Questions and answers on the 2026 European Semester Autumn Package

GENERAL QUESTIONS ON THE EUROPEAN SEMESTER

1. What is included in this year's European Semester Autumn Package?

This year's European Semester Autumn Package is a comprehensive package of policy documents:

• A chapeau communication setting out the joint EU policy priorities and an overview of the package;
• A proposal for a 2026 recommendation for the economic policy of the euro area;
• The first edition of the European Macroeconomic Report that aims to inform strategic policy choices to strengthen the euro area and EU's resilience in the face of a rapidly evolving global order;
• The 2026 Alert Mechanism Report, which aims to identify potential macroeconomic imbalances in Member States;
• A number of documents related to fiscal surveillance, including opinions on draft budgetary plans and a Report under Art. 126(3) of the Treaty on the Function of the EU, evaluating the compliance of EU Member States with the deficit criterion;
• A Communication on Post-Programme Surveillance Assessments;
• A proposal for a Joint Employment Report, which monitors the implementation of employment guidelines and the European Pillar of Social Rights;
• A Recommendation for a Council Recommendation on Human Capital, which aims to address skills shortages and promote human capital development in the EU.

2. What is the role of the European Semester Autumn Package?

The European Semester Autumn Package provides a comprehensive overview of the economic, social, and employment developments in EU Member States, and sets the stage for the annual European Semester cycle.

Building on the Commission's most recent Autumn Economic Forecast, this package is focused on providing coordinated policy guidance to deliver on the Competitive Compass. By achieving stronger economic and social coordination, the objective is to ensure sustainable economic growth, job creation, macroeconomic stability and sound public finances across the EU.

The Autumn Package therefore includes policy guidance on the economic policy of the euro area and, for the first time, new policy guidance on human capital in the Union, as announced in the Union of Skills.

In terms of fiscal and budgetary surveillance, the Package includes a comprehensive assessment of the fiscal situation in all EU Member States and the Alert Mechanism Report, which initiates the annual cycle of the macroeconomic imbalance procedure (MIP). The MIP aims to detect, prevent and correct imbalances that could adversely affect the proper functioning of the economy of a Member State, or of the EU as a whole.

3. What role is the Semester going to play for the next multiannual financial framework (MFF)?

The Commission proposes to channel a significant part of funding under the next MFF through national and regional partnership plans (NRPPs) for investment and reform. In such context, the European Semester would serve as a main reference framework for such NRPPs.

In the proposal, the Commission envisages that the NRPPs submitted by Member States effectively address all or a significant subset of the challenges identified in the context of the European Semester. To this end, the 2026 cycle will help identify reform and investment needs at national and regional level, providing a robust foundation for steering EU funding under the next MFF.

4. How will the Semester be adjusted compared to the previous rounds, and why?

This year, the European Semester will place a stronger focus on assessing the implementation of 2025 Country-Specific Recommendations (CSRs) and drawing lessons from how Member States have operationalised them. This reinforced approach reflects the need to tackle the EU's structural challenges and protect its social model, with a strong emphasis on delivering concrete results.

Notably, the 2026 cycle will look beyond the Recovery and Resilience Facility's operational period. The 2026 CSRs will build on the comprehensive set of CSRs that were adopted by the Council in 2025 and remain focused on delivering the priorities identified in the Competitiveness Compass.

At the same time, in the context of preparing for the next MFF, the Commission will further strengthen analysis in priority areas essential to improving competitiveness. The country reports will also contain a reinforced analysis of regional competitiveness.

GENERAL QUESTIONS ON FISCAL POLICY

5. How is the Commission assessing fiscal performance in 2025?

When assessing compliance with the provisions of the Stability and Growth Pact, the Commission bases itself on its Autumn 2025 Economic Forecast to highlight risks to compliance.

The Commission's forecast takes into account information provided by the Member States in their Draft Budgetary Plans for 2026 (for euro area Member States), in their reports on action (for countries in an excessive deficit procedure) and, more in general, the budgetary situation in all Member States.

The assessment of compliance is based on a comparison of net expenditure growth as projected by the Commission with the maximum net expenditure growth recommended by the Council. In the assessment, the Commission also took into account the flexibility for defence expenditure provided by the national escape clause for the 16 Member States for which it has been activated.

