Communication from the Commission - Choosing to grow: Knowledge, innovation and jobs in a cohesive society - Report to the Spring European Council, 21 March 2003 on the Lisbon strategy of economic, social and environmental renewal {SEC (2003) 25}
Date: 2003-03-31
Institutions: European Commission
Subjects: EU environmental policy, economic and social cohesion, economic development, economic growth, economic policy, economic reform

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 31.3.2003
COM(2003) 5 final/2

Corrigendum
Annule et remplace le COM(2003) 5 final.
Concerne les 11 versions linguistiques.

COMMUNICATION FROM THE COMMISSION

Choosing to grow:
Knowledge, innovation and jobs in a cohesive society

Report to the Spring European Council, 21 March 2003 on the Lisbon strategy of
economic, social and environmental renewal

{SEC (2003) 25}

The Lisbon strategy remains the right approach

EXECUTIVE SUMMARY

In March 2000 the Lisbon European Council launched the Union’s decade long strategy for
economic,  social  and  environmental  renewal.  Conditions  today  could  hardly  be  more
different. Political uncertainty and the protracted downturn over the last eighteen months have
knocked  business  and  consumer  confidence.  The  vulnerability  of  our  economy  to  external
conditions reinforces the case for accelerating the pace of change.

The Lisbon strategy will make the Union stronger and provides it with an opportunity to show
global leadership. It remains the right course for an enlarged Union. Its added value lies in its
co-ordinated,  comprehensive  and  mutually  reinforcing  approach.  Past  achievements  –  ten
years  of  the  internal  market,  five  years  of  a  European  Employment  Strategy  and  the  first
anniversary  of  the  arrival  of  the  euro  –  show  the  Union’s  capacity  to  deliver  ambitious
reforms.  In  many  areas,  they  are  already  driving  growth  and  job  creation  within  flexible,
strong and open markets, but pressure for further structural reforms must be maintained.

Is the Union still on track?

Successfully  transforming  the  Union  by  the  end  of  the  decade  depends  on  improving  the
Union’s  potential  to  grow.  This  requires  action  that  increases  employment  and  improves
productivity. While progress has been seen in  almost all areas  of the  Lisbon strategy, it  has
generally  neither  been  fast  enough  nor  sufficiently  co-ordinated  to  produce  the  results  that
Heads of State and Government signed up to three years ago.

–  Employment.  Despite  the  rise  in  unemployment  in  response  to  the  downturn,  there  are
strong  signs  that  reforms  over  the  last  five  years  have  produced  important  structural
changes  in  many,  but  not  all,  European  labour  markets.  More  than  12  million  new  jobs
have  been  created  since  1996  with  around  500,000  jobs  still  being  added  during  2002.
Nevertheless,  performance  varies  considerably  and  reforms  have  not  been  pursued  in  a
sufficiently comprehensive way in all Member States.

As a result without additional efforts (particularly from those Member States who have not
yet  contributed  significantly  to  employment  growth),  the  Union  looks  set  to  miss  its
intermediate employment rate target for 2005 (67% of the working age population). And it
remains far away from its goals of keeping at least 50% of older workers in the workforce
by the end of the decade and raising the average effective exit age from the workforce by
five  years  –  both  key  factors  in  achieving  full  employment  by  2010.  Given  current
economic conditions, the priority (already signalled in last year’s Spring Report) attached
to strengthening activation measures for the unemployed remains valid.

Moreover, the picture is just as mixed as regards progress towards providing the workforce
with  the  skills  needed  to  drive  a  knowledge-based  economy  and  improving  not  only  the
number of jobs, but their quality as well; both important factors for better productivity.

–  Reforms of product, service and capital markets. Significant parts of the internal market
have  worked  well  over  the  last  decade.  But  in  others  the  benefits  have  had  less  impact.
This  is  why  the  Lisbon  strategy  targets  areas  such  as  services,  public  procurement,
transport, energy, financial services and the modernisation of competition rules, as well as
certain areas of taxation. Agreement on important reforms for many of these has however

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been seen over the last twelve months.

The greatest risk– in contrast to last year’s European Council in Barcelona - is not the lack
of decisions at European level, but the failure by Member States to ensure that agreed rules
and new policies are effectively implemented and applied. This means that in key areas the
Union has yet to unleash the full potential of the internal market. Each Member State must
do much more to ensure that agreed measures are implemented properly and on time.

–  Knowledge,  innovation  and  business  dynamism.  These  are  key  to  opening  up  new
opportunities for growth, stimulating competition, and delivering new, more effective ways
of approaching common problems such as disease or climate change. Many of the Union’s
knowledge industries have been badly hit by current conditions, and business and industry
as  a  whole  is  still  held  back  by  a  complex  and  incomplete  regulatory  environment.
Business  is  not  investing  sufficiently  in  knowledge  and  innovation.  The  proposed
Community  Patent  –  a  touchstone  for  the  Union’s  commitment  to  innovation  –  remains
blocked.

Despite current strains on national budgets, Member States should create the conditions for
more public and private investment in education, research and the knowledge economy, as
these are essential for medium-term growth. Fiscal and regulatory incentives, as well as a
competitive environment are therefore needed to ensure that private spending follows these
priorities.

Establishing  bridges  between  knowledge  and  the  market  place  and  putting  in  place  the
right environment for innovation is the new competitiveness challenge. Both existing and
future Member States have been doing more in recent years and initiatives such as eEurope
and the European Small Firms Charter are helping; but once again a more co-ordinated and
consistent approach is needed if EU businesses are to take advantage of new opportunities
in order to contribute fully to Lisbon strategy, create jobs and drive growth.

–  Social cohesion. Developing an accurate picture of progress in tackling poverty and social
exclusion is still held back by the lack of up to date data. Nevertheless, improvements in
employment,  particularly  reductions  in  long-term  unemployment  and  in  the  number  of
jobless  households,  are  helping.  On  the  other  hand,  little  progress  has  been  registered  in
reducing  the  numbers  of  early  school  leavers  or  gender  inequality.  Reform  and  the
modernisation  of  social  protection  systems,  which  continue  to  play  a  central  role  in
strengthening  cohesion  across  the  Union,  are  underway  in  most  Member  States.  Their
pursuit is central to long-term success. It is, of particular concern, however, that Member
States have not yet done enough to ensure the long-term sustainability and quality of their
social  protection  systems,  particularly  in  the  face  of  an  ageing  population.  In  the  short-
term,  enlargement,  is  likely  to  increase  significantly  the  diversity  in  performance  and
cohesion across the Union.

–  The  environmental  dimension  of  sustainable  development  -  Higher  economic  growth
and  increased  market  opening  will  not  be  sustainable  over  the  long-term  if  not
accompanied by action to curb environmental pressures and to preserve natural resources.
Natural and man-made disasters – like the recent “Prestige” catastrophe – calls for renewed
attention to the implementation of the Union’s agenda for sustainable development.

Continued efforts are needed to implement  Community  environmental  legislation,  and  to
complement  it through  the use  of economic instruments.  Measures  to  ensure  a  continued
reduction  in  greenhouse  gas  emissions  and  improved  air  quality  must  be  treated  as  a

3

priority,  and  Member  States  have  to  ensure  that  they  stay  on  track  to  meet  their  Kyoto
commitments. Pricing mechanisms and tax systems need to reflect better the broader cost
to society of economic activity to ensure long-term-sustainability and to encourage the take
up  of  clean  technologies,  so  that  both  the  economy  and  society  can  reap  their  potential
benefits.  In  turn  this  will  help  boost  competitiveness,  while  helping  to  meet  commonly
agreed international goals.

–  The  EU  commitment  to  sustainable  development  on  a  global  scale.  The  Union  has
chosen to take a leading role in promoting sustainable development on a global scale, and
has been on the forefront in setting up the international agenda in recent  years. Important
decisions  were  taken  in  2002  At  a  global  level,  important  decisions  were  taken  in  2002
through  the  launch  of  the  Doha  development  agenda,  the  Monterrey  Conference  on
in
development  assistance  and 
Johannesburg last August. But decisions must now turn into delivery.

the  World  Summit  on  Sustainable  Development 

Given  its  ten-year  perspective,  time  is  needed  to  formulate,  agree  and  deliver  the  Lisbon
strategy policies, but there is a lack of progress and urgency at a national level in many of the
most important areas. Developments since the last Spring European Council, taking account
of  the  current  slowdown,  therefore  show  that  while  the  Lisbon  strategy  goals  remain  well
within reach, there is not yet a firm guarantee of success. Economic and political conditions
have  made  things  considerably  more  difficult.  The  next  twelve  months  will  be  crucial.  At
European  level,  they  offer  the  narrowing  window  of  opportunity  before  the  next  European
Parliament elections to deliver the full set of reforms proposed by the European Council. At a
national level, they must be used to push the pace of change.

Enlargement and the Lisbon Strategy

Enlargement  too  reinforces  the  case  for  accelerating  progress.  The  new  Member  States  are
increasingly familiar with Lisbon’s logic and working methods. It forms the basis of many of
the policies that they are now adopting and efforts to integrate them further into the process
must accelerate.

Enlargement does not, however,  require  a  wholesale  rewriting  of  the  Lisbon  strategy  or  the
relaxation  of  its  key  targets  –  those  are  targets  for  the  whole  of  the  Union  rather  than  for
individual counties. They remain valid for a Union of 25 or more.

It does, however, mean that additional efforts are needed from existing Member States to keep
the Union on track. But such efforts are possible. As this Report shows, in almost every area
of  the  Lisbon  strategy,  the  best  performing  Member  States  serve  as  a  benchmark  of  often
world beating performance. The structural and sectoral indicators developed through the open
method of co-ordination promoted by the Lisbon Strategy provides a valuable tool for mutual
learning  and  sharing  common  solutions  to  common  problems.  It  should  be  strengthened  in
key areas in view of accession.

In the face of enlargement, existing and new Member States must now choose to grow – but
in  a  way  which  anchors  future  growth  and  new  and  better  jobs  to  steady  improvements  in
cohesion and our environment.

Choosing to grow – the March 2003 Spring European Council

The  European Council  must assume  its enhanced  role at  the  centre  of  economic,  social  and
environmental policy-making. Its spring meeting must look beyond the short-term challenges

4

and  pressures  to  focus  attention  on  action,  which  can  stimulate  our  medium-term  prospects
and  ensure  that  decisions  are  consistent  with  long-term  objectives.  It  must  set  the  direction
and speed of future work, in partnership with the European Parliament.

To do this, Member States and the EU  Institutions must do two things – set the conditions
for improved investment in knowledge and innovation, while delivering and accelerating
the reforms already agreed.

The  Lisbon  strategy  must  continue  to  lay  the  foundations  for  new  opportunities  for  future
generations.

The  European  Council,  building  on  the  Spring  Report,  needs  to  reinforce  its  central  role
each  year  in  setting  the  direction  for  the  Union’s  economic,  social  and  environmental
action.  This  March  it  will  have  a  particular  opportunity  to  set  priorities  within  three  of  the
main  policy  instruments  -  the  Broad  Economic  Policy  Guidelines,  the  revamped
Employment  Guidelines  and  the  Internal  Market  Strategy  –  used  to  deliver  the  Lisbon
strategy. All of which from this year take on a new three-year perspective.

In doing this, the European Council must ensure that:

(1) 

(2) 

(3) 

is  given  to  knowledge  and 

innovation.  This  means  supporting
A  boost 
entrepreneurship,  promoting  knowledge  industries  and  the  diffusion  of  new  ideas,
technologies  and  services.  It  must  be  underpinned  by  effective  and  increased
investment  in  education,  life-long  learning  and  research.  Both  public  and  private
funding at Community and national level will have a role to play.

Final decisions are taken on the remaining Lisbon reforms. This means delivering
agreed  reforms  of  product,  capital  and  labour  markets,  as  well  key  environmental
measures and moving ahead with the modernisation of social protection systems. The
Spring European Council must set deadlines and assign responsibilities to ensure that
all  measures  at  EU  level  are  adopted  ahead  of  the  European  Parliament  elections  in
June 2004 – including those still to be tabled up by the Commission before June this
year. Commitment is  required  not  only  from  Governments,  but  also  from  a  range  of
stakeholders including the Social Partners, to ensure success.

The  interaction  between  the  Lisbon  strategy  and  macroeconomic  policy  is
reinforced. This means that economic policy co-ordination should be strengthened, in
line  with  recent  Commission  proposals  on  budgetary  co-ordination.  The  Lisbon
objectives  should  be  better  taken  into  account  within  the  Broad  Economic  Policy
Guidelines.

5

TABLE OF CONTENTS

Executive Summary ................................................................................................................... 2

1.

2.

2.1

2.2

2.3

2.4

3.

4.

