SPEECH/08/33
Günter Verheugen
Vice-President of the European Commission responsible for Enterprise and Industry The Strategy for Growth and Jobs
Speech and discussion at the Swedish Parliament Stockholm 22nd January 2008
Ladies and Gentlemen,
Dear colleagues,
I am very grateful for this opportunity to discuss with you progress and challenges of the EU economic reform strategy. Sweden is going to hold the EU presidency in less THAN two years time and it is therefore all the more important that you stay attuned to what is going on in Brussels and that we are well informed about your ideas and concerns.
As you know, the European Commission presented in December its assessment of the functioning of the Growth and Jobs Strategy since its renewal in 2005.
Hard economic data as well as our qualitative assessment of the reform process give us good reasons to be optimistic. The number of jobs created and the overall economic performance have improved considerably in recent years. Since 2005, 6.5 million new jobs have been created in the European Union. According to our forecasts, another five million jobs will be created in the next two years. We are moving closer to the employment rate target of 70%. Unemployment has decreased to levels not seen in many years.
The strong economic performance since the renewal of the Lisbon Strategy in 2005 is of course partly related to the favourable economic cycle and a strong global demand. But let us not be too modest here. The EU as a whole also strongly benefited from the quickly improving economic situation in the new Member States after their accession to the EU.
I leave the debate on whether the good recent economic results are a predominantly cyclical or a predominantly structural phenomenon to economists. The important message for me is that the renewed Lisbon strategy has undoubtedly played a positive role for the implementation of structural reforms all around the EU; reforms which give us a good chance to boost Europe's competitiveness for the future. Our conclusion in December last year was therefore clear – the renewed strategy, based on an open and operational partnership, works.
Despite this generally good progress, we found areas where implementation of reforms has not been sufficient. This concerns for example the area of competition, particularly in network industries. Another area of great importance for the overall success of the strategy is R&D. While all the Member States have set R&D spending targets, the latest available data for 2006 – as well as the aggregation of the national targets across the EU-27 – suggest that the 2010 spending target of 3% of GDP will not be reached. These are areas where the implementation deficits of the first cycle must be tackled decisively.
Based on this analysis, the Commission's strategic report has proposed the main orientations for the next cycle of the renewed Lisbon strategy. We based our proposal on the motto "never change a winning strategy". The areas on which the Commission would like to put particular emphasis in the years ahead therefore come as no big surprise.
The social dimension of the strategy, and in that context mainly education and training as well as the modernisation of labour markets. Energy and climate protection: concrete steps toward a low carbon economy; this includes also a sustainable industrial policy. Increased efforts regarding the knowledge society, above all enhancing the mobility of researchers; And finally, the entrepreneurial potential, above all of SMEs, where the Commission is making concrete proposals for the reduction of administrative burdens and will present a "Small Business Act" for Europe during this year.
As a horizontal orientation, we also decided to put more emphasis on the external dimension of the strategy. We have clearly seen with the US sub prime crisis how our own competitiveness can depend on external factors. Our approach is therefore based on two pillars – we will continue to eagerly promote openness of markets worldwide, but we will also stand ready to stay firm against unfair competition.
As a key element of the Commission's package for the next three-year cycle of the Lisbon strategy, we also presented a new Community Lisbon Programme. The new programme envisages 10 ambitious but realistic objectives that we want to reach at the EU level until 2010. Realizing them will require joint efforts between all those who have a say in EU policies – Commission, Council, European Parliament, but also in many cases the support of national parliaments. We are convinced that these objectives themselves and the concrete actions to be taken to realise them will bring considerable Community value added and are expected to have a strong impact on growth and jobs.
Let me only mention a few examples to demonstrate this:
Regarding investment in people and the modernisation of labour markets A renewed social agenda is being proposed. And a common migration policy will be created.
Concerning the improvement of the business environment We will propose a Small Business Act. We will, by 2012, reduce administrative burdens by 25% and implement an ambitious simplification programme. The single market will be strengthened further and there will be more competition in services, including financial services.
To promote knowledge and innovation: The so-called "fifth freedom" will ensure that we have mobility of researchers in the European Research Area. We will also improve the framework conditions for innovation, particularly through venture capital and strengthened intellectual property rights.
With regard to energy and climate change An internal market for energy will be created and by 2009 an action plan on climate change will be adopted We are developing a sustainable industrial policy focusing on sustainable production and consumption.
Our analyses show that the complete implementation of the measures under the Community Lisbon Programme would lead to a lasting and sustainable increase in real GDP and employment. We are convinced that the Community Lisbon Programme represents a solid strategic roadmap for the work of all European institutions with regard to the Community dimension of the Growth and Jobs Strategy.
Let me briefly turn to the specific situation of Sweden.
I am glad to say that Sweden is one of the top performers in the context of the Growth and Jobs Strategy. Sweden is also among the best performers with regard to both of the quantitative targets set under the Lisbon Strategy: on R&D spending and employment. Increasing the target on R&D spending, Sweden recorded 3.8% of GDP in 2006 and is number one. Sweden is also the leading country in Europe for innovation as recorded in the European Innovation Scoreboard. Sweden's policies in this area in particular are an example to be emulated by other Member States. On the employment rate target, Sweden reached 73% in 2006.
In the Commission's view, Sweden has been making very good progress both with regard to the implementation of its National Reform Programme since 2005 as well as in the four priority areas identified by the 2006 Spring European Council: knowledge and innovation; enhancing business potential; employability; and energy/climate change.
While Sweden is one of the best performers, there is of course scope for some additional progress. Thus, the Commission recommends that Sweden make some additional efforts in the area of competition, notably in services and with regard to labour supply. Here the Commission sees the need for Sweden to monitor the incentives to work, to further tackle youth unemployment, to raise the employment rate of immigrants and to ensure the reintegration of people on sickness-related schemes.
To conclude, a few words about the next steps.
In the course of 2008, Member States will draw up or update their National Reform Programmes for the new three-year cycle based on the Integrated Guidelines. In that context, it will be important for the credibility of the reform strategy for the Member States to ensure that implementation deficits from the previous three-year cycle are taken into account.
To ensure this, the next implementation reports to be published by Member States should contain concrete action plans listing the measures envisaged in response to the country-specific recommendations and the points to watch. To enhance the ownership of the reform process, it would be useful if Member States arranged for annual debates on the reform implementation in their national Parliaments.
I am sure I can count on your support.
