Opinion of the European Economic and Social Committee on ‘the post-2010 Lisbon Strategy’

In a letter dated 23 July 2009, Mr Diego Lopez, State Secretary for European Affairs at the Spanish Ministry for Foreign Affairs and Cooperation, requested the European Economic and Social Committee under Article 262 of the Treaty establishing the European Community to draw up an exploratory opinion on

The Section for Economic and Monetary Union and Economic and Social Cohesion (Lisbon Strategy Observatory) was instructed to prepare the Committee's work on the subject.

Because of the nature of the work, the European Economic and Social Committee, at its 457th plenary session, held on 4 and 5 November 2009 (meeting of 4 November 2009), appointed Mr Greif as rapporteur-general and adopted the following opinion by 178 votes to 6 with 15 abstentions:

1.1. This opinion will put forward some policy recommendations, which the EESC believes should be given priority when drawing up a new European Strategy for the period after 2010. The profound economic, social and political implications of the current financial market and economic crisis must be taken into consideration here. It is important to identify the key points of policy changes which seem essential in order to ‘draw on the crisis’ to secure momentum for sustainable growth, jobs and social cohesion and to prevent the current crisis from being repeated.

1.2. This opinion was prepared by the EESC's Lisbon Strategy Observatory with the active participation of national economic and social councils (ESCs). The various contributions made during joint meetings, some of which were of a controversial nature, underscore the political quality of the recommendations in this document, as well as their relevance to civil society.

1.3. The Europe-wide perspective presented in the opinion is supplemented by sections on each country, which were drawn up by national delegations (1) on the basis of a catalogue of questions concerning a) an analysis of the current Lisbon cycle (2008-2010), b) the future of the Lisbon Strategy after 2010. The interactive network, which the EESC has developed with national ESCs and other similar partner organisations, is therefore presenting a new (2) Integrated Report, which should contribute to the political decision-making of the European institutions in connection with the European Council Spring Summit in 2010.

2.1.1. In March 2000, the European Council presented an ambitious reform programme for Europe. The aim of the Lisbon Agenda was to make the EU the world’s most competitive and dynamic knowledge-based economy by 2010 – an economic zone that is capable of achieving long-term economic growth with more and better jobs and greater social cohesion.

2.1.2. With the addition of the sustainable development dimension (Gothenburg Strategy), a broad strategy was thus developed. In many policy areas quantifiable targets were drawn up, to be implemented in Member States using the open method of coordination (OMC).

2.1.3. The EESC has always regarded this integrated policy approach as the notable advantage of the Lisbon Strategy and warned against a narrow interpretation, calling instead for a balance to be struck between the three pillars.

2.2. 2005 Relaunch – internal focus and concentration on national implementation

2.2.1. Several EU countries were able improve their performance in certain areas. Although there had been a general rise in employment, and progress (3) had been made in extending broadband, participation in further education, youth education and in other areas, at ‘half-time’ many countries were still far from achieving the goals that had been set in numerous areas.

2.2.2. It was against this background that the 2005 critical assessment was conducted, which focused on the partnership approach between European and national players. Attention shifted to national implementation measures, coupled with a focus on ‘growth and jobs’. This meant that part of the broader list of objectives, for example the social pillar, to some extent took a back seat in favour of increasing employability and a more rigorous economic approach. The approach of giving Member States greater responsibility for determining their country-specific plans and in doing so placing greater emphasis on national reforms, was not accompanied by steps to promote an appropriate economic and social framework at European level.

2.2.3. Despite recent progress (4), many countries have still been failing to meet the requirements set. In many areas, the targets will be achieved by 2010 as an EU average at best, but not in all Member States. This concerns, for example, the 3 % target for research and development, where most Member States and the EU as a whole have made hardly any progress, and also the reduction of greenhouse gas emissions. As far as the employment targets are concerned, only limited progress has been made, for example, in terms of female employment, since there has been a significant increase in the number of part-time jobs (in some cases not the employee's choice) (5), temporary work, and, at the same time, also of low-paid jobs often without a standardised job contract.