4.1

4.2

4.3

4.4

4.5

Introduction.................................................................................................................. 7

Progress towards the Lisbon goals............................................................................... 8

Employment driven growth in the second half of the 1990s ..................................... 10

Boosting investment and productivity ....................................................................... 12

Improving social cohesion ......................................................................................... 16

Sustainable development............................................................................................ 17

Enlargement ............................................................................................................... 21

Choosing to grow: priorities for next twelve months ................................................ 23

Lisbon remains the right strategy............................................................................... 23

Building economic, social and environmental governance around the Spring
European Council....................................................................................................... 26

Achieving sustainable growth and raising employment within a cohesive society... 27

Embedding Lisbon within sound economic policies ................................................. 33

Ensuring sustainability is properly addressed ............................................................ 33

Annex: Summary Table Structural Indicators.......................................................................... 36

6

1.

INTRODUCTION

The  Lisbon  strategy  sets  out  a  roadmap  for  European  Union’s  economic,  social  and
environmental  renewal  in  the  medium  to  long-term.  It  involves  a  comprehensive,  coherent
and mutually reinforcing  set of actions designed to transform  the performance  of  the Union
and deliver sustainable development.

These  actions  can  deliver  the  conditions  for  a  continued  period  of  high,  non-inflationary
growth. They can improve competitiveness and allow businesses to play a full role in seizing
new  opportunities,  creating  jobs  and  wealth.  They  can  enhance  social  cohesion  and  ensure
that  investment  in  the  environment  and  sustained  growth  reinforce  each  other.  They  mark
Europe’s positive choice in favour of quality of life.

The strategy has now reached a decisive moment. As it enters its fourth year, building on the
decisions taken  in  Copenhagen,  it  faces  a  clear  choice.  The  Union  can  maintain  the  current
sluggish pace of reforms or show that it is capable of a step change ahead of enlargement.

It is a choice between moderate growth, continuing unemployment, limited cohesion and slow
progress  in  curbing  unsustainable  trends,  or  raising  the  Union’s  potential  and  sustaining  it
over the next seven years to keep the Lisbon goals within reach. A choice between following
or leading.

Past reforms in the second half of the 1990s already show what is possible; an additional half
a percentage point on growth, 12 million jobs and a reduction in structural unemployment of
around 40%. But developments have shown that despite progress, the Union is still too easily
knocked  off  course  by  global  conditions  and  that  greater  efforts  are  needed  to  curb
unsustainable trends and improve cohesion and share prosperity across the Union.

This year’s Spring Report contains a special focus on knowledge and innovation. It is the key
to taking the agenda forward over the next twelve months, but it remains an area of unfulfilled
promise. Lisbon was rapidly followed by the current downturn that burst the dotcom bubble
and  unjustifiably  knocked  short-term  confidence  in  a  knowledge-driven  economy  with  a
follow on effect for sectors such as telecommunications.

An enlarged Union needs to reinforce investment in knowledge and to create the conditions in
which businesses can turn innovation into growth and employment. If at the same time it can
speed up product, service, capital and labour markets reforms, the medium-term prospects for
productivity and more and better jobs are  good.  By promoting all aspects of the  knowledge
chain from basic education to advanced research, from finance to entrepreneurial know-how,
the  Union  can  boost  innovation.  It  can  speed  up  the  creation  of  employment,  modernise
traditional  industries  while  securing  future  ones  -  from  the  life  sciences  to  environmental
technologies  -  and  it  can  put  ideas  and  technology  to  work  in  ways  which  strengthen
cohesion,  relieve  environmental  pressures  and  offer  greater  opportunity  to  participate  in
society.

This Report and its accompanying Staff Paper set out the progress that has been made across
the whole of the Lisbon strategy. Chapter 2 looks at progress towards the Lisbon goals. It also
takes  into  account  the  internal  and  external  dimensions  of  sustainable  development  in  the
follow  up  to  the  Johannesburg  World  Summit.  Chapter  3  identifies  the  challenges  and
opportunities that the Lisbon strategy presents for  candidate  countries. Chapter 4 draws  this
analysis  together  and  sets  out  priorities  and  actions  needed  within  the  broad  set  of  Lisbon

7

strategy  reforms  in  order  to  make  the  biggest  contribution  to  boosting  the  Union’s  future
performance.

2.

PROGRESS TOWARDS THE LISBON GOALS

The  Lisbon  strategy’s  potential  lies  in  the  comprehensive  and  co-ordinated  nature  of  the
reforms it contains. Market reforms, labour market policies and social protection systems all
have a  role  to  play  in  improving  the  performance  and  quality  of  life  within  the  Union.  The
European Council has set out an ambitious programme of change.

Box 1 Remaining milestones on the road to economic, social and environmental
renewal by 2010

2003

New framework for communications services

Rules for VAT and electronic commerce

New impact assessment system for EC legislation

Integrated risk capital markets

Opening of rail freight markets on trans-European networks

Revision of the European Employment Strategy

Mid-term review of the social policy agenda and of the Structural Funds Programming

2004

European Company

New rules on consultation and information of employees

Further opening of gas and electricity supply for business customers*;

Single European Sky

New rules for public procurement*

New rules for pharmaceuticals

Integrated financial market

Further stage of opening up postal service markets

Opening of gas and electricity markets for household customers*

Galileo satellite navigation system operational

Market opening of the entire rail network**

2005

2006

2007

2008

Reform  decisions  still  pending:  Community  Patent,  2nd  Railway  package,  climate  change  package,  TENs-transport  revision,
temporary agency workers, updating of social security co-ordination rules, mutual recognition of qualifications; EU wide regime
for taxation of savings.

Reforms  where  Commission  proposals  will  be  tabled  in  2003:  Proposals  on  transport  infrastructure  pricing  including  a
Eurovignette modification (Mid 2003); Phasing in of the European health insurance card (February 2003); Action plan on raising
R&D investment in the Member States (April 2003); New framework for management of chemicals (Mid 2003); Development of
European Technology Platforms (End 2003); Environmental technologies action plan (End 2003);)

* Agreement in principle in Council ** current rules  provide  only  for  international  freight services,  but second  rail  package  will
extend this to all rail freight services.

8

Reform today can and  will deliver a medium-term  growth  dividend1. Current economic and
political uncertainty makes it all the more important to accelerate the process of change. This
means addressing the factors that can make the biggest  contribution  to  growth  and  ensuring
that is consistent with sustainable development.

Box 2 Key factors behind EU growth

Two principal factors contribute to output growth: the number of people in work and productivity.

Productivity can be broken further into two areas. One is the level of investment or capital deepening,
for  example,  to  expand  businesses,  adopt  new  technologies,  or  to  invest  in  human  capital  (skills,
training  and  education).  The  opportunities  provided  by  market  reforms  tend  to  stimulate  investment.
The second is the output-generating effects of both human and business capital investments. It reflects
factors such as the degree of competition, the ability to create new ideas and know how and use them
to drive innovation and to reorganise work processes, and the overall regulatory environment. This is
often described by total factor productivity.

% p.a.

Graph 1: Employment and productivity growth, EU15

3

2.5

2

1.5

1

0.5

0

-0.5

EMPLOYMENT

CAP.DEEPENING

TFP GROWTH

-1

Source : European Commission

1991-1996

1996-2001

The  evidence  highlights  that  growth  during  the  second  half  of  the  1990s  and  in  2000  was
driven by the Union’s success in creating and filling new jobs. The contribution of investment
to growth dropped significantly and there was little change in the impact of other elements.

This  translates  into  a  varied  picture  across  the  Union  in  actual  levels  of  employment  and
productivity.  Absolute  levels  of  productivity  per  worker  are  high  in  some  Member  States.
However, in the second half of 1990s the US made progress in raising both employment rates
and  labour  productivity.  The  Union  succeeded  in  raising  the  employment  rate,  while,  in
contrast to the US, labour productivity growth has slowed down.

1

See The 2002 EU economy review, COM(2002) 712, 11.12.2002.

9

                                                
GRAPH 2 EMPLOYMENT AND PRODUCTIVITY LEVELS IN THE 
EU 2001

0
0
1
=
A
S
U
y
t
i
v
i
t
c
u
d
o
r
P

110.0

100.0

90.0

80.0

70.0

60.0

50.0

40.0

B

IRL

F

EU15

D

I

EL

E

US

DK

UK

NL

S

EU target 2010

FIN

A

P

50

55

60

65

70

75

80

2000 employment data for D and L
Source: European Commission

Employment rate

This  picture  forms  the  backdrop  against  which  progress  on  jobs,  structural  reforms,
knowledge, social cohesion and sustainability should be assessed.

2.1

Employment driven growth in the second half of the 1990s

Overall,  the  Union  has  improved  its  performance  in  terms  of  employment  rates.  Member
States  have  been  pursuing  structural  reforms  of  their  national  labour  markets,  which  have
started to bear fruit in the form of more people in work and lower unemployment, including a
notable  reduction  in  long-term  unemployment.  One  significant  development  has  been  that
improvements  in  the  labour  market  have  not  led  to  a  short-term  increase  in  inflation  as
companies  put  up  prices  in  order  to  recover  the  higher  wages  needed  to  retain  and  attract
employees. This suggests structural improvements in the employment market.

Box 3 Employment performance

–  Between 1995 and 2001, the total number of jobs increased by about 12 million and the employment rate

rose by 4 percentage points.

–  Employment increased with the creation of around 500,000 new jobs during the downturn in 2002.

–  Overall  employment  in  2001  grew  fastest  in  Luxembourg,  Portugal  and  Ireland  with  strong  growth  in
employment  for  women  seen  in  Ireland  at close to  4%  and  in  the  accession  countries  (over  8%).  The  three
best performing Member States saw overall employment grow at 3.9% and female employment around 3.6%.

–  Unemployment fell between 1995 and 2001 by more than 4 million across the Union, though as a result of
current conditions there has been a modest increase to an EU average in 2002 to 7.6 %. The average for the
three Member States with the lowest levels of unemployment was around 3%.

–  Unemployment  in  2002  remained  lowest  in  Luxembourg,  the  Netherlands  and  Austria  and  rose  in  all
Member  States  except  Greece  and  Italy.  Five  of  the  accession  countries  (Cyprus,  Hungary,  Slovenia,  the
Czech Republic and Malta) had unemployment rates below the EU average.

–  Mobility of the workforce between and even within Member States remains relatively limited at around

1.2% of the population.

– 

Important gender gaps persist in employment rates, earnings, job status and career progression.

10

 
Employment  performance  varies  considerably  across  the  Union.  Denmark,  the  Netherlands,
Sweden and the UK currently meet the  70%  target set  for  2010 for the overall employment
rate, while another three Portugal, Austria and Finland are above the 67% intermediate target
set  for  2005.  Yet  overall,  despite  these  positive  performances,  the  Union  may  not  meet  its
intermediate target unless all Member States make greater efforts.

Graph 3 : Labour force participation in the EU

Overall
(aged 15-64) 

Female
(aged 15-64)

Older workers 
(aged 55-64)

75

70

65

60

55

n
o

i
t

l

a
u
p
o
p

f

o
%

50

45

40

35

30

1995

1996

1997

1998

1999

2000

2001

Note: labour force participation is defined as active persons in a given age group as a share of the total population in the same group. Source : Eurostat Labour Force Survey.

There  is  strong  evidence  that  the  countries  that  have  made  the  strongest  progress  are  those
that have undertaken wide ranging reforms2. Denmark, Ireland and the Netherlands stand out
as having implemented the most comprehensive set of labour market reforms, tackling wage
bargaining  structures;  training  and  activation  policies,  benefit  levels  and  eligibility  criteria;
and  high  levels  of  general  and  labour  taxation.  In  addition,  labour  market  reforms  in  these
countries  were  often  accompanied  by  other  structural reforms in product  markets.  The  need
for  a  broad  approach  was  also  recognised  by  the  Spring  European  Council  2002,  which
identified priorities for further labour market reforms in the Member States3.

The  most  significant  challenge  is  to  boost  employment  and  participation  rates,  first  and
foremost, for older workers, but also for women and for minority and other groups. Attracting
and retaining these people depends on a range of factors, amongst which tackling the gender
gap that is visible in many Member States.

A  sizeable  proportion  of  new  jobs  created  during  the  1990s  and  2000  were  in  sectors
requiring medium to high  levels  of  educational  attainment.  It  is  essential  to  equip  all  levels
and age groups within the workforce with the skills needed in a knowledge-driven economy.

2

3

See EU Economy Review, footnote 1 above.
In Barcelona the European Council set the following objectives for national labour market reforms: (1)
reduction of tax burden on low-wage earners, (2)  make  work  pay  within  tax  and  benefit  systems,  (3)
national  labour  institutions  and  collective  bargaining  to  take  account  of  relationship  between  wage
developments  and  labour  market  conditions  in  order  to  bring  wage  developments  in  line  with
productivity,  (4)  review  employment  contract  regulations  in  order  to  strike  a  proper  balance  between
flexibility  and  security,  (5)  remove  disincentives  for  female  participation  in  workforce  and  strive  to
improve  childcare  provision,  (6)  promote  active  ageing  and  reduce  early  retirement  incentives  for
individuals and companies. Presidency Conclusions, Paragraph 32, Barcelona, 21 March 2002.

11

 
 
                                                
This  is  why  the  Lisbon  strategy  places  a  premium  on  educational  achievement  and  on  life-
long  learning.  Yet,  public  spending  on  education  seems  to  have  stagnated  since  the  mid-
1990s,  while  the  performance  in  terms  of  life-long  learning  across  the  Union  is  extremely
varied. Participation rates are above one in four in the UK and one person in five in Sweden,
Finland and Denmark, but below one in twenty in six Member States and eight of the future
Member States and candidate countries.

