Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the competitiveness of the European Information and Communication Technologies (ICT) Industries'
Date: 1997-12-11
Institutions: European Economic and Social Committee
Subjects: action programme, competitiveness, information technology, international competition, market

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II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council, the European Parliament, the Economic and Social Committee and the
Committee of the Regions on the competitiveness of the European Information and
Communication Technologies (ICT) Industries’

(98/C 73/01)

On 21 April 1997 the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 5 November 1997. The rapporteur
was Mr Burani.

At its 350th plenary session (meeting of 11 December 1997), the Economic and Social
Committee unanimously adopted the following opinion.

1.

Introduction (Chapter 1 of the communication)

The communication represents an initial Com-
1.1.
mission contribution to a debate launched by the
Netherlands Government and by an informal council of
ministers in spring 1997 on the situation of the ICT
industries (1) in Europe. The communication is designed
to stimulate further contributions on a burning issue that
requires swift and effective solutions. The Committee
believes that this topic urgently needs to be addressed
with a view to finding practical solutions; such is the
intention of the comments and proposals which follow.

1.2.
After pointing out that the ICT industries are a
‘critical component’ of the European economy, the
Commission notes some ‘worrying signs’ of EU weakness
compared with other countries: slow market growth,
declining relative shares for European producers, and
an inadequate response to market and technological
evolution. This phenomenon is well known, and is
found in other similar industries.

1.3.
The Commission states that the EU needs a
competitive and dynamic ICT industry in order to avoid
excessive dependence on key technologies, participate
in expanding global markets and help create new jobs,
and — the final and most ambitious objective — in
order to be at the forefront of future innovation.

(1) The Commission document specifies that it only examines
the following fields: consumer electronics, computer and
office equipment, telecommunications equipment, com-
ponents, software (either as component or product, or
services associated with the provision of software). Other
sectors, such as broadcasting or content industries, which
are often included in the definition of ICT industries, are
not covered.

These objectives are unimpeachable. However,
1.4.
the Committee feels that while the objective of being at
the forefront might possibly be achieved via a medium
to long term strategy, the situation calls for immediate
action that is consistent with those strategies; this is
logical and indeed is recognized by the Commission
itself.

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1.5.
The communication states that the industry,
the Member States and the Commission must act
immediately and draw up an effective action plan.
Success will undoubtedly depend not only on action
from the industry but also on appropriate legislative
and regulatory infrastructure. The communication
makes only brief mention of the role of the legislator (1).
The Committee would like to see more stress on
the primary responsibility of the public authorities in
establishing the basic conditions for boosting competi-
tiveness and making it easier for the industry to take
advantage of innovations and create new jobs.

2. The ICT industries: global structures, European

competitiveness

2.1. Market structure (chapter 2.1 of the communi-

cation)

2.1.1.
For the purposes of a systematic examination,
the Commission divides the market into three segments:
infrastructure, industrial and commercial markets, and
consumer markets. The three segments differ in their
characteristics and in how they operate, and call for
differing legislative and policy action. However, the
Committee feels that they have one point in common:
in very few of them is Europe ahead of its competitors.
Analysing the reasons for this is a first step towards
understanding the problems.

The infrastructure market covers large-scale
2.1.2.
systems with relatively long product life-cycles, and is
affected by downsizing and deregulation. The Com-
mission notes that while the traditional
‘European-
affiliated’ suppliers are in a strong competitive position
in some fields, such as telecommunications, they are
also facing progressive deregulation and liberalization.

Industrial and commercial markets attract
2.1.3.
many producers who have often built on niche markets
to secure themselves large markets. Such producers tend
to be technology oriented and depend heavily on venture
capital. The Commission notes that US industry enjoys
strong positions on these markets.

2.1.4.
Consumer markets demand constant inno-
vation and product reliability; they are becoming the
‘technology drivers’ of ICT industries. Their main
problem is constant price erosion, which forces firms
into mergers. The market is now dominated by a
relatively small number of recognized brand-names
supported by global production structures. The market
leaders are Japan and Korea, although ‘European-
affiliated’ producers hold their own relatively well;

(1) Commission communication, first paragraph of point 2.1.

however, their position is threatened by the US, which
is gaining ground especially in the field of micro-
computers.