6. What are the next steps in the Commission's fiscal surveillance?

For euro area Member States that have submitted a Draft Budgetary Plan, the Eurogroup will discuss the Commission's Opinions and is expected to issue a statement on the draft budgetary plans for 2026. Governments and national Parliaments should take due note of the Commission's Opinions and the statement of the Eurogroup and, if needed, take the necessary measures to ensure that fiscal policy in 2026 is in line with the relevant Council recommendation.

In general, the Commission stands ready to engage with all Member States and to support efforts to ensure compliance with the economic governance framework.

The Commission will provide an updated assessment for all Member States in spring 2026. It will be based on outturn data for 2025, the Commission's Spring 2026 Forecast and the Annual Progress Reports, which all Member States must submit by 30 April 2026.

For Member States in excessive deficit procedure, the Annual Progress Reports will also include the subsequent reporting on action taken in response to the respective Council Recommendations.

7. Government debts are expected to increase in several Member States in 2025 and 2026. What is your assessment?

The increase of debt-to-GDP ratios in 2025 and 2026 was expected.

These are the first two years of the implementation of the reformed economic governance framework. To recall, debt-to-GDP ratios are expected to be put on a downward trajectory by the end of Member States' medium-term fiscal-structural plans.

Fiscal consolidation efforts must continue in the concerned countries.

In addition, the activation of the national escape clauses is expected to lead to higher debt and deficit levels by 2028 compared to what was expected in the plans and will probably require additional consolidation needs in the next round of plans.

8. Is the fiscal stance projected in the euro area for 2025 and 2026 appropriate?

The EU/euro area fiscal stance is projected to remain broadly neutral in both 2025 and 2026, meaning that budgetary policies are expected neither to provide significant stimulus nor to impose additional tightening, although there will be considerable cross-country heterogeneity.

On average, a broadly neutral stance in 2025 and 2026 appears largely consistent with Member States' compliance with the maximum growth rates of net expenditure recommended by the Council and the use of flexibility under the national escape clause for defence. A broadly neutral fiscal stance also appears to be appropriate from a macroeconomic perspective. For the euro area, the broadly neutral fiscal stance in 2025 has complemented the ECB's monetary policy easing, as inflation continues to fall and high uncertainty is still surrounding the growth outlook. In 2026, the broadly neutral fiscal stance is compatible with the expected stabilisation of inflation at around 2% and the projected moderate growth outlook.

The composition of the fiscal stance in 2025 and 2026 also appears to be appropriate. Nationally financed investment is preserved, while total investment is further supported by increased expenditure financed through Recovery and Resilience Facility (RRF) grants, with implementation accelerating as the instrument approaches its end.

9. Does the reformed fiscal framework succeed in protecting investment?

The reformed fiscal framework recognises that investment is crucial to promote growth and to reduce public debt ratios, thereby reducing the required fiscal consolidation efforts.

In this sense, the reformed framework protects investment through several channels:

• First, Member States are given more gradual adjustment requirements compared to the previous framework;
• Second, Member States with debt below 60% of GDP and deficit below 3% GDP are able to spend more than under the previous framework, if they so wish;

• Third, Member States have the option of planning a more gradual fiscal adjustment if they commit to implementing a specific set of investment and reform measures;

• Fourth, such a set of reforms and investment underpinning an extension needs to ensure that the planned overall level of nationally financed public investment over the period covered by the medium-term plan is not lower than the medium-term level before that period.

Projections show that the reformed fiscal framework is indeed successful in protecting investment. In particular, public investment in the euro area is projected to expand in 2026 driven by a mix of national and EU financing, with investment in defence also gaining momentum. Moreover, most euro area Member States are projected to invest more than they did prior to the pandemic.

NATIONAL ESCAPE CLAUSE

10. How is the flexibility provided under the National Escape Clause reflected in the assessment of Member States budgetary performance?

To date, 16 Member States have requested the activation of the national escape clause. These are: Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia, and Finland. This is a critical number of countries, showing the benefit of following a coordinated approach.

The national escape clause provides Member States with flexibility under the EU fiscal rules to increase defence expenditure, without an immediate need to finance this increase with spending cuts or revenue raising measures.

Member States for which the Council has activated the national escape clause for defence spending can temporarily deviate from their recommended maximum growth rates for net expenditure, provided that those deviations are related to increases in defence spending by up to 1.5% of GDP over the period 2025 to 2028.