2.2

Boosting investment and productivity

2.2.1 Boosting investment and productivity through market reforms

The internal market has succeeded over the last decade in boosting growth and creating jobs.
It  has  increased  trade  and  investment  flows  within  the  Union.  Open  markets  and  greater
competition  has  also  stimulated  innovation  and  helped  businesses  to  grow,  while  offering
users  benefits  in  terms  of  lower  prices  and  greater  choice  in  utility  sectors  such  as
telecommunications,  and  to  a  lesser  degree,  electricity.  There  appears  to  have  been  a
permanent  reduction  in  price  differences  between  Member  States  as  a  result  of  market
integration and competition, but evidence suggests that the impact may now be tailing off4 –
enlargement may help to re-ignite this effect.

Box 4 Examples of the benefits of economic reforms

Ten years of the internal market5

–  2.5 million people extra are in work today as a result of the internal market.

–  The Union is €877 billion better off amounting to €5,700 per household.

–  The internal market has contributed to growth. Without it, EU GDP would be 1.8% lower this year.

The Integration of Financial Markets

Recent  studies  for  the  Commission  have  highlighted  the  potential  impact  of  integrated  financial
markets over a ten-year period6. The benefits translated into:

–  A 1.1% rise in GDP or €130 billion (at today’s prices) and a boost to total employment of 0.5%.

–  Businesses will be able to get cheaper finance: with an expected drop in the cost of equity capital of
0.5%  and  a  corresponding  fall  of  0.4%  for  bond-finance.  Investors  should  benefit  as  well  from
higher returns on their investments.

–  Eliminating inefficiencies in the retail sector could bring an increase of 0.5% in GDP.

The Community Patent

–  Estimated  annual  savings  in  processing  and  administrating  intellectual  property  rights  under  the
current proposal would be around €0.5 billion with a saving of around €5,000 per patent compared
to a European Patent.

–  A  one  off  benefit  to  the  economy  of  around  €18  billion  could  be  felt  as  a  result  of  the  increased

value of patent portfolios because of lower litigation costs and simpler enforcement.

4

5

6

Economic Reform: report on the functioning of Community product and capital markets, COM(2002)
743, 23.12.2002, (the “Cardiff Report”).
The Internal Market - Ten years without frontiers, SEC(2002) 1417. 7.1.02.
London  Economics  study  for  the  European  Commission  /  European  Round  Table  on  Financial
Services/CEPR Study for the European Commission, November 2002.

12

                                                
Untapped potential in key sectors. The internal market’s benefits have not yet been effectively
felt  in  those  areas  where  there  has  been  less  reform  and  less  competition  such  as  energy
markets, transport, service markets, financial services and public procurement all of which are
targeted by the Lisbon strategy. As a result businesses in these and other areas have found it
harder  to  grow,  while  past  reforms  have  not  always  done  enough  to  curb  pressures  on  the
environment.

Taxation also remains a source of fragmentation across the Union. Discrimination and double
taxation,  for  instance,  create  problems  in  several  fields,  such  as  pensions,  car  taxation  and
corporate  taxation.  Having  to  comply  with  15  different  tax  systems  comes  at  a  cost  and  is
stopping  companies  from  reaping  the  full  benefit  of  the  internal  market7.  The  lack  of  a
common  approach  in  key  areas  has  prevented  the  tax  system  playing  a  consistent  role  in
supporting Lisbon priorities, such as investment in R&D or a better environment. Moreover,
rapid progress is hampered by the requirement for unanimity to adopt such measures and the
unwillingness  of  Member  States  to  give  this  the  priority  that  it  deserves.  All  this  acts  as  a
brake on growth and employment.

Strong competition and an effective competition policy have also been an important factor for
the  internal  market.  At  Union  level  there  has  been  a  trend  in  Member  States  to  reduce  and
redirect State aid. Total aid in the Union fell from €105 billion in 1996 to €82 billion in 2000
(the last year available). Member States have also been redirecting aid to horizontal objectives
such as the environment and research and development. In parallel, Member States have been
reforming  national  competition  rules  to  align  them  with  the  Community  approach  and  will
shortly  take  over  responsibilities  as  regards  the  application  of  the  Community  level  rules
within their national markets.

Transforming decisions into action at a national level

Progress on delivering further market reforms has been mixed so far. Much has been done by
the Commission, the European Parliament and by the Council to overcome the “delivery gap”
at  EU  level  signalled  by  the  Barcelona  European  Council.  There  have  been  notable  recent
successes  such as  those on  opening  of  energy  markets,  the  Single  European  Sky  and  postal
services.  But  some  of  the  most  pressing  reforms  are  still  being  delayed.  The  Community
Patent and pending proposals on tax and on procurement are just some examples.

A source of even greater concern is the continuing problem of ensuring that rules agreed by
the Council and European Parliament and the orientations given by the European Council are
transformed into national action:

–  On average, for legislation, it takes four and half years from the moment rules are proposed
before  they  are  uniformly  applied  across  all  Member  States.  This  is  around  two  years
longer than should be the case taking account of the time needed to steer measures through
the decision-making machinery and implement them at a national level.

7

The Commission has identified priority areas; in particular for immediate action in the field of corporate
taxation  to  address  obstacles  deriving  from  the  tax  rules  applied  to  transfer  prices,  to  mergers  and  to
transactions  between  parents  and  subsidiaries.  Towards  an  Internal  Market  without  tax  obstacles.  A
strategy  for  providing  companies  with  a  consolidated  corporate  tax  base  for  their  EU-wide  activities.
COM(2001) 582, 23.10.2001.

13

                                                
–  Nevertheless  there  has  been  some  progress.  The  European  Council  in  Stockholm  set  a
target  transposition  rate  of  98.5%  of  all  internal  market  directives  set  by  the  European
Council, as well as the additional target set in Barcelona of zero tolerance for measures that
were more than two years overdue. Such targets can only be viewed as staging posts on the
road to full compliance with Community law.

Graph 4 : Implementing the internal market's legal framework

Nov 97

Nov 02

12

10

8

6

4

2

0

S

FIN

DK

NL

UK

E

B

L

IRL

I

D

A

P

EL

F

Percentage of Internal Market directives NOT yet communicated as being transposed

Source: Commission services.

–  In  November 1997 the transposition deficit was  still  above  three  percentage  points  in  all
Member  States,  in  November  2002  this  was  only  true  for  three.  The  improvements  in
Sweden and to a lesser extent in Belgium and Austria show what is possible with political
will  over  a  relatively  short  period.  Nevertheless,  in  the  months  since  the  Barcelona
European  Council  the  transposition  deficit  has  started  to  increase  once  again  with  the
number of Member States meeting the Stockholm target slipping back from six to five and
only one Member State – Finland, meeting the zero tolerance target.

All this increases costs for business, impacts trade and often undermines the regulatory goals
such measures pursue.

2.2.2 Boosting investment and productivity through knowledge, innovation and
business dynamism

Knowledge  is  an  important  factor  in  releasing  the  potential  of  the  Lisbon  agenda.  The
knowledge  captured  in  new  technologies  and  processes  can  drive  growth,  competition  and
new  jobs  and  deliver  a  cleaner  environment.  But  knowledge  must  be  treated  as  part  of  the
wider  framework  in  which  businesses  grow  and  operate.  Equipping  people  with  the  right
skills is a key tool in overcoming risks of exclusion and improving cohesion. Establishing the
bridge between knowledge and the market place and backing it by the right environment for
innovation is the new competitiveness challenge.

In  general  terms,  Member  States  are  increasingly  conscious  of  the  need  to  improve  the
overall  business  environment.  Actions  underway  vary  from  cutting  red-tape,  reducing  the
formalities and costs involved in creating  a new  business,  easing the process of transferring
such businesses, promoting public and private business support mechanisms, such as business

14

angel schemes, and changing approaches to business failure. Yet although Europe is as good
at  creating  businesses  as  the  US,  businesses  here  often  have  difficulty  growing.  The
entrepreneurial culture within the Union needs to be further strengthened.

Box 5 The Lisbon strategy and Industry

The Lisbon strategy actions will be a key factor in the competitiveness of the whole of the EU economy. It is
relevant to businesses of all sizes and all sectors. The Union’s industrial base – and the low to medium-technology
businesses  that  predominate  in  the  future  Member  States  –  is  central  to  Lisbon’s  success.  It  has  played  an
important role in driving the successes of the late 1990s and the fragile signs of recovery seen in 2002 have been
largely export-led.

In the face of competition from newly industrial countries, EU industry has outperformed its main competitors.
While the Union’s share in world exports fell from an average of 19.3% over the 1991/95 period to 18.4% in 2002,
the  US  share  over  the  same  period  dropped  from  15.1%  to  12.1%,  and  Japan’s  share  from  12.2%  to  8.2%.
Furthermore,  in  some  major  industrial  sectors  such  as  automobiles,  aeronautics,  mobile  communications  or
pharmaceuticals, EU companies have achieved world leadership.

The Commission has recently set out its ideas  for  the  role  of industrial policy  in  fostering competitiveness in an
8
.  This  is  part  of  a  broader  reflection  to  be  continued  in  a  forthcoming  Green  Paper  on
enlarged  Union
Entrepreneurship and a Communication on Innovation Policy – both to be presented before the Spring European
Council.  The  Commission  will  return  in  the  second  half  of  the  year  to  pull  together  these  separate  strands  to
reinforce its approach to the businesses across all sectors that are the driving force behind jobs and growth.

Insufficient investment in knowledge by business

Although progress has been made in moving towards a knowledge-based economy, the Union
is still lagging behind its main competitors in terms of investment and performance9, despite
policy  measures  put  in  place  in  many  Member  States.  The  paybacks  on  research  and
innovation  are  often  more  favourable  in  other  parts  of  the  world,  and  industry  in  the  last
decade  has  increasingly  voted  with  its  feet.  Today  40%  of  the  research  of  Europe’s  largest
companies takes place outside the Union. Enlargement will add a new dimension to this. The
skills base and lower costs in the future Member States and candidate countries can offer an
attractive home for new research.

There are numerous examples of the problems faced by the Union as a whole when compared
with its competitors or the best performing Member States:

–  There  are  five  researchers  per  1000  working  people  compared  to  eight  in  the  US  and
nine  in  Japan.  In  the  three  best  performing  Member  States  the  figure  is  around  ten  per
1000.

–  The  average  level  of  high-tech  patents  (28  per  million  inhabitants)  highlights  a  wide
variation  across  the  Union  with  Finland  (138),  Sweden  (95)  and  the  Netherlands  (58)
ranking well above average.

–  Public  expenditure  on  education  (around  5%)  and  total  expenditure  on  R&D  (around
1.9%) as a share of GDP, hardly changed in the second half of the 1990s, even if for R&D
Member States are now strengthening measures to boost investment, for example, through

8

9

Communication on industrial policy in an enlarged Union, COM(2002) 714, 11.12.02.
Sectoral composite indicators developed by the Commission services confirm this trend, which is found
in  the  individual  structural  indicators.  See  Science,  Technology  and  Innovation  -  Key  Figures  2002,
European Commission.

15

                                                
fiscal incentives, promotion of risk capital, university-industry collaboration and selective
immigration policies. Yet the public investment in education in the three best performing
Member States amounts to 7.3% of GDP and for research the figure is above 3%.

–  ICT spending has risen significantly, since the mid-1990s, even if it has remained below
that in the US  and  does not seem on its own to have brought  about  a similar  or uniform
boost  to  EU  productivity.  Continued  investment  in  ICT  is  also  critical  to  modernising
public services.

Investment  tends  to  be  higher  in  education,  R&D  and  information  technology  in  Sweden,
Denmark, Finland, while the rise in overall business investment as a percentage of GDP has
been  steepest  in  catching-up  countries  –  Greece,  Ireland,  Portugal  and  Spain.  Higher
investment and the impact of the internal market and improved competitiveness contributed to
productivity growth, even if it failed to close the gap with growth in the US. Improvements in
total factor productivity – possibly reflecting stronger investments in technology, innovation
and  knowledge  –  were  highest  in  Greece,  Ireland  and  Finland.  TFP  growth  in  Ireland  and
Greece  was  twice  that  in  Spain  and  Portugal  despite  comparable  increases  in  the  level  of
overall business investment in all those countries.

2.3

Improving social cohesion

Assessing progress in relation to cohesion continues to be hampered by the lack of up to date
data  in  several  areas.  Nevertheless,  both  the  improvements  in  employment  since  the  mid-
eighties and  the  continuing  fall in long-term unemployment  between  2000  and  2002  should
help to reduce the risk of exclusion. This is reflected in a stabilisation or modest decline in the
number of jobless households – a factor closely linked to the risk of poverty – in nine of the
twelve Member States for which data is available. The reduction in the tax burden on the low
paid  should  also  have  helped  in  reducing  the  risk  of  poverty,  while  helping  to  remove
disincentives  which  keep  people  outside  the  workforce.  Other  improvements,  such  as  the
efforts  being  made  in  most  Member  States,  to  boost  childcare  provision  –  sometimes  by
setting national targets is a further positive step.

