Less than half of all EU member states were able to meet the 23 September deadline for telling the Commission that they had been able to fully implement the Institutions for Occupational Provision’s (IORP) directive, but many in the industry say this should not be a cause for concern.
Previously, private speculations of those close to the issue had predicted a rather higher compliance ratio, of somewhere between 50-80%.
Data gathered by the European Federation for Retirement Provision (EFRP), suggests that nine member states had notified the Commission by the cut-off date, although this number is increasing all the time.
The EFRP does not think that too much attention should be paid to non-compliance at this stage, and believes that most, if not all, member states will comply by the end of the year.
Writing in the Financial Times, Jaap Maassen, chairman of the EFRP, stressed that “delays in notification do not signify failure”. Conversely, he argued, “notification is no guarantee of correct transposition anyway”.
Chris Verhaegen, EFRP secretary general, said that there could be a number of reasons for non-notification by member states. “Some may have waited to see what has been happening with the directive elsewhere in other member states, some may simply have been trying to get more clarification,” she said. “We don’t think that this is the kind of directive which is going to be left on the side and member states are going to ignore,” she added.
Yves Stevens, professor of social law at the Catholic University of Leuven, said that the publication of a report he is preparing on the transposition of Article 20 of the IORP directive, dealing with social labour law, has had to be postponed because of some “curious implementation steps” that some member states have taken with regards to the IORP directive. The report had been scheduled for release in October.
Stevens said that of particular interest are the measures taken by Italy, France and Belgium. Finland also seems to have adopted a novel approach for dealing with Article 20, but this is not a country that his report will look at.
Charlie McCreevy, the commissioner responsible for overseeing smooth implementation of the IORP directive, has been invited to attend a sitting of the European Parliament in Strasbourg in November to answer questions about the current state of play.
Under pressure from the Commission, many member states now seem willing to try and get their public finances under control. But there is some concern that these valiant efforts could be undermined by the rapid ageing of Europe’s population – either that or Europe’s social model will come under fire.
Italy’s draft 2006-2007 budget, which was published at the start of October, seeks to put E20bn extra in the coffers through a combination of tax-raising and spend-cutting measures. Italy’s budget deficit is forecast to hit 4.3% this year, well over the EU’s 3% limit.
France, another country with a large deficit problem, also proposed slashing spending and raising taxes in its draft budget, unveiled mid-September. France hopes to raise some E9bn over the next two years in this way.
Similarly, the 2006 budget for Greece, a country that has also run into problems with the stability and growth pact, also recommends putting the breaks on spending.
Germany also looks willing to tackle its deficit problem, an issue facing new Chancellor Angela Merkel.
All this sounds good for Europe’s economy, but warnings have appeared from all quarters that demographic ageing still remains one of the key challenges to repairing the EU’s deficit gaps, and will put pressure on governments to raise spending on pensions at a time when they should be being more prudent.
Last month, Joaquín Almunia, the commissioner in charge of the Euro-zone’s monetary policy, told a dinner debate in Athens that “ongoing demographic developments will have a huge impact on public finances over the next few decades, but also on economic prospects”.
Internal market commissioner Charlie McCreevy chose Italy to express his concerns. “Economic growth in Europe over the last few years has been below its potential. Added to this, we have the twin problems of low population growth and ageing,” he said.
Speaking in Slovenia, social affairs commissioner Vladimir Spidla said: “Ageing is one of Europe’s biggest and most complex challenges. It is already transforming our society, the economy and the relationships between different generations.”
All this noise being made by commissioners is by way of sending a clear message to member state governments, who will meet for an informal meeting at the end of October: national governments must reform their social model, if they are to be able to meet their spending commitments without running up huge deficits. Demographic ageing is going to make this all the harder.
Despite the sounds of compliance coming from some of the worst offending countries, the Commission still feels anxious that the October meeting will not take any concrete steps towards reform. It is telling that the UK presidency of the EU chose to host the meeting at an informal level, rather than the usual summit, to allow a free exchange of ideas without the need to make any decisions.

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