Economic analysis and recommendations

The Observatory for Competitiveness (ODC) works in various areas within the context of international economic governance.

• At a European Union (EU) level, the ODC participates, alongside the Ministry of Finance, in the Economic Policy Committee (EPC) and is also involved in the work carried out in relation to the European Semester.
• The ODC conducts a range of tasks related to the Organisation of Economic Co-operation and Development (OECD). Specifically, it is the national point of contact for the economic survey of Luxembourg which is carried out by the OECD every two years.

EU and the European Semester

Within the context of the European Semester, the European Commission analyses Luxembourg's budgetary policy and reform efforts each year. The objective of these analyses is to align the budgetary policies and to coordinate economic policies with a view to attaining the EU's objectives. The European economic governance rests on the principles of monitoring, prevention and correction of any imbalances that could pose a risk to the economies of the EU Member States.

The Observatory for Competitiveness (ODC) participates, alongside the Ministry of Finance, in the Economic Policy Committee (EPC), which is a consultation body with the European institutions. The EPC contributes in particular to the work of the EU Council with a view to coordinating the economic policies of the Member States. Its task is to provide economic analyses, opinions on methodologies and projects for formulating policy recommendations, in particular on structural policies aimed at improving the potential for growth and employment. The EPC supports the EU Council in formulating the broad guidelines for economic policies and contributes to the multilateral surveillance procedure. It also supports the work of the Economic and Financial Committee, which essentially focuses on following the short- and medium-term macroeconomic development in the Member States and within the Community.

At a national level, the ODC contributes to works carried out within the context of the European Semester, alongside the Ministry of Finance. The European Semester is a mechanism for coordinating economic and budgetary policies. The annual cycle of the European Semester defines the general economic, budgetary and social priorities for the year ahead and provides policy guidelines to help the Member States to achieve the objectives.

• Under the guidance of the Ministry of Finance, the ODC contributes to drawing up the medium-term fiscal-structural plan (MTFSP). In concrete terms, the ODC is responsible for coordinating, at a ministerial level, the drafting of the structural component of the MTFSP concerning the policies and structural reforms being planned and implemented in Luxembourg.
• The ODC, in collaboration with the Ministry of Finance, acts as a national coordinator for drawing up the Country Report for Luxembourg, which is published annually by the European Commission within the context of the European Semester.
• The ODC also participates in the National Social Dialogue within the context of the European Semester.
• Finally, the ODC disseminates the information related to the European Semester to the competent actors within the Luxembourg government administration.

OECD

The Observatory for Competitiveness (ODC) performs two main tasks in relation to the Organisation of Economic Co-operation and Development (OECD), namely, participation in the OECD's Economic Policy Committee (EPC) and cooperation in conducting Luxembourg's economic survey, which is carried out every two years by the OECD (EDRC).

The ODC participates in the OECD's Economic Policy Committee (EPC) which uses a multilateral approach and is a forum for discussing the current and future major macroeconomic issues. The EPC's main objective is to contribute to sustainable and balanced economic growth, whilst duly taking into account the social and environmental consequences of government action. The EPC hereby aims to promote responsible structural, budgetary and monetary policies. To achieve its objectives, the EPC examines the short-, medium- and long-term economic challenges, by evaluating the immediate risks as well as the major changes and pressures that could be on the horizon. The EPC is committed to monitoring the situation and the economic and financial policies of member countries, and conducts cross-sectional analyses of their effect with the aim of helping to improve public policies.

The ODC is the national point of contact for the Economic Survey of Luxembourg, which is carried out by the OECD every two years. This regular review provides a complete analysis of economic developments, with chapters covering the main economic challenges and recommendations on which policies to implement in order to meet these challenges. Within the OECD, the Economic and Development Review Committee (EDRC) is at the core of the process. The economic surveys are assessed using the OECD's peer review mechanism. ODC agents participate in the EDRC on Luxembourg's behalf. At the start of each assessment cycle, the ODC helps the EDRC's secretariat to prepare a draft report on Luxembourg, by organising, in particular, the necessary technical and political missions. The draft report prepared by the EDRC's secretariat serves as the basis for the peer review and is reviewed by the EDRC, with participation by member countries' and the European Union's permanent delegates to the OECD. To make the process manageable and efficient, the EDRC designates two of its members as lead examiners for each review. After the EDRC's plenary meeting, the secretariat revises the draft report in consultation with the country under review, so that the observations and recommendations made by the committee may be taken into account. Thanks to this interactive process, there is generally a wide consensus on these economic surveys. Ultimately, the EDRC approves the final version and then publishes the economic survey under its own responsibility.