For the 16 Member States for which the Council has activated the national escape clause for defence spending, the Commission's assessment of compliance includes a check whether an excess over the recommended maximum growth of net expenditure is explained by a corresponding increase in defence expenditure compared to a reference year, of up to 1.5% of GDP over the period 2025 to 2028. If a deviation can be fully explained by a projected increase in defence expenditure, the Member State is considered to be compliant with its recommendation.

EXCESSIVE DEFICIT PROCEDURE

11. How is the Commission assessing whether effective action was taken by Member States under the excessive deficit procedure [EDP]? What does being “in abeyance” mean in the context of an EDP? What is the procedure for non-compliant countries?

Assessments were based on the Commission's Autumn 2025 Economic Forecast and took into account the actions taken by the Member States, as set out in their reporting on action taken in response to the respective Council Recommendations. Compliance is assessed by comparing the Commission's projections for net expenditure growth with the maximum net expenditure growth recommended by the Council. The assessment also took into account the flexibility for defence expenditure provided by the national escape clause for the 16 Member States for which the clause has been activated.

When the recommended net expenditure path is respected, the excessive deficit procedure is held in abeyance. This means that no further procedural steps are taken at this stage but that the EDP remains open, and the Member States remains bound by the respective Council recommendation.

When the recommendation is not respected, the Commission and the Council may “step up” the procedure. If the Council decides that a euro area Member State fails to comply with the corrective path set under the excessive deficit procedure, the Commission may propose to the Council to give notice to the Member State concerned. Should a Member State then fail to act upon the notice, the Commission can recommend the Council to impose a fine of up to 0.05% of the previous year's GDP. The fine needs to be paid every six months until the Council assesses that the Member State has taken effective action.

In this round, in the absence of outturn data for 2025, the Commission has decided to keep the excessive deficit procedures in abeyance for all Member States but highlighted a number of issues and risks. The situation will be reassessed next spring, when outturn data for 2025 becomes available.

12. What is the Commission's assessment of the action taken by Romania in the context of its excessive deficit procedure and what are the implications for the macroeconomic conditionality process?

Thanks to the fiscal consolidation packages adopted by the Romanian government over the summer, net expenditure growth in 2025 is projected to be only slightly above the ceiling recommended by the Council, while it is projected to grow well within the ceiling in 2026.

As a result, the EDP is held in abeyance and the Commission will not at this time propose the suspension of EU funds under the procedure of macroeconomic conditionality.

The Commission will undertake a new assessment in spring 2026, under the European Semester Spring Package. The implementation of existing policy commitments will contribute to ensuring that Romania complies with the corrective path recommended by the Council.

13. Is the Commission proposing to open new deficit-based excessive deficit procedures?

As part of the 2025 Autumn Package, the Commission has adopted a report under Article 126(3) TFEU to assess compliance with the deficit criterion by Finland and Germany.

For Germany, the report is triggered because the planned deficit for 2025 is above 3% of GDP. However, the report finds that there is no case to open an EDP for Germany at this stage because the excess of the deficit over 3% of GDP is fully explained by the increase in defence spending and therefore allowed by the national escape clause.

For Finland, the report is triggered by the 2024 deficit exceeding the 3% of GDP reference value and a planned deficit above 3% of GDP for 2025. In Finland's situation, the deficit in excess of 3% of GDP in 2025 can only be partly explained by the increase in defence spending and the flexibility granted under the national escape clause. Therefore, after taking into account the opinion by the Economic and Financial Committee on the report, the Commission will consider proposing to open an excessive deficit procedure for Finland by recommending to the Council to adopt a Decision under Article 126(6) TFEU establishing the existence of an excessive deficit as well as a Recommendation under Article 126(7) TFEU with a view to correcting the excessive deficit.

DRAFT BUDGETARY PLANS

14. How does the Commission assess the Draft Budgetary Plans by euro area Member States? What is the procedure for countries at risk of non-compliance?

The Commission's assessment of the draft budgetary plans of euro area Member States examines Member States' compliance with the EU's fiscal framework. The Commission also assesses the euro area fiscal stance and overall budgetary situation and prospects.

The Commission has assessed whether the draft budgetary plans of euro area Member States respect the ceilings of net expenditure growth as recommended by the Council on the basis of Member States' medium-term plans or the requirements under the EDP and has published Opinions assessing 17 draft budgetary plans.

