Opinion of the Economic and Social Committee on 'Employment, Economic Reform and Social Cohesion - Towards a Europe of Innovation and Knowledge'
Date: 2000-03-02
Institutions: European Economic and Social Committee
Subjects: economic and social cohesion, economic reform, fight against unemployment, innovation, marginalisation, social security, vocational training

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Opinion of the Economic and Social Committee on ‘Employment, Economic Reform and Social
Cohesion — Towards a Europe of Innovation and Knowledge’

(2000/C 117/13)

On 23 September 1999 the Economic and Social Committee decided, in accordance with Rules 11(4),
19(1) and 23(3) of its Rules of Procedure, to draw up an Opinion on ‘Employment, Economic Reform
and Social Cohesion — Towards a Europe of Innovation and Knowledge’.

The Subcommittee ‘Employment, Economic Reform and Social Cohesion’, which was responsible for the
preparatory work, adopted its opinion on 9 February 2000. The rapporteur was Mr Morgan, the
co-rapporteur Ms Engelen-Kefer.

At its 370th plenary session on 1 and 2 March 2000 (meeting of 2 March), the Economic and Social
Committee adopted the following opinion by 114 votes in favour with 5 abstentions.

1.

Introduction

1.1.
On 16 October 1999 the Finnish and Portuguese
presidencies invited contributions to the discussion at the
extraordinary European Council to be held in Lisbon on 23
and 24 March 2000 on the subject ‘Employment, economic
reform and social cohesion — Towards a Europe of innovation
and knowledge’. The ESC is delighted to have been asked to
contribute to this Summit and, in particular, to have been
invited together with the Parliament, the Commission, the
European Central Bank and the social partners to the follow-up
High Level Forum to be held in Portugal at the beginning of
June.

1.2.
On 17 January 2000 the Portuguese Prime Minister
wrote to the members of the European Council restating the
issues. The following is an extract from his letter:

A new period is beginning in European construction.

Despite the economic recovery, serious social problems con-
tinue to exist, such as unemployment, social exclusion and the
risks of a future imbalance of the social security systems —
which are also the reflection of deeper-seated structural
difficulties calling for courageous reform. These difficulties are
heightened by the unavoidable challenges posed by globalisa-
tion, technological change and an ageing population. The
European social model can only be sustained by building new
competitive factors and the renewal of the social model itself.

The Portuguese presidency takes place in the year 2000. It is
an appropriate moment for long term thought and decisions.
This is the aim of the Special European Council we will hold
in Lisbon on 23 and 24 March. We want to update the
European strategy for growth, competitiveness and employ-
ment in the light of the new conditions, as well to enhance the
content of the European Employment Pact.

There is a central issue which I would like to raise as a starting
point. A new paradigm is emerging: that of the economy of
innovation and knowledge, which is becoming the main
source of the wealth of nations, regions, enterprises and
people. Europe is lagging behind significantly and should
define its own path for a new competitive platform, while also
fighting the new risks of social exclusion. It is necessary to
combine innovation with social inclusion.

I believe that we have the conditions to define a new strategic
goal for the next ten years: to make the European Union the
world’s most dynamic and competitive economic area, based
on innovation and knowledge, able to boost economic growth
levels, with more and better jobs and with greater social
cohesion.

An economic and social strategy to renew the basis of growth
in Europe must combine macro-economic policies, and the
modernisation of social protection.

1.3.
The Portuguese presidency has subsequently presented
its document dated 12 January 2000 entitled ‘Employment,
Economic Reform and Social Cohesion — Towards a Europe
of Innovation and Knowledge’.

The Committee welcomes the document and the

1.4.
general direction of its proposals.

1.5.
The Committee endorses the idea of an ‘affirmative
strategy’. This Opinion is also affirmative. We endorse the call
for a growth rate of at least 3 % for the whole of the EU. It
may need to be higher to eliminate unemployment and social
to foster a
exclusion. We agree that
culture of dynamism and entrepreneurship and a culture of
strengthened social cohesion. We too believe that an economic
and social strategy to renovate the basis for growth in Europe
must combine macroeconomic policies, economic reform,
and structural policies, active employment policies and the
modernisation of social protection.

is now essential

it

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1.6.
The ESC response is based on the proposition that the
people of the European Union possess a capacity for inno-
vation and enterprise sufficient to create all the new and
sustainable jobs we need.

1.7. What is the impediment to job creation in Europe? An
firms and other organisations are
insufficient number of
successfully innovating and exploiting knowledge resources.
Creativity is a powerful human talent. Why is it not fully used
in Europe? What is the new paradigm?

2.2.3.
If the new paradigm is an ‘outcome’, what are the
factors that have brought it about, and what factors might
create an equivalent outcome in the EU? There is no definitive
answer to this question, but a number of causes can be
identified. They range from the economic and the industrial to
the cultural, the social and the ecological, and the demand for
sustainability.

