The European Semester

The European Semester is the main vehicle for the formulation of goals and surveillance of public policies in the EU. It is based on the six-pack and two-pack and draws on a long legacy of EU initiatives in public policy surveillance and coordination, such as the BEPG and the Open Method of Coordination, so it is not entirely innovative, but it is arguably much more important. In particular, the Semester’s remit is anything that might affect SGP compliance or macroeconomic imbalances, and so it is effectively the open invitation to engage in detailed discussion of health policy that the treaties previously lacked.

5.3.1 The European Semester: process

The European Semester was first introduced in 2011 as part of the six-pack. It is a powerful tool for achieving consistent policy recommendations – not just among Member States, but also horizontally across EU and European programmes as well – as through the Semester the Commission can review a raft of information that is pertinent to the TSCG, Euro Plus Pact and Europe 2020, as well as the SGP and the Macroeconomic Imbalance Procedure (MIP).

The name European Semester refers to the idea that European surveillance of national budgets should come before national surveillance, which occurs during the National Semester in the second half of the year. This process is referred to as “upstream policy coordination” by the Commission²⁰ but has caused many to question whether the European Semester leaves national parliaments out in the cold.

The European Semester starts in October, when Member States are required to submit their draft budgets to the Commission.²¹ These draft budget documents are published. The Commission can ask for redrafts if it considers that a budget plan is out of line with the SGP. In November the Commission sets out the EU’s budgetary priorities for the next year through a series of reports. The first

20 European Commission (2013). Economic and financial affairs: the European Semester. Brussels: European Commission. Available at: http://ec.europa.eu/economy_finance/economic_governance/the_european_

semester/index_en.htm, accessed 14 July 2014.

21 The following text draws heavily on European Commission (2013). Economic and financial affairs:

the European Semester. Brussels: European Commission. Available at: http://ec.europa.eu/economy_

finance/economic_governance/the_european_semester/index_en.htm, accessed 14 July 2014; European Commission (2013). Making it happen: the European Semester. Brussels: European Commission. Available at:

http://ec.europa.eu/europe2020/making-it-happen/, accessed 14 July 2014; and Council of the European Union (2013). What is the European Semester? Brussels: Council of the European Union. Available at:

http://www.consilium.europa.eu/special-reports/european-semester, accessed 14 July 2014.

key report is the Annual Growth Survey, which sets out proposed priorities. (It is reminiscent of the state of the global economy reports produced by bodies such as the OECD and the IMF.) The second key report is the Alert Mechanism Report, which flags up macroeconomic imbalances in Member States as required by the MIP and explains which Member States will subsequently be subject to in-depth review. These recommendations are discussed by the Council and the European Parliament in the following months.

These Commission reports are key agenda-setting documents. In March the European Council adopts “economic priorities” for the EU, working from the Commission’s recommendations in the Annual Growth Survey. And in April Member States submit the Stability Programmes (fiscal plans drawn up by Eurozone States) or Convergence Programmes (fiscal plans drawn up by non-Eurozone States) required by the SGP, as well as the National Reform Programmes required within the Europe 2020 strategy. The Commission then publishes its in-depth reviews.

From these data, and from the rest of its ongoing surveillance, the Commission proposes a CSR for each Member State. The CSRs are endorsed by the European Council, discussed by the employment, economic and finance, and competitiveness councils, and then adopted by the DG for Economic and Financial Affairs (ECFIN).

The European Semester is a vital link between the soft-law style of target setting often associated with the EU’s new governance mechanisms, such as Europe 2020, and the harder structural adjustment politics of the EU’s economic crisis.

By beginning with budgetary discipline and structural adjustment issues, from the legal basis that these issues have in the TFEU and the normative basis that they have in ECFIN, the European Semester exists as a framework that can impose its hierarchy on other, non-economic policy areas. So now it is not just a framework for economic policy governance, it is also a framework for social and policy governance in a way that its predecessors never really became. This becomes clear when the relationship between the European Semester and the soft-law governance tools such as Europe 2020 and the Euro Plus Pact are considered.