Two Member States (Belgium and Spain) did not yet submit a draft budgetary plan as no draft budget was submitted to their national Parliaments. Austria submitted a DBP covering 2025 and 2026 in May and the Commission published its Opinion in June 2025.

The Commission's assessment focused on the annual and cumulative net expenditure growth in 2026. Countries where the Commission highlights a risk of non-compliance are invited to take the necessary measures within their national budgetary process to ensure that fiscal policy in 2026 is in line with the Council Recommendations.

15. Which countries are at risk of not complying with the net expenditure growth path? Why? How should these countries address the situation?

Four euro area Member States are found to be at risk of non-compliance with the recommended maximum growth of net expenditure. These Member States are Croatia, Lithuania, Slovenia and Spain.

Two euro area Member States are found to be a at risk of material non-compliance. These Member States are Malta and the Netherlands.

These six Member States are invited to take the necessary measures within their national budgetary process to ensure that fiscal policy in 2026 is in line with the Council Recommendation.

For Member States in EDP, this is important to avoid a possible stepping up of the excessive deficit procedure in spring.

MEDIUM-TERM FISCAL STRUCTURAL PLANS

16. Has any Member State announced its intention to revise its medium-term fiscal structural plan?

Under the EU economic governance framework, Member States are permitted to revise their medium-term fiscal structural plan if there is a change in government during the lifetime of the plan.

As such, Ireland has announced its intention to revise its medium-term fiscal structural plan, as there has recently been a change in government.

17. When will the Commission assess the progress made with the implementation of reforms and investments that underpin the extension of the adjustment period?

The Commission will provide an updated assessment of the budgetary developments for all Member States in spring 2026, under the European Semester Spring package. The updated assessment of compliance will be based in particular on outturn data for 2025, on the Commission's Spring 2026 Economic Forecast and on the Annual Progress Reports, which must be submitted by Member States by 30 April 2026.

Where relevant, the assessment in spring 2026 will include a review of progress in the implementation of reforms and investments underpinning the extension of the fiscal adjustment period. This concerns eight Member States: Spain, France, Italy, Finland, Belgium, Austria, Germany and Romania.

18. How can we balance respect for the recommended maximum growth rates of net expenditure with the need to accommodate competing spending priorities?

We live in challenging economic and geopolitical times, with many competing claims on scarce government resources. In this respect, improving the quality of public finances should be a key priority for Member States.

The EU economic governance framework also includes several features that help Member States balance respect of the recommended fiscal paths with the need to accommodate spending priorities:

• First, the medium-term plans must include reforms and investments that together form a coherent package and address EU common priorities, including the clean transition and the build-up of defence capabilities.
• Second, fiscal adjustment requirements are differentiated with respect to debt sustainability challenges, providing Member States with healthy public finances with more space to step up investment.
• Third, the framework offers Member States with less fiscal space the possibility to choose a slower fiscal adjustment path provided that this is underpinned by commitments to investments and reforms responding to country-specific challenges and common EU priorities.
• Finally, the activation of the national escape clause for increasing defence spending. The application of this clause has been designed in a manner that does not endanger Member States' fiscal sustainability in the medium term, but it provides some time for budgets to adapt gradually to the new reality.

Overall, the reformed economic governance framework protects public investment and better supports growth, coupling stronger ownership with more credible enforcement mechanisms.

2026 EUROPEAN MACROECONOMIC REPORT

19. What is the purpose of the new 2026 European Macroeconomic Report, and what can be expected to be included in it?

The new 2026 European Macroeconomic Report is designed to streamline and strengthen the EU's economic policy coordination framework.

It replaces both the Staff Working Document that traditionally accompanied the Euro Area Recommendation and much of the horizontal analysis of the Alert Mechanism Report's Staff Working Document.

Its purpose is to bring all key analytical elements together in a single, coherent document. By doing so, it provides a comprehensive view of the EU and euro area economy, offering a common analytical basis for policy debates.

The report includes four different chapters covering the European economic environment, macro-financial vulnerabilities, an analysis of the European savings, and the macroeconomic impact of higher defence spending.

MACROECONOMIC IMBALANCE PROCEDURE

20. What is the Alert Mechanism Report [AMR]? What are the next steps?

The Alert Mechanism Report (AMR) is an annual report aimed at identifying and monitoring economic imbalances at an early stage. It is the starting point of the Macroeconomic Imbalance Procedure (MIP) annual cycle.