All this has resulted in market globalization
2.1.5.
which has reached a point where the term ‘European
industries’ in the strict sense is virtually meaningless.
Interpenetration of markets and capital is occurring all
over the world. This trend is set to increase, and its
implications deserve serious consideration. It must not
be forgotten that the ICT industries are found to a large
extent in sensitive sectors; the defence applications of
R&D are a case in point. In such sectors, moves towards
globalization must be tempered by the need to maintain
political balance worldwide.

2.1.6.
The communication paints a detailed and
accurate picture of the situation. The Committee would
add that the EU is unlikely to become competitive if it
is unable to adopt policies and structures geared to
market globalization. Hence purely ‘European’ solutions
and approaches could condemn the EU to weakness.

2.1.7.
The sector’s employment position is mixed.
Jobs are being lost in the wake of high productivity
gains or, in some cases, relocation to third countries,
but new jobs are being created in software and services.
The Commission sums up the net result as ‘overall
moderate growth in the long term’.

2.1.8.
The Committee would sound a note of caution
here. In the absence of precise figures on relocation, it
is difficult to say whether the employment balance is
positive or negative. A more detailed analysis is needed
in order to ascertain whether any new or expanding
industries (e.g. telecommunications) show a positive
balance that offsets the negative balances of other
industries. At all events,
it is difficult to estimate
the number of jobs lost in related fields (transport,
hospitality, commerce, services) when businesses re-
locate. It is thus clear that the main problem — and not
only as regards employment — is how to correct the
tendency to set up production units outside Europe. The
answer might lie in application of the ‘social clause’.

2.1.9.
This tendency is also encouraged by the EU’s
external policy, particularly as regards central and
eastern European countries. It has to be recognized that
the need to support the development of these countries
— inter alia with a view to the accession of some of
them to the EU — is politically, economically and

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socially justified. However, in present circumstances it
is difficult to reconcile the need to create jobs within the
EU with that of keeping up a substantial flow of
investment to third countries.

In the Commission’s view, these problems should be
remedied by:

— a greater marketing and communications drive on

the part of suppliers;

— a greater commitment to promoting ICT take-up by

3. Competitiveness of the European ICT industries

public administrations;

(chapter 2.2 of the communication)

The communication cites a number of figures
3.1.
which give a clear idea of the meteoric growth of ICT
industries. These industries have now outstripped the
chemical and motor industries in terms of turnover,
production and added value. The growth rate (7 %
per year, and likely to remain stable) is outstanding.
However, the optimistic picture is tempered by the fact
that the growth rate is lower than those of the United
States and the emerging Asian economies, and the EU’s
trade balance for these industries as a whole is worsening.

3.2.
A sectoral examination reveals that the EU is
behind in the software field and very poorly placed in
electronic assembly, but relatively competitive in the
semi-conductors field thanks to international strategic
alliances. Telecommunications equipment is the only
sector where the EU has a leading position, exemplified
by the success of GSM telephony. In short, the outlook
is not entirely bleak, and the Commission’s attempt to
analyse the reasons for the problems and find ways of
remedying them deserves fullhearted support.

4. Main challenges for the European ICT industries

(chapter 3 of the communication) (1)

4.1.

Improve market take-up

4.1.1.
market problems:

The communication identifies a number of

— businesses are not forward-looking; many still per-
ceive investment in ICT solely in terms of cost, and
underestimate how it can improve competitiveness;

— individual consumers and public administrations are
slow to take up ICT technologies (the communi-
cation mentions the low number of Internet users);

— the chief problem, however, is felt to be the uneven
pace of telecommunications liberalization in the
Member States.

— speedier harmonization of standards and regu-

lations.

4.1.2.
The Committee endorses the analysis and,
broadly speaking, the proposed remedies. However, it
would caution against solutions which, however obvious
they might seem, could turn out to be double-edged
swords;
if companies are not already competitive,
investment in marketing and communications cam-
paigns could further the cause of third country suppliers.
Similarly, harmonization of standards and regulations
would offer a wider market to those who are best placed
to exploit it. Such considerations have nothing to do
with protectionism; they merely seek to assess which
initiatives are helpful to EU industry and which ones
boost competition from the strongest third countries. In
short, the first task is to lay the foundations for making
the ICT industries more competitive in the weaker
sectors and to keep their position in the stronger ones.

4.2. Transform industrial structures

4.2.1.
The Commission’s analysis shows that the
European ICT industry has been slow to restructure and
has tended not to follow the trend towards outsourcing,
unlike US and Japanese producers who have set up
networks of component suppliers in Asia. The Com-
mission suggests that the EU could turn to central and
eastern European countries for this, thereby establishing
Europe-wide industrial cooperation.