2.3. What factors are driving the new paradigm and what
are its characteristics? What drives inflationless growth? Some
of the obvious elements are:

2. The New Paradigm

— global competition, which exerts a downwards pressure
on the price of goods and services in certain sectors,

2.1.
In conventional use, the term ‘new paradigm’ means
growth without inflation, and is used in the context of US
monetary management. In practice, this also means higher
levels of employment without inflation, as can be demon-
strated by the lower US levels of unemployment. For social
reasons the US is not seen as a model for Europe. In a
European context we could reinterpret
this paradigm as
follows:

— maximising economic development while minimising

social exclusion and conflict;

— providing a competitive economy while sustaining a

competitive social model;

— optimising the utilisation of new technologies in a strategy
which is sustainable for the social and natural environment
and resources;

— securing sustainability with the development of a partici-
patory culture and an appropriate corporate culture based
upon a creative approach to lifelong learning and solidarity.

2.2.
In the present EU context such a new paradigm —
economic growth, embracing also social cohesion, leading to
employment growth but not to inflation — is the most
desirable of outcomes.

2.2.1.
A buoyant and optimistic economic climate is ben-
eficial to structural change. Doing away with jobs that are no
longer competitive is easier the more new, sustainable jobs are
created elsewhere and the more a change of jobs entails the
prospect of better working conditions.

2.2.2. What will therefore be beneficial
is an economic
policy which also seeks to achieve a steady expansion in
overall demand over and above gains in productivity. The
current problems cannot be overcome by renouncing econ-
omic growth. We need to achieve at least the 3 % growth
target stated in the Presidency document.

— productivity, which seems at last to be entering a new
dimension as a result of long-term investments in IT and
telecommunications,

— skills, where changes in demand have put a minority of
jobs at a premium and a majority of semi-skilled and
unskilled jobs at a discount in the labour market,

— re-structuring, driven by IT, which has led to de-layering

and outsourcing, both of which can be deflationary,

— development of

the service sector and a transfer of

employment to the service sector,

— extension of flexible ‘lifestyle’ employment, in terms of

both location and working hours.

If the above factors explain why inflationary pressures

2.4.
have been reduced, what factors might account for growth?

— the dynamic industrial sector of information technology
(IT), or more correctly the information society technologies
(IST) sector — including hardware, software and services,

— the rapid growth of information-based industries such as
media and finance on the back of IST developments,

— the progressive transformation by IST of

traditional

asset-based industries,

— the growth of the venture capital industry and the prolifer-
ation of new enterprises, many of them exploiting new
technologies,

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— the emerging impact of sustainable development policies
causing both the adaptation of old industries and the
development of new ones.

2.5.
The factors described in paras. 2.3 and 2.4 have only
been able to have positive impact on the new paradigm
because of favourable fiscal and monetary policies. In turn,
these have stimulated and allowed extensive investments in
information technologies.

2.6.
A major factor in the achievement of the new paradigm
in the USA has been the role of capital markets. The huge
growth in the market value of the technology sector has been
achieved by a major redirection of investment. The vast growth
of venture capital funds is another example of this new focus.
An EU capital market does not yet exist in this way. The
introduction of the euro is a vital precursor, but equity
and venture capital markets remain underdeveloped. Recent
cross-border transactions in Europe point to the way ahead
but governments, banks, companies and regulators will need

ambition and vision on a Community-wide scale to underpin
the new paradigm in the EU. However, if cross-border financial
it must be
transactions are to be facilitated in Europe,
recognised that cross-border social movement is not possible
in the same way as social movement between states in the
USA. Therefore the social dimension will need a European
solution.

2.7.
These growth and productivity factors are in turn
affecting the social, cultural and organisational dimensions of
business.

2.8.
Table 1 reflects the impact of Japanese manufacturing
practices as explained in the book ‘The Machine that Changed
the World’ (1). It is recognised that customers create jobs, that
people are the key asset, and that to be fully effective employees
have to be empowered.

(1) Womack, James P., et al. The Machine that Changed the World,

1990.

Table 1: The Old and the New Soul of the Enterprise

Old

New

Profit first priority

Assets are things

Customer satisfaction first priority

Assets are people

Thinkers are separated from doers

Doers and thinkers are the same

Mass production

Lean production

Separated marketing with suppliers and customers at arm’s length

Integrated marketing with partnership-based relationships with sup-
pliers and customers

Organisation controlled by hierarchies, functional departments separ-
ated

Organisations based on teamwork, numerous cross-teams

Performance measurement for control, financially dominated

Performance measurement for improvement, broader measures

Scale economies important

Time economies important

Source: Hall, Soul of Enterprise (1993), p. 281.

2.9.
Table 2 describes the new organisational ethic based
on employable skills, rapid change and extensive collaboration

and reward systems.