The AMR comprises an economic and financial assessment based on an economic reading of a set of macroeconomic indicators (the MIP scoreboard). The report screens all Member States to identify those that may be affected, or may be at risk of being affected, by economic imbalances and on that basis selects countries for which an in-depth review (IDR) will be prepared.

This year's AMR focuses on the outturn data for 2024 and, in a forward-looking approach, also considers the 2025 in-year developments and the Commission's 2025 Autumn macroeconomic forecast. The AMR package comprises three documents: the AMR Communication, an accompanying staff working document (SWD) and a statistical annex. In addition, the European Macroeconomic Report – published this year for the first time – provides an analysis of the wider developments in the vulnerabilities and imbalances in the economies of the EU and its Member States, putting the country developments surveyed under the MIP in a wider context.

The Commission will discuss the findings of the Alert Mechanism Report with the Council and will then prepare IDRs for the Member States concerned in the coming months. These will be prepared in early 2026, ahead of the European Semester Spring package. IDRs will be technical documents and will provide the basis for the Commission's assessment regarding macroeconomic imbalances and the extent to which policies are addressing them. The eventual decisions on imbalances will be part of the European Semester Spring package.

21. What are the main findings of the Alert Mechanism Report in terms of the macroeconomic imbalances affecting the EU?

Regarding the external sector, current accounts increased in almost all Member States in 2024 while generally remaining below their pre-pandemic levels. Yet, important divergences across Member States remain, with both significant current account surpluses and large external deficits. In terms of external debt, negative net external stock positions narrowed further and there has been some rebalancing of external positions within the euro area.

In terms of competitiveness, while inflation is receding in the EU on average, the divergent increase in price and cost levels over the last five years has led to cost competitiveness deteriorations for some Member States, with economic convergence stalling in some cases.

On the government side, high deficits have left government debt above its pre-pandemic level in most countries. That has happened despite strong denominator effects on the debt-to-GDP ratios associated to high nominal GDP growth. Those effects will weaken in the future while the interest rate-growth differential have become less favourable, making reductions of debt ratios more difficult to achieve. At the same time, Member States face increasing defence spending needs and significant investments in the digital and decarbonisation transitions, on the top of ageing-related expenditure.

Households and corporate debt ratios have decreased further, attaining new historical lows.

High house prices are an economic and social challenge across an increasing number of Member States, and in some cases price increases have been very strong for years, partly reflecting muted housing supply.

The EU financial sector has remained resilient, with credit institutions maintaining high profitability and strong capital ratios. Yet, the non-bank financial sector has been expanding in recent years and could be a source of vulnerability, while new risks, including cyber risks and risks related to climate change, are emerging.

22. Which Member States are selected for an in-depth review? Why?

This AMR concludes that in-depth reviews are warranted for seven Member States.

These are the Member States for which it was concluded that there were imbalances (Greece, Italy, Hungary, the Netherlands, Slovakia, and Sweden) or excessive imbalances (Romania) in the previous cycle.

For the remaining Member States, the Commission concludes that there is no need to carry out in-depth reviews at this juncture.

EURO AREA RECOMMENDATION

23. What is the proposal for a recommendation on the economic policy of the euro area?

The recommendation on the economic policy of the euro area presents tailored advice to euro area Member States for the period 2026-2027 and is underpinned by a Staff Working Document analysing the macroeconomic outlook and the main structural challenges that the euro area is currently facing.

The recommendation reviews fiscal, financial and structural issues, as well as institutional aspects of Europe's Economic and Monetary Union.

The recommendation provides an agenda setting for the euro area as a whole and a framework to steer policy debates on priorities for the Monetary Union and its members, in particular in the Eurogroup.

24. What are the main elements contained in this year's euro area recommendations?

This year's euro area recommendations focus on ensuring fiscal sustainability while creating space for key investments, including on defence and competitiveness, alongside improving the efficiency of public finances and completing Recovery and Resilience Plans.

The 2026 euro area recommendation also highlights the need to prioritise public and private investment in research and innovation, industrial decarbonisation, clean energy and digital transition, economic security and the reduction of strategic dependencies across value chains emphasising the importance of removing barriers in the Single Market, including through regulatory simplification.