4.2.2.
This would seem an attractive solution, and
there are already a few signs of it being adopted.
The Committee supports actions for closer integration
between EU and CEEC industries in the ICT sector. For
this purpose the Commission can provide initiatives in
the fields of training of suppliers, networking, quality
management and the like.

4.2.3.
The communication does not address one
issue related to industrial restructuring: concentrations,
mergers and agreements among EU firms, or between
EU and third country firms. It has been recognized (2)
that Europe needs industrial groups large enough to
compete with the giants of the United States, Japan and
the emerging Asian countries. At the same time, there is
justified concern to safeguard competition rules in the
single market in accordance with Articles 85 and 86 of

(1) Paragraphs 4.1 to 4.6 follow the order of the subheadings

(not numbered) in the communication.

(2) See the Ciampi report of June 1996.

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the Treaty. The Committee calls on the Commission to
consider this, particularly when it applies the concept
of ‘relevant market’ to the ICT industries. Decisions
should seek to strike a balance between two opposing
requirements which might sometimes clash. A case-by-
case approach that eschews preconceptions is absolutely
vital in this sector.

4.3. Develop fast-growing companies

4.3.1.
The Commission notes that the EU has failed
to foster dynamic growth of new companies, especially
SMEs, and that further training and labour mobility
need to be improved.

4.3.2.
The Committee wonders what has caused these
problems, and the Commission returns to them at a
later point (see 4.7). SME growth is a wider issue, but it
is worth making some comments which, while holding
good for all companies, are particularly applicable to
ICT industries:

— the EU suffers from a lack of venture capital
and from rather inefficient secondary markets in
securities;

— the average level of taxation and social charges in
the EU is higher than elsewhere because of the
European social model. Should tax or social charge
concessions be considered, they should go hand in
hand with measures to train the workforce or
training partnerships between firms and educational
establishments. As regards the distribution of ICT
investment among the Member States, the future
code of conduct in taxation matters will play a major
role in ensuring that investment is determined by
real — as opposed to tax — differences.

4.4. Enable European excellence in software

The communication affirms a principle which,
4.4.1.
if accepted unconditionally, would undermine many of
the solutions being proposed: ‘no amount of restructur-
ing can change the fact that Europe is a high-cost region
for manufacturing’. The Committee points out that
accepting this affirmation would be tantamount to
accepting permanent European inferiority in ICT manu-
facturing. The affirmation should therefore be given the
gloss that is probably intended in a context which notes
the importance of software, a field in which Europe
could play a leading role in quality terms.

4.4.2.
The Commission rightly thinks that Europe
should devote special attention to software, given its
importance for competitiveness, added value and job
creation. The Commission mentions the potential mar-
kets offered by financial services and services in general,
aviation applications and numerous industrial products.
The Committee would add to these the market created
by the switch to the single currency, which will require
the adaptation of countless financial, accounting and
administrative programmes, and will provide an oppor-
tunity to revise business procedures and those of the
public administrations. The Commission also considers
that linguistic diversity poses an additional challenge,
as it could put European industry at an advantage in
supplying versions in the different national languages.
The Committee has reservations about this latter point
(see 4.6.3 below).

4.4.3.
The Commission’s analysis may be endorsed
in the context of a market which is divided into different
national languages, although the Committee points out
that there are other quite significant disadvantages (see
4.6.3 below). However, it must be borne in mind that
excessive diversification could increase costs for users
in the smaller countries, thereby weakening their com-
petitive position. In any case, the market has already
taken this aspect on board: the less common language
versions are rare and expensive.

4.5. Optimize technology development and diffusion

4.5.1.
The Commission notes that R&D costs are
rising as a result of shorter product life-cycles, and calls
on producers to accelerate market take-up (a point
mentioned in 4.1 above). The Committee notes that
whilst a prompt response to market needs is important,
innovation is much more so. Experience shows that
success depends not so much on following market trends
as on creating new products which anticipate needs and
create new markets.