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Table 2: Management Choices

Pre-Revolution

Post-Revolution

Lifelong employment

Minimise risks from change

Adversarial management

Lifelong employability

Maximise opportunities for change

Collaborative management

Narrow view of main stakeholders

Extensive view of main stakeholders

Concentrate rewards

Emphasise administrative expertise

Focus on continuity

Distribute rewards

Emphasise technical expertise

Focus on continuous discontinuity

Separation and specialisation key to success

Holistic approach to organisation

Fragmented view of work and enterprise

Integrated view of work and enterprise

Stick by the old rules

Search out new rules

Source: Cannon, Welcome to the Revolution (1996), p. 18.

2.10.
Table 3 emphasises particularly the impact of infor-
mation systems on organisational culture. This is the new

paradigm in an organisational sense.

Table 3: Transition from Industrial to Information

Industrial Age Organisation

Information Age Organisation

Focus on measurable outcomes

Focus on strategic issues using participation and empowerment

Highly specialised knowledge base resulting in single-skilling

Interdisciplinary knowledge base resulting in multi-skilling

Individual accountability

Team accountability

Clearly differentiated and segmented organisational positions, roles
and responsibilities

Matrix arrangement — flexible positions, roles and responsibilities

Linear input-output thinking about programmes

Holistic perspective on programming

Reactive in solving problems as they emerge — a short-term focus
dominated by the ‘bottom-line’

Proactive: anticipate issues before they become crises; achieving
balance between short-term pragmatism and long-term purpose

Local perspective informs programming

Global perspective informs local action

Hierarchical, linear information flows

Multiple interface, ‘boundaryless’ information networking

Attention to quantitative differences

Attention to qualitative differences

Plant and equipment targeted for investment

Development of people targeted for investment

Achieving effectiveness through methods

Achieving superior performance underpinned by shared values

Initiatives for improvement emanate from a management élite

Initiatives for improvement emanate from all directions

Present-oriented, doing what is known now

Future-oriented, operating at the cutting edge

Source: Hames, The Management Myth (1994).

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2.10.1.
The existence of creative potential is increasingly
the key to competitive success. Traditionally, it has mainly
been the preserve of a select few to develop new solutions. But
to keep up with the increasing pace of development, this
creative potential needs to be multiplied. In doing so it is
essential that it is not just basic knowledge and the latest
technology which is promoted;
it is just as important to
increase specialist know-how in all areas of activity. It is
therefore vital to promote employability and to continually
adapt and upgrade manpower skills if the capacity of Europe’s
economy for innovation is to be enhanced.

Innovation is a profoundly social process involving
2.10.2.
people first and foremost, with their knowledge, skills and
creativity. These skills need to be given room to develop in
cooperative and participatory work environments unhindered
by traditional hierarchies. What matters is not just following
the regulations, but organising the production process in the
best possible way. To achieve this, employees must be given a
say. New forms of work organisation, such as group and team
work, make it possible to utilise the knowledge and skills of
the workforce to the full and to broaden their scope for action
and decision-making,
thereby creating an opportunity to
combine increased productivity and competitiveness with
improved working conditions for employees. Involving the
whole of the workforce also entails developing information,
consultation and participation processes within businesses and
services.

2.10.3.
Innovation, when seen not only as a technical
process, but also as a social one, requires a radical change in
work structures and a corresponding rethink of working hours.
New answers need to be found which reconcile the objectives
of business, the needs of workers and the interests of the
consumers. Businesses benefit from the increased productivity
thereby generated, while workers enjoy the security of com-
petitive jobs and are better able to combine career and family.
The goal must be to reconcile all interests fairly and to find a
new balance between the needs of business in terms of
flexibility, on the one hand, and the need felt by workers to
have greater control over their time and to benefit from social
protection on the other. As structural change continues, so
the norm for employment conditions will change with it.
Redefining ‘normal working hours’ requires collective agree-
ments (and in some cases legal provisions) to guarantee the
social protection rights of workers, but these in turn should
not become barriers to employment and competitiveness.

2.11.
The changes outlined in the three tables are radical.
They are not easy to achieve in large enterprises with a history.
They are much easier to achieve in new enterprises with no
social and organisational legacy. This explains, in part, the

rapid growth and success of some new enterprises. The
challenge is to achieve these changes in all enterprises.

2.12.
well as opportunities.

The rapid pace of structural change brings risks as

— Labour intensive activities employing a relatively unskilled
workforce will give way to more capital-intensive indus-
tries with a more skilled workforce and person-to-person
and company-to company services.

— A higher level of skilling will be required both for those
joining the workforce and for those already employed. At
the same time, the ‘durability’ of knowledge acquired will
be shorter, making it necessary to respond and adapt
increasingly quickly. This in turn will require a radical
revision of the arrangements for training trainers.

— New forms of work organisation must involve placing
greater responsibility on workers, giving them more scope
to realise their potential. Greater problem-solving abilities
and social skills will be required, even at the lowest levels
of the organisational structure.

— Changing jobs, either within an organisation or from one
organisation to another, will be more common. For many
this goes hand in hand with dwindling job security. At the
same time, new forms of employment, in most cases less
protected, are becoming widespread, such as temporary
contracts, casual labour, self-employment with semi-em-
ployee status etc., making it necessary to develop and
apply adequate strategies and investments to provide
adjustment for workers and provide adequate social protec-
tion. One of the most important preconditions for structur-
al change to work well is that it should be accompanied by
social security.