Each Member State’s Europe 2020 commitments are articulated via a National Reform Programme, a report stating the policy measures to be adopted by the State and explaining how they meet that State’s EU-level targets – stemming from both the Europe 2020 strategy and other initiatives including the CSRs and Euro Plus Pact commitments. These National Reform Programmes are reviewed by the Commission during the European Semester, alongside their economic governance equivalents, the Stability and Convergence Programmes.

Commitments made under the Euro Plus Pact are treated in a similar manner.

The Euro Plus Pact, also known as the Competitiveness Pact or the Pact for the Euro, is an agreement reached in March 2011 by 23 Member States, as reported in the conclusions of the European Council.²² Interestingly, as well as the Eurozone countries, the Pact includes six non-Eurozone countries: Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania. These countries agreed to adopt targets in four broad areas of policy, including labour market and employment reforms, competitiveness, fiscal policy and financial stability measures. The Pact is designed to be flexible, and not all Member States have made pledges in each of these areas. Where these pledges do exist, they vary in their specificity: from adopting a fiscal rule to increasing labour participation of certain demographic groups.

Unlike its hard-law siblings, the Euro Plus Pact was agreed to under the OMC.

There is consequently very little infrastructure supporting it and little public documentation. It also means that the European Parliament has no formal role in scrutinizing activities under the Pact.²³ Like the Europe 2020 targets, pledges made under the Pact are monitored through the European Semester process, with Member States publicly stating that there needed to be consistency rather than overlap between the Euro Plus Pact and the information presented in National Reform, Stability and Convergence Programmes. To that end, Member States urged a focus on fewer, high-impact measures that combine “durable consolidation of public finances with structural reforms”.²⁴

5.3.2 The European Semester: health policy content

The power of the Semester, legally and politically, rests not in its contribution to health and well-being but in its contribution to the EU’s fiscal governance.

Legally, the policy instruments underlying it are grounded in fiscal rules, not social or health policy objectives. Politically, it was instituted to solve problems of moral hazard and soft budget constraints, not to improve social or health policy.

As might have been expected, the Semester process therefore began in a way that was worrisome from a health and healthcare perspective. Organizationally, the initial key directorates-general were Employment, Taxation (TAXUD), and, very much pre-eminent, Economic and Financial Affairs (ECFIN). The Council formation overseeing it and making the ultimate decisions was ECOFIN, the Council of Finance Ministers. From some perspectives, it was essentially a vehicle

22 The following draws on European Commission (2011). Background on the Euro Plus Pact. Brussels:

European Commission. Available at: http://ec.europa.eu/europe2020/pdf/euro_plus_pact_background_

december_2011_en.pdf, accessed 14 July 2014.

23 Library of the European Parliament (2012). Library Briefing: Parliament’s role in anti-crisis decision-making.

Brussels: Library of the European Parliament.

24 Council of the European Union (2012). Euro Plus Pact: the way forward – conclusions of Member States participating in the Euro Plus Pact. Brussels: Council of the European Union.

for a network of finance ministries to tighten their control over key areas of revenue and expenditure such as health.²⁵

The initial Semester CSRs reflected this political, legal and organizational focus on fiscal sustainability as understood by finance ministries.²⁶ There were initially relatively few health-related CSRs and they were often either fairly crude or amounted to an EU endorsement of existing Member State plans (as happened especially clearly with Austria, whose CSRs in the first years mirrored quite precisely the plans that the health and finance ministers had already agreed). Some CSRs were relatively inexplicable and clearly showed a lack of understanding of health policy, as with the suggestion in 2015 that France might reduce its health expenditure by increasing the number of health professionals it trained, in defiance of what is known about the importance of supply-induced demand in healthcare.

Over time, a variety of pressures began to change the Semester process and content. The process changed, with DG TAXUD less visible and DG EMPL and SANTE more visible. Under the Juncker Commission, the Secretariat-General became more important in the process, especially vis-à-vis DG ECFIN (which was headed by a Socialist from France). At the same time, a number of conflicts between Member States and the Commission led to a less clear-cut and punitive application of fiscal governance than the law alone might have suggested.

Meanwhile, after pressure from health ministers, DG SANTE, and other health policy interests, DG SANTE became a more important part of the Semester process. The EPSCO council’s pressure on the Commission (section 3.5.2) led to the Commission’s 2014 Communication on effective, accessible and resilient health systems, which emphasized the need to strengthen health systems and lent extra authority to participation of DG SANTE in health systems discussions.

