As the revived Lisbon strategy affirmed, the European Union needs to continue gearing itself to address issues brought about by globalisation and also by its very own demographic composition, while maintaining the social models that have characterised European societies for the past decades. In these last few years, reform has been consistently aimed at increasing both employment and productivity rates.
The emphasis on competitiveness has now become part and parcel of our collective thought. It is not, contrary to some expectations, a dog-eat-dog scenario. The concept surely lies with increasing efficiency and attracting more custom.
As with any process, performance indicators are required. Every year an annual report is compiled on the state of the European Union in terms of its overall performance with regard to competitivity. For 2006 the overall picture has been termed by the European Commission as an improvement. Productivity and gross domestic product (GDP) levels have increased substantially for the 27 member states as a whole. Employment levels too have increased, albeit at a lower rate than the other indicators when compared to the previous quarter. The Union’s real GDP grew by three per cent in the 2006 – a rate not attained since 2000.
The radio and TV equipment manufacturing sector showed the highest share in terms of labour productivity annual growth while the tobacco sector had a substantial negative growth rate over 2005 figures. Higher growth rates were evident in water transport, pharmaceuticals, utility networks and telecommunication sectors as well as in the manufacturing of office machinery, recycling, clothing, furniture, rubbers and plastics and others.
Underlining the need to invest further in research and development, with the active participation of the private sector, the report shows the current situation vis à vis the targets set in the i2010 strategy that is intended to develop a digital economy. The EU’s gross domestic expenditure on R&D as a percentage of GDP lay at less than two per cent last year while the target stood at well over 2.5 per cent in line with the ultimate goal to reach three per cent of GDP by 2010.
More progress for the service industries, which the Commission considers to have a limited growth rate in respect of the opportunities provided by the single market, is expected with the implementation of the Services Directive. If a Copenhagen Economics study has hit the spot, the successful realisation of the Directive’s aims should see the creation of a further 600,000 jobs. Another interesting development would be a fully operating single market for financial services.
The European Commission is conducting various initiatives to reinforce competitiveness. Basing itself on the observation that small and medium-sized enterprises fuel economic growth, it is providing help with access to finance through its CIP and Jeremie programmes. On the regulatory front, there is a two-pronged approach – reduce red tape for business while increasing efforts to improve market access to external economies. The development of labour skills and increased flexibility are also quite highly prioritised. Private initiative is essential. However, even in this field the European Union provides practical assistance as can be attested by the various European educational programmes as well as the frameworks being established.
The Competitiveness Report for 2006 shows general and broad improvements within the EU. There is no doubt however that the pace must not only be maintained, but also increased. The Partnership for Growth and Jobs calls for a persisting concerted effort to attain the targets. The year 2010, as we know, is very close.
Julian Micallef is Civil Society Coordinator at Forum Malta fl-Ewropa