— The opportunities for less-skilled workers on the labour
market look set to diminish further. This will bring higher
unemployment,
lower relative incomes and increasing
wage disparity. The situation is compounded by the high
incidence of long-term unemployment. Therefore adequate
policies for education, training, retraining and integration
of long term unemployed are needed. There will be more
barriers to employment as some employees will find it
difficult or even impossible to adapt.

— Poverty and social exclusion may increase and new forms
of marginalisation will accompany the rapid pace of
structural change. There are also dangerously increasing
costs, both direct and indirect, related to social exclusion.
Both private and public bodies, including enterprises, must
dedicate themselves to combating this trend through
adequate measures in order to make a social inclusion
policy a priority in all fields.

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Any sustainable improvement in the employment
2.13.
situation in Europe will
therefore also depend on how
successfully economic restructuring, particularly with regard
to information technology, can be promoted and organised in
a socially acceptable way, and how the ability of companies to
innovate can be enhanced.

3.2. The ESC proposes the following agenda for the Lisbon Summit

3.2.1. A d a p t

t h e s o c i a l m o d e l ( s )

t o t h e n e w

p a r a d i g m

2.14.
Clearly it is the intention of the Portuguese Presidency
to use the Lisbon Special Summit to accelerate and accentuate
the work on innovation and knowledge under way via the
Cologne, Cardiff and Luxembourg processes.

While retaining social protection, the social model
in its
different manifestations needs adapting to remove barriers to
employment, avoid social exclusion in all age groups and
reinforce equal opportunities, especially for women.

2.15.
The key requirement for the Lisbon Council is to take
a strategic view of the condition of Europe in the context of
the new paradigm. The current cyclical economic recovery
could provide an excuse for not taking the fundamental action
which is needed if the cyclical recovery is to be translated
into a structural renaissance leading to sustained growth in
employment.

3.2.2. A c h i e v e m a s s t r a i n i n g i n I n f o r m a t i o n

S o c i e t y T e c h n o l o g i e s

To ensure employability and avoid social exclusion, specific
consideration needs to be given to each generation of men and
women.

2.16.
It is our conviction that in Europe we do have the
necessary innovation, creativity, knowledge and enterprise to
in the new paradigm. But we must release these
excel
capabilities. Obstacles must be replaced by opportunities.
Penalties must be replaced by incentives. The last decade saw
the liberalisation of European industries. Now we have to
liberate the energies of European men and women.

3.2.3. P o p u l a r i s e a n d f a c i l i t a t e t h e g r o w t h

o f t h e e n t e r p r i s e c u l t u r e

Issues include skills and employability for all, incentives for
entrepreneurs and employees and recognition of the social and
economic value of enterprise. By entrepreneurs we mean the
founders and managers of SMEs, including social economy
firms, exploiting new technologies and addressing new mar-
kets.

3. Towards the New Paradigm — a Society of Innovation

and Knowledge

3.2.4. H e l p e s t a b l i s h e d c o m p a n i e s
v e r t t o t h e n e w p a r a d i g m

t o c o n -

3.1.
The task of the Lisbon Summit is to accelerate the
advent of the new paradigm. To some extent the ‘processes’
already in place lead in that direction. The Europe of knowledge
has many dimensions and a number of Community policies
are designed to promote its development. Generated primarily
by scientific and technological research, knowledge must be
structured appropriately so that it can be spread and more
readily drawn upon by ordinary people. Information tech-
nologies — themselves the product of the knowledge boom
— are a powerful tool for disseminating knowledge: mastering
these technologies is thus an essential step in the development
of a Europe of knowledge What we need at Lisbon is
commitment to a limited number of highly visible actions
which will create the climate for the new paradigm, as well as
accelerate progress towards it. Action will be proposed to
boost innovation. As for the knowledge-based society, the
proposal is to focus on knowledge acquisition through the use
of information technologies.

The tables and commentary in section 2 have demonstrated
the scale of change required.

3.2.5. A d a p t e d u c a t i o n a n d t r a i n i n g t o t h e

n e w p a r a d i g m

While education and training is central to the whole concept of
the new paradigm in general, and employability in particular, it
is remarkable that the new paradigm in the USA is emerging
from a base of generally low educational achievement. Given
the support of governments and companies, the EU has an
opportunity to create new employment of quality as well
as quantity as a result of higher educational achievement.
Investment in human capital
is the basis for a society of
innovation and knowledge.

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3.2.6. H a r n e s s s u s t a i n a b l e d e v e l o p m e n t

f o r

i n n o v a t i o n a n d g r o w t h

— How far do different provisions for childbirth and child-
care, as well as the organisation of work and family life,
help and hinder the employment of parents?

Fully adapting the economy and culture of the EU to the
principles and precepts of sustainable development involves
radical change, fundamental discontinuity and both techno-
logical and behavioural innovation. Such developments are
consistent with the new paradigm.

