Implementation of the partnership for growth and jobs (first report)

The Communication reviews the Community Lisbon Programme and the national reform programmes. It analyses the macroeconomic, microeconomic and employment aspects of the national reform programmes and proposes 4 actions to correct the shortcomings which emerged during the evaluations. It also sets out implementing measures.

ACT

Communication from the Commission of 25 January 2006 to the Spring European Council - Time to move up a gear - Part 1: The new partnership for growth and jobs [COM(2006) 30 final - Not published in the Official Journal].

SUMMARY

The partnership for growth and jobs needs to be converted into a genuine reform with the help of the Community Lisbon Programme and the national reform programmes (NRPs). The Commission reviews their progress here.

Community Lisbon Programme

The Commission has already adopted two-thirds of the planned measures. However, certain measures have yet to be adopted by the European Parliament and the Council or rely for funding on an agreement on the financial framework (2007-2013). Some noteworthy measures have been added to those already planned:

• a communication on research and innovation;
• the development of an integrated industrial policy;
• initiatives to improve the tax and customs environment;
• investigations into more competitive markets in energy and financial services;
• a proposal to create a single payment area in Europe;
• new Community funding available for SMEs to improve energy supply and demand.

National reform programmes

All Member States have drawn up NRPs and appointed national Lisbon coordinators. Some have streamlined internal coordination in order to improve policy coherence. The Commission does not consider it necessary at this stage to adapt the integrated guidelines and feels it is too early to propose formal, country-specific recommendations. The emphasis at this stage must be on implementing the partnership and the specific measures proposed at Community and national levels. The Commission draws the Member States' attention to the individual evaluations of each NRP, drawing conclusions on the macroeconomic, microeconomic and employment aspects, and on specific points which will require particular attention (weaknesses).

Macroeconomic aspects

Analysis of the NRPs from a macroeconomic point of view shows that:

• many factors complicate short-term and long-term budgetary discipline, making the macroeconomic problem more serious for Member States;
• Member States are trying to cut spending rather than increase taxes. However, it has yet to be clearly defined where and how savings can be made;
• the measures proposed in the "euro zone" are geared mainly towards future public finances but do not aim to support labour market adjustments or to create more competitive internal markets;
• despite recognition of the problem of ageing populations in Europe, NRP measures appear to be piecemeal or insufficient;
• only some Member States have taken an integrated approach in planning their NRP.

Microeconomic aspects

The following conclusions may be drawn with regard to microeconomic issues:

• the NRPs reflect the need to increase investment in research and promote innovation;
• 18 of the 25 Member States have set investment targets relative to GDP which at EU level will equate to 2.6% by 2010, falling short of the overall target of 3%. This figure is currently 1.9% for the EU;
• initiatives relating to transport infrastructure and communication technologies could receive support from the cohesion and rural development funds;
• access to internal markets (energy and services) deserve greater attention. The application of Community Directives in this area is a beginning;
• initiatives to foster a more positive attitude towards entrepreneurship do not go far enough. Education can help to reduce the stigma of failure;
• Member States need to adopt a more integrated approach in order to improve the rule-making which affects business and at the same time supplement action at Community level;
• comprehensive and coordinated implementation of the different microeconomic policies may achieve much greater benefits than the sum of the individual policies put together.

Employment

The Commission draws the following conclusions with regard to employment:

• the proposed employment objectives are inspired by Community objectives but are often piecemeal and do not take the life cycle approach;
• greater attention should be given to "flexicurity", facilitating the transition from one job to another with adequate social protection and a reliable lifelong learning system;
• the reform of education systems concentrates mainly on the quality and transparency of qualifications, as well as access to them. Investment needs to be stepped up.

Overall conclusions

The NRPs are a good basis for implementing the partnership for growth and jobs, but not all are of equal quality:

• some have set clear targets and timetables, with specific measures and budget details. Others lack such information;
• the three dimensions (macroeconomic, microeconomic and employment) could be more closely integrated so that one measure would benefit several sectors;
• only some Member States provide for measures to remove obstacles to market access;
• the cohesion and rural development funds will be needed to achieve the Lisbon objectives, although the macroeconomic repercussions of using these funds will need to be taken into account. Coordination mechanisms need to be put in place for planning the use of these funds and drafting the NRPs.

