WRITTEN QUESTION E-1897/02

by Brice Hortefeux (PPE-DE) to the Commission

(1 July 2002)

Subject: Competitiveness

According to figures published in the annual report on competitiveness, the gap in relation to the United States is steadily widening, which suggests that the European Union is liable not to achieve the economic objectives set in the Lisbon strategy, i.e. the aim of becoming the most dynamic area in 2010.

EU labour productivity was 0,5 % in 2001, whereas it is 1,2 % in the US despite the recession. The European Union is particularly lagging behind in the information and communication technologies sector. It is also faced with a worrying shortage of skills. Educational standards are no doubt rising among European citizens, but not rapidly enough in comparison with the United States and Japan.

In view of these alarming developments, what strategy can the Commission adopt to help remedy the shortcomings and reverse this negative trend?

Answer given Mr Solbes Mira on behalf of the Commission

(16 September 2002)

It is true that the productivity gap between the EU and the United States has been widening since the second half of the 1990s, but the annual competitiveness report has also shown that in the periods 1975-1985, 1985-1990 and 1990-1995 labour productivity rose faster in the EU than in the United States. In 2001, one of the reasons for the EU's poor productivity record in the EU was the 1,1 % rise in employment compared with a 0,1 % fall in the US. Even so, the Commission considers that productivity is of considerable importance to Europe and it keeps a close eye on productivity figures. The strategy for reversing this negative trend was defined at the Lisbon European Council on 23/24 March 2000.

Lisbon set the EU the ambitious target of becoming the world's most dynamic, most competitive and most viable economy in ten years, with full employment and greater economic and social cohesion. The annual competitiveness report stated that the structural reforms needed to achieve the Lisbon objectives have already been identified. But it recommended that the Member States and the Commission should act to ensure that the reforms are now rapidly implemented.

The work already achieved is encouraging. Considerable success has been achieved in certain policy areas, such as an improved rate of transposal of internal market directives into national law, a virtual doubling in the value of the public tenders published in the Official Journal in the second half of the 1990s and the fall in telecommunications and electricity prices due to liberalisation of the markets. As the annual competitiveness report pointed out, however, there is still much to be done. The initial phases of the reform strategy are bound to consist of defining the measures to be taken. These measures will then have to be put into effect. Many of the reforms have yet to be adopted, and when they are, a further period will elapse before their effects are felt. In its spring report to the Barcelona European Council (15/16 March 2002), the Commission called on Parliament and the Council to act to absorb this implementation deficit.

The Commission thus believes that what is needed is not so much a new strategy but dynamic action to implement the Lisbon strategy. Measures such as unbundling the local telecommunications loop and the new framework for electronic commerce should narrow the gap in information and communication technologies; measures such as the new framework for public tenders and the greater openness of the electricity and gas markets for industrial customers should improve productivity, while measures such as the action plan on skills and mobility should promote the development of human resources in the Union.

Investment in human capital is a key factor in economic performance. Public expenditure on education is currently 5 % of GDP in the EU and the United States (Eurostat: Structural indicators). Of those aged between 25 and 64, 22 % have completed higher education compared with 18 % in 1995 (workforce survey). The Lisbon strategy provides for a substantial increase in per capita investment in human resources. The employment policy guidelines have set objectives for improving the quality of education and training systems and developing on-line education and training for all.

Investments in research and development (R & D) and the resulting technical progress are a major driving force for future economic performance and the creation of skilled jobs. The Barcelona European Council set the EU the objective of expanding its R & D to some 3 % of GDP, two-thirds being financed by the private sector, by 2010. The Commission plans shortly to present the preliminary results of its study of this subject. This objective forms part of the more general task of setting up the European Research Area. Investment must be accompanied by extensive efforts to improve the overall effectiveness of research in Europe, through coordination of national policies, developing cooperation between business and universities and producing and attracting more highly skilled research workers while guaranteeing them greater mobility.

The results of the Lisbon strategy will be fully felt in the next decade; the strategy is already having an effect on the productivity gap between the EU and the United States.