The Committee takes it

the EU
3.3.
institutions and the Member States will fully involve the social
partners and other socio-professional organisations when
implementing the decisions of
the Lisbon Summit. Such
involvement is essential for success.

for granted that

4. Adapting the Social Models

4.1.
Our concern relates to that part of the social and
cultural model which involves getting employed, employment
protection, unemployment and post-employment retirement.
A recent analysis suggests that in the EU it is necessary to
recognise Rhenish, Nordic, Mediterranean and Anglo-Saxon
models. These differ in their scope, the mechanics of their
operation and their financing. For the purposes of this opinion
it is important to recognise that these differences do actually
produce different outcomes on many different scales, e.g.

— Percentage of men employed in various age ranges.

— Percentage of women employed in various age ranges.

— Percentage of young people not yet in work.

— Proportion of older people of working age permanently

excluded from work.

— Etc.

4.2. Without focusing specifically on any one model we
can ask some general questions about the working of all the
models.

— Why are so many young people excluded from the work
force in certain countries? What are the barriers to their
employment?

— Why do certain models postpone the entry of young
people into the work force for almost a decade — arguably
the decade in which people possess most energy and
inspiration?

— Why do some models lead to more single women in
employment than single men, while in others this is far
from the case?

— Why does cyclical unemployment convert into structural
unemployment in some models more easily than others?
What are the barriers to re-employment?

— What is the link between pension funding and early
retirement in certain Member States? Can this linkage be
broken so that the retired can be re-employed without
damaging their pension expectations?

— What are the main factors that create poverty and social
exclusion and what are the most efficient policies to
promote the inclusion of the most vulnerable groups?

In order to find solutions and answers to these questions the
EU Summit should review the process of benchmarking and
exchange of good practice.

4.3.
Given a framework of favourable fiscal and monetary
policy, employment can be further increased when the arrange-
ments for employment protection and social changes are well
balanced.

4.3.1.
The introduction of flexible working hours and other
collectively agreed working time arrangements should not only
be determined by companies’ profit-based time management
criteria, but should also give employees of both sexes more
say in the way their individual working hours are structured.
Making working hours more flexible broadens businesses’
scope for action, but should also give employees more scope
to improve coordination of their professional and private
commitments. Increasing the options for employees as regards
working hours also opens up new avenues in the field of
employment policy.

4.3.2.
As far as the cost of employment is concerned, the
main problem arises in those models where social costs are
recovered by a tax on employment. There is need for careful
reform of these financing structures in the European context.

Pensions are a particular issue in many Member States’
4.4.
social models. The ratio of employment-age men and women
to retirement-age men and women is deteriorating continually.
Yet the retirement age is falling, the young are unemployed,
and unfunded pension liabilities are a growing embarrassment
and a potential cause of higher social charges. All three issues
need resolving:

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in the short term

— use early retirement to facilitate downsizing and to create

employment for young people;

in the longer term

— bring the young into the workforce;

— reverse the trend towards early retirement;

4.9. We endorse Section 4 of the Document of the Presi-
dency where it says that ‘to make use of [our]... employment
potential also requires stock to be taken of the European social
model, which is one of the strong suits of the European
project. But there are two prerequisites for its continuation in
the context of globalisation: the renovation of its economic
base, building new competitive factors, and the modernisation
of its very structure. This will make it possible to find a new
synthesis with more jobs and greater social cohesion.’

— restructure the organisation and financing of pension

systems.

5. Mass training in Information Society Technologies

4.5.
Caring for future generations is essential for a future
social model. With regard to children, policies to combat
child exploitation should take into consideration the holistic,
preventive, proactive approach provided by the ESC Opinion
on this matter (CES 976/98). In this context the Committee
praises and expresses its strongest support for the goal set by
the Portuguese Presidency to eliminate child poverty by 2010.

4.6.
As comparative studies of employment policy in the
various Member States show, an integrated approach involving
economic,
fiscal, structural and labour market policy is
required to achieve sustainable successes in the fight against
unemployment. This policy mix also entails securing the future
of businesses and jobs through social, organisational and
structural
innovations in the private and public sectors.
Economic and social innovations are needed in businesses
instead of unimaginative job-cutting or relocation to low-wage
areas.

4.7.
It is clear that the new paradigm must embrace the
social model. The EU must hold onto its ‘acquis’. At the same
time the mechanics of the various models must be addressed.
Underpinning all our thinking should be the belief that if, in
the new paradigm, we really can build a society of innovation
and knowledge, then our ability to create new sustainable jobs
will considerable. The social model should be mainly focussed
on giving an adequate framework and protection to enable all
workers to best develop and apply their skills. In the new
paradigm the social model should not be defensive; it should
be infused with optimism and a conviction that we can rely
on the enterprise of our people. Without that, no model can
help us.

4.8. While considering how the existing EU social models
need to be adapted to the new paradigm, it will be necessary,
as an extension of this work, to consider how the accession
states from Eastern Europe and elsewhere can be fast-tracked
towards the paradigm. Clearly this involves reformed business
structures as well as an adequate and stimulating social
framework.

