Macroeconomic dialogue with the social partners on 23 May 2022

The Council presidency, the European Central Bank and the European Commission met with European social partners on 23 May 2022 to discuss recent developments of the economic situation, as well as the consequences of the war in Ukraine on the European labour market, especially as regards the labour market integration of Ukrainian refugees.

While the European Union gradually emerged from the COVID-19 crisis and experienced a robust growth, the war in Ukraine constitutes a new economic shock. It materializes through the higher inflation driven by the surge in energy prices which weighs on the economic recovery. In this context, an intense dialogue between all economic actors is decisive to calibrate our economic policy responses in order to protect the most vulnerable groups, as called for by the social partners, and to reduce our energy dependency. During this difficult period, the responsibility of the European Union is also to support Ukrainian refugees forced to flee their country. The EU has already responded effectively and it will continue its efforts in favour of the integration of Ukrainian refugees into the European labour market. A close cooperation with social partners will be key to implement appropriate support policies, particularly in the areas of training and language learning. Bruno Le Maire, French Minister for the Economy, Finance and Industrial and Digital Sovereignty

Russia’s military aggression against Ukraine is having a devastating humanitarian impact. Human losses are mounting by the day, and more than 6.3 million people have fled Ukraine in search of safety. It is also hitting the EU economy hard. We see higher energy prices fuelling inflation and disrupted supply chains. Still, the EU economy should see growth continue this year and next. This shows our economic resilience. The EU’s labour markets started the year on a strong footing, with record low unemployment and millions of new jobs created. They do not show signs of cooling down yet. All these factors illustrate the resilience of the EU economy, even though uncertainty and downside risks are high. This is all the more reason for the EU to stay on the course of reforms and investments. Valdis Dombrovskis, Executive Vice-President of the European Commission

Today, we have had a very valuable exchange of views on a range of issues at macroeconomic dialogue. The context with the war in Ukraine and the awful humanitarian crisis provided us with a sobering backdrop but it reaffirmed our unity of purpose in support of Ukraine. We need to continue to pursue policies that safeguard economic growth. There is also a particular need at this time to facilitate Ukrainian refugees and ensure that they are fully equipped in both adapting and transitioning into our economies, however long that might last for. Paschal Donohoe, President of the Eurogroup

Urgent action is needed to protect working people from the cost of living crisis, to safeguard jobs and businesses from the impact of the Russian invasion of Ukraine and the resulting sanctions, and to integrate refugees into work and life in the EU. ETUC rejects calls for wage moderation. Working people have suffered wage moderation for more than a decade, and cannot sit by while inflation drives down living standards and profits reach record levels. As a result of the war in Ukraine, member states will need to invest in speeding up the energy transition, strengthen social protection and take measures to help people deal with the surge in inflation, especially on energy and food. To support this the ETUC asks the EU to re-finance SURE with a wider scope. The ETUC calls for the prolongation of the escape clause of the Stability and Growth Pact, and for the European Commission to come quickly with proposals to reform EU economic policy rules. More than ever, these rules will need to be agile enough to strengthen European resilience to economic shocks. Luca Visentini, ETUC General Secretary

The EU economy, in common with much of the global economy, is entering a difficult phase. Higher global prices for energy, raw materials and food are all driving EU inflation and putting pressure on businesses and households alike. As a net importer of energy, we cannot escape the fact that higher global energy prices will tend to lower real incomes in the EU. In this context, social partners need to engage responsibly in collective bargaining on wages and help ensure that temporary price rises do not give rise to rising inflation expectations and in turn a damaging wage-price spiral, that would risk weakening medium-term growth and employment prospects. Markus J. Beyrer, Director General of BusinessEurope

SGI Europe supports the economic sanctions to deter Russia and calls for the EU and the member states to limit the adverse effects on our economy as much as possible. High energy prices and high inflation lead to rising supply costs for enterprises and a loss of real income, especially for the most vulnerable. It is urgent to clarify how to realistically finance infrastructure projects to strengthen our energy resilience and accelerate the transition out of fossil fuels. Member states should also consider new measures to best protect the most vulnerable households with better accessibility and affordability of essential services and address inflation. The first step is to agree today on the prolongation of the general escape clause of the SGP while continuing its long term review to better financing needs. Valeria Ronzitti, General Secretary of SGI Europe

Before Europe’s economy could really recover from the Covid pandemic, it faced massive external shocks stemming from the Ukraine war, related sanctions and continued surges of the virus. Neither additional liquidity nor massive wage increases can compensate the loss in welfare and they cannot be fully offset by additional subsidies. All economic policy makers and social partners have now the joint responsibility to avoid additional inflation and to support households and SMEs most under pressure, which cannot bear the surge in prices for energy and other basic products. Véronique Willems, SMEunited Secretary General

The Russian aggression in Ukraine and the resulting refugee crisis is above all a terrible human tragedy that has affected the whole world. The refugee crisis presents a challenge for policy makers namely in the EU. It is appropriate that swift political action has been taken to provide humanitarian aid and to prepare for long-term integration both at the national and the EU level. The next key step for all EU member states will be to implement all relevant measures with the support of our social partners. In light of the fight for democratic values that is taking place in Ukraine we have an obligation to do so. Future Czech Presidency (Jul-Dec 2022)

There is no doubt that the Russian invasion of Ukraine has, and will continue to have, an adverse effect on EU economies. The surge in energy prices has driven up inflation, which will affect vulnerable households and companies. The economic development is clouded by many uncertainties, and it will be important to continue monitoring closely the European labour market. The macroeconomic dialogue with European social partners serves as an important tool to form appropriate policy responses. Not least in terms of how the EU can best support Ukrainian refugees and swiftly facilitate their entrance into the EU labour market. Future Swedish Presidency (Jan-Jun 2023)

The next macroeconomic dialogue will be organised under the Czech presidency.