2.3.1. As regards the failure to achieve the Lisbon goals, the predominant view is that this was, first and foremost, due to the lack of a more consistent policy by Member States regarding the goals and the OMC's failure to provide adequate incentives for national and Community commitment. Another equally important cause is the lack of a relevant European framework for macroeconomic policy and social policy, which Member States need if they are to implement the correct reforms in a coordinated way, achieve the targets set, and prevent national reforms from competing with each other. Moreover, the EESC has on numerous occasions noted the lack of joint responsibility, which it attributes not least to the failure to properly involve the social partners and civil society.

2.3.2. The EESC is in favour of continuing an integrated and global strategy beyond 2010. However, it is also of the view that neither a ‘back to Lisbon 2000’ approach or an approach involving ‘more of the same with a somewhat stronger environmental focus where appropriate’ is the right answer to the current challenges. The priority now must be to adopt long-term approaches which allow competitiveness, R&D and innovation to be combined with the innovative potential of a socially responsible, sustainably developing Europe and the concept of ‘good work’ (6). Furthermore, the current crisis represents in many respects a clean break and requires new options, such as effective regulation of the financial markets, a radical readjustment in the direction of resource saving and low-CO2 production and consumption, and investment in innovative public services, in order to provide people with security and to win back trust in the EU.

2.3.3. Current challenges, such as the financial and economic crisis and the resulting social problems, the globalisation of the economy, the need to improve the working of the single market, energy policy and climate change, demographic trends and migration, require a new, comprehensive post-2010 global strategy at European level which a) tackles these challenges; b) corrects shortcomings in implementation; c) is backed up by a sense of shared European responsibility and d) is capable of linking up all EU strategies in a coherent way (the Recovery Strategy, the Lisbon Strategy, sustainable development, climate change). The EESC proposes that this strategic reorganisation should be made clear, among other things, by giving a different name to the new European strategy.

3. Policy recommendations: Think and act along European lines through European projects

3.1. Establish a European framework for promising reform programmes: Although Member States have the main responsibility for implementation, there needs to be an appropriate European framework enabling the intended structural reforms to be implemented in a coordinated and consistent way. An evaluation of national reforms at European level and their impact on economic development, the distribution of wealth and income and social cohesion is urgently needed. It is also important here to study in detail a number of specific rulings by the ECJ (Vaxholm, Viking, Rüffert and Luxembourg) and possibly to introduce suitable, tangible measures to protect workers, and thus make clear that economic freedoms and competition rules do not in any way call into question basic social rights.

Strengthen the focus on growth in EU policy by creating a proper economic policy framework: The 3 % growth target which underpins and is integral to the strategy has been achieved in two cases only. The financial crisis and the EU economy's inability to withstand the shock demonstrate the need for a new macroeconomic approach. The EESC believes that a balanced macroeconomic policy that duly combines supply- and demand-side aspects must constitute an integral part of the post-2010 strategy. The quality of growth to be aimed at is also important. The fundamental goal is growth of well-being. GDP is not by itself an adequate measure of well-being, and a better indicator (or set of indicators) of well-being needs to be used in order to define and calibrate a more satisfactory and coherent growth objective for the new strategy.

3.2.1. Solution to the financial market crisis and social challenges: The EU must take a coordinated, decisive and leading role in forthcoming efforts to solve the crisis and, above all, in redesigning the financial system. A new global financial system (including above all effective regulation of the banking system, as well as hedge funds and private equity businesses) must facilitate the development and provision of sound financial instruments which support the real economy and are also of benefit to citizens. However, the current crisis is not only the result of difficulties in the financial market. A series of growing macro- and micro-economic imbalances, in particular income disparities also contributed to it, especially in the USA. The way forward to get out of the crisis must be to turn away from growth based to some extent on ‘speculative bubbles’, and return instead to growth underpinned by investments above all in innovative sectors of the real economy, fair distribution, the creation of high-quality and productive jobs and environmental sustainability.

3.3. Improve the functioning of the internal market by striking a better balance between the economic, social and environmental dimension. To achieve this goal a correct application and possibly also an improvement of the internal market social acquis, better regulation, as well as a successful micro-economic environment and adequate scope for private investment are required. However, precautions also need to be taken to make sure that competition between Member States in the common market is geared towards innovation and is neither counter-productive nor detrimental to social cohesion and environmental sustainability.

Promote social cohesion as a factor in a stable and dynamic economy: The EESC believes that a well developed social policy, including a comprehensive policy for creating ‘quality jobs’ which also should set ambitious targets for initial and further education — both of a general and vocational kind —, as well as for lifelong learning, does much to boost growth and productivity. The path out of the crisis must be supported by the appropriate investments.