5.1.
The personal mastery and application of IST skills goes
beyond both education and work. Like the ability to drive a
car in the 20th century, they are basic life skills for the
21st century.

5.2.
In the 20th century the slow evolution of mass motor-
ing meant that driving skills could be acquired when needed
by each generation. The full development of the internet-based
information society will take less than a generation. Therefore
familiarisation must be accelerated. This requires both govern-
ment and company initiatives.

5.3. Mass familiarisation with the Internet and e-mail
offers considerable social benefits. It offers a new world of
opportunity to the elderly, the disabled and the sick. Trends
also suggest that the individual consumer will be better served
in the foreseeable future by e-commerce than by conventional
distribution channels. This means that individuals unfamiliar
with the internet are likely to be disadvantaged, which may
mean that the already disadvantaged could become more so.

5.4.
Civil society generally needs to develop an appreciation
of the risks and opportunities involved in IST so that IST can
be developed in accordance with social needs. Therefore there
must be both teaching and learning about the opportunities
and limitations of ISTs. A virtual society is no substitute for a
real society.

5.5.

How should mass familiarisation be achieved?

Familiarising the general public with IST is not
5.5.1.
simply a question of training and acquiring the relevant skills.
It is primarily a question of changing the way people think.

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— Changing the way people think about accessing knowledge
and information (wealth of information — speed of access);

5.6.

The recommended actions for government are:

— Changing the way people think about processing infor-

mation and drawing conclusions;

5.6.1.
Ensure quality of IST education in schools with
targets set to ensure that the skills are universally acquired; this
will require a resource injection for the training of teachers,
amongst other things.

— Changing the way people think about the objective value
of each piece of information and knowledge, particularly
with regard to the present need constantly to filter
information and continually to gauge the reliability of
knowledge.

With this in mind, training alone is not enough to familiarise
the general public with IST. What is needed is education, and
this on an ongoing basis.

5.5.2.
The generation under twenty should learn IST skills
in the formal education system. Where teacher understanding,
teacher training and school equipment are not yet up to
standard, crash programmes of improvement should be intro-
duced. In this context, the considerable skills of many students
should be recognised and harnessed.

For those at work, encourage schemes for IST
5.6.2.
education and training, if necessary in advance of the actual
need. All employees should have the opportunity to acquire
these skills and governments and companies will need to be
tough minded to ensure to do so.

5.6.3.
Provide employment-oriented IST education and
training for the unemployed, including those who have retired
from the workforce but can be re-engaged. In this context, it
is also necessary to provide alternatives to IST skills for that
minority that is not capable of acquiring these skills.

5.6.4.
Provide community-oriented IST education and
training for individuals excluded from the workplace and for
the elderly, the disabled and the sick.

The rest of the population will have to undergo a
5.5.3.
process of reeducation and training. Responsibility for this, as
well as its implementation, will inevitably be down to the
schools and institutions of lifelong education and training. It
is clear that immediate measures and adjustments are required
to achieve this.

5.6.5. Mass penetration may also require provision of
hardware at low or no cost. Unions and companies can use
their purchasing power to buy cheaply on behalf of the
employees. The community (5.6.4 above) may have to rely on
the government and third parties. The new trend to develop
sub PC devices should help the economics of internet usage.

5.5.4.
A large proportion of employees are learning in the
work place. Special programmes are in place in a number of
Member States. This is reinforced by the influence of school
age children. Schools have the potential to teach any of their
parents not using IST at work.

5.6.6.
these actions.

The Lisbon Summit could commit Member States to

6. The enterprise culture

5.5.5.
However, a large proportion of the working gener-
ation just under sixty may be less exposed to and receptive to
IST at work. Early retirement may mean that some of this
generation will have bypassed IST completely. There is the
particular issue here of re-engaging this generation into work.

6.1.
The Summit Conclusions should recognise the social
and economic role of enterprise and entrepreneurs. These
provide an important channel for the exploitation of tech-
nology, innovation and knowledge.

5.5.6.
The generation over sixty will have been largely
by-passed. Yet without IST access it will be socially vulnerable.

Lisbon should set out to remove the obstacles to
6.2.
enterprise, while at the same time gaining approval for its
social and economic role.

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Actions to promote enterprise:

6.2.1.
Every school at every level should launch enterprise
initiatives. Careers advisers should be trained to communicate
the challenge and excitement of business careers. Young
people leaving education should have the capability to become
entrepreneurs in their 20s, when they are at their most creative.

determination of the Commission to drive forward its e-com-
merce legislation is very welcome in dot.eu. The Committee
welcomes the eEurope initiative (1) and the Communication on
Strategies for Jobs in the Informations Society (2) which the
Commission has recently presented in view of the Lisbon
Summit.

7. Established Companies and the New Paradigm

6.2.2.
Fiscal changes to provide incentives for entrepreneurs
and their employees are necessary. A fiscal environment really
attractive to venture capital needs to be created. All of this
should be aimed at SMEs and the creation of new enterprises.

