Commission to propose KPIs to measure ‘real’ progress in industrial strategy

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European Commissioner for Internal Market Thierry Breton. [EPA-EFE/FRANCISCO SECO]

The European Commission is working on a series of key performance indicators (KPI) to include in the update of its industrial strategy expected for March, to measure the transformation of European industry and its resilience in the aftermath of the pandemic.

“With the Industry Strategy of March 2020, we set out a roadmap for a green, digital, resilient future. The direction of travel remains unchanged, but we need to accelerate our industry transformation and draw the lessons from the pandemic – in particular how to reduce our economic and geopolitical dependencies in a range of areas including pharmaceutical ingredients, batteries, raw materials, hydrogen, semiconductors,” Internal Market commissioner, Thierry Breton, told on Thursday.

EU leaders tasked the Commission with mapping the strategic dependencies of European industry, seeking to diversify trading partners and invest more in strategic products, services and infrastructures. 

“We are developing a set of key performance indicators to continue measuring our collective progress in turning our ambition into reality,” Breton added. 

In spite of various industrial strategies proposed by the Commission over the past years, the EU has failed to transform its manufacturing sector or increase its share in the European economy.

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Instead of a sectorial approach, the Commission last March proposed 14 ecosystems, such as tourism, retail or agrifood, to better capture the dynamism of European industry, and the links between various players such as suppliers or startups.

As part of the updated strategy, the Commission is working on three fronts: ecosystem matrix, business cases and the KPIs. 

The mapping (or “matrix”) of the ecosystems will provide a complete diagnosis of the entire value and supply chain to identify needs. 

The impact of the COVID-19 pandemic represented a “reset moment for Europe”, said Kerstin Jorna, Commission’s director general for Internal Market, Industry, Entrepreneurship and SMEs, during an event organised by EURACTIV in December.

Once the needs are clear, the EU will use its tools (financing, regulations, trade and competition instruments and new transversal alliances) “to help the ecosystems recover, transform to more green and more digital and become more resilient”, added Jorna. 

“It is important for the digital and green transitions to show that there’s a business case, and then use the matrix to see how we can accompany the process with our tools”, Jorna said.

But given the disappointing implementation of past strategies, the Commission wants to measure the progress made. 

To that end, the EU executive will put forward a series of KPIs similar to those used by the private sector. The Commission however wants to measure not only the input, such as research spending, but also the output, for example in terms of the resilience of the manufacturing sector.

Portugal, which currently holds the rotating EU presidency, admitted that designing the KPIs will be a “challenge”, said Rui Durao, senior official at the Portuguese Ministry of Economy. He commented that this benchmarking cannot become a “name and shame” exercise, and the indicators must be based on reliable data. 

Last October, in a report drafted by Carlo Calenda (S&D, Italy), the European Parliament called on the Commission to adopt “a strong Key Performance Indicator (KPI) system to analyse the ex-ante impact of Union regulations and instruments and possible investments needed, and to monitor progress and results taking into account the SME dimension”.

The Parliament said that the KPI system should be based on “objectives that are specific, measurable, achievable, relevant and time-oriented”.

The European Round Table for Industry (ERT) also proposed last November a KPI scoreboard to measure the implementation and performance.

The business group said that the scoreboard should be based on five impact indicators (gross value added, employment, wages and salaries, fixed investment and exports) and a total of 28 specific KPIs with accompanying targets for 2030 spread across four categories (output performance, internal processes, future orientation and global relationships).

Unions supported the deep sectorial analysis that the Commission is conducting in order to create complex ecosystem matrix. Otherwise, there is a risk that the fragmentation of the industrial landscape will persist or even expand in the aftermath of COVID, due to the national recovery plans, warned Judith Kirton-Darling, deputy general secretary of IndustryAll.

[Edited by Benjamin Fox]

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