Yet disparities across the Union continue, both in income distribution (where the gap between
the income of the top and bottom 20% of society in the three best performing Member States
is half of that in the three worst performers) and in the regional distribution of employment.

Exclusion  imposes  unjustifiable  and  avoidable  costs  on  society.  The  Lisbon  strategy’s
response - a European social agenda - is to provide basic skills for all, promote employment
for those who are able to work and ensure  adequate social protection for  those who  cannot.
This  approach  recognises  the  role  of  well-developed  social  protection  systems  in  reducing
poverty and promoting employment and employability, as well as the need for such systems
to be modernised to ensure their long-term sustainability in the face of an ageing population10.
Ageing is returned to in the section below.

Action and targets at a national level are important, but not yet sufficiently developed, within
the  two-yearly  plans  on  poverty  and  social  exclusion.  The  use  of  the  open  method  of  co-
ordination in this field can help to overcome the lack of recent data by monitoring progress on
the ground.

10

The Commission assesses progress in its social policy agenda scoreboard. The next edition is foreseen
before the Spring European Council.

16

                                                
2.4

Sustainable development

In June 2001, the Göteborg European Council agreed a strategy for sustainable development
that  completed  the  Union's  political  commitment  to  economic  and  social  renewal,  added  an
environmental  dimension  to  the  Lisbon  strategy  and  established  a  new  approach  to  policy
making.  It  highlighted  unsustainable  trends  posing  a  threat  to  the  Union’s  quality  of  life11.
These included  economic  and  social issues  such  as  poverty  and  social  exclusion,  but  also  a
number of environmental problems such as climate change, the depletion of natural resources,
transport and land-use pressures and the longer term effects of many hazardous chemicals in
everyday use.

Many of the Lisbon strategy reforms are already helping to address these problems. However,
Göteborg  emphasised  that  many  of  them  are  closely  tied  to  economic  structure  and
development.  In  making  policy  choices  and  assessing  results,  greater  account  needs  to  be
taken of the long run impact of different choices, the “spill over” between policy areas and the
fact that the effects of new policy measures take time to be felt. This approach is essential if
the  Union  is  to  succeed  in  decoupling  economic  growth  from  environmental  damage.  This
Report focuses on three aspects of sustainability – ageing, environmental trends in the Union
and the external developments impacting Lisbon and sustainability in the light of the World
Summit on Sustainable Development held in South Africa in August 2002.

2.4.1 The challenge of ageing

All Member States are facing up to the impact of an ageing population, but few have so far
taken  sufficient  steps  to  cope  with  the  financial  challenges  ahead  while  maintaining  the
adequacy of pensions, and other benefits and services.

Box 6 The challenge of an ageing population

Ageing has far reaching implications for public budgets, for continuing improvements in growth and employment,
but also for pensions, health systems and long-term care.

–  The  number  of  people  over  65  is  expected  to  rise  from  61  million  in  2000  to  103  million  by  2050  and

those over 80 from 14 million to 38 million.

–  At the same time, the working age population will decrease significantly so that from one person over 65

for every four of working age today, the ratio will fall to one for every two by 2050.

–  The  ageing  population  will  make  it  even  more  necessary  beyond  2010  to  maintain  high  levels  of

employment and improving productivity levels.

–  Public  pension  spending  is  set  to  rise  by  between  3  and  5%  of  GDP  in  most  Member  States  over  the

coming decades, but could be as high as 7.9% in Spain and 12.2% in Greece

12

.

The national Pension Strategy Reports submitted for the first time last September show that
all  Member  States  are  committed  to  maintaining  adequate  pensions  and  protecting  older

11

12

Communication on a sustainable Europe for a better world, COM(2001) 264, 15.5.01.
Estimates from the work of the Pensions Working Group of the Economic Policy Committee in 2000.
They do not take account of the latest reforms undertaken by Member States since then. Large increases
in Spain and  Greece  reflect  the  maturing  of  the  pension  system  with  an  increasing  number  of  people
during the period having a full working career.

17

                                                
people  against  the  risk  of  poverty13.  Similar  messages  emerge  from  the  questionnaires  on
healthcare and long-term care14. They also show to varying degrees how Member States have
started  addressing  these  challenges,  for  example,  by  raising  employment  rates  for  older
workers,  designing  tax  and  benefit  systems  to  provide  rewards  for  those  remaining  in  the
workforce longer and continuing the consolidation of public finances which has the benefit of
providing  a  greater  margin  of  manoeuvre  for  pension  systems  and  other  age-related
expenditure.

2.4.2 Environmental trends

With  less  than  two  years  since  Göteborg  the  pace  and  direction  of  progress  in  this  area  is
difficult  to  assess.  Certain  industrial  sectors  have  succeeded  in  cutting  emissions  while
increasing  output.  There  are  positive  signs 
terms  of  policy  development  and
implementation – particularly in terms of developing the global perspective of sustainability.
On the basis of the data available for 2000, the worrying trends that were observed at the time
of the launch of the Union’s sustainable development strategy have continued.

in 

Box 7 Developments concerning unsustainable environmental pressures

–  Freight transport continues to grow more quickly than GDP while passenger transport growth is slightly less,

although both generate large environmental costs.

–  Road  transport,  even  though  trends  towards  lower  emissions  and  fewer  road  deaths  continue,  imposes  a
particularly high cost in terms of air pollution, congestion, noise and road fatalities (still over 40,000 per year).

–  Overall  progress  towards  Kyoto  targets  is  mixed. While  overall  emissions  fell  by  around  3.5%  from  1990  to
2000, much of the improvement results from reductions in the UK and Germany. In 2000 nine Member States
remained well above their Kyoto targets paths.

–  Renewable energy  sources  represent  an  increasing  share  of  electricity  generation  but  progress  is  not  fast
enough to meet the indicative target for renewables set by the European Council, unless the Member States
implement effectively the Community measures recently approved

15

.

–  The  energy  intensity  of  the  Union  is  slowly  reducing.  The  future  Member  States  and  candidate  countries
must make a major effort, as average energy intensity is four times higher than the current Member States.

– 

In  relation  to  public  health,  the  European  Food  Agency  is  operational  from  the  beginning  of  this  year.  Air
quality has improved and that is expected to continue in coming years, but there are significant problems with
some specific pollutants and in “hotspots”.

–  Despite  progress  made  by  Member  States  in  proposing  sites  for  nature  protection  under  the  Natura  2000
network,  bio-diversity  and  habitats  are  under  pressure  from  a  range  of  economic  activities,  such  as
agriculture and over fishing.

These trends highlight the need to accelerate efforts, reflected in recently adopted and pending
proposals,  to  address  unsustainable  trends.  Clean,  environmental  technologies  may  have  a
particular role.

13

14

15

Draft  Joint  Report  by  the  Commission  and  the  Council  on  adequate  and  sustainable  pensions,
COM(2002) 737, 17.12.2002.
Draft  Joint  Report  by  the  Commission  and  the  Council  on  health  care  and  care  for  the  elderly:
supporting  national  strategies  for  ensuring  a  high  level  of  social  protection,  COM  (2002)  774,  3.  01.
2003.
Directive  2001/77/EC  on  the  promotion  of  electricity  produced  from  renewable  energy  sources,  OJ
L283, 27.10.2001.

18

                                                
Box 8 Stimulating the take up of environmental technologies

Environmental  technologies  –  already  a  €180  billion  market  world-wide  -  will  be  major  factor  in  ensuring  that
environmental  pressures  can  be  decoupled  from  economic  growth.  EU  businesses  are  well  placed  to  tap  into
rapidly growing export markets. Trade in environmental technologies is good for the Union, but it is also good for
our trading partners by offering them a wider range of options for the environmental problems they face.

However,  investment  in  clean  technology  is  held  back  where  market  prices  are  distorted  by  subsidies,  tax
breaks or price structures that support environmentally damaging technologies, especially in key sectors such as
transport and energy.

Decisions at the Community level are needed to provide the right incentives. The proposed emissions trading
regime  for  greenhouse  gases  will  be  an  important  step  forward.  The  Commission  during  2003  will  propose  a
Europe-wide  framework  to  ensure  that  all  transport  modes  are  properly  priced.  The  energy  tax  directive  which
should be agreed before the Spring European Council after five years of discussion will be a welcome first step
leading  perhaps  to  a  small  cut  in  emissions  equivalent  0.5%  reduction.  All  of  these  instruments  are  important
tools, which need to be followed up by further and broad ranging action.

2.4.3 External developments

The focus of the Lisbon strategy is on internal policy reforms. This is also true of sustainable
development strategy  adopted at Göteborg. However, the  Union’s  “internal” policies have a
significant  effect  on  the  policies  and  prospects  for  third  countries.  Moreover,  some  policy
issues such as climate change are intrinsically global. It is therefore important to ensure that
internal policies are coherent with external commitments.

The  Union  has  chosen  to  take  a  leading  role  in  promoting  sustainable  development  on  a
global  scale.  It  can  do  this  by  aiming  to  make  its  own  policies  more  sustainable,  but  also
through a more pro-active stance on issues of trade, aid and debt relief. In the past year there
have been a number of important developments:

–  At Doha, an agenda for a new trade round was established, raising the prospect of further
trade liberalisation. Free and fair trade will be a further stimulus to reform and innovation
within  the  European  Union,  underpinning  the  Lisbon  reforms.  But  more  than  that,  Doha
offers  a way  to  manage  globalisation  in  a  responsible  manner.  It  can  support  sustainable
development by providing  a  level  playing  field  for  trade,  by  ensuring  that  the  developed
world opens its markets to the developing world and finding new ways of working with all
stakeholders in addressing common problems.

–  In  the  run-up  to  the  Monterrey  Conference  on  Financing  for  Development,  the  Union
established  clear  commitments  to  increase  the  EU’s  Official  Development  Assistance
(ODA) providing an additional €20 billion by 2006. This will raise ODA from the current
level of 0.33% of ODA to the 0.39% level between now and 2006, as a first step towards
the  long-term  objective  of  the  0.7%  ODA  target.  It  is  essential  that  Member  States  act
decisively on these commitments.

–  The World Summit on Sustainable Development in Johannesburg, the 10 year follow up to
the  United  Nations  summit  in  Rio  in  1992,  added  new  momentum  to  the  objective  of
sustainable development. It led to a range of important commitments, which the Union is
now  actively  seeking  to  implement.  Delivery  of  the  Monterrey  commitments  will  be
crucial to its ability to do so.

19

Box 9 Commitments from the World Summit on Sustainable Development

–  Halving the number of people lacking access to basic sanitation by 2015, currently 3  billion people  or  half

the world’s population.

–  Minimising  the  harmful  effects  on  human  health  and  the  environment  from  the  production  and  use  of

chemicals by 2020.

–  Halting the decline in fish stocks and restoring them to sustainable levels no later than 2015.

–  Beginning national strategies on sustainable development by 2005.

–  Curbing the loss of bio-diversity by 2010 in line with the Bio-diversity Convention.

–  The  Summit  also  agreed  to  establish  ten-year  framework  programmes  for  sustainable  production  and
consumption  and  agreed  concrete  actions  to  support  sustainable  trade  and  to  strengthen  corporate  social
responsibility.

–  On energy while the Union was unsuccessful in establishing global targets for the share of renewable energy

within the overall energy mix, it launched a coalition of countries prepared to set such targets.

The outcome of the World Summit on Sustainable Development (WSSD), together with the
Doha Development Agenda and the Monterrey consensus, has shaped a global partnership for
sustainable  development. The  issue is now  to  follow  up  and  deliver  on  these  commitments.
The  Union  should  consolidate  its  leading  role  in  the  follow  up  process  by  translating  its
political ambitions into concrete actions. This will require a long-term effort focusing on:

–  Policy coherence. The Union will need to redouble its efforts to ensure coherence between
its  internal  and  external  policies.  Some  domestic  EU  policies  have  negative  spillover
effects on other countries, notably in the developing world. In several important areas, like
agriculture  and  fisheries  where  the  Commission  has  proposed  important  reforms,  EU
policies need to change.

–  Sustainable  globalisation.  Globalisation  and  increased  trade  and  investment  flows  have
created new opportunities for economic development. But the pace of change also creates
new  challenges,  particularly  for  developing  countries  and  countries  with  economies  in
transition.

The Union should continue to ensure that market liberalisation takes place within a broader
regulatory framework that aims to spread the potential benefits of globalisation. Pursuing
negotiations in the WTO on the basis of the Doha Development Agenda is the main task,
but  other  actions  can  contribute.  In  particular,  enhancing  corporate  social  and
environmental  responsibility  in  the  Union  and  internationally,  promoting  sustainable  and
fair  trade  through  developing  incentives  to  trade  in  sustainably  produced  goods  and
ensuring that export credit agencies act in a way which supports sustainable development.

–  Sustainable  consumption  and  production.  Some  challenges,  such  as  climate  change,  can
only be tackled through fundamental changes in the way societies produce and consume. In
Johannesburg  it  was  agreed  that  developed  countries  should  take  the  lead  in  decoupling
economic  growth  from  environmental  damage,  in  particular  by  making  full  use  of  the
potential  of  new  environmental  technologies.  The  Union  should  push  forward  at  the
international  level  a  10-year  framework  for  regional  and  national  programmes  on
sustainable consumption and production, building on existing initiatives.

In addition, the Union should also develop and consolidate the Johannesburg coalition of

20

countries prepared to make commitments on renewable energy, for example, by achieving
the indicative EU target for renewable energy (12% of the total energy mix by 2010).

–  Poverty  eradication.  Meeting  the  United  Nations  Millennium  Development  Goal  of
halving extreme poverty  in  the  world  by  2015  is  a  huge  challenge.  From  the  Union  side
significant  efforts  are  needed  to  improve  the  effectiveness  of  development  policy  and  to
help  promote  good  governance  in  developing  countries.  The  timely  delivery  of  the
Monterrey commitment for additional ODA resources including agreement on monitoring
arrangements will help. In addition, the Union should finalise arrangements to implement
the  "water  of  life"  and  the  "energy  initiative  for  poverty  eradication  and  sustainable
development".

3.

ENLARGEMENT

The  negotiations  have  been  concluded  with  Cyprus,  Czech  Republic,  Estonia,  Hungary,
Latvia,  Lithuania,  Malta,  Poland,  Slovak  Republic  and  Slovenia.  After  ratification  these
countries will join the European Union on 1 May 2004.

Detailed  roadmaps  have  been  agreed  for  Bulgaria  and  Romania,  which  offer  them  the
perspective  of  membership  from  2007  and  the  prospect  established  of  starting  Turkey’s
accession  negotiations  without  delay  after  December  2004  if  it  fulfils  the  Copenhagen
political criteria.

Enlargement offers the expectation in the medium to long-term of giving a substantial boost
the Union’s performance and its capacity to grow. It provides opportunities that with time will
bring the Union closer to the Lisbon strategy goals.

The challenges posed by those goals are common to both future and existing Member States.
The  integration  of  the  future  Member  States  and  the  candidates  into  the  Lisbon  strategy  is
already  well  underway.  For  example,  they  are  preparing  their  involvement  in  the  European
Employment  Strategy  and  Social  Inclusion  Process,  have  adopted  an  eEurope  Plus  strategy
and  are  participating  in  both  the  structural  indicators  for  this  Report  and  in  sectoral
benchmarking.

The  future  Member  States  has  achieved  a  high  degree  of  macro-economic  stability  and  the
process  of  structural  reform  is  well  underway.  This  has  resulted  in  market  opening,
accompanied  by  significant  industrial  restructuring.  They  have  also  made  progress  in
modernising their institutional, legal and administrative environment.

A key factor in their future success will be ensuring and maintaining high levels of investment
in  order  to  improve  overall  performance  in  the  medium-term,  creating  the  conditions  for
economic convergence and greater cohesion. The Union is providing around €21.7 billion for
investment through the Structural Funds  in  the  future  Member  States  over  the  period  2004-
2006, a significant share of which will support human and physical capital. The aim is to help
reduce  the  wide  disparities  within  an  enlarged  Union  and  to  contribute  to  improving  the
quality of life (including the environment) and releasing the full potential of those countries.

21

Box 10 Enlargement brings with it considerable challenges

–  Candidate countries have experienced rapid growth in the last five  years,  partly  due  to  economic  reforms
and  inward  investment.  However,  catch  up  implies  sustained  investment  into  physical  and  human  capital  to
allow  substantial  improvements  in  productivity.  But  patterns  are  varied.  In  2001  direct  foreign  investment
ranged from €521 per person in Slovakia to €2,284 per person in the Czech Republic.

–  The enlarged Union will be much more diverse. The gap in GDP between the richest 10% and the poorest
10% of the population will be nearly twice what it is at present, and more than a quarter of the population will
live in regions where GDP per capita will be below 75% of the EU average.

–  The  employment  rate  of  an  enlarged  Union  today  would  be  62.6%  -  somewhat  lower  than  the  current
Member  States,  however,  employment  growth  can  pick  up  even  ahead  of  accession  if  the  future  Member
States embrace further reforms in line with priorities jointly established with the Community.

–  The  structure  of  industry  and  employment  is  different  to  the  current  Member  States,  with  agriculture
representing  a  larger  share  of  employment.  The  industrial  base  of  those  countries  is  biased  towards  low  to
medium-technology sectors.

– 

Infrastructure  needs  are  large.  Completing  the  transport  infrastructure  alone,  which  gives  access  to  the
internal  market,  as  identified  in  the  enlargement  negotiations  on  trans-European  networks,  will  require
investment of around € 100 billion. That is 1. 5% of the GDP of the future Member States until 2015.

–  Further  industrial  restructuring  is  likely  to  be  necessary,  particularly  in  the  steel  sector  where  over-
capacity remains and within industries still in public ownership that may find it difficult dealing with increased
competition.

In many of the future Member States, the  Lisbon strategy has acted as a further catalyst for
their  comprehensive  structural  reforms.  Progress  has,  however,  been  uneven  and  is  notably
lagging in a number of priority areas. For most candidate countries, achieving income levels
close to the EU average will take time. In 2001, the future Member States had on average a
GDP  per  capita  of  45%  (in  PPS)  of  the  EU  average,  despite  last  years’  economic  growth
figures for most them that exceeded those of the current Member States.

Labour  productivity  has  improved  for  all  future  Member  States  since  1995,  although
sometimes interrupted by temporary down turns in the countries concerned. Levels of labour
productivity are still very divergent varying between 83% of the EU  average  in Cyprus  and
33% in Latvia.

Future and existing Member states alike share several challenges. These include: the need to
improve incentives embedded in tax and benefit systems and labour market institutions so as
to  increase  employment  rates,  the  strengthening  of  competition  rules  and  competition
authorities,  further  efforts  to  make  the  public  sector  more  efficient,  reform  of  network
industries  to  increase  competitiveness,  and  the  need  to  build  up  their  skills  base  and  their
knowledge infrastructure. This will help them adapt to the knowledge-economy. Even though
recent  developments  in  these  countries  have  been  impressive,  the  magnitude  of  the  shared
challenges is still substantially greater than for the existing Member States. However, the ten
new  Member  States  are  aware  of  these  challenges  and  in  the  Pre-Accession  Economic
Programmes they have already defined their own agenda of reforms.

22

4.

CHOOSING  TO  GROW:  PRIORITIES  FOR  NEXT  TWELVE
MONTHS

This Report has made the case for accelerating structural reforms to boost productivity and
jobs, and to help decouple environmental damage from economic growth. This should deliver
the  improvements  in  performance  needed  to  make  all  the  Lisbon  strategy  goals  possible,  at
the same time that the Union is opening its arms to ten new Member States.

The Spring European Council must set the direction and  speed of future work.  It must
provide orientations for the Council in partnership with the European Parliament. It must take
advantage  of  the  new  three  year  perspective  of  the  Union’s  main  policy  tools  for
structural  reforms  –  the  Broad  Economic  Policy  Guidelines  (BEPG),  the  Internal  Market
Strategy  and  the  Employment  Guidelines.  It  must  identify  dates  and  responsibilities  for  the
next steps.

Tough economic conditions and political uncertainty over the last year cannot be allowed to
slow down change. Instead, they strengthen the case for the Lisbon reforms. They are needed
to ensure in the medium-term that the  Union  is  better  able to  cope  with  future uncertainties
and economic shocks. Lisbon remains the right way to bring this about, not least because of
its co-ordinated, mutually re-enforcing and comprehensive approach.

4.1

Lisbon remains the right strategy

The  Report  has  shown  the  potential  of  structural  reforms  to  raise  the  overall
performance of the Union. Recent reforms have stimulated growth, created jobs and helped
to remove people from the risk of poverty and exclusion. Future reforms will produce similar
improvements potentially raising annual growth rates to close to 3 percent or more during the
course of the decade and creating the additional 15 million jobs needed to achieve the Lisbon
employment  targets.  At  the  same  time,  Lisbon’s  comprehensive  approach  should  allow
reforms  to  go  ahead  in  a  way  that  ensures  improvements  are  economically,  socially  and
environmentally sustainable.

In  many  areas  of  the  Lisbon  strategy,  some  Member  States  are  already  doing  as  well  or
better  than  the  targets  that  have  been  set  for  2010.  Moreover,  in  assessing  the  best
performers  within  the  structural  indicators  chosen  in  agreement  with  the  Council,  the  same
countries – Denmark, Sweden, Finland, come up time and time again as best performers. This
proves that progress can be made on all fronts – economic, social and environmental – if the
policy  mix  is  right.  It  signals  the  unfulfilled  potential  in  other  Member  States  and  the
importance of benchmarking and learning from the experience of others.

23

Box 11 Structural Indicators - Best Performers

The Lisbon strategy is backed up by a broad and balanced set of structural indicators that reflect the performance
of  Member  States  across  six  areas  (general  economic  performance,  employment,  research  and  innovation,
economic reform, social cohesion and the environment). While the indicators cover a wide range of factors, which
make  varying  contributions  to  the  success  of  the  Lisbon  reforms,  they  nevertheless  provide  a  snapshot  of
relative performance between Member States and – for the first time this year –the future Member States and
candidate  countries.  The  full  set  of  indicators  can  be  found  in  the  Staff  Paper
  supporting  this  Report.  An
overview table is also annexed to this Report.

16

One striking fact is the frequency that certain countries  appear again  and  again  amongst  the  top  three  Member
States, most notably Sweden, Finland and Denmark. These are countries that had already undertaken deep and
successful reforms well before the launch of the Lisbon strategy.

The  Graph  below  should  the  frequency  with  which  Member  States  appear  in  the  Top/Bottom  Three  of  the
Structural Indicators. It should, of course, be treated with a degree of caution. First, it only provides a static picture
of the situation based on the current indicators without taking account of the different starting points that exist. Nor
does  it  capture  the  strong  growth  and  progress  made  by  some  countries  –  Greece,  Portugal  and  particularly,
Ireland  and  Spain,  over  recent  years  in  catching  up  with  the  Union’s  best  performers.  Finally,  the  indicators
selected by Council in agreement with the Commission are quite diverse, so the graph should not be taken as an
aggregate measure of performance.

Graph 5: Frequency of Appearance in the Top/Bottom Three of the Structural 
Indicators

Bottom Three

Top Three

B

DK

D

EL

E

F

I

IRL

L

NL

A

P

FIN

S

UK

0

5

10

15

20

25

30

35

40

45

50

Other  countries  do  well,  but  not  so  consistently  across  all  the  indicators.  At  the  same  time  all  Member  States
appear among the best performers at least once across the full set of structural indicators.

16

SEC(2003) 25, 14.1.2003. The Structural Indicators can also be found on the Eurostat Website, where
they are updated around the middle of each month (http://europa.eu.int/comm/eurostat/).

24

                                                
A  further  indication  of  progress  over  the  last  year  is  provided  below,  which  summarises  the  Commission’s
assessment  of  progress  made  in  relation  to  the  country  specific  recommendations  within  the  2002  Broad
Economic Policy Guidelines

. These, of course, cover some but not all of the Lisbon strategy.

17

Public finances Labour markets Product markets

BELGIUM
DENMARK
GERMANY
GREECE
SPAIN
FRANCE
IRELAND
ITALY
LUXEMBOURG
NETHERLANDS
AUSTRIA
PORTUGAL
FINLAND
SWEDEN
UNITED KINGDOM

SOME
GOOD
LIMITED
SOME
SOME
LIMITED
SOME
LIMITED
SOME
SOME
LIMITED
SOME
SOME
GOOD
SOME

SOME
SOME
LIMITED
SOME
SOME
SOME
SOME
SOME
SOME
SOME
LIMITED
SOME
SOME
GOOD
SOME

SOME
GOOD
SOME
SOME
SOME
SOME
SOME
SOME
LIMITED
SOME
SOME
SOME
LIMITED
SOME
GOOD

The  challenge  of  enlargement  does  not  call  the  Lisbon  targets  into  question.  Existing
Member  States  must  keep  to  those  targets  and  new  Member  States  must  use  the  best
performers  as  their  benchmark.  Enlargement  offers  opportunities  for  both  new  and  existing
Member States.

At  the  same  time,  the  credibility  of  the  Lisbon  reforms  depends  most  on  transforming
policy declarations into action, allowing Member States to judged by what they do and not
just by what they say.

The Council and the European Parliament have done much to close the “delivery gap” at the
level  of  the  European  Union.  However,  progress  should  be  a  matter  of  commitment  rather
than brinkmanship. Ensuring that European level decisions lead to action on the ground is a
difficult challenge. It can and must be tackled more seriously. Whether measured in terms of
implementing directives on time or delivering national  policies  to keep the  Lisbon  goals  on
track, the performance of Member States is too varied. This undermines  the  internal market
and  harms  jobs,  innovation  and  growth.  Showing  a  greater  capacity  to  deliver  change  at  a
national  level  and  unblocking  key  decisions  in  the  run  up  to  the  Spring  European  Council
would be an important short-term step to boost confidence in the Union’s capacity to change.