The Committee sees insufficient investment in
4.5.2.
R&D as one of the main reasons for the European ICT
industry’s lack of competitiveness. Investment in this
sector as a percentage of GDP is much lower than in the
United States or Japan. To win lasting success on the
world markets, it is not enough to offer competitively
priced products;
innovation and the
tendency for prices to fall mean that it is more important
to offer original and innovative products which cannot
be found elsewhere.

the speed of

4.5.3.
The Committee thinks that a European R&D
plan, conducted jointly by industry and the public
authorities, should be a top priority. The success of the

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plan will depend not only on investment, but also on
the availability of human resources; this is not so much
a question of boosting employment as of seeking the
highest possible professional skills. As a result of
the shortage of properly qualified workers, the ICT
industry’s scope for development is more restricted and
its costs are higher compared with the rest of the world
since firms have to overbid in their efforts to attract the
limited number of competent people. The ICT industry’s
heavy dependence on a technically highly trained work-
force, which constantly needs to update its skills and
develop its expertise, makes the shortage even more
painful. This factor is probably the most severe threat
to this industry — a threat which cannot be averted by
passive measures such as reducing general costs but
militates for direct action to boost the number of
qualified persons.

4.5.4.
Investment in R&D in the defence industry
merits special attention, since — as with the electronics
industry — such research can have a spin-off effect on
research into civil applications. This aspect is outside
the remit of the present opinion, but was considered
in the ESC opinion on the European defence-related
industry (CES 326/97 — rapporteur: Mr Sepi) (1).

4.6. Exploit the potential for employment growth

4.6.1.
which ICTs have on employment:

The Commission identifies three types of effect

— direct effects on the ICT and related industries;

— indirect effects on other branches of the economy;

— other effects related to the growing value of services
and the resulting changes in the international division
of labour.

The findings of studies into these effects have hitherto
not been conclusive — although it must be recognized
that this is an extremely difficult exercise. The scenarios
vary from a ‘pessimistic’ one with three million net job
losses to an ‘optimistic’ one with the net creation of six
million jobs. More detailed analyses are needed, building
on a preliminary discussion of the basic criteria for
establishing the various scenarios.

4.6.2.
The Commission goes on to cite the example
of the United States, where ICT industries have been
restructuring for some time and have created many new

jobs. The Commission repeats its call to create the
conditions for rapid company growth (see 4.3.1 and the
Committee’s comments in 4.3.2).

4.6.3. While considering employment in ICT indus-
tries, the Committee would like to raise a matter that is
specific to Europe, namely linguistic diversity. Labour
mobility in the United States is high for various reasons,
one of which is the absence of linguistic borders; in
Europe, the existence of 11 different languages is an
obstacle in itself. It is true that Europe’s linguistic
diversity is a source of cultural enrichment, and that in
the ICT industries the provision of different language
versions for different countries can offer new job
opportunities. However, there is no denying that this
diversity is generally an obstacle to worker mobility in
the EU. In high-tech industries in particular unfamilarity
with the main language used in the sector is a further
disadvantage.

4.6.4. Hence job vacancies within the EU can only be
filled by local workers or by others who know the local
language plus, in many cases, the basic language of the
technologies concerned; this limits opportunities for
both workers and employers. The Committee would
cite here the case of Luxembourg, whose multilingual
nature makes it easier to use human resources from
neighbouring countries. However, there are few other
countries to which this example can be extended;
language forms a barrier for most Member States,
especially the smaller ones.

4.6.5.
The Committee realizes that this is a difficult
obstacle to overcome, and will not repeat the old
nostrum about including language teaching in school
curricula. However, the language factor must be taken
into account in any benchmarking exercise (see 6.8
below).

5. Priority areas for policy initiatives (Chapter 4 of the

communication)

5.1. Policy initiatives under way which require urgent
implementation (Chapter 4.1 of the communi-
cation)

5.1.1.
Under this heading the Commission lists the
priority actions already taken or scheduled to start soon
under the action plan for the information society
published in November 1996 (2). The Committee has
already given its views on some of the actions, and is
currently drawing up its comments on others. Here it
will therefore simply reiterate the points mentioned and

(1) OJ C 158, 26.5.1997, p. 32.

C 296, 29.9.1997.

(2) COM(96) 607 final, 27.11.1996 — ESC opinion in OJ

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make a few brief comments. The Commission lists
nine priorities which together form a complex action
programme that will only succeed if it is framed and
conducted in a realistic and flexible manner.

5.1.2.
The deadline for effective liberalization of the
telecommunications markets is the end of this year. The
Committee urges the Commission to act firmly to correct
any discrepancies or resistance and see that all Member
States respect this deadline.

The Commission describes electronic com-
5.1.3.
merce as ‘the first practical
implementation of the
information society, the first “massive application” of
the future’. The Committee has drafted an opinion on
the Commission’s recent communication (1) on the
subject.