7.1.
Change is a constant for business. Every company has
within it the potential for failure. Market forces continually
change the rules. Companies must innovate to survive.

6.2.3.
A regulatory revolution to remove the obstacles to
company formation and development should be launched. By
the end of 2000, reduce the number of documents needed to
form a company to the absolute minimum needed in any
Member State.

6.2.4.
Enterprises have a finite capacity to deal with regu-
lation. They cannot continue to absorb new regulations year
after year. Even larger companies have difficulties to cope with
the inflation of administrative formalities, although the cost is
proportionally less than for SMEs. The regulatory trend for
companies, and for small companies in particular, must be
reversed and the burden reduced.

6.2.5.
Politicians will need to act dramatically to stem and
reverse the tide of regulation sweeping over business and
society. Because government departments are compartmentali-
sed, they cannot assess the total regulatory burden imposed
on business by all departments. The European Commission
and most Member States have studied the issue for years, but
to very little effect. It will take draconian political action to
have any effect. Member States should recommit themselves
to this effort at Lisbon with an efficient monitoring process
and timetable. A Small Firms Charter as recently advocated by
several sources would be a highly visible and effective way of
addressing these issues and bringing most of the strands
together.

Innovation can apply to all areas of business operation:
7.2.
research and development, products and production, markets
and marketing and service provision. Where this involves the
organisation of work, innovation will be particularly needed
in the technical, structural and social spheres.

7.3.
Innovation means change. In the new paradigm change
is a constant. Business society and government must accept it
readily. Enterprises must be more flexible and adaptable, less
rigid and hierarchical.

7.4.

Action points include:

The remaining distinctions between blue and white
7.4.1.
collar workers need to be reconsidered, since the flexible
company aims at one class of employee.

According to Article 13 of the Amsterdam Treaty, discrimi-
nation based on sex, racial or ethnic origin, religion or belief,
disability, age or sexual orientation, should be abolished.

7.4.2.
Enterprises must achieve optimum competitive
advantage from information society technologies. As a result
management may be de-layered, employees empowered, new
jobs created, old jobs replaced. Such changes will have to be
made sensitively. Accordingly, in order to mitigate the negative
consequences and increase the acceptance of change, workers
will need help from government, unions and management for
re-training and re-employment.

It is particularly important not to strangle e-commer-
6.2.6.
ce at birth. The explosive growth of dot.com companies is a
major source of innovation. They need encouragement. The

(1) eEurope — An information society for all, COM(1999) 687 final.
(2) COM(2000) 48 final.

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7.4.3.
A skilled and adaptable workforce will be essential
for the new innovative work environment. Currently only a
minority of workers have the skills to embrace the new
technologies and they are able to attract higher rewards. The
majority are in unskilled and semi-skilled jobs and they are
less well rewarded. There will be fewer unskilled and semi-skil-
led jobs in the future and it will be necessary for all workers to
develop their full potential through training and retraining.

reason for social marginalisation. The challenges of the modern
world of work do not allow human skills to remain untapped.
A comprehensive action plan for literacy and numeracy at all
ages for all people must have the utmost priority in the
knowledge society. Special attention needs to be paid to
immigrants and ethnic minorities.

7.4.4.
The Committee reiterates its request that all compa-
nies and public sector bodies employing over 1 000 employees
within the EU prepare a ‘managing change report’ on a
voluntary basis (1) to provide information on structural changes
foreseen and a pro-active outline of proposed change manage-
ment. Employees and their representatives should be involved
in drafting and implementing the report.

8.3. More thorough preparation for the world of work by
the education system would help focus young people on their
personal employability while also highlighting self-employ-
ment and entrepreneurial opportunities. At the same time they
would learn about the economic and social contribution of
business and the obligations of business to society.

7.4.5.
In helping to anticipate and plan for sectoral and
regional economic development the Committee also invites
the Commission to make a feasibility study on the creation of
a European Observatory on Industrial Change (2).

8. Adapting Education and Training to the New Paradigm

Education and training should achieve the following

8.1.
objectives:

(a) at the individual level:

— fulfil personal potential

— ensure employability

(b) at the national level:

— fulfil population’s potential

— develop the skills necessary for the new paradigm

economy and society.

8.2.
The basic preconditions for fulfilling personal potential
is that the school system equips individuals to shape their own
lives successfully, assert themselves in society and at work and
develop social skills and the readiness to accept responsibility.
In order to exploit the potential of new technologies to the
full, it is vital, above all, to have a good to very good basic
knowledge and mastery of basic skills such as speaking,
reading, writing and numeracy. Lack of these skills is the major

(1) See ESC Opinion on ‘Managing Change — Final report of the
High Level Group on economic and social implication of industrial
Change’, OJ C 258, 10.9.1999.

(2) Ibid.