The recommendation calls for strengthening labour markets by boosting skills, improving education outcomes, increasing participation, supporting job quality and addressing poverty and housing affordability, while ensuring wage growth remains aligned with productivity.

Finally, they promote the development of a European Savings and Investment Union and underline the need to advance the digital euro project, reinforce the international role of the euro, and monitor macro-financial risks.

25. What are the novelties in this year's euro area recommendations?

The 2026 Euro Area Recommendations build upon the strategic direction set in 2025, but introduce a significant shift towards more operational, targeted, and urgent actions in response to the current economic and geopolitical landscape. While maintaining the core pillars of competitiveness, resilience, and stability, the 2026 recommendations introduce several innovations:

• Focus on defence: The recommendations move beyond a general call for investment. They now provide a more granular approach, explicitly referencing the "national escape clause" for defence spending. Furthermore, they call for new measures to address industrial bottlenecks and promote joint procurement to ensure new spending translates effectively into new capabilities.
• Savings and Investment Union: It is now linked to specific, concrete initiatives put in place by the Commission to better mobilize private European savings.
• A more granular approach to Labour and Skills: While reskilling remains a priority, the 2026 recommendations are more targeted. They place a new emphasis on foundational "basic skills" and call for measures to address "large regional disparities" in human capital, ensuring all parts of the Union can contribute to and benefit from productivity growth.
• Increased urgency: The new recommendations are marked by a clear sense of urgency. They reaffirm the hard deadline of 31 August 2026 for the completion of Recovery and Resilience Plans and use stronger language to "take all steps necessary" to advance the creation of a digital euro.

POST-PROGRAMME SURVEILLANCE

26. What are the conclusions of the post-programme surveillance for the relevant Member States?

The assessments find that all five assessed Member States - Ireland, Greece, Spain, Cyprus and Portugal - retain the capacity to service their debt:

• Ireland's capacity to service its debt is supported by large liquid asset buffers and a favourable debt structure.
• Greece's capacity to service its debt is helped by a declining public debt-to-GDP ratio, large government cash reserves and low short and long-term debt sustainability risks.
• Spain's capacity to service its debt is underpinned by solid economic expansion and strong revenue growth. Spain is set to exit post-programme surveillance by end-2025, being the first Member State to successfully conclude the post-programme monitoring.
• Cyprus' repayment capacity is helped by a long maturity of its debt portfolio and large cash buffers.
• Portugal's repayment capacity is supported by comfortable cash buffers and an active debt management strategy.

The Commission forecasts positive economic growth for Ireland, Greece, Cyprus, Spain and Portugal.

On the fiscal side, Ireland, Greece and Cyprus are projected to maintain budget surpluses while Portugal is forecast to have only small deficits. Spain's general government deficit narrowed in 2024 and is expected to keep decreasing in 2025 and 2026.

All five countries are expected to see a continuing decline in their public debt-to-GDP ratios, while Greece's, Portugal's and Spain's debt-to-GDP ratio remain at high levels. The banking sectors in these countries are currently performing well, with strong profitability and either robust (Ireland, Spain and Portugal) or improving (Greece, Cyprus) asset quality.

JOINT EMPLOYMENT REPORT

27. What is the Proposal for a Joint Employment Report? What are the next steps?

The Joint Employment Report provides an annual overview of the main employment and social developments and challenges in the EU and Member States' actions in line with the Employment Guidelines. Member States can compare their own performance to that of others and take steps to align policy measures more closely.

The report also monitors progress towards the three EU headline targets on employment, skills, and poverty reduction by 2030, as well as the related national targets put forward by the Member States.

In addition, the Joint Employment Report includes the first stage country analysis of the Social Convergence Framework, based on the indicators of the Social Scoreboard. It identifies those countries that require a more thorough second-stage analysis, in light of potential risks to upward social convergence.

The proposal for a Joint Employment Report will now be discussed in two advisory bodies of the Council, the Employment Committee and the Social Protection Committee. EU employment and social affairs ministers are then set to adopt the report in their March 2026 meeting.

28. What are the main findings and features of this year's Proposal for a Joint Employment Report?

The Report finds that overall, our job markets continue to perform strongly. Last year, 1.7 million more people were in work, bringing employment rates to new highs.

But behind the positive headline figures are weaknesses. Labour productivity in the EU is stagnating. Skills shortages remain high.  And there is the issue of the quality of our jobs.

8% of workers are at risk of poverty. One in five are in low-paid jobs. Over 50 million people that could work remain outside the labour force – mostly women, migrants and young people.

Looking at the Social Pillar headline targets, beyond employment rate, the share of adults participating in learning every year saw only limited progress in the EU, from 37.4% in 2016 to 39.5% in 2022, remaining significantly below the EU headline target of 60% by 2030.

In terms of reduction of the number of people at risk of poverty or social exclusion, in 2024, it decreased by 1.1 million compared to 2023 and by 2.9 million compared to 2019. However, further efforts will therefore be needed to reach the national targets and achieve at least 15 million fewer people at risk of poverty or social exclusion in the EU by 2030, in comparison with 2019.

The proposal for a 2026 Joint Employment Report maintains a strong country-specific focus based on the principles of the Social Convergence Framework, in line with the new economic governance framework.

29. Which countries are facing potential risks to upward social convergence and need further analysis in the second stage of the Social Convergence Framework?

The first-stage country analysis of potential risks to upward social convergence covers all 27 Member States. The Commission will conduct a more detailed second-stage analysis (using a wider set of quantitative and qualitative evidence) for nine countries, for which it identified potential risks in the first stage. This analysis providing a deeper look at the challenges will be published in spring 2026.

COMMISSION RECOMMENDATION FOR A COUNCIL RECOMMENDATION ON HUMAN CAPITAL

30. Why a new EU-27 Recommendation on human capital? How does this match with the competitiveness priority?

We have the Competitiveness Compass, and we cannot speak of competitiveness without human capital. We may have tech, investment but if we don't have the talent and skilled workforce of today and the future, well prepared and flexible, we will not be able to win this global race.

This is the very reason why education and skills are now subject to an overall EU 27 council recommendation as it has been the case with the Euro Area so far. This ensures that the structural urgent concerns and the demand of policy action are addressed.

Within the overarching policy coordination framework of the European Semester, the Recommendation will guide the identification of necessary structural reforms and investments in education and training systems to ensure they are future-proof and respond to labour market needs. To this end, the strategic priorities identified in the recommendation would also inform the analysis in the Country Reports and, where relevant, the Country-Specific Recommendations next spring.

31. What is the content of the new Recommendation?

The recommendation focuses on skills gaps in strategic sectors and new education and training priority areas for action, in support of the EU's competitiveness and preparedness. The recommendation calls on Member States to take actions in the five areas: i) basic skills; ii) vocational education and training; iii) higher education; iv) investments in education and skills v) skills intelligence. It aims to provide more operational guidance and a stronger focus on strategic priority areas, which are not sufficiently covered in other parts of the Semester.

More in detail, the Commission asks all Member States to:

1. Reverse the trends on basis skills. More and more children are weaker in the matters that are key for the future such as maths.
2. Prioritise STEM at all levels of education, from VET to tertiary. There are many girls and women who are outside the labour market today who must be attracted as a matter of urgency in this field. Here too, teaching must evolve in line with technology – even be ahead of it. This is the way to achieve competitiveness.
3. Mobilise adequate resources. Investing in people's education and skills is a joint responsibility between private and public sector. The Commission invites Member States and their business environment to sit together and invest together because this is a win-win investment for society companies and people alike.
4. Invest in data. Proper intelligence about labour market needs is required. Again, a joint responsibility of both those who develop technologies and public authorities.

32. What is the difference with the Joint Employment Report, and what is its adoption process?

The Joint Employment Report monitors the implementation of the Employment Guidelines, which present common priorities for national employment policies and provide the legal basis for Country-Specific Recommendations in the employment and social areas.

The new Recommendation on human capital is a key innovation introduced in the Semester in line with the Competitiveness Compass. It is based on Article 148(4) of the TFEU and provides clear and operational guidance to Member States to act individually and/or collectively to fill the human capital gap which is essential to support strategic sectors for the EU economy and address the new needs stemming from AI, renewable energy technologies, biotech, defence and security.

The Recommendation for the first time places education and training system and their link with resilient labour market at the core of the Semester as the EU economic and employment coordination process. Its findings will inform the preparation for the country report and inform the country specific recommendations.

For more information

Press Release: Commission outlines priorities to boost EU competitiveness in its 2026 European Semester Autumn Package