to individuals looking for flexible-type of employment and can serve as an entry point for many people into the labour market, which then opens a career pathway. Many individuals can also view working in the collaborative economy as a micro entrepreneurial activity. Nevertheless, due to lack of legislation, such individuals may fall out of the scope of social protection, and therefore the Commission intends to fill this gap through legislation during this mandate.
  3. A European Unemployment Benefit Reinsurance Scheme would take the form of a common fund through national contributions. The purpose of this fund would be to aid member states going through economic difficulties who may require to make cuts in social spending. In this case, the fund would allow those member states to retain benefits to the unemployed at the same level prior to the crisis.
  4. The Work-life Balance directive will see the introduction of various leave categories, including a minimum of 10 working days of paternity leave; 4 months of parental leave of which 2 months are compensated and non-transferable; and 5 annual days to care for children or elderly with serious medical conditions. This is a key component of the European Pillar of Social Rights and the Commission intends to oversee its implementation nationally as it requires to come into force by 2022.

For questions or more detailed information on any topic please contact EU Affairs Manager Daniel Debono and Senior Advisor Mark Seychell from the Malta Business Bureau’s Brussels Representative Office on infobrussels@mbb.org.mt  

MBB circular on EU policy and legislation 06/2019