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25/07/2016

Growth and Jobs: Relaunch of the Lisbon strategy

Innovation & Industry

Growth and Jobs: Relaunch of the Lisbon strategy

On 22-23 March 2005, the Spring Council discussed the Commission’s mid-term review of the Lisbon strategy for economic, social and environmental renewal. More focus on growth and employment, simplification and national ownership via national action plans are the key elements to relaunch the Lisbon reforms agenda.

Background

The Lisbon strategy to make the EU "the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment by 2010" was adopted by the European Council in 2000. For more information on the first phase of the strategy please see the Lisbon Agenda LinksDossier.

In 2004, the European Council and the Commission decided to prepare a mid-term review of the Lisbon process, to be presented to the Spring Summit in March 2005. Former Dutch Prime Minister Wim Kok was mandated by the March 2004 European Council to lead a group of experts with the objective of reviewing the Lisbon strategy.

The Kok report concluded in November 2004 that little progress had been made over the first five years and recommended to refocus the agenda on growth and employment. It also underlined the need for real ownership by the member states of the reforms needed.

Issues

The Commission's mid-term review had three main objectives:

  • more focus with "rigorous prioritisation": the Commission proposes to focus on economic growth and employment by launching the idea of a "Partnership for Growth and Jobs", which would be supported by an action plan at Union level and national action plans in the member states; 
  • mobilise support for reforms: national member states, social partners and even citizens need to take "ownership" of the necessary reform processes. Lisbon "must become part of national political debate"; member states will be urged to present national action programmes and to appoint a 'Mr or Ms Lisbon' at government level;
  • simplification, clarification and simpler reporting: instead of the myriad reports "that no one reads" [in Barroso's words], there will be a single Lisbon report at EU level and one at national level.  

The Commission's proposals need to be read together with its proposals for a new social agenda and the mid-term review of the sustainable development strategy (Gothenburg process). 

In July 2005, the Commission presented a 'Community Lisbon programme', which forms the complement to the national action plans for growth and jobs that member states have to present. The programme consists of 50 initiatives (regulatory actions, financing actions and policy development) which have been or will be taken at EU level to refocus the EU's economic reform agenda on growth and jobs. 

There are no genuinely new initiatives in the list of fifty measures but the Commission has grouped them together under eight "key measures with a high European value-added":

  • supporting knowledge and innovation;
  • reform of state aid policy;
  • simplification of the regulatory framework;
  • completion of the internal market for services;
  • global agreement on the Doha round;
  • removal to obstacles to physical, labour and academic mobility;
  • developing a common approach to economic integration;
  • supporting efforts to deal with the social effects [eg job losses] of economic restructuring.  

In its first annual progress report on the Lisbon strategy in January 2006, the Commission defined four priority areas where more action is needed. Next to repeated calls for more investment in education and research, more support for SMEs and higher employment rates, the Commission has taken on board one new area, which was up to now not part of the Lisbon strategy: the need to define a common EU energy policy. 

second progress report, adopted in December 2006 and entitled "A year of delivery", concluded that the Commission has delivered on around 75% of the actions it presented as the Community dimension of the Lisbon strategy, such as the services directive being adopted, progress being made in financial services and the 7th Research Framework Programme being agreed. "Unfinished" issues include the portability of pensions, full liberalisation of the energy and transport sector and the renewal of the EU's intellectual property system.

Four priority areas for action were defined, including: further investment in knowledge and innovation, reducing administrative burdens for SMEs (see LinksDossier on Better Regulation), modernising labour markets (see LinksDossier on Labour market reforms) and energy and climate change (see LinksDossier on Energy and competitiveness).

The Commission's December 2007 strategic report, endorsed by leaders at the March 2008 Spring Summit (EurActiv 18/03/08) and entitled "Keeping up the pace of change", concluded that the policies defined in the Lisbon Strategy were finally paying off. The report however underlined that "not all member states have undertaken reforms with equal determination" and that reforms in some areas, such as opening up energy and services markets and tackling labour market segmentation, have lagged behind. 

It suggests that governments should continue on the same path they have been following so far but with a special focus on a few "high-impact actions", including: 

  • connecting all schools to high-speed internet by 2010 and setting national targets for connecting households (the Commission had initially suggested an EU-wide goal of at least 30% of the EU population, but member states did not take this up, see EurActiv 17/03/08); 
  • improving basic learning skills, such as reading; setting targets to reduce early-school leaving; and; adapting school curricula in accordance with constant monitoring of companies' skills requirements; 
  • increasing availability and affordability of quality childcare
  • adopting the Commission's "blue card" proposal for a skills-based immigration policy (EurActiv 24/10/07);
  • fostering SME growth by pushing through a comprehensive "Small Business Act", aimed at cutting red tape, increasing SMEs' access to European programmes and public procurement, and reducing barriers to cross-border activity through the creation of a European small company statute (EurActiv 15/05/07). 
  • encouraging innovation by agreeing on an integrated patent  jurisdiction and a single affordable patent
  • facilitating the exchange of researchers with the introduction of a "researcher passport"; and; 
  • completing the internal market for energy, including setting mandatory energy reduction targets for government buildings and systematically including energy efficiency as the one of the award criteria for public procurement.  

Positions

The Commission's proposals to relaunch the Lisbon agenda have raised controversy about the equality of the three pillars in the process: economic growth and competitiveness, social inclusion and environmental concerns. 