3.4.1. Moves to tackle growing inequality and poverty across Europe : A goal has been set that by 2010 there should be a significant reduction in the number of people at risk of poverty and social exclusion. The Commission's 2007 social reality report showed, however, that Europe still faces serious social problems in many countries and regions. Therefore the post-2010 strategy must be geared towards social progress, the consolidation and sustainability of social protection systems and combating poverty, not least by preventing unequal distribution of wealth. The European year for combating poverty (2010) is the ideal occasion for creating efficient targets, including timelines, for combating poverty (e.g. minimum income and replacement income systems (7)). An initiative of this kind, which is aimed at preserving social cohesion, would represent an important step towards re-establishing public confidence in European integration.

Creating an inclusive labour market : Despite some progress, as an EU average the 2010 employment targets will not be reached. In view of the current crisis, which has reached its peak but has not yet been fully overcome, and has deepened inequalities and threatened the livelihoods of more and more people, this should give cause for concern. Re-establishing growth as quickly as possible in order to stabilise the labour market will require, according to the European Economic Recovery Plan (8) , the consolidation of domestic demand supported by measures to improve structures. It is important to establish effective concepts for initial and further training, create jobs, not least for those who are excluded from the labour market due to, for example, shortcomings in their education, and to take effective steps to remove discrimination as far as access to and remaining in the labour market are concerned. The various forms of social economy which exist in the Member States in particular can play an exemplary role in tackling the crisis, especially in creating jobs, including in the area of social service activities. The EESC is of the view that employment and labour productivity must rise in parallel. In this connection, the EU must aim for the introduction of appropriate rules for non-standardised employment associated with a low level of social protection while involving national and European social partners and taking due account of their autonomy (9).

3.4.2.1. Social Economy enterprises, which are present in all sectors of activity and combine economic profitability with general interest and social considerations, are a good example of specific forms of entrepreneurship and corporate governance that will contribute to the achievement of the revised Lisbon Strategy goals. The European Economic and Social Committee asks the European Council, the Commission and Member States to consider proposals aimed at implementing the political recommendations (10) made by the European Parliament, to make sure that Social Economy enterprises can compete on a level playing field with other enterprises.

3.4.3. Flexicurity must provide effective security in changing circumstances : Changing economic conditions require a high degree of innovative adaptability not least in the labour markets. An intelligent response is needed to structures that are changing quickly. It must be ensured within the framework of flexicurity that workers are equipped for the new challenges in the world of work. The concept of flexicurity must ensure effective security in changing circumstances, with equal priority in practice for labour market security, stable employment and jobs, maintaining employability, social security, and labour market mobility geared towards good, productive jobs (‘make transition pay’). It is therefore also particularly important to make sure that the Community acquis in the social field is fully implemented and put into practice and also extended, in order to prevent any unfair competition in the area of employment standards.

3.4.4. Better coordination of tax policy: In line with the EU Treaties, greater efforts should be made to achieve EU-wide coordination of Member States’ tax policy (including harmonised tax bases and minimum rates), primarily in those areas in which the tax basis is internationally mobile and the risk of tax evasion and tax competition between Member States is greatest. The goal of European coordination must be to safeguard public budgets and to promote fairer tax systems (among other things, by strengthening the tax revenue basis, shutting down tax havens and taking action to combat tax evasion).

3.4.5. The ECB must comply with its overall economic mandate : The post-2010 strategy needs to create an appropriate, and at the same time, sustainable balance between the growth and stability goals for future generations. The ECB must assume its full responsibility under the Treaties and along with its priority task of guaranteeing price stability pay attention also to additional Community goals, including a high level of employment, social protection and sustainable growth.

3.4.6. Maintain fiscal policy scope for investment: Steps must be taken to increase the scope of economic policy by restructuring budgets, making use and taking account of the flexibility mechanisms provided for under the stability and growth pact in place to handle crisis situations so that public investment relevant to Lisbon (including affordable and efficient public services, research, education and innovation) and productive investment by the private sector, not least in low-CO2 production, can be boosted. In this connection, the idea of a European bond from a European state fund should be developed further (11).