In other words, a process that was initially quite exclusive and focused on narrow fiscal policy goals was broadened out as other affected interests sought participation and other priorities were pushed onto the agenda.²⁷ The result was more discussion of health and healthcare, more sophisticated discussion of health and healthcare, and more sensitive policy recommendations. The effects are visible now, when it can seem plausible to see the Semester as an evolution of the OMC as much as an instrument for fiscal control.

25 Stamati F, Baeten R (2015). Healthcare Reforms and the Crisis. Brussels: European Trade Union Institute.

26 Azzopardi-Muscat N et al. (2015). EU Country Specific Recommendations for Health Systems in the European Semester Process: Trends, Discourse and Predictors. Health Policy, 119:375–83.

27 Greer SL, Brooks E (2020). Termites of Solidarity in the House of Austerity. University of Michigan, working paper. For a review of the health and equity dimensions of the Semester, with case studies, and suggestions for further improvement, see EuroHealthNet “The European Semester 2019 from a health equity perspective” 2019. https://eurohealthnet.eu/sites/eurohealthnet.eu/files/publications/FINAL%20 The%20European%20Semester%202019%20from%20a%20health%20equity%20perspective.pdf, accessed 27 September 2019.

Box 5.1 lists the formal recommendations for 2019 as agreed by the Council. In most cases a country with a recommendation has a paragraph-long discussion in the text summarizing some key healthcare issues and challenges (some of which is quoted in the box). The apparent vagueness of some recommendations is therefore balanced in some cases by more precision in the text (Box 5.2). Some countries have neither recommendations nor discussion in the text, which presumably means that no attribute of their healthcare policies has been deemed a threat to fiscal sustainability.

What should stand out from these recommendations is just how far they have come from the institutionalized austerity of the early Semester. In case after case, the equity, effectiveness and quality of the healthcare system are raised as issues.

This is a much subtler and more health-informed approach than was seen in the early years of the Semester, and one that values a broader range of outcomes and appreciates the logic of longer-term investments. It is evidence of a process of

“socialization” that scholars have noted.²⁸ Thus we can see that countries such as Latvia and Lithuania are given advice to improve the quality and affordability of their health systems, and Italy to redress its regional inequalities, while Cyprus and Ireland receive endorsement of their moves towards universal health coverage (with a particularly supportive discussion of the Irish policy challenge: see Box 5.1) Member State ownership is in general a value in the Semester process as it operates now, which effectively means that the Commission tries to avoid recommendations that lack support within the Member State.²⁹ Compared to the earlier handling of health in CSRs, this is a dramatic difference.

Another point that is visible in the recommendations for several countries (Austria, Ireland, Malta, Portugal and Slovenia) is the linkage between the fiscal sustainability of the healthcare system and that of the long-term care and pension systems. The recommendation is often concretely about reducing pension liabilities, but the linkage of pensions and health is made because both are seen as costs of an ageing population. Notably, health is discussed more in these cases as a cost that will increase with ageing, like pensions, rather than an investment in reducing the costs and increasing the benefits such as informal care associated with an ageing population.

As this book went to press, incoming Commission President Ursula von der Leyen told the Parliament that she would “refocus our European Semester to make sure

28 Zeitlin J, Verdun A (eds.) (2018). EU Socio-Economic Governance since the Crisis. The European Semester in Theory and Practice. Abingdon: Routledge; Zeitlin J, Vanhercke B (2018). Socializing the European Semester: EU social and economic policy co-ordination in crisis and beyond. Journal of European Public Policy, 25(2):149–74.

29 Tkalec I (2019). The Council’s Amendments to the Country-Specific Recommendations: More than just Cosmetics? Journal of Contemporary European Research, 15(2):212–27. Available at: https://doi.

org/10.30950/jcer.v15i2.1001.

that we stay on track with our Sustainable Development Goals”³⁰ (see Box 2.6).

This statement, along with other statements such as the Council statement on the economy of well-being (Box 1.4), suggests that the Semester, and perhaps broader EU policy, will develop a more social and coherent framework.