Opinion of the European Economic and Social Committee on Promoting sustainable productivity in the European workplace
Date: 2007-09-26
Institutions: European Economic and Social Committee
Subjects: economic and social cohesion, employment policy, production policy, productivity, sustainable development

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Opinion of the European Economic and Social Committee on ‘Promoting sustainable productivity
in the European workplace’

(2008/C 10/19)

On 16 February 2007 the European Economic and Social Committee, under Rule 29(2) of its Rules of
Procedure, decided to draw up an opinion on Promoting sustainable productivity in the European workplace.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 17 July 2007. The rapporteur was Ms Kurki.

At its 438th plenary session, held on 26 and 27 September 2007 (meeting of 26 September), the European
Economic and Social Committee adopted the following opinion by 155 votes to none, with nine absten-
tions.

1. Conclusions and recommendations

Traditional

economic growth drivers

force
1.1
investment in means of production, rising education
growth,
levels) need to be supplemented by the creation of new elements
capable of generating sustainable growth. Firstly, productivity
growth must be boosted from present levels. Secondly, ways
must be found to at least halt the decline in labour supply.
Thirdly, the world of work needs to be made more attractive.

(labour

1.2
The Committee believes that it is the European Union's
task to support all Member States and companies in their efforts
to increase sustainable productivity, which is an essential
component of the Lisbon Strategy. The idea that quality and
social innovations implemented in the workplace have a major
impact on business success must be actively promoted. The
Committee proposes that this aspect be taken on board as part
of the evaluation and reform of the Economic and Employment
Guidelines.

1.3
that a
The Committee would reiterate its proposal
European index describing the quality of working life be
devised. The index would be built on research-based ‘good
work’ criteria and would be compiled and published on a
regular basis. Such an index could be used to shed light on
changes and improvements in the quality of European working
life and the effects on productivity. At the same time it would
serve as a basis for new initiatives relating to the improvement
of the quality of working life.

1.4
The development of a European quality of work
index requires the creation of a broad forum. The strong and
wide-ranging expertise which the European Economic and
Social Committee possesses with regard to the challenges of a
changing workplace and responding to such challenges would
serve as a good basis for such a forum. The Labour Market
its work
Observatory could also examine
programme permits.

issue

this

if

The EESC urges the Commission to commission further
1.5
studies on the relationship between the quality of working life
and productivity. A more in-depth analysis is needed of the
In this
factors which contribute to sustainable productivity.

work, the EU institutions and Member States could make better
the research and analytical work carried out by the
use of
Dublin-based European Foundation for the Improvement of
Living and Working Conditions and the Bilbao-based European
Agency for Safety and Health at Work.

1.6
to give
The Committee believes it would be useful
emphasis to workplace innovation and new kinds of profes-
sional skills and management practices in EU innovation and
the Competitiveness and Innovation
training initiatives (e.g.
Framework Programme, Structural Funds programmes, the Inte-
grated Lifelong Learning Programme). The social partners bear a
major responsibility in this regard for preparing, implementing
and evaluating projects.

1.7
The Committee proposes that the Member States imple-
ment programmes promoting the quality and productivity of
work as part of their employment programmes and innovation
policy. Many countries have national productivity centres and
work research centres which could take part in such initiatives.
The social partners have a key role to play here in planning
projects and in practical project implementation.

1.8
It is essential that the debate and practical initiatives on
sustainable productivity be continued in Europe's various
forums, in the Member States and in companies. The Committee
can make an important contribution to this process by
presenting the views of civil society on the subject, particularly
as part of its opinions on economic, employment and innova-
tion policy.

2. Introduction

2.1
Sustainable economic growth and a high employment
rate are essential for the prosperity of Europe. The EU's goal is
to ensure ‘the sustainable development of Europe based on
balanced economic growth and price stability, a highly competi-
tive social market economy, aiming at full employment and
social progress and a high level of protection and improvement
of the quality of the environment’ (1). This can be achieved by
increasing productivity growth from current levels in all sectors

(1) EU Constitutional Treaty, Article I-3(3).

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the economy (2). Productivity growth increases citizens'
of
well-being when it is based on improving the quality of working
life and expanding the number of jobs. Sustainable productivity
growth offers a way of ensuring sound public finances and
sustainable provision of social and health care services for an
ageing population. At
the same time new, quality jobs are
created. Thus, sustainable productivity growth supports the
economic, social and environmental objectives of the Lisbon
Strategy.

than through direct R&D spending by service firms them-
selves (5). Thus making mechanical calculations in productivity
comparisons can lead to wrong conclusions, unless the actual
content of different sectors is taken into account. This also
applies to public services, where productivity growth targets
also have to take into account social and public policy objectives
as well as the requirement to guarantee a climate which is
conducive to innovation and productivity growth.