17

Communication on the implementation of the 2002 Broad Economic Policy Guidelines, COM(2003) 4,
14.1.2003.

25

                                                
Box 12 A comprehensive and a co-ordinated approach to reform

This report has provided evidence that:

–  Comprehensive  reform  is  most  beneficial.  A  piecemeal  approach  to  reforms  is  much  less  effective.
Ensuring  more  effective  co-ordination  and  coherence  across  different  policies,  as  well  as  internally  and
externally,  will  reinforce  the  Union’s  success.  However,  Member  States  must  also  follow  an  equally
comprehensive approach when pursuing national reforms.

–  A co-ordinated approach is most effective. The Lisbon reforms, if pursued across all Member States in a
co-ordinated  manner,  maximise  the  spill  over  effects  from  one  country  to  another.  This  removes  the
disincentive  for  Member  States  of  bearing  the  full  costs  of  reforms,  but  seeing  the  benefits  accrue  in  other
Member States as well as their own. It also creates a critical mass, which may justify a more accommodating
monetary  stance  from  the  European  Central  Bank,  which  can  in  turn  help  to  ease  the  short-term  impact  of
certain reforms.

–  The interaction between structural reform and macro-economic policies should be strengthened. This
is not new. Sound macro-economic policies have long been recognised as offering the best framework for the
the  Commission’s
delivering  reforms.  By  strengthening  economic  policy  co-ordination 
18
,  the  Union  can
Communication  last  November  on  strengthening  the  co-ordination  of  budgetary  policies
reinforce the interaction between the two, in particular, by securing sound and sustainable public finances and
raising the contribution of public finances to growth and employment in line with the Lisbon strategy.

line  with 

in 

4.2

Building economic, social and environmental governance around the
Spring European Council

The  Lisbon  strategy  must  pursue  this  comprehensive  and  co-ordinated  approach.  Progress
must be maintained and, in some cases, strengthened along its three dimensions.

During  2002,  the  governance  system  has  been  adjusted  to  allow  it  to  play  a  more  effective
role in the pursuit of the Lisbon strategy objectives. The Spring European Council, drawing
on  the  Commission’s  Spring  Report,  will  continue  to  be  the  central  annual  event  to  review
progress.  It  must  set  priorities  for  Council  work  and  give  guidance  for  the  Member  States
through the Union’s principal, Treaty-based co-ordination instruments, as well as for policies
delivering  structural reforms.  The timing  of  these  instruments  -  the  Broad  Economic  Policy
Guidelines and the Employment Guidelines – has now been synchronised19. Together with the
Internal  Market  Strategy,  they  will  take  on  from  2003  a  three  rather  than  single  year
perspective.

In parallel, the Council has streamlined its individual configurations creating amongst others a
new  Competitiveness  Council  and  giving  a  clear,  overall  co-ordination  role  to  the  General
Affairs and External Relations Council in preparing the Spring European Council20.

Finally,  the  European  Council  must  also  strengthen  its  partnership  with  the  European
Parliament to pursue the Lisbon strategy agenda in terms of planning, which allows for all key
decisions to be taken ahead of the European Parliament elections in June 2004.

18

19

20

Commission  Communication  on  strengthening  the  co-ordination  of  budgetary  policies,  COM(2002)
668, 27.11.2002.
Communication from the Commission on streamlining the annual economic and employment policy co-
ordination cycles, COM(2002) 487, 3.9.2002.
Notwithstanding  this  streamlining  the  Lisbon  Strategy  impacts  the  work  of  six  of  the  nine  Council
configurations,  in  addition  to  the  co-ordination  role  given  to  the  GEARC,  namely,  Economic  and
Financial  Affairs;  Employment,  Social  Policy,  Health  and  Consumer  Affairs;  Competitiveness;
Transport, Telecommunications and Energy; Environment, and Education, Youth and Culture.

26

                                                
All  this  reinforces  the  Union’s  governance  and  the  Spring  European  Council’s  role  in  the
overall co-ordination of economic, social and environmental policies.

4.3

Achieving  sustainable  growth  and  raising  employment  within  a
cohesive society

The  Union’s  priority  for  the  next  twelve  months  must  be  to  stimulate  investment  in
knowledge  and  innovation  alongside  faster  structural  changes  in  order  to  boost
productivity and employment.

This relies on:

–  Strengthening public and private investment in research, education and training, and
in the take  up of new technologies, while adopting urgent reforms  of  product,  service
and capital markets to open opportunities and boost competition and innovation.

–  Sustaining  and  extending  labour  market  reforms  especially  in  Member  States  that  are
lagging  behind,  investing  in  human  capital  and  lifelong  learning,  and  modernising
Europe’s  social  model,  which  should  include  strengthening  the  open  method  of  co-
ordination for social protection.

–  Ensuring  reforms  address  environmental  pressures  and  taking 

the 

lead 

in

environmental technologies.

These actions need to be reinforced by better integration of Lisbon strategy priorities into
the  Union’s  instruments  and  monitoring  mechanisms  for  macro-economic  policy  co-
ordination  and  by  ensuring  that  sustainability  is  properly  addressed  in  policy
formulation,  and  that  our  internal  policy  measures  are  consistent  with  our  external
commitments.

The Spring European Council must set deadlines for decisions at a European Union level.
(Table 13 at the end of this Chapter identifies timetable and maps specific actions to different
Council  responsibilities).  Member  States  must  assume  a  double  role  in  this  regard;  first,  to
work towards rapid agreement within the EU Institutions, and second, to put agreed measures
in place at a national level.

In  other  areas,  the  Community  and  Member  States  will  use  different  instruments.  The
Community,  through  the  Structural  Funds,  plays  an  important  financial  role.  Around  ten
percent of the funds are used to support investment in the area of research, innovation and the
information society, whilst more than a quarter relates to the development of human resources
and education. A further twenty five percent relates to the financing of transport and energy
trans-European  networks.  A  mid-term  review  is  foreseen  during  2003  will  provide  an
opportunity for Member States to assess the impact of their programmes. Ministers in charge
of regional development together with ministers in charge of  employment meeting in spring
2003  should  assess  how  the  well  the  Lisbon  objectives  have  been  supported  in  national
programmes and consider possible changes taking into account the orientations in this Report.

However,  in  most  cases,  Member  States  have  the  greatest  responsibility  for  delivery  of  the
Lisbon  strategy.  Their  active  commitment  and  involvement  is  vital,  as  is  that  of  the  social
partners  and  other  interested  actors.  The  work  programme  of  the  social  partners  agreed  in
November  2002  is  an  important  step  forward  in  their  contribution  to  the  Lisbon  agenda.  In
order  to  enhance  their  involvement,  the  Employment,  Social  Policy,  Health  and  Consumer

27

Affairs  Council  must  formalise  the  Tripartite  Social  Summit  through  a  Council  Decision
ahead of the Spring European Council.

4.3.1 Opportunities through knowledge and market reforms

Exploiting knowledge, skills and innovation

The  Union’s  long-term  success  will  depend  to  a  large  extent  on  how  easily  businesses  and
people can generate and transform knowledge into commercial realities  and new  skills. The
low level of investment in research is a key factor holding back innovation and the Union’s
growth potential.

For  this  reason,  the  Competitiveness  and  Education,  Youth  and  Culture  Councils  must  also
focus  on  how  Governments  and  more  importantly,  business  can  be  encouraged  to  invest  in
knowledge  and  innovation.  The  Competitiveness  Council  must  also  actively  assume  its
horizontal  role  of  ensuring  overall  competitiveness  taking  account  of  developments  in  the
internal  market,  industry  and  the  research  world.  The  open  method  of  co-ordination  –
including the setting of national targets – is starting to work in areas of education, research,
innovation and enterprise, but it must be better exploited as a way of sharing best practice and
fostering progress.

In particular, supporting knowledge, skills and innovation means:

–  Member  States  must  look  at  investment  in  knowledge  -  both  public  and  private  -  from
teaching basic skills to pursuing high level research if they are to meet demand from high
and  medium-technology  industries  for  a  highly  skilled  labour  force.  At  a  national  level
within  current  budgetary  constraints,  investment  must  focus  more  on  building  skills,
supporting  R&D  and  encouraging  the  uptake  of  information  and  communication
technologies, and particular attention should paid to ensuring the more effective use of the
funds available.

–  The Education, Youth and Culture Council must move forward with the implementation
of  the  action  plan  on  the  ten  year  objectives  for  education  systems  and  set  and  use
benchmarks  for  improving  overall  investment  in  human  resources,  monitor  progress  and
identify best practice.

–  To make progress on the Barcelona R&D investment objective, public funding for R&D
should be used in ways which can leverage private financing and which take account of the
growing  role  of  trans-national  research  collaboration.  The  Commission  will  present  an
Action  Plan  to  Council  and  the  European  Parliament  later  this  year  to  boost  R&D
investment and innovation based on the lessons learned and best practices from on-going
national efforts. The Competitiveness Council and Member States should set both common
and individual objectives and should monitor progress and best practice in the context of
the open method of co-ordination in the research area.

–  More generally, action at Union and national level to improve the business environment
must intensify, in particular,  to  reduce and  simplify  the  regulatory  burden  on  businesses.
The  Commission  will  contribute  to  this  at  a  European  level  by  shortly  launching  a
comprehensive  rolling  programme  to  simplify  and  consolidate  existing  Community
legislation between now and the Spring European Council in 2005.

28

–  Member  States  must  improve  the  overall  environment  for  frontier  and  other  leading
technologies,  for  example,  by  moving  ahead  rapidly  with  the  European  Biotechnology
Action Plan. In the latter area key legislation has  yet to be implemented by nine Member
States, progress is very much in the hands of Governments. An emphasis should be placed
on  clusters  at  national,  regional  and  local  levels  to  bring  together  technological  know
how, industry, regulators and financial institutions to develop a strategic agenda for leading
technologies or to address particular problems that may have a profound impact on growth
or sustainability. These could also take  the  form  of European Technology  Platforms in
areas such as railways, aeronautics, clean steel production, plant genomics or the transition
to hydrogen as a fuel within the energy sector.

–  The European Investment Bank should step up its support for the Lisbon strategy beyond
its successful Innovation 2000 Initiative (i2I), which is now coming to an end. The EIB’s
follow  up  should  target  investment  in  the  European  knowledge  economy,  in  particular,
R&D  and  innovation  in  the  private  and  public  sectors,  as  well  as  support  risk  capital
markets.

–  The Competitiveness Council must achieve a decisive breakthrough on the Community
Patent before the  Spring European Council,  failing  which  the  Commission  will  consider
withdrawing its proposal at the spring summit. The Community Patent has now become a
touchstone for the Union’s commitment to knowledge and innovation.

Delivering promised reforms

The economic reform agenda builds on ten years of success of the internal market. It focuses
on  improving  the  performance  of  goods,  services  and  capital  markets  across  the  Union.
Reforms  open  new  opportunities  for  investment  and  business  growth.  Work  is  already  well
underway.  Attention over the  next  year must focus  on  ensuring  that  reforms  already  agreed
are finalised and that the businesses and people are equipped to seize these new opportunities.

First,  final  decisions  are  need  for  pending  reforms  for  example  on  energy,  transport,
procurement, social security and qualifications. The Competitiveness Council must also inject
fresh  momentum  into  the  completion  of  the  internal  market  for  services,  while  the
Economic and Financial Affairs Council must ensure that remaining barriers are removed
to a risk capital market at the end of 2003 and that the Financial Services Action Plan is
delivered by the end of 2005. Progress on the latter should take into account new issues such
as  corporate  governance  in  order  to  raise  confidence  and  bolster  the  overall  stability  of
financial markets.

Second, at the start of the fourth year of the strategy, it is time to ensure that all the necessary
conditions are in place to make the most of reforms already agreed. Examples include:

–  Improving  cross-border  connections  and  moving  ahead  on  the  development  of  trans-
European networks21, as recognised in Barcelona, in order to underpin market opening in
energy,  and  overcome  congestion  in  transport,  particular  in  view  of  enlargement.  Public
financing of infrastructure could be enhanced by public-private partnerships.

21

To take forward the revision of the Community Guidelines on the trans-European transport network, a
High Level Group chaired by former Commissioner, Karel Van Miert and  made  up  of  Member  State
representatives,  observers  from  adhesion  countries,  EIB  and  the  Commission  will  draw  up
recommendations in Spring 2003 on the priorities for the TEN transport network up to 2020 in both the
current and future Member States.

29

                                                
–  A  knowledge-driven  economy  –  particularly  in  the  current  business  climate  –which  has
particularly  affected  the  telecommunications  industry-  depends  on  the  new  regulatory
framework  for  communications  services  being  in  place  on  time  with  action  to  stimulate
broadband  networks  and  the  use  of  new  multi-platform  on-line  services  in  government,
health,  education  and  business,  in  line  with  the  eEurope  2005  Action  Plan.  The
Commission  will  report  before  the  Spring  European  Council  on  the  regulatory,  technical
and other issues relating to information society and the telecommunications sector.