3.5. Promote industrial policy and entrepreneurship and create appropriate conditions for SMEs: Economic growth and a climate for investment are essential prerequisites for creating new jobs and retaining existing ones. Major companies contribute to this, but so do SMEs to a large extent. The latter in particular are rooted in the local economy and therefore draw particular benefit from stable and expanding domestic demand. The EESC has pointed out on a number of occasions that special emphasis should be placed on further developing European industrial policy, not least in the direction of ‘green technologies’, nanotechnology and ICT, and on boosting socially responsible entrepreneurship, as well as on promoting business start-ups and enabling companies to stay in business. Cutting excessive red tape and an improved framework for company finance are a matter of priority for the economy and are crucial both for European competitiveness and a favourable climate for productive investment. The legitimate protection interests of employees and consumers should not be put at risk here. As economic output, innovation and employment depend increasingly on SMEs, the development of entrepreneurship among young people should be a priority.

3.6. Meet the challenge of demographic change and offer solutions to migration issues: The main starting points for dealing with the challenges of an ageing society are and continue to be growth and employment. This applies equally to the younger and the older generation. Alongside tackling unemployment and creating more and better jobs, more must also be done — considering also birth rates — to achieve a work/life balance. Successful solutions in the area of migration and integration which promote Europe's potential for growth and at the same time do not put social cohesion at risk represent some of the key challenges of the post-2010 period (12).

The knowledge triangle (education, research, innovation) should be further promoted: Europe must further strengthen its potential in terms of skilled workers, science, research and technology and thus its capacity to innovate as a key element of competition. In any case, the knowledge triangle must remain at the heart of the post-2010 strategy. In this context the notion of innovation has to be widened to include also ‘social innovation’ in order to increase social capital which is important both for competitiveness and social cohesion.

3.7.1. To lay the foundation for future innovations, science and research – and their application in economic practice – must be high on the agenda. The Bologna goal of creating a higher education area in Europe must be implemented in concrete stages and requires more political will if policy areas are to be coordinated. Insufficient investment in innovation and further education is exacerbating economic problems and affecting labour productivity. Universities and higher education institutions must take responsibility and step up their efforts to develop a European dimension since they play a key role in the education, research and innovation knowledge triangle. For example, multilateral research collaborations should be promoted as part of their cross-border activities. Europe also lacks high-tech companies that invest in research and development. Businesses must find incentives to further increase investment in research and development and to create productive jobs.

3.7.2. Well-educated workers particularly in scientific/technical areas and the capacity to innovate are key elements of competition and a prerequisite for prosperity. This should be accompanied by the creation of productive, highly-skilled and well-paid jobs. Even during the crisis, efforts must be made to help young graduates enter the jobs market with the appropriate skills and enable them to develop careers which offer good prospects.

Managing climate change as a key aspect of the post-2010 strategy requires change in many areas: Promoting energy efficiency and renewable energy will, in addition to drawing on the environmental sector, be a key element of the post-2010 strategy. The renewed strategy must include an action plan for a low-carbon economy. Having put in place a comprehensive legislative framework for energy and climate change, the EU should now concentrate on practical implementation. Effective policy measures should be integrated into the integrated guidelines, country-specific recommendations and national reform programmes.

3.8.1. The EU must become the most energy and resource-efficient economic area : Climate policy, which both cuts greenhouse gas emissions and permanently reduces dependency on fossil fuels and imports of energy, must be geared towards sustainability, i.e. economic, environmental and social goals must be given proper consideration. In particular, all possibilities for saving energy must be exhausted and local, renewable and regional structures must be utilised. Improving energy and resource efficiency will become one of the key elements of a new strategy. A further strategic goal of the EU should therefore be ‘as a Community to become the most energy and resource-efficient economic area’. In order to achieve this transition, Europe must assume substantial responsibility for CO2 reduction. The aim must be to work with the individual sectors concerned to establish specific targets and timeframes.

3.8.2. New Green Deal : The potential of the environment sector as an engine for growth, employment and innovation should be exploited as part of a ‘new green deal’, leadership in developing innovative green technologies should be sought and costs should be saved, without foregoing prosperity, quality of life, and global competitiveness. The development of research and technology — and its conversion into marketable new products and services, and the creation of jobs that goes with that — will be of key significance in this essential innovation process.

