Higher employment in all member states, except the UK, and a 2.8% increase in the bloc's GDP at the end of 2007 are "significant steps forward," a European Commission spokesperson told EurActiv following the presentation of annual progress reports on member states' implementation of the Lisbon Growth and Jobs Strategy.
Recent efforts provide a "strong basis" for the future, he underlined.
In reality, the EU's ambitious target of making sure that 70% of Europeans take part in the labour market appears out of reach (the current rate is 65.5%), and may even prove impossible to achieve given the current crisis, as a result of which unemployment is expected to rise by 2.5 percentage points across the EU.
The Commission's positive assessment also fails to take account of the lack of progress, and in some cases even stagnation, in fields like R&D investment and high-speed Internet access, which are seen as key to keeping Europe competitive.
R&D remains 'key challenge'
A large majority of member states (19) still considers investment in R&D and innovation as a key challenge for the years to come, according to Eurostat data referred to in the Commission report.
This, however, does not represent any actual increase in public spending in these fields. Spending remains stable at 1.84% of GDP, mainly due to stagnating investment in the four largest EU member states: Germany, the UK, France and Italy, data showed.
Among research-intensive economies, only Austria has managed to increase its spending significantly: up to 2.6% of GDP, according to the figures, bringing it close to the 3% target agreed by member states. Currently, only Sweden and Finland are performing above this target (3.5% and 3.6% respectively).
The Scandinavian countries – along with Germany and the UK – are the only ones with innovation indexes comparable to the US and Japan, the EU's two main competitors. As for the bloc as whole, although the gap keeps narrowing, it remains significant, the Commission noted.
High-speed Internet for all remains distant target
Expanding broadband coverage across the EU is seen as key to maintaining the bloc's innovative base and competitiveness. The EU executive demonstrated this yesterday (28 January) by pledging to reallocate €1 billion of unspent EU money to bring broadband to rural areas (EurActiv 29/01/09).
Although the number of fixed broadband lines more than doubled between July 2005 and July 2008, 30% of the EU's rural population still has no access to the Internet, said the Commission, noting that the situation differs widely from one country to another.
Like the R&D figures, Scandinavian countries are also the front-runners regarding broadband access, while most of Eastern Europe is still lagging behind, indicate the reports.
EU a knowledge-based economy? 'No more than an illusion'
Commenting on the innovation indicators, Bruno van Pottelsberghe, a scholar at the Brussels-based economic think tank Bruegel, declared that "innovation, the key to long-term growth, is going in the wrong direction".
Given these figures, the EU's objective to become "the most dynamic and competitive knowledge-based economy in the world" by 2010, is no more than an "illusion", the scholar told EurActiv.
Most of the Commission's recommendations urge improvements in the fields of R&D and innovation (27).
SME policy seen as increasingly important
Member states are also attaching growing importance to the needs of small and medium-sized businesses (SMEs), often seen as the backbone of the European economy.
Recent measures such as the adoption of the Small Business Act (SBA; see EurActiv Links Dossier) or increasing SMEs' access to finance pushed things in the right direction, the Commission noted. But the EU executive nevertheless criticised such firms' lack of international scope, as well as the high administrative hurdles they must currently face.
Human capital investment 'insufficient'
The scope of the current economic crisis has highlighted the need to upgrade the skills needed on the labour market, but little progress has been made on improving conditions for older and low-skilled workers, the Commission said.
Some member states are even experiencing "worrying decline" when it comes to increasing funding for life-long learning programmes, according to the Commission's text, which accuses goverments of ignoring the fact that new skills are "critically important for growth and productivity".
At the end of last year, the Commission launched an initiative to promote new skills across Europe (EurActiv 17/12/08), an issue which will also be addressed in the context of the current European Year of Creativity and Innovation (see EurActiv interview with Education Commsisioner Ján Fígel' ahead of the launch of the year).
Education ranked low
Furthermore, contrary to public pledges that investment in people is key to future growth, public expenditure on education between 2005 and 2007 decreased from 5.2% to 5% of national GDP. But figures vary widely across the EU, with Denmark spending around 8% and Romania investing under 4%.
Flexicurity: a short-term solution?
The Commission also criticised most member states for failing to take active labour market policies to keep people at work or help the unemployed to re-enter the jobs market.
"Flexicurity (see EurActiv Links Dossier), the Nordic concept of easy hiring and firing rules combined with high benefits for the unemployed, was the right approach for the current crisis," the Commission said.
But it added that only a few member states have put in place proper strategies. Governments overall efforts are "insufficient" in this regard, the EU executive concluded.