Although Commission President José Manuel Barroso tried to tackle potential critics by underlining that the renewed Lisbon strategy's overarching goal is sustainable development, he did give ammunition to them by comparing the three pillars to his three sons: "If one of my children is ill, I focus on that one, but that does not mean that I love the others less." In a conference organised by the European Policy Centre on 22 November 2005, Persident Barroso stressed the importance of ownership at national level of the Lisbon strategy. He indirectly blamed the Prodi Commission for parts of the relative failure of the Lisbon strategy, saying that "naming and shaming" as the main instrument to get member states to adopt the strategy did not work. Instead, Mr. Barroso said, the national action plans were part of a new approach by the Commission he himself heads. 

Addressing journalists in Brussels on 25 January 2005, President Barroso said: "My overall message is clear, it is time to move up a gear. [...] We’ve come a long way since last year and the right foundations are now in place. [...] Now the spotlight moves to delivery." Commission Vice-President Günter Verheugen, in charge of enterprise and industry, compared the 25 member states to a group of ships. "The convoy has left the harbour and is slowly and jointly moving in the right direction - not all at the same speed, but the process encourages slower ships to step up speed."

When asked about concerns regarding differences between the national action plans, Commissioner Verheugen admitted: "It is true that the quality is very different, but I am more than happy that the process has started." President Barroso declined to comment on which countries were doing worse than others, saying he believed a collaborative effort was going to achieve more than "naming and blaming" member states for shortcomings.  

Barroso said he also did not believe in a sanction system similar to the one established for the Stability and Growth Pact: "It would not be accepted by member states, and we want to do this in partnership with them. We hope that the member states will accept this kind of peer review, of collective monitoring." 

EPP-ED  MEP Alexander Radwan  said: "Increased spending on research will only have value if the research can be put into practice. In this sense, Europe has been lagging behind. What good does it do if European researchers come up with heaps of ideas only to see them realised in the US and in China?"

For the PSE Group, which has published its own extensive comment  on the renewed Lisbon strategy, MEP Hannes Swoboda said: "EU action is handicapped not only by lack of funds and a minimalist budgetary framework but also by financial rules that give rise to useless bureaucracy and require impossible guarantees from small- and medium-sized enterprises, especially to obtain loans for research. [...]More public investment is needed, including from the EU budget, as well as urgent measures to facilitate private investment."

The Socialists, Greens and the leftist groups in the European Parliament have accused the "business-friendly" Commission of selling out Lisbon to a 'neo-liberal' growth-only agenda. Commenting on Mr Verheugen's 'new' programme, the Party of European Socialists (PES) expressed disappointment over the Commission's "lack of ideas to boost demand". President of the PES Poul Nyrup Rasmussen said: "Europe desperately needs economic growth and new jobs but the European Commission will not achieve it without investment. Europe needs public and private investment to accompany reform."

ALDE Leader Graham Watson said: "[The] chief responsibility for the success or failure of the Lisbon goals of economic growth lies with the Member States. The Commission can take the Member States to water but it cannot make them drink. It is now up to each and every national government to take these recommendations seriously and commit, at the Spring European Council, to comply with their National Reform Programmes and learn from best practice across the Union."

The American Chamber of Commerce to the EU welcomed the 2007 strategy report, which it believed sets out "ambitious – but pragmatic and achievable – goals and actions" for the future. 

John Monks, Secretary General of the European Trade Union Congress (ETUC), said: "The Commission needs to understand that excessive competition at the expense of working conditions leads to less, not more productivity and innovation. Workers who feel insecure or even exploited will be less willing to invest in productivity and will resist change."

Eurochambres  President Pierre Simon said: "I believe that the Commission, in a muted and diplomatic manner, confirms the business community reaction to the Reform Programmes. They lack ambition. The NRPs will not bring Europe the radical reforms needed to regain competitiveness: they will only result in slight improvements, and then only if they are actually implemented."

UNICE President Ernest-Antoine Seillière  said: "The lack of growth is the root of Europe’s problems. The national reform programmes are a step forward. But many of the programmes lack ambition when it comes to concrete implementation of the announced reforms. We must go beyond a mere diagnosis of Europe’s problems and start the therapy, with a clear governance process. European social partners are invited to play a role. UNICE is ready to participate under the condition that it focuses on the real issues." 

Other reactions have focused on the challenge to get member states, social partners and citizens behind the Lisbon agenda. It is unclear how the Commission will be in a position to force the member states to establish national action plans, and even if governments would agree to such plans, to control how these will be implemented (see the problems the EU has with its Stability and Growth Pact). Even more daunting will be the task of communicating to the citizens what Lisbon means to them.

A comment by Jean-Claude Juncker, prime minister of Luxembourg, gives a clear indication as to how painful he expects these reforms to be: "We know exactly what to do, but we do not know how to win the next elections once we have done it."

Timeline

  • March 2005:  EU leaders relaunched the Lisbon strategy, recentering it on the priority of achieving "more and better jobs".
  • March 2008: The Spring Council, under the Slovenian Presidency, endorsed the priorities for the last 3 years of the Lisbon Agenda, laid out in the Commission's strategic report on the the Lisbon Strategy ("Keeping up the pace of change").
  • Autumn 2008: Member states to present a second round of National Reform Plans, based on the revised integrated guidelines. 

Further Reading