This area of the pact is the same as addressed in Abolishing Wage Indexation. It will be evaluated by the national Unit Labour Cost (ULC), a quantitative measure of wage costs, and is to be addressed by both reducing the cost of labour as well as increasing productivity. Labour costs are to be reduced by reforming the "degree of centralisation in the bargaining process",
the "indexation mechanisms" as well as decreasing wages in the public sector.
Productivity is to be increased by deregulating industries
as well as improving infrastructure and education.
The goal will be evaluated by quantitative measures of long term and youth unemployment rates, and labour participation rates. This aim is to be achieved by promoting the “flexicurity” model as well as "lowering taxes on labour" and "taking measures to facilitate the participation of second earners in the work force".
Indicated as being the most important aim of the pact this objective is to be addressed by increasing the "sustainability of pensions, health care and social benefits" as well as implementing "national fiscal rules." Increasing the sustainability of pensions, health care and social benefits means limiting the liability of the government to a more manageable level, this will be done by "limiting early retirement ... in the age tranche above 55" as well as implementing "schemes and using targeted incentives to employ older workers" reducing the burden on pension systems
One of the most stringent conditions of the pact is given with respect to fiscal rules:
"Participating Member States commit to translating EU fiscal rules as set out in the Stability and Growth Pact into national legislation."
When implementing a balanced budget amendment "Member States will retain the choice of the specific national legal vehicle to be used" provided that it has a "sufficiently strong binding" condition and a "durable nature." The pact recommends a constitutional amendment or framework law that is formulated as either a "debt brake
, rule related to the primary balance or an expenditure rule." Additional it should "ensure fiscal discipline at both national and sub-national levels" in case these have autonomy to issue debt or other liabilities.
The Financial stability will be measured quantitatively with respect to the "level of private debt
for banks, households and non-financial firms." With assistance from the President of the European Systemic Risk Board countries are expected to put into place "national legislation" to resolve these in case they exceed benchmark levels.
Tax policy coordination
Developing a common corporate tax base
could be a revenue neutral way forward to ensure consistency among national tax systems while respecting national tax strategies, and to contribute to fiscal sustainability and the competitiveness of European businesses. Tax policy coordination is also expected to strengthen best practices sharing and fight against fraud and tax evasion. Direct taxation remains a national competence.