2.2
Labour productivity has grown steadily in Europe in the
post-war period. Even in the late 1960s it was growing at an
average annual rate of about 5 % per hour worked. From the
1980s onwards labour productivity growth started to slow, and
the annual growth rate amounted to only about 1-2 % in the
early 2000s. Changes in EU Member States' productivity figures
in recent years can be explained by many factors acting in
different directions. Average labour productivity growth in
Europe has been boosted by the accession of new Member
States, where the starting level of productivity is lower than in
the old Member States. Since 1995, however, the number of
low-productivity jobs has increased throughout Europe. These
include low-pay, low-skill jobs in the service sector and many
jobs where people are employed on atypical contracts. This
trend has contributed to slower productivity growth (3).

In manufacturing productivity growth has been fastest in
2.3
technology-driven industries. These industries' share in total
manufacturing is small, which the Commission believes is symp-
tomatic of potential problems. The larger their share in value
added, the more they contribute to productivity and real earn-
ings growth in an economy. These industries are invariably
leaders in innovation and in the modernisation and diffusion of
new technologies, also across borders (4).

2.4 Weak productivity growth in the private and public
service sector in recent years is clearly a serious problem.
However, it should be borne in mind that it is more difficult,
even impossible, to measure productivity growth in this sector
using the same indicators as in manufacturing. Despite the fact
that innovations of various kinds, such as the use of ICT applica-
tions, have increased in services, this has not shown up as
productivity growth in productivity statistics. Typically, innova-
tions in the service sector are introduced through acquired tech-
nology (ICT, organisational changes and human capital) rather

(2) Productivity can be measured at different levels, e.g. whole economy
(macro-level), economic sector (manufacturing, ICT), company/work
organisation/work unit, employee/occupational group,
individual.
Aggregate productivity is that part of productivity growth that cannot
be explained by an increase in the amount of ‘traditional’ factor inputs
(labour, capital, raw materials, energy). Productivity growth comes
about as the result of such things as technological development,
training of workers, organisational development or improvements in
management and production methods.

(3) The Employment Committee working group report on Enhancing
higher productivity and more and better jobs, including for people at the
margins of the labour market, EMCO/18/171006/EN-final, 2006.
URL:
pdf/emco_workgroupprod06_en.pdf.

http://ec.europa.eu/employment_social/employment_strategy/

(4) Communication from the Commission to the Council and the
European Parliament: Productivity — the key to competitiveness of
European economies and enterprises, COM(2002) final.

Improving employment and boosting productivity are
2.5
not mutually exclusive. On the contrary, together they underpin
the goals of the Lisbon Strategy, which are concerned with
increasing the number of better-quality jobs. According to the
International Labour Office (ILO), productive employment is the
foundation of decent work (6). Sustainable productivity growth
and a rising employment rate are a sound way of reducing the
share of undeclared work in the economy.

2.6
The structure of EU economies is changing and there is
an increasing shift of emphasis in factor inputs away from
physical capital to human capital. According to the Commission,
the demand for labour in the EU has already shifted away from
traditional skills to high-skilled labour. This reflects changes in
the content of
jobs themselves rather than changes in the
sectoral allocation of employment. Between 1995 and 2000,
job creation in fast-growing, knowledge-intensive
sectors
than two thirds of all new high-
accounted for more
and medium-skill jobs, and for a very large proportion of new,
low-skilled jobs (7). Business
in particular, have
increased their workforces and they will play a key role in the
future in providing new employment and compensating for job
losses and rationalisation in manufacturing industries (8).

services,

2.7
For the individual productivity growth means that jobs
are more secure and that workers have better opportunities to
progress
in their work and achieve higher earnings. This
improves workers' qualifications and enhances their employ-
ability in a changing environment.

For companies boosting their productivity is crucial, the
2.8
key to their competitiveness. As world markets determine prices
to a large extent and productivity cannot be increased indefi-
nitely by traditional
investment in machinery and equipment,
other means must be used. For companies productivity growth
means that costs rise more slowly, price competitiveness and

(5) See above.
(6) ILO World Employment Report 2004-2005:

URL:
htm.

http://www.ilo.org/public/english/employment/strat/wer2004.

(7) Communication from the Commission to the Council and the
European Parliament: Productivity — the key to competitiveness of
European economies and enterprises, COM (2002) 262 final.

(8) EESC opinion of 13 September 2006 on Services and European manu-
facturing industries: Interactions and impacts on employment, competitive-
ness and productivity, rapporteur: Mr Calleja (OJ C 318, 23.12.2006,
p. 26).
URL:
C:2006:318:0026:0037:EN:PDF.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:

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payroll capacity improve, jobs are more secure (and hence more
desirable), work tasks and organisation change, more added
value is achieved for customers with fewer resources, profit-
in the market become
ability improves, growth and survival
possible, and the ground is laid for investment and the develop-
ment of activities.

2.9
Economic growth in Europe has traditionally depended
on growth of the labour force, the level of investment in means
of production and rising education levels. Now this model no
longer functions as ideally as it should. Labour supply is no
longer increasing, but rather is shrinking. Companies are less
willing than before to invest
in physical capital. Work has
changed from being labour-intensive to being capital-intensive,
and human capital
is becoming more and more important.
There is a growing shift away from manual work requiring little
education to expert (knowledge) work requiring special training.
Investment in basic training alone no longer brings as large
productivity gains as before.