To promote equal opportunities in the learning society,
8.4.
it is essential that women have greater access to new tech-
nologies. It is just this kind of technology to which women in
some Member States still have little or no access when growing
up at home or in school. This must be rectified in future to
provide equal opportunities for men and women and to
prevent women being pushed out of the labour market.
Whereas women have benefited in the past from the expansion
of the service sector, it must be assumed that the proportion
of men working in such areas will grow in future. One reason
for this is that,
in many cases, ongoing rationalisation in
typically female service occupations is creating more jobs for
men in new service sectors closely linked to production. This
being the case, it is important for women to acquire skills so
that they can hold their own in these rapidly growing market
sectors in the future.

8.5.
It would be a mistake to allow our concern for
employability and work place skills to downgrade the status of
Individuals with important academic
academic education.
intellects should ideally complete academic education to the
highest level before switching to a profession. Many of the
best brains in business achieved first class academic results
before entering business. Well trained academic minds can
contribute to all spheres of national life and are needed to play
a leading role in the knowledge society.

8.6.
An economy seeking to exploit innovation and know-
ledge must be underpinned by science and technology. An
adequate supply of advanced scientific, technical and mana-
gerial skills is needed and needs to be widely diffused in the
workforce. Science and technology courses are not sufficiently
attractive. A new approach to science and technology teaching
and learning at all levels in the education and training system
must be a high priority and a closer link between the theoretical
study of science and its application in industry should be
ensured.

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8.7.
The ESC is currently producing an opinion on ‘The
European Dimension of Education: its nature, content and
prospects’ in which it will develop its proposals. At Lisbon the
EU should commit itself to upgrading the skills of its existing
workforce via Member State and company initiatives while at
the same time promoting increased understanding and support
for the enterprise culture.

9.5.
The prospects for a durable economic, ecological
and socially stable future will improve if a broad basis of
technological and organisational expertise can be built up and
developed further. One of the requirements for this is a
functional and effective system of innovation in which the
interplay between research and education, between training,
production and organisation, and between technology transfer
and state policy on innovation takes on a variety of forms.

9. Sustainable Development

9.1
It would be difficult to conceive of a new paradigm
which did not encompass sustainable development. It must be
a ‘sustainable’ paradigm and to be so it must be based on
innovation and knowledge. Amongst the major concerns are:

9.1.1.
land, in water and in the atmosphere.

The control and reduction of waste and pollution on

The sustainable use of land and water,

9.1.2.
agriculture, forestry, horticulture, urbanisation,
ation, transport, tourism and sport.

involving
industrialis-

9.5.1.
It is also necessary for this purpose to give more
support in Europe, in terms of breadth and depth, to research
and development as the seedbed and basis for future inno-
vations (1). At the same time the associated careers must be
made so attractive that the most gifted candidates can be
attracted and remain in Europe. Already in schools there must
be more qualified teachers of mathematics and science subjects
(and also, if need be, of technical subjects).

9.6.
The Lisbon Summit should charge the Commission
with the responsibility for examining the issues raised in
section 9.1 in the context of existing EU programmes and
commitments so that the Council can consider further actions
to ensure that the new paradigm is sustainable.

The sustainable dimension will be a particular chal-

9.7.
lenge for the accession of new Member States.

9.1.3.
the use of organic fuel and other limited natural resources.

The development of sustainable fuel resources and

10. Government and the New Paradigm

9.1.4.
That food production on land and at sea be better
balanced to demand and sustainability, with increased atten-
tion to the quality of the food chain.

10.1.
Considering the issues highlighted in this opinion,
and the plethora of Member State initiatives identified, the key
issue which emerges is whether we do not also need a new
paradigm for government itself.

9.1.5.
A better balance between public and private trans-
port, supported by a more rational approach to spatial
planning and land use.

9.2.
Development of the relevant knowledge base provides
the means for improved management of sustainability. There
are opportunities for public and private research but public
initiatives are imperative.

10.2.
The classical view that the state is sovereign as a
service provider must be superseded by a cooperative relation-
ship between the state and society. The public expects from
the state not only that rules and regulations are observed but
also that services are provided properly and efficiently.

10.3.

A modernising policy by the state must

— be focused more on decentralised cooperation networks,

There is a vast potential for job creation arising from
9.3.
the exploitation of technologies for environmental protection
and sustainable development.

— give greater prominence to economic efficiency and effi-

cacy.

Technical, industrial, behavioural and cultural inno-
9.4.
vations will all be needed if the concerns detailed in 9.1 above
are to be achieved. Successful innovation should lead to the
revival of existing companies and the formation of new
and successful SMEs. Member states will need to establish
appropriate incentives (both carrots and sticks) to stimulate
such innovation.

This includes greater efficiency in administrative implemen-
tation and weighing the economic case for alternative methods
of application.

(1) See also Commission Communication ‘Towards a European

research area’ (COM(2000) 6 final).

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10.4.
The restructuring of the state and public adminis-
tration is an altogether complicated and lengthy task.

Proposals on way ahead could be set out in a separate ESC
opinion.

Brussels, 2 March 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI