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". Madam President, ladies and gentlemen, I too wish to express my joy that enlargement is now a reality. I am happy that, at this unique historic moment for the European Union, I am being given an opportunity to debate with you, the representatives of 450 million people and of a union of markets, economies, peoples and societies, the two basic foundations on which the European Union is based: the economic and the social model. The Social Policy Agenda plays a most important role in the updating of the European social model. It has as its reference point the strategic objective of Lisbon, according to which Europe needs to seek to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. This clearly reflects the perception that the Lisbon objective was a single strategic objective and not three juxtaposed aims. Thus, it is clear that securing more and better jobs or promoting social cohesion are elements which can support competitiveness and improve economic performance. The inclusion of competitiveness at the World Economic Forum, at which European countries such as Finland, Sweden and Denmark clearly have leading positions, clearly emphasises the vital importance of this interaction. The success of the Social Policy Agenda depends on numerous factors and this constitutes an important advantage, because it broadens the range of agencies involved in implementing the Agenda and, in this way, strengthens the commitment to update the European social model. The social partners play a crucial role from this point of view. Social policies are not therefore simply the only result of good economic performance; they are, at the same time, a factor which makes an essential contribution to economic growth. Updating the social model means developing and adapting it, so that account is taken of the fast changes taking place in the social economy. Finally, I should like to point out that economic prosperity depends on efficient competition between businesses and social progress depends on solidarity between citizens. Both these factors have contributed to the success of Europe. Competition without solidarity would result in the law of the jungle. Solidarity without competition would lead to stagnation. That is why the European model is based on the market economy, which recognises the rights of workers and social dialogue. In conjunction, therefore, with highly developed social systems, it provides the possibility to carry out the necessary structural changes in the economies of our societies in such a way as to avoid conflict and safeguard social stability. The European economic model concerns the unification of markets and economies and the coordination of economic policies. The European social model is designed to secure a high level of social protection, education and social dialogue, based on good economic performance. These two models are two sides of the same coin. They represent the two characteristics which distinguish the European Union from other areas in the world. In addition, they have helped not only to secure entire decades of increased prosperity for all citizens, but also to consolidate peace and friendship between the peoples of Europe. As far as the European economic model is concerned, the Treaty makes provision for the application of an economic policy based on close coordination of the economic policies of the Member States. Economies with a great degree of unification and interdependence which share a common market and have a common currency need efficient coordination of economic policy if they are to benefit from them. That is why the European Union has drawn up a detailed framework for economic policy. Within this framework, the expression 'coordination of economic policy' is used as a general term, which covers an entire spectrum of interactions between policy-making factors, at both national level and European Union level. The methods used include exchanging information, discussing best practices, engaging in policy-making dialogue, drafting jointly agreed rules and policy objectives and taking jointly decided action. The uniqueness of the coordinating framework in Economic and Monetary Union lies in the fact that an independent, supranational European Central Bank has undertaken to exercise a single monetary policy, while responsibility for economic, financial and structural policies remains decentralised in the hands of the national authorities, but subject to joint rules. The European Central Bank decides monetary policy on the basis of developments noted in the eurozone as a whole and therefore has the facility to deal in the best possible way with any important crises which may affect the common currency zone. By contrast, the national governments each have the facility to apply their own economic policy based on the specific problems and crises which each individual country faces within, of course, the limits of joint rules. Many of the constituent components of the economic coordinating framework are closely linked to the general Lisbon strategy, a strategy of structural reforms with economic, social and environmental dimensions. The framework of economic policy gives the national policy of each country a noteworthy degree of autonomy in important sectors and reflects the application of the principle of subsidiarity, which is based on strong economic and political logic. In certain specific sectors, such as the single market, competition policy and financial deficits, the application of joint rules and provision for reliable measures to ensure they are adhered to are required. In other sectors, such as the size and composition of government spending, structural policies and social welfare benefits, there are no strong arguments for requiring that competence for exercising policy be transferred to supranational level. The decentralisation of policy-making procedures gives the national authorities the necessary room for manoeuvre, allowing them both to apply policies in keeping with national economic structures and preferences and to adapt to the economic developments noted in each individual country. It also provides the facility to safeguard the beneficial results of competition policy. Macroeconomic coordination in the eurozone is generally based on dialogue and agreement. It aims to maintain a healthy and stable macroeconomic framework and to optimise the policy mix at short-term level to address cyclical developments. Its main objective is to ensure that economic growth comes up to its real potential. The results of structural policies in the partner countries and the joint benefits provided by Economic and Monetary Union may not be perceived quite as easily as the consequences of macroeconomic policies. Nonetheless, it is clear that the existence of efficient and flexible markets is of decisive importance to increasing the potential for growth and to safeguarding the smooth functioning of Economic and Monetary Union. In order to avoid distortions and safeguard the smooth functioning of the internal market, structural policies which have a direct impact on the functioning of the internal market and competition are subject to stronger forms of coordination. Now, what constitutes the European social model? The conclusions of the European Council in Barcelona describe it as a model based on good economic performance, a high level of social protection and education and social dialogue. Thus, the European social model supports the parallel development of economic and social prosperity and is based on the interdependence between economic efficiency and social progress. Despite the differences which exist between our individual national systems, this particular European social model, which European social policies strengthen in a bid to consolidate the economic power of Europe, really does exist. The European social model, in the various forms in which it appears in the Union, has played a vital role, contributing to the constant increase in productivity and uninterrupted improvement in the social level in the whole of the Union, while at the same time ensuring that the benefits are as widespread as possible. Nonetheless, in order to improve its efficiency, this model needs to be updated. The social partners play a very important role from this point of view. The reform is also facilitated by cooperation at European level, which is happening today with issues such as employment, social integration and the reform of pension systems."@en1

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