2.10
Economic growth in some Member States has also been
boosted by tax measures (e.g. cuts in business and payroll taxes)
and increased private consumption (e.g. interest rate policy, taxa-
tion). However, the scope for using these growth factors is
limited and they must be assessed from the viewpoint of both
tax competition and maintenance of public infrastructure.

2.11
In addition to the above-mentioned growth factors,
there is a need to create new growth-generating elements. Intan-
gible success factors have entered the picture alongside tangible
ones,
to motivate
employees and harness their skills.

the ability of management

in particular

2.11.1
Firstly, firms' productivity growth must be increased
from present levels. This calls for policies geared to creating an
environment promoting sustainable business growth and inno-
vation and to ensuring healthy competition. This is the only
way to increase the overall size of the economic cake.

2.11.2
Secondly, ways must be found to at least halt the
decline in labour supply. Several Member States will lose about
15 % of their labour force over the next ten years. Employment
rates must be kept high through more effective manpower
policy, immigration and integration of skilled workers, measures
to reconcile work and family life and gender measures, and by
reforming pension systems. Helping employees to cope in the
workplace and maintaining their job motivation are key ways of
inducing people to postpone retirement.

Thirdly, the world of work needs to be made more
2.11.3
attractive. A large number of those in employment are in the
40-54 age group, which poses a considerable economic chal-
lenge. At the same time,
it is of paramount importance to
prevent young people from dropping out of education and to
get them to take part in working life. Quality in work and avail-
ability of skilled labour must be improved so that the benefits
of new technology, innovation and research and development
can be more readily exploited.

2.12
The European Council has consistently stressed the
need for investment in order to improve quality in work, inter
alia, with the aid of quality indicators (9). During Finland's presi-
dency of the EU a debate was launched on the significance of
productivity for the Lisbon Strategy. Finland asked the European
Economic and Social Committee to draw up an opinion on
Quality of working life, productivity and employment in the context of
challenges (10). The Committee
globalisation and demographic
adopted its opinion in September 2006.

2.13
The German presidency has continued the debate on
the quality of working life. The theme of ‘good work’ gives prac-
tical expression to the Lisbon Strategy goal to create more and
better jobs (11). At the informal meeting of ministers for employ-
ment and social affairs ministers in Berlin in January 2007,
Germany, Portugal and Slovenia jointly emphasised the impor-
tance of ‘good work’ in their conclusions (12). In its conclusions
of 8-9 March, the European Council stressed the importance of
‘good work’ for boosting employment in Member States and
reinforcing the European social model. According to the
Council,
the principles underlying ‘good work’ are workers
rights and participation, equal opportunities, safety and heath
protection at work and a family-friendly organisation of
work (13).

2.14
European-level programmes give consideration, in one
way or another, to the development of working life and the
possibility of workplaces to cope with challenges to change.
Unfortunately, they usually offer only separate proposals, rather

(2000) conclusions stated the need to put the

(9) The Lisbon European Council of 23 and 24 March 2000 set the
overall goal of achieving full employment by creating not only more
but also better jobs.
The Nice Council
emphasis on the promotion of quality in all areas of social policy.
The Stockholm Council (2001) pointed out that regaining full employ-
ment not only involved focusing on more jobs, but also on better
jobs, and called for quality of work to be included as a general objec-
tive in the 2002 employment guidelines and for accurate quantitative
indicators for that purpose.
The Laeken European Council (2001) noted that quality in work was a
multi-dimensional concept and that the indicators recommended by
the Employment Committee were based on ten areas presented in the
Commission communication, and called for
incorporation
from 2002 in the European Employment Strategy. See the Communica-
tion from the Commission to the Council, the European Parliament,
the European Economic and Social Committee and the Committee of
the Regions Improving quality in work: a review of
recent progress,
COM(2003) 728 final.

their

(10) EESC opinion of 13 September 2006 on Quality of working life,
productivity and employment in the context of globalisation and demo-
graphic
(OJ C 318,
23.12.2006, p. 157).
URL:
C:2006:318:0157:0162:EN:PDF.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:

rapporteur: Ms Engelen-Kefer

challenges,

(11) Political priorities of

the Federal Ministry of Labour and Social
Affairs during the German EU Council Presidency in the first half of
2007.
URL: http://www.london.diplo.de/Vertretung/london/en/03/News__-
and__features/EU__Presidency/Political__priorities__FULL__Down-
loadDatei,property=Daten.pdf.

(12) Chair's conclusions drafted in cooperation with the next two presi-

dencies, Portugal and Slovenia.
URL:
0119BMAS1.html.

http://www.eu2007.de/en/News/Press_Releases/January/

(13) Brussels European Council 8-9 March 2007 — Presidency conclu-

sions. Council of the European Union 7224/07.
URL:
tions/newsroom/LoadDocument.asp?directory=en/ec/
&filename=93140.pdf.

http://www.consilium.europa.eu/cms3_applications/applica-

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than a central starting point for guiding action. Moreover, coor-
dination between programmes is poor, so that any progress, or
lack of it,
in the area of sustainable productivity goes unde-
tected.

A key question here is how companies' productivity
2.15
growth can be boