Making it happen: the European Semester

All Member states have committed to achieving Europe 2020 targets and have translated them into national targets and growth-enhancing policies. But only if the individual efforts of all the countries are coordinated and focused, can they result in the desired impact on growth.

Therefore the European Commission has set up a yearly cycle of economic policy coordination called the European Semester. Each year the European Commission undertakes a detailed analysis of EU Member States’ programmes of economic and structural reforms and provides them with recommendations for the next 12-18 months.

The European semester starts when the Commission adopts its Annual Growth Survey, usually towards the end of the year, which sets out EU priorities for the coming year to boost growth and job creation.

Country specific recommendations for Belgium are available (excerpts) :

(12) Prices for electricity and many other goods and services are higher in Belgium than in other
Member States, reflecting weak competition and structural barriers. Prices in the retail sector
remain above the euro-area average, while restrictions on professional services impede the
development of innovative business models and restrain investment. Belgium has made only
limited progress on improving competition in the network industries and the establishment of
strong and independent regulators remains incomplete. Belgium has the second-lowest rate of
mobile broadband penetration in the EU, largely due to regulatory and coordination problems
with regards to spectrum availability. While higher consumer switching has diminished the
dominance in generation of the traditional energy operator, competition at retail level for
electricity and gas and at wholesale level for electricity remains a challenge with high
distribution costs disproportionally contributing to net price levels for industrial users when
compared with neighbouring countries. Belgium’s decision to control end user retail prices for
electricity and gas may hamper capacity investments and new market entry. Licensing
conditions in the postal sector still raise concerns. Domestic rail passenger transport is not
open to competition and port labour legislation has not been modernised. Given the
importance of all of the above-mentioned sectors for competitiveness, these measures are
urgently needed.

(13) The Belgian taxation system relies disproportionately on direct taxes and contains loopholes
that diminish its fairness. While Belgium has made some efforts to reduce the overall tax
burden on labour, the implicit tax rate is still among the highest in the EU for most types of
workers. Belgium continues to be one of the countries with the lowest share of environmental
taxation in total tax revenues. There is scope for simplifying the tax system and improving its
efficiency, including by reducing and streamlining tax expenditures, as well as removing
unjustified or ineffective reduced VAT rates.

(14) Belgium suffers from below-average and stagnating labour-market participation and high
employment and unemployment disparities across regions and population subgroups.
The population groups with the lowest participation in the labour market include those with a
migrant background, the elderly and low-skilled youth in all regions. These groups are also
exposed to higher risks of poverty and social exclusion. The reform of the unemployment
benefits system is a move in the right direction but does not in itself guarantee more effective
matching of labour supply and demand if it is not associated with effective job-search
assistance and training opportunities. The interaction between the targeted reductions at the
federal level and the employment support schemes implemented by the regions generates
considerable complexity. Although the measures aimed at low-skilled youth are likely to also
benefit migrants, an encompassing strategy specifically aimed at this target group is called for.
In addition, it would seem difficult to solve certain labour mismatches without significantly
increasing interregional labour mobility.

(16) The coordination issues inherent in a highly regionalised structure put emphasis on an
efficient organisation of public governance, as the presence of multiple networks, layers and
actors may lead to duplication of structures with weakened governance and higher
administrative costs. These issues come to the fore with regard to taxation and the burden
sharing of budgetary efforts including for education and social security, which requires in
general more cooperation and coordination.

And the recommendations of the EU commission are extremely useful to read on pages 10 and following!