–  Reinforcing  business  investment  in  the  leading  industries  in  the  Union  such  as  the
pharmaceutical and chemicals industries needs rapid progress in defining and agreeing new
rules  governing  the  operation  of  those  sectors  in  order  to  exploit  better  technological
progress and to take account of the objective of sustainable development.

–  Consolidating the framework for the operation of services of general interest in the Union,
thereby underpinning the development of the internal market, long term economic growth
and  improved  cohesion.  The  Commission  will  shortly  issue  a  Green  Paper  on  general
interest services  and  is  developing  guidelines for the application  of  State  aid  rules  in  the
area.

4.3.2 New jobs and an updated social model for a knowledge society

More and better jobs within an inclusive labour market

Labour  markets  in  many  Member  States  have  already  have  shown  greater  resilience  to  the
economic cycle, proving that the  Lisbon employment  targets are attainable as  a  result of
on-going reforms within the Lisbon strategy. However, sluggish productivity, an insufficient
skill base and high levels of inactivity and unemployment continue to hold back growth. At
the same time they put at risk the long-term sustainability of the improvements seen and limit
opportunity across the Union. This is particularly true for women and older workers.

The  Employment,  Social  Policy,  Health  and  Consumer  Affairs  Council  and  the  Member
States must therefore maintain the momentum for  reforms  of  national labour  markets.  They
should  promote  and  manage  change  on  the  basis  of  a  revamped  European  Employment
Strategy22, which  will more  closely  link  employment goals to  the  Lisbon objectives.  Those
Member  States  that  have  made  only  small  contributions  to  improving  the  operation  of  EU
labour markets so far should do more by pursuing comprehensive reforms.

The  new  strategy  should  foster  three  mutually  supportive  objectives:  full  employment  and
higher  labour  market  participation;  raising  quality  and  productivity  at  work;  and  promoting
cohesion and inclusive labour markets. The strategy will therefore focus on issues highlighted
in  earlier  Spring  Reports,  such  as  the  balance  between  flexibility  and  security  at  work,
entrepreneurship  and  reducing  undeclared  work;  gender  gaps  and  regional  disparities  and
increasing employability and the integration of disadvantaged groups.

In the context of this year’s Spring European Council, particular emphasis should be paid to
three aspects of the new strategy:

22

Communication on the future of the European Employment Strategy, COM(2003) 6, 14.1.2003.

30

                                                
–  Boosting  employment  and  participation  rates  for  older  workers.  This  is  where
performance  is  still  a  long  way  from  the  Lisbon  targets.  Comprehensive  strategies  are
needed to attract older workers and reward people for remaining in employment23.

–  Improving  productivity  by  promoting  adaptability  and  job  quality  and  by  ensuring  the
right  incentives  and  resources  for  private  and  public  investment  in  human  capital  and
lifelong learning.

–  Strengthening prevention and activation measures for the unemployed and reforming

tax/benefit systems to make work pay and further reduce structural unemployment.

A  fresh  approach  must  be  taken  to  immigration  as  a  means  of  ensuring  that  high  levels  of
employment  and  productivity  can  be  maintained  in  future  decades.  At  the  heart  of  any
approach must be the better integration of migrants – who are often able to make a substantial
contribution  to  entrepreneurship  -  into  society,  while  taking  account  of  the  impact  of  such
immigration on the countries from which migrants come.

The  revised  European  Employment  Strategy  should  be  results-oriented  and  include
quantified targets, where these can help to achieve the Union’s goals. This could be the case,
for  example,  in  relation  to  prevention  and  activation  policies,  gender  equality,  life-long
learning, and health and safety actions.

In many of these areas, action is not just a matter for Government. It requires investment from
industry, other stakeholders and the full and active involvement of the social partners.

Modernising social protection systems in view of an ageing society

Sustained  progress  towards  the  Lisbon  goals  can  only  be  achieved  by  moving  ahead  at  the
same  time  in  the  social  area.  Particular  emphasis  should  be  put  during  the  coming  year  on
reducing the risk of poverty and modernising social protection systems to meet the challenge
of an ageing population:

–  Member-States  should  seize  the  opportunity  to  set,  in  their  Social  Inclusion  National
Action Plans covering the period 2003-2005, national targets to reduce significantly the
number of people at risk of poverty and social exclusion by 2010, as a means to inject
more ambition into their policies in this domain.

–  The  momentum  behind  the  on-going  reforms  to  secure  sustainable  and  adequate
pension  systems  must  be  maintained.  Similar  challenges  are  posed  for  health  and  long-
term  care  systems  by  ageing.  Adapting  pension  systems  to  new  needs,  increasing
employment  rates  and  improving  incentives  so  that  older  workers  remain  longer  on  the
labour market will be particularly important. The Economic and Financial Affairs Council
and  the  Employment,  Social  Policy,  Health  and  Consumer  Affairs  Council  must  work
together to ensure that all Member States are actively addressing these issues.

–  The streamlining of current disparate actions linked to social inclusion and pensions
and, in  time, co-operation in relation  to  health  care  and  ‘making  work  pay’  into  a  single
open  method  of  co-ordination  will  contribute  to  the  necessary  modernisation  of  social
protection systems. The Employment, Social Policy, Health and Consumer Affairs Council

23

Joint  Council/Commission  report  on  increasing  labour  market  participation  and  promoting  active
ageing, Council doc No 6707 of 8 March 2002 adopted on the basis of COM(2002) 9, 24.1.2002.

31

                                                
in co-operation with the Economic and Financial Affairs Council must actively pursue this
streamlining,  which  will  considerably  strengthen  the  social  dimension  of  the  Lisbon
Strategy. The Commission will adopt a Communication on this topic.

4.3.3 Addressing environmental pressures

As  markets  are  opened  and  new  jobs  created,  it  is  also  essential  to  ensure  that  the
opportunities are sustainable and that growth and environmental policies reinforce each other.
A renewed effort is needed to implement Community environmental legislation, complement
it  through  the  use  of  economic  instruments  to  provide  the  right  signals  and  incentives  to
change  behaviour,  as  well  as  removing  damaging  subsidies,  and  using  fewer  resources  or
using and reusing them more efficiently.

This  should  support  the  decoupling  needed  to  ensure  that  the  economy  can  grow  faster
without  increasing  pressure  on  the  environment  and  can  benefit  from  the  growth
potential of cleaner technologies.

New environmental technologies will help by offering more environmental protection for less
money. The countries and regions that can harness these technologies today will play a major
role in shaping the world of tomorrow. The Commission will shortly publish a progress report
on the way to a fully-fledged Action Plan in December 2003. That Action Plan will identify
the steps needed to support Europe’s leading role in their diffusion.

Recent accidents such as the sinking of the Prestige oil tanker cause long-term environmental
and economic damage for the areas and sectors concerned. New and modern technologies, as
well  as  early  implementation  of  adopted  maritime  safety  measures  by  Member  States,  will
also help to make the Union’s coastlines safer.

The Transport, Telecoms and Energy Council and the Environment Council must both play a
full role. In particular:

–  Member States must accelerate implementation of the existing ERIKA I and II legislation
and the Transport, Telecommunications and Energy Council and the Environment Council
must ensure early adoption of the measures proposed by the Commission to  further limit
the risk of future accidents24.

–  Measures to ensure a continued reduction in greenhouse  gas emissions and  improved
air  quality  against  the  trends  of  increasing  transport  demand  and  energy  consumption
must be treated as a priority. For energy, an important first step should be for the Economic
and Financial Affairs Council to agree the pending energy tax proposal before the Spring
European Council.

–  Member States must make renewed efforts to ensure that they stay on track to meet their
Kyoto commitments. The focus should be on measures where costs are likely to be low,
such  as  emissions  trading  and  removing  environmentally  harmful  subsidies.  Such  steps
will be important to meet the European Council’s indicative target for renewable energy.

24

In view of the increased political uncertainty and its consequences  for oil prices and energy supplies,
progress is also needed from the Transport, Telecommunications and Energy Council on proposals on
oil and gas stocks in the context of the security of EU energy supplies.

32

                                                
–  Bio-diversity  and  habitats  are  under  pressure  from  a  range  of  economic  activities.
Successful  adoption  by  the  Agriculture  and  Fisheries  Councils  of  Commission  proposals
on agriculture and fisheries would make a significant contribution to the protection of bio-
diversity  and  help  to  secure  the  long-term  future  of  these  sectors.  The  decisions  in
December 2002 on fishery reforms are an important step forward.

–  Measures have already been agreed which should help to break the link between transport
growth and GDP by shifting transport to more environmental friendly modes, but more is
needed.  Transport  infrastructure  pricing  will  be  an  important  tool  in  controlling
environmental pressures and bringing about  a faster switch to more sustainable modes of
transport.  Revenues  raised  might  be  used  to  help  finance  infrastructure  on  the  basis  of
public-private partnerships. Member States should also restructure national transport taxes
in  a  way  more  closely  linked  to  pollution  and  CO2  emissions,  which  can  be  achieved
without increasing the total tax burden.

–  More  generally, pricing  mechanisms and tax systems need to reflect better the  broader
costs to society of economic activity to ensure long-term sustainability. Unless distortions
in markets are removed, there will be a bias against investment in cleaner technologies.

4.4

Embedding Lisbon within sound economic policies

The steps set out above  will be  achieved  most effectively if  supported by well  co-ordinated
macro-economic policies. Here the Economic and Financial Affairs Council must play its role
in preparing the 2003  Broad Economic  Policy Guidelines  for  endorsement  by  the  European
Council in June. Those guidelines must seek to ensure an economic environment that supports
the  priorities  set  out  in  this  Report.  They  have  a  double  role  of  mapping  out  the  macro-
economic  conditions  for  stable  growth  and  employment  and  providing  the  economic
framework  for  structural  reforms  on  the  basis  of  the  orientations  provided  by  the  Spring
European Council.

In terms of macro-economic policy reform, the Commission’s Communication of November
2002 set out proposals for improving the implementation of the Stability and Growth Pact25.
In addition to securing the core budgetary objectives of sound and sustainable public finances,
the  proposals  recognise  the  need  to  raise  the  contribution  of  public  finances  to  growth  and
employment in line with the Lisbon strategy. This forms part of a more general approach to
strengthen  economic  policy  co-ordination  and  is  consistent  with  the  relevant  proposals
forwarded by the Commission to the Convention on the Future of Europe.26

4.5

Ensuring sustainability is properly addressed

The  Union’s  sustainable  development  strategy,  as  recognised  in  previous  Spring  Reports,
underpins  all  of  the  Lisbon  actions.  This  means  moving  ahead  on  the  three  pillars  of
sustainability – economic, social and environmental.  Implementing this strategy is  essential,
but  it  presents  a  challenge.  Policy  makers  need  to  pay  close  attention  to  the  interaction  of
these different dimensions and making sure that the short-term concerns do not lead to “quick
fix” solutions that undermine progress towards longer term objectives.

25

26

Commission  Communication  on  strengthening  the  co-ordination  of  budgetary  policies,  COM(2002)
668, 27.11.2002
Communication from the Commission: For the European Union Peace, Freedom, Solidarity
COM(2002) 728 final, 4.12.2002.

33

                                                
The  Commission’s  new  system  of  impact  assessment  will  be  an  important  instrument  in
improving  the  coherence  of  key  Commission  proposals.  The  same  attention  is  now  needed
from  the  European  Parliament  and  from  the  Member  States  in  assessing  the  impact  of
amendments to proposed new rules or of national measures implementing Community law.

The additional priority for this Spring European Council is for Member States and the Union
to  follow  up  Doha,  Monterrey  and  Johannesburg.  This  can  contribute  to  the  long-term
improvement in the performance of both the Union and its partners around the world. It will
require leadership in pursuing global solutions to curb key unsustainable trends.

This  means  moving  forward  on  the  broad  trade  and  development  agenda  that  has  been
identified, but it also highlights again  the importance of  agriculture and  fisheries  reforms in
order to deliver economic and environmental benefits.