A further action area is the strengthening and
5.1.4.
acceptance of internationally agreed principles and rules
on competition, intellectual property rights, privacy and
individual rights, information security, interoperability
and standards. The Committee endorses this, but has
the impression that the accent is on compliance by
European operators. Action should also focus on com-
pliance by third country players, who are not always
noted for respecting European and international stan-
dards.

5.1.5.
The Commission also mentions take-up actions
and awareness initiatives. More detailed information is
needed on these.

5.1.6.
An action at Union level in the field of satellite
personal communication services has already been sub-
mitted, and the Committee has issued an opinion on
it (2).

Action plans are being prepared for ICT
5.1.7.
applications in the transport sector. They concern
trans-European networks, air traffic control systems,
and numerous consumer applications. The Committee
awaits further details of these.

5.1.8.
The R&TD framework programme scheduled
to begin in 1998 will integrate support for the develop-
ment of technologies into a single programme covering
four areas: services for citizens, electronic commerce,
multimedia content and key technologies. Here too, in
the absence of further details, the Committee is unable
to comment, and would simply refer back to the general
remarks made in 4.5.2 above.

(1) COM(97) 157 final, 16.4.1997 — ESC opinion in OJ C 19,

21.1.1998.

(2) COM(95) 529 final — ESC opinion in OJ C 204, 15.7.1996.

5.1.9.
Education, training and refresher/retraining
courses are critical for equipping workers with the skills
and flexibility needed to use technology. The Committee
fully supports the various initiatives which the Com-
mission has launched in this field. It would however
point out that training programmes must not neglect
the need for a basic grounding in the main languages
used in information technology, for the reasons set out
in 5.1.10 below.

5.1.10.
The language problem is particularly acute
for European software, and has been covered in a
separate programme (3) on which the Committee has
already issued an opinion. Here it would add that, while
respecting linguistic diversity, initiatives should also be
assessed in cost/benefit terms, in order to ensure that
the countries with less common languages are not
disadvantaged because the cost of adapting programmes
is spread among a small number of users.

6. New areas requiring attention (Chapter 4.2 of the

communication) (4)

6.1.

Improve global competition

6.1.1.
The communication mentions the two main
steps towards worldwide liberalization. These were the
WTO conference held in Singapore in December 1996,
at which the ITA (5) was concluded, and the WTO
telecommunications agreement of February 1997. It also
mentions the abolition of tariffs on all IT products by
the year 2000, and proposes action to extend the country
coverage of the ITA. Lastly, it thinks that all these
developments will help to reduce European ICT pro-
duction costs and improve export prospects for European
producers.

6.1.2.
The Committee strongly endorses the action
plan and the principles underpinning it. However, it
wishes to add some cautionary comments, and would
recommend that the impact of each initiative be assessed
in advance. Free trade is undoubtedly the right path to
follow as it will open up competition and bring down
prices, but it must be remembered that markets are won
by the most competitive players. While liberalization
undoubtedly helps European producers to penetrate
third country markets, the same applies to third country

(3) COM(96) 456, 2.10.1996, adopted by the Council on
8.10.1996 — Multiannual programme to promote the
linguistic diversity of the Community in the information
society — ESC opinion in OJ C 212, 22.7.1996.

(4) Paragraphs 6.1 to 6.8.2 follow the order of the subheadings

(not numbered) in the communication.
(5) ITA — information technology agreement.

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producers and the European market — a market which
is already largely open. A medium to long-term forecast
is needed of the results of market liberalization from a
European standpoint, giving figures on the likely costs
and benefits,
the increase in production and in
imports/exports, and the impact on employment.

6.1.3.
In short, market liberalization must be consis-
tent with the aim of not denting the competitiveness of
EU industry. To this end, the Commission should review
some aspects of decisions and actions either taken or
due to be taken. Firstly, it should review the rules
on public procurement by government authorities,
excluding from these rules privatized telecommuni-
cations operators in countries where there is now free
competition between operators. Also, the United States
should be pressurized into revoking the Effective Com-
petitive Opportunity Test (ECO-Test) as it is incompat-
ible with the undertakings made in the WTO agreement
on basic telecommunications services.