Key areas

The Commission calls on the Member States to implement their national reform programmes fully and on time. To correct the shortcomings which emerged from the evaluations, it proposes four integrated actions which it intends to implement by the end of 2007:

Action 1: Investing more in knowledge and innovation

The Lisbon objective was to boost R&D spending to 3% of GDP by 2010 (1% from the public sector, 2% from the private sector). Member States must increase public spending and make it more effective through wider use of fiscal incentives and closer coordination with the other Member States with regard to spending. Public procurement has a part to play in transforming the results of research into innovation. At the same time, more competitive markets encourage businesses to be more innovative.

The private sector must be able to make a greater contribution to funding for higher education, and the link between universities and business must be strengthened. The objective should be to increase investment in higher education to 2% of GDP.

Action 2: Unlocking the business potential of SMEs

By 2007, every Member State should have set up a one-stop shop to assist would-be entrepreneurs to fulfil administrative requirements all in one place - electronically, where possible. They must set up similar one-stop shops for VAT and for the recruitment of a first employee. The time taken to set up a business should be cut in half, and start-up fees should be as low as possible.

By that date they must also adopt a methodology for measuring administrative costs for national rules and regulations. This exercise should facilitate initiatives to reduce these administrative costs. The Commission will propose similar initiatives at Community level.

Action 3: Responding to globalisation and ageing

Member States must help people to work longer, and they need to reform pension schemes, for example by changing the statutory retirement age, enhancing financial incentives for older workers to remain in work, offering more training opportunities to workers over the age of 45 or allowing gradual retirement. Disability schemes, together with health care and long-term care systems, should also be reviewed to make them more effective.

The entry of young people into the labour market, in line with the Youth Pact, is another important factor. By 2007, young people who have left school should be offered a job or additional training within 6 months, or within 100 days by 2010.

The Commission wishes to consult the social partners on better ways to reconcile family and professional life. It also plans to present a report in order to seek agreement on 'flexicurity' by the end of 2007, comprising the following elements:

• reduction of labour market segmentation and undeclared work;
• Member States to establish lifelong learning strategies to prepare people for change, supported by the European Social Fund and the Globalisation Adjustment Fund;
• removal of obstacles to worker mobility by reaching a political agreement on the portability of supplementary pension rights.

Action 4: Moving towards an efficient EU energy policy

The Commission is proposing an energy policy designed to ensure that energy is secure, competitive and sustainable. The security of supply will be improved by:

• strengthening and deepening the internal energy market (in particular completing the energy market by 1 July 2007), by promoting more competition in the electricity and gas markets, and by more integration between the gas pipeline systems of the Member States);
• exploiting the potential of renewable energy sources and promoting more efficient use of energy;
• developing a more focused, coherent and integrated approach to ensuring the security of energy.

A Green Paper has been published on ways to achieve these objectives.

Implementation

The Commission intends to involve national (and regional) parliaments, local authorities and other stakeholders in the implementation of the NRPs, particularly where there has not been sufficient time to do so during the preparation of the programmes. It proposes to involve the social partners by holding an extraordinary Social Summit. The NRPs must be further developed and strengthened by mutual learning among Member States. Those Member States which have not yet set targets with regard to future R&D spending and the employment rate should do so. The Commission and Member States will ensure that the open method of coordination, in the areas of education and training, social protection and social inclusion, also makes a strong contribution to the objectives.

With regard to the implementation of the Community Lisbon Programme, the Commission has proposed a roadmap setting out the major steps required for measures supplementing the NRPs.

The European Union institutions and the Member States need to define a communication strategy to improve understanding of the challenges and opportunities of the new partnership for growth and jobs at local, regional and national levels. This is essential in order to develop a sense of ownership on the part of all involved.

Background

As provided for at the Spring European Council in 2005, the Commission has drawn up the first report on the implementation of the new partnership for growth and jobs. With this report, the 2006 Spring European Council will be able to review progress made and comment on any adjustments to the integrated guidelines, which serve as a basis for the national reform programmes and the Community Lisbon Programme.

Last updated: 09.11.2006