Improve the financial basis of the Lisbon Strategy: In order to deal with future challenges, there also needs to be a new strategic discussion of the future EU budget.

3.9.1. Reform the EU budget in accordance with Lisbon : Generally speaking, the budgets of individual policies need to be re-evaluated in line with Lisbon and geared towards research and competitiveness, environment and climate, investment in sustainable energy use; constructive public spending in the business location, active labour market policy, work/family life balance, social cohesion, poverty prevention and creating new, high-quality jobs. In connection with this, a reform-based discussion on the EU budget relating to Lisbon should also be given consideration in the forthcoming 2014-2020 financial framework (13). An effective implementation of European targets will also require that the consolidation of the regional dimension is included as a key topic in the discussion on the funding of structural and cohesion policy after 2013.

3.9.2. Examine alternatives to EU funding : There are numerous cross-border challenges for which the European dimension of political action must be strengthened. For European projects, alternative funding options and the possibilities of an expanded EU budget should be discussed along with restructuring and savings opportunities. The EESC proposes in this connection that the possibility of introducing EU-wide finance mechanisms (including in the field of tax) should also be examined. For example, the introduction of a tax on financial transactions could contain speculation. The possibility of introducing a carbon tax should also be examined.

3.10. Consolidate the external dimension: Europe's prosperity is based among other things also on its openness to the world. Given Europe's status as the world’s biggest economic power, the largest exporter and importer of goods and services, the second largest source and recipient of foreign direct investment, and the world’s biggest donor of development aid, the consolidation of its international agenda in the form of clear, long-term goals is of key importance. In view of the rise of new global economic powers and the impact of the international economic crisis, it is more important than ever for the EU to give itself a new, more unified and assertive framework for its external activities, in order to secure an adequate, fair and sustainable opening of markets, raise the normative standards on the basis of the relevant rights involved, foster multilateralism and dialogue with key partners, and create a mutually beneficial area of progress that also includes the Mediterranean region and Africa. If this is achieved, Europe and its social market economy system will continue to act as a role model for the rest of the world. Europe will be able to hold its ground at international level, in particular as regards access to markets and raw materials, while at the same time ensuring that international conditions of competition are fair, that sustainable development is able to take root, and everyone is able to draw on the benefits of globalisation.

4.1. Maintain targets and increase them in the medium term: Despite new challenges and the setbacks that are associated with the current crisis, the post-2010 agenda should not overlook current targets. The EESC proposes that the common targets of the current strategy be maintained but also that further ambitious goals be set which should be implemented by 2015. For example, the research rate should be increased to 3.5 % (where appropriate, supplemented with a more broadly-based target for investment in innovation) and the goals for more and better jobs, and for initial and further education, should also be further increased.

4.2. Take into account the starting point for individual EU countries in terms of their national contributions: Economic capacities vary greatly from one EU Member State to another. The EESC proposes, as was the case when the quantitative Lisbon targets were originally set, that the situation in individual Member States be taken into account and that the accordingly ambitious national contributions to the strategy guidelines be assessed and discussed within the framework of the EU-27.

4.3. Reintroduce qualitative goals: Furthermore, the future agenda should include those qualitative goals, which in the course of the relaunch of the Lisbon Strategy over the past few years have largely fallen by the wayside (e.g. Laeken indicators to measure the creation of high-quality employment (14)).

4.4. Set new targets wherever there are shortcomings: In addition, new or specific targets should be set within the framework of the integrated guidelines, especially in areas where there has been limited progress or shortcomings in previous reform policy. Therefore the EESC proposes own guidelines with measurable goals on gender equality, dealing with jobs that do not provide adequate social protection, the transition to a low-CO2 economy, fighting poverty (including poverty suffered by people in employment) and moves to prevent social exclusion (for example, appropriate support in the case of unemployment or incapacity to work and in access to public services).

5.1. Boost the role of the European institutions: The new strategy needs more punch. An enhanced role for the European institutions is particularly important in the light of the current crisis. Since the Lisbon Strategy was revamped in 2005 the activities of the Commission have gained far greater visibility, especially the publication and dissemination of country-specific guidelines and examples of best practice. Calls have been made for a public discussion in the Council so as to maintain the momentum of the process as a whole. In the renewed strategy, these issues should be looked at in greater depth and expanded. The Commission and the Member States should make a renewed effort to improve the implementation and promotion of cross-border exchanges of best practice through the use of electronic communication methods. The above methods, however, depend on the Member States being given an appropriate European framework in which they can achieve Community targets. If necessary, new, innovative instruments should be examined.