6.2. Accelerate ICT take-up and promote awareness

6.2.1.
The communication includes this among the
‘new areas’, but it is also listed among those under way
(see 5.1.5). The Commission mentions first and foremost
the role of the public authorities in stimulating take-up
of ICT by their own services, by schools, by the public
and by companies. The Commission mentions the
lagging situation of some of the southern and peripheral
Member States, and states that information technology
is ‘a powerful tool to promote cohesion by reducing
barriers’. This is undoubtedly true, but there are other
major barriers such as the linguistic diversity which it is
proposed to maintain.

The Committee would also point out that,
6.2.2.
outside the market offered by the public authorities,
steps are needed to give a decisive boost to per capita
spending on ICT products by corporate and individual
users, with appropriate policies being adopted in the
fields of education, training and health applications. A
careful assessment is needed of the impact of punitive
tax policies such as the proposed ‘bit-tax’. The mere
prospect of such a tax would have an adverse impact
not only on the market, but also on investment strategies
in the sector.

6.3. Create new markets by timely standards

6.3.1.
The Commission stresses the importance of
adopting universal standards as a strategy for opening
up new markets. To this end it calls on producers to
cooperate at world level, whilst not forgetting the
existence of ‘regional specificities’ which are justified by
the need to win new markets or keep traditional ones.
The Commission’s line on this is flexible. On the one
hand, it ‘supports the creation of (...) structures enabling
European companies to participate in the international
ICT standardization process’. On the other, it notes
that these structures should ‘trigger internationally
recognized standards using European specificities’.

6.3.2. On the subject of technical standards, the
Committee points out that a distinction must be drawn
between different types. The Commission’s use of the
term is too generic and does not properly reflect the
need for the industry to respond swiftly to standards
dictated by the market, which might be different from
official ones. On this point the Committee draws the
Commission’s attention to the comments which it made
in an earlier opinion (1).

6.3.3.
The Committee considers that the delicate
balance between universal and European standards
should be established on a case-by-case basis. General
principles are not enough to resolve possible conflicts
with the competition rules under Article 86 of the
Treaty. Such conflicts should be settled by the competent
authorities with the requisite flexibility and with a clear
view of the interests at stake, taking account of the
points made in 4.2.3 above.

6.3.4. With a view to ensuring ‘consistency and an
optimal use of the European standardization resources’,
the Commission suggests the early establishment of a
one-stop office under the umbrella of the European
standardization bodies. The mooted objectives are too
generic for the Committee to give any views on them,
and it is unable to comment until it has information
about the nature, duties and role of the office.

6.4. Exploit the potential of enlargement

EU enlargement is felt to offer the European
6.4.1.
ICT industries a larger high-growth market and
improved economies of scale for production. This
would allow European companies to reorganize their
manufacturing structures as the United States and Japan

(1) COM(96) 359 final on standardization and the global
the European approach — ESC

information society:
opinion in OJ C 89, 19.3.1997.

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have done vis-à-vis Asian countries. The Commission
notes that this process is already under way, to the
extent that some producers are relocating activities from
the Far East to central and eastern Europe.

for European SMEs compared with their American
counterparts, especially in Silicon Valley. The Com-
mittee endorses this but would point out that to ensure
an effective, clear comparison, it is important also to
consider the type of model and taxation.

Furthermore, the analogies between the CEEC
6.4.2.
and certain Asian countries are less real than they seem.
The advantages offered by the CEEC in terms of lower
production costs will steadily become less pronounced
once they have joined the EU. If one rejects the principle
of country specialization in production structures
(see 4.2.2), it is clear that the role of these countries
cannot be limited to accessory products. The Com-
mission’s policy is to encourage ‘active industry represen-
tation in the CEEC’, but the terms in which this is
couched make it sound more like a colonial relationship.
This cannot be the Commission’s intention, and the
Committee asks it to redraft this part of the communi-
cation so as not to create the wrong impression.

6.5. Promote industrial cooperation

6.5.1.
The Commission mentions industrial cooper-
ation initiatives that are under way or proposed in the
Newly Independent States, the Mediterranean region,
South America and Asia. The Commission calls for
more efforts to inform firms, especially SMEs, of the
opportunities offered.

6.5.2.
The Committee notes these statements, but
points out that calls for ‘cooperation’ in fact encourage
relocation of businesses or of part of them, with obvious
consequences for employment (see 2.1.9 above). Such a
policy will give positive results in the long term, by
improving market penetration, extending European
interests in the rest of the world, and boosting employ-
ment. In the short term, however, there is no doubt that
relocation reduces job opportunities for Europeans.
This must be addressed by a policy for cushioning the
social effects, but must be accepted as the price to pay
for the prosperity of future generations.