34

Table 13 Role and responsibilities – Mapping Councils and the necessary legislative decisions
/ guidelines to take Lisbon forward

Priority

Council

Deliverable

Opportunities through
Knowledge and Market
Reforms

Competitiveness

(cid:1)  Breakthrough on the Community Patent

before the Spring European Council 2003

(cid:1)  Procurement Package (June 2003)
(cid:1)  Action Plan on raising R&D investment (Dec

2003)

Final adoption by March 2004
(cid:1)  A Corporate Governance Strategy
(cid:1)  Take-over Bids Directive

Transport, Telecoms, Energy

Final Adoption by June 2003
(cid:1)  European Single Sky
(cid:1)  Public service contracts for passenger

Economic and Financial Affairs

transport

(cid:1)  Access to port services
(cid:1)  Airport slot allocation
(cid:1)  Energy package
(cid:1)  TENs transport

Final Adoption by Dec 2003
(cid:1)  Second railway package
(cid:1)  European network and information security

unit

(cid:1)  Public sector information
(cid:1)  Transport infrastructure pricing (including a
Eurovignette modification) (mid 2004)

Agreement before the Spring European Council:
(cid:1)  Tax Package
(cid:1)  Energy tax

Financial Services Action Plan
Final adoption by July 2003 on
(cid:1)  Prospectus Directive
(cid:1)  Pensions Directive and extension of

Lamfalussy process to banks, insurance and
conglomerates

Final adoption by March 2004 on
(cid:1) 
Investment Services Directive
(cid:1)  Transparency Directive

Employment, Social Policy,
Health and Consumer Affairs

(cid:1)  Pharmaceutical regulation package (Dec

2003)

Education, Culture and Youth

(cid:1)  ERASMUS World and eLearning

Programmes (Nov 2003)

Employment / Social
Dimension

Employment, Social Policy,
Health and Consumer Affairs

Addressing
environmental pressures

Environment

Economic and Financial Affairs

(cid:1)  Employment Guidelines 2003
(cid:1)  Temporary agency workers (Dec 2003)
(cid:1)  Updated regulation on social security co-

ordination (Dec 2003)

Final adoption by March 2004
(cid:1)  Climate change package
(cid:1)  Environmental liability
(cid:1)  Air quality package
(cid:1)  Energy taxation (January 2003)

Economic Policy
Framework

Economic and Financial Affairs

(cid:1)  Broad Economic Policy Guidelines 2003

35

Annex:  Summary  Table  showing  the  frequency  with  which  Member  States  appear
within the top three and bottom three of the Structural Indicators

The  attached  table  provides  an  overview  of  where  Member  States  are  positioned  in  relation  to  the
agreed set of indicators established by the Commission and the Council.

It highlights those countries appearing in the top three for a given indicator (“+”) and those appearing
in the bottom three (“-”).

The  complete  set  of  indicator  graphs  are  annexed  to  the  Staff  Paper  (SEC(2003)  25,  14.1.2003)
accompanying 
line
www.europa.eu.int/comm/eurostat  where  the  indicators  are  updated  on  a  monthly  basis  and  a  full
explanation of the methodology used is available.

available 

Report 

Spring 

year’s 

also 

and 

this 

are 

on 

This diverse set of indicators covers the broad range of areas touched by the Lisbon strategy, but are
very  different  in  character  and  cover  different  reference  years,  sometimes  still  predating  the  Lisbon
Strategy. This must be taken into account in looking at the picture presented by this annex.

Finally, not all of the agreed indicators are suited to producing a ranked order for Member States.

36

Table shows the appearances in the top (+) / bottom (-) positions for each of the structural indicators
 agreed between the Commission and Council.
nd = Data not available for that Member State for the year used 
 * = Indicator not suitable for ranking either because of type of data recorded or lack of sufficient current data

B DK D EL E F

I

IRL L NL A P FIN S UK

+
+

-

-

+

-
-
+ +
-
-
-
-
-

-
- nd - +
nd nd -
+ -

+ +

-

-

+ nd -
+ nd -

-
-

- + nd
- + nd
- + nd
- + nd
-
-
- +
+
-

-

+

-

-

-

-

+

+ +
+

+ -

+ -

-

-
-
-

-
-

-

+

+ +
- + -
+ +
+
+ +
+ + nd
+ nd
-

-
-
+
- + +

-

-

-
-
- +

- +

- +

+ nd

-
- + +

-
-
+

+

-
-

-
-

nd +
nd
- nd
nd
nd
+ nd
+ -
+
+ -
+ - nd
+ +

-

+
+ +

+
+ +

+ +
+

+

+

+
-
- +

+
-
-
-

+
+

- +

- +

+

- + + +

+

-

-

-

-

-

+

- +

+

+

nd

+
+ + -

nd
-
-
+ + +

- + + +

+ + +

+

-

-

+

-

-
-

-

-

-

-

-

General Economic Background

a1

a2

b1

b2

c1

c2

c3

d

e

f

g

GDP per capita in PPS (2002)
Real GDP growth rate (2002)

Labour productivity per person employed (2002)
Labour productivity per hour worked (2002)

Total employment growth (2001)

Employment growth - females (2001)
Employment growth - males (2001)

Inflation rate (2002)

Unit labour cost growth (2001)

Public balance  (2001)
General government debt  (2001)

Employment

I.1.1

I.1.2

I.1.3

I.1.4

I.1.5

I.1.6

I.2.1

I.2.2

I.2.3

I.3

I.4
I.5.1

I.5.2

I.5.3

Total employment rate (2001)

Employment rate - females (2001)

Employment rate - males (2001)

Total employment rate of older workers (2001)

Employment rate of older workers - females (2001)
Employment rate of older workers - males (2001)

Total effective average exit age (2001)

Effective average exit age - females (2001)
Effective average exit age - males (2001)

Gender pay gap in unadjusted form (1999)

Tax rate on low-wage earners (2001)

Life-long learning (adult participation in education and 
training) - total (2002)
Life-long learning (adult participation in education and 
training) - females (2002)
Life-long learning (adult participation in education and 
training) - males (2002)

I.6.1.1 Accidents at work - serious accidents - total (2000)

I.6.1.2 Accidents at work - serious accidents - females (2000)

I.6.1.3 Accidents at work - serious accidents - males (2000)

I.6.2

I.7.1

I.7.2

I.7.3

Accidents at work - fatal accidents (2000)

Total unemployment rate (2002)

Unemployment rate – females (2002)
Unemployment rate – males (2002)

37

Innovation and Research

B DK D EL E F

I

IRL L NL A P FIN S UK

Spending on human resources (public expenditure on 
education) (2000)

nd + nd -

- nd

nd

+ + -

+
-

+
nd +

Total R&D expenditure - GERD (1999)

Total R&D expenditure – industry (1999)

Total R&D expenditure – government (1999)
Total R&D expenditure - abroad (1999)

Level of Internet access - households (2002)
Level of Internet access - enterprises (2002)

Science and technology graduates - total (2000)

Science and technology graduates - females (2000)
Science and technology graduates - males (2000)

Patents - EPO (2001)
Patents - USPTO (2001)

Venture Capital investments - early stage (2001)

Venture Capital investments - expansion/replacement 
(2001)

ICT expenditure - IT expenditure (2001)

ICT expenditure - Telecommunications expenditure (2001)

-

+ -
-
+ +

- +
-
-
nd
- nd
nd
+ -
+ -

-

-
-
-

nd
nd
nd - nd
nd
nd

+
nd
nd -
nd nd + -
-
nd nd + nd -
nd nd + nd -

nd

-

+

-
-

-

- +

nd + -

-

- + +
- + +
-
+
- +
+

-
nd + + -
+
- +
+
+
- +
+
- + +
- + +
- + +

-

-

+

+ +

+ - + -

II.1

II.2.1

II.2.2

II.2.3

II.2.4

II.3.1

II.3.2

II.4.1

II.4.2

II.4.3

II.5.1

II.5.2
II.6.1

II.6.2

II.7.1

II.7.2

+

*
*

+

+

-

*
*

-

+

*
*

*
*

+ -
+

- +
+ - nd +
nd -

-

*
*
+

+

*
*

*
*

-

+

*
*
+
-

-
-

-

*
*

*
*
-

+ -
nd

nd
+ +

*
*

*
*

*
*
+

*
*
-
+ -
- + -
+ +
- + +
-
-
- nd

+

-

- nd nd +

+

+ + -

+ -

nd

-

nd -

nd -

nd -

+

+

+ +

-

-

- + + +

Economic reform

III.1.1

III.1.2

Relative price levels
Price convergence between EU Member States

III.2a.1 Price of telecommunications - local calls (2002)
III.2a.2 Price of telecommunications - national calls (2002)
III.2a.3 Price of telecommunications - calls to USA (2002)
III.2b.1 Electricity prices - industrial users (2002)
III.2b.2 Electricity prices - households (2002)
III.2c1 Gas prices - industrial users (2002)
III.2c2 Gas prices - households (2002)
III.3.1 Market share of the largest generator in the electricity 

market (2000)

III.3.2.1 Market share of the incumbent in fixed 

telecommunications - local calls (including calls to the 
Internet)* (2000)

III.3.2.2 Market share of the incumbent in fixed 

telecommunications -long distance calls (2000)

III.3.2.3 Market share of the incumbent in fixed 

telecommunications - international calls (2000)

*
*
-

-

-

38

B DK D EL E F

I

IRL L NL A P FIN S UK

+ +

- +
+

*

*

*

-

-

-

*

*

*

*

*

*

+

+

+

+

+ + -

+ -

+ -

-
+
+
-
+ + -

-

*

*

*

*

*

*

-

+ -

-

-

-
-

*

*

*

-

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

- + +

- + +

-

+ + -

-

+

+ +
- + +

*

*

*

*

*

*

-

*

*

*

-

+ +

-

-

- + +

-

-

-

-

-

+ -

+ -

- +

-

-

- + + -

- + nd
- + nd
- + nd

+

-

+ -

+ -

-
-

+

+

+

+
+

- nd

- nd

nd -

+

+
+ nd

nd -
- + nd -

-

-

-

-
-
-
-
-

-
- nd nd + + +

- nd nd + +

+

- nd nd + + +

-

-

-

+ - + + nd
- + + nd
+ nd

+ -

nd + +
+

-
- + nd
-

nd nd + +

+

- nd -

+

- nd

+ -

+

+

+ nd nd -

+ nd nd -

III.3.3 Market share of the incumbent in mobile 

telecommunications (2002)

III.4

Public procurement (2001)

Sectoral and ad hoc State aid (2000)

III.5.1
III.6.1 Market Integration - Convergence of interest rates - 

mortgages

III.6.2 Market Integration - Convergence of interest rates - short 

term loans to enterprises

III.6.3 Market Integration - Convergence of interest rates - 
medium and long-term loans to enterprises
III.6.4 Market Integration – Trade Integration - goods (2001)

III.6.5 Market Integration – Trade Integration - services (2001)

III.6.6 Market Integration – Trade Integration – FDI (2001)

III.7

Business investment (2001)

Social Cohesion

IV.1
IV.2.1

IV.2.3

IV.2.5

Inequality of income distribution (1999)

At-risk-of-poverty rate before social transfers – total (1999)

At-risk-of-poverty rate before social transfers – females* 
(1999)
At-risk-of-poverty rate before social transfers – males* 
(1999)

IV.2.2

At-risk-of-poverty rate after social transfers - total (1999)

-

*

*

*

+

+

+

IV.2.4

IV.2.6

IV.3.1

IV.3.2

IV.3.3

At-risk-of-poverty rate after social transfers - females* 
(1999)
At-risk-of-poverty rate after social transfers - males (1999)

At-persistent-risk-of-poverty rate - total (1999)

At-persistent-risk-of-poverty rate - females (1999)

At-persistent-risk-of-poverty rate - males (1999)

IV.4.1 Dispersion of regional employment rates – total (2001)

IV.4.2 Dispersion of regional employment rates – females (2001)

IV.4.3 Dispersion of regional employment rates  – males (2001)

IV.5.1

IV.5.2

IV.5.3

IV.6.1

IV.6.2

IV.6.3
IV.7.1

IV.7.2

Early school-leavers - total (2002)

Early school-leavers - females (2002)
Early school-leavers - males (2002)

Long-term unemployment rate - total (2001)

Long-term unemployment rate - females (2001)
Long-term unemployment rate - males (2001)

Population in jobless households – persons aged 0-65 
(2002)
Population in jobless households – persons aged 0-60 
(2002)

39

Environment

B DK D EL E F

I

IRL L NL A P FIN S UK

Greenhouse gases emissions (2000)

Energy intensity of the economy (2000)

Transport - Volume of freight transport relative to GDP 
(2000)
Transport - Volume of passenger transport relative to GDP 
(2000)
Transport - Modal split of freight transport - percentage 
share of road (2000)
Transport - Modal split of passengers transport  - 
percentage share of cars (2000)

+

-
+ + -

+

-

-

-

-

-

+ -

+

-
+ -

+ +
-

-

-

-

+

+ +

- +

-

+

+ +

- +

Urban air quality – Population exposure to air pollution by 
ozone* (2000)
Urban air quality – Population exposure to air pollution by 
particulate matter (PM10) (2000)

nd

nd -

- nd nd + - + +

+ nd

nd - nd - nd nd

- +

+

-

+

Municipal waste collected (2000)

Municipal waste landfilled (2000)
Municipal waste incinerated (2000)

Share of renewable energy (2000)

+ - nd nd
+ + nd nd -
*
*
*
-

*

*

*

*

-

-

nd - nd +
*
*

*

*
-

nd + + nd nd
nd
*
*
+ -

-
*
*
+ +

*

*

*

*

*

*

*

*

*

*

+

*

*

*

*

- + + -

+

-

-

+ +

-

V.1

V.2

V.3.1

V.3.2

V.3.3

V.3.4

V.4.1

V.4.2

V.5.1

V.5.2

V.5.3

V.6
V.7.1

V.7.2

V.7.3

Protection of Natural Resources - Fish stocks in European 
Marine Waters
Protection of Natural Resources – protected areas for 
biodiversity (Habitats Directive) (2000)
Protection of Natural Resources – protected areas for 
biodiversity (Birds Directive) (2000)

*

-

40