5.2. Make the OMC more effective in Member States: As the ‘methodical backbone’ of the Lisbon Strategy, under the EU Reform Treaty, the OMC will be prescribed for other areas. For the EESC, the Achilles heel of the OMC, aside from its low public profile, is its ineffectiveness at national level. It is therefore vital that the targets no longer be viewed, as has often been the case up to now, as ‘points on a wish list’, but rather as concrete political obligations. Instruments should be found of making the targets more binding and creating better incentives for Member States to pursue the target commitments to which they have agreed more consistently. To guarantee a better balance, not just the economic and finance ministers, but also other ministers, particularly the labour and social ministers, should be involved in the implementation of the new strategy. The EESC also recommends boosting the role and visibility of the European social partners, for instance by routinely appending the outcome of the tripartite macroeconomic dialogue to the conclusions of the European Council.

5.3. Monitor the Lisbon Strategy goals via Member States’ economic and social councils: The special role of national ESCs and similar civil society organisations should be further strengthened based on the respective consultative procedures and competences of the social partners in the individual Member States (15). The relevant reports which are to be drawn up by the ESCs should contain analyses on the implementation of the Lisbon targets for submission to governments and the European institutions, who in turn would be encouraged to draw appropriate conclusions. The ESCs and civil society organisations could invite Commission representatives to discuss specific national circumstances. Likewise, national ESCs should be involved in the Commission's annual consultations. Maintaining exchanges of views and experience between the EESC and national ESCs on the national reform plans and the Lisbon agenda is of particular importance here.

5.4. Greater credibility through the enhanced involvement of civil society and boosting the regional dimension: The EESC has consistently pointed out that, for the Lisbon Strategy to be implemented more effectively, not only must the European institutions assume full responsibility, but also full account must be taken of all society interests and there must be closer cooperation at local, regional, national and European level between the government and social partners as well as civil society (16).

Brussels, 4 November 2009.

The president of the European Economic and Social Committee

Mario SEPI

(1) There are considerable differences as regards the institutional framework for civil society participation in national policy-shaping. There is an ESC in many Member States. In most ‘new’ Member States, there are tripartite committees (social partners plus government representatives). Although other countries have no ESC, some of them have alternative ways of taking account of civil society interests. The EESC is keen to gather the contributions of as many of these representative bodies as possible.

(2) Cf. CESE 1468/2005 rev ‘Implementation of the Lisbon Strategy - a summary report for the European Council’, 23 and 24 March 2006; CESE 40/2008 ‘Renewed Lisbon Strategy 2008-2010: The role of organised civil society’, summary report for the European Council, 13-14 March 2008.

(3) For the relative successes and shortcomings in fulfilling the Lisbon goals, see the overview in M.J. Rodrigues, Europe, Globalisation and the Lisbon Agenda (2009), p. 16.

(4) See footnote and EESC opinion on ‘Effective governance of the renewed Lisbon Strategy’, OJ C 175, 28.7.2009, p. 13.

(5) Cf. http://www.eurofound.europa.eu/ewco/reports/TN0403TR01/TN0403TR01_3.htm, Part-time work in Europe, Dublin-Foundation, 2004.

(6) Cf. the set of indicators on the quality of work adopted by the European Council in Laeken in 2001: COM(2001) 313 final ‘Employment and social policies: a framework for investing in quality’.

(8) Communication from the Commission to the European Council, ‘A European Economic Recovery Plan’, COM(2008) 800 final, 16.11.2008.

(9) Overview of the relevant European social partner agreements: http://europa.eu/scadplus/leg/de/cha/c10132.htm.

(10) European Parliament resolution of 19 February 2009 on the Social Economy (2008/2250(INI).

(12) In this connection, the establishment of the European integration forum, which brings together the EU institutions, stakeholders and NGOs under the auspices of the EESC, is particularly to be welcomed.

(14) See COM(2001) 313 final ‘Employment and social policies: a framework for investing in quality’.

(15) The EESC stresses that it does not in any way interfere with existing consultation mechanisms, responsibilities and competences of the social partners in the individual Member States.