6.6. Facilitate the emergence of SMEs

6.7. Focus on employment: skills, education and

training

6.7.1.
The Commission proposes the adoption of
a ‘skills standards’ scheme to underpin the regular
adaptation of skills to technological and scientific
development. The establishment of skills profiles related
to the main activities on an industry-wide basis would
help when defining training programmes. The standards
would thus also provide yardsticks for improving school
curricula.

6.7.2.
This proposal deserves careful consideration.
However, it is clear that no ‘profile’ derived from official
‘skills standards’ could be upgraded frequently enough
and fast enough to keep pace with the constant advances
in research and technology. Direct cooperation between
businesses and education institutions is thus necessary.
It should be the job of the Member States to lay the
necessary foundations for this cooperation, in line with
local requirements but taking account of the fact that
training should increase the number of researchers
and technicians with an IT background, and improve
workers’ potential mobility within the EU.

6.7.3.
The Committee also thinks that undoubted
benefits are to be had from Community initiatives to
support industrial reconversion and reskilling of ICT
workers, so that they can move from the hardware
sector to the software and services sectors. The latter
two sectors are expanding rapidly and are set to continue
to do so; it is here that new jobs can be created to offset
those lost in the hardware sector, if not to actually
generate a net increase in employment.

Lastly, the Committee notes that the scope for
6.7.4.
creating new jobs in the ICT sector is closely tied to the
development of global networks and of the information
society (i.e. the Internet, online information exchange
services, multimedia services, electronic commerce appli-
cations, teleworking, distance learning, etc.).

6.6.1.
The communication recognizes the role of
SMEs as prime movers in the creation of new jobs and
in innovation. It identifies lack of venture capital and
poor cooperation with financial institutions as the main
reasons why Europe lags behind the United States in
fostering the emergence of new SMEs. The excess of red
tape in Europe is also felt to be a serious obstacle. The
communication proposes benchmarking of conditions

6.8. Promote benchmarking

6.8.1.
The Commission considers that benchmarking
is an effective and powerful tool for improving competi-
tiveness, and it intends to promote its use by companies,

9.3.98

EN

Official Journal of the European Communities

C 73/9

especially SMEs. This topic is considered in a separate
Commission document, on which the Committee has
issued an opinion (1). Benchmarking of the ICT industry,
along the lines already followed by the Netherlands
Government, will be extremely useful. The communi-
cation states that the Commission will work closely
with the Member States and companies to identify
critical framework conditions. The Committee rec-
ommends that when speaking of ‘companies’, due
account is also taken of the experience and suggestions
offered by SMEs.

The Committee is pleased that the Commission
6.8.2.
has not lost any time. The first communication (2)
was followed by a further communication (3) which
announces the launch of a pilot project for the ICT
industries.

7. Conclusions

7.1.
The Commission concludes by highlighting the
common thread which links the various proposed
measures — that of urgency. It intends to follow up the
communication by working together with the Member
States and industry to draw up specific actions and
establish a work schedule.

7.2.
The Committee has already commented on the
various strands individually. It endorses the implemen-
tation of a coherent action plan which must be flexible
so that it can keep pace with a highly volatile situation;
it must be free of red tape; and it must be closely
tailored to its ultimate aim, that of regaining global
competitiveness.

7.3.
The Committee feels it extremely positive that
the Commission has pinpointed concrete areas for
action. Efforts should focus in particular on measures
that will create new jobs; this means incentives for
SMEs, and especially for the creation of new SMEs
in the most promising sectors (software, multimedia
content, etc.), support for training for young people
and workers, and incentives for schools to use new
technologies and join networks.

7.4.
In addition to the communications on bench-
marking, the Commission has launched a number
of communications and projects on the information
society (4). Each separate project may be worthwhile,
but they need to be carefully coordinated so as to
avoid any overlapping or incompatibility and to pursue
potential synergies.

(1) COM(97) 153 final — ESC opinion in OJ C 296, 29.9.1997.
(2) COM(96) 463 final, 9.10.1996.
(3) COM(97) 153 final, 16.4.1997.

(4) Among these, mention may be made of the communication
on Europe at the forefront of the Global Information
Society: Rolling Action Plan (COM(96) 607 final, OJ C 296,
29.9.1997.

Brussels, 11 December 1997.

The President

of the Economic and Social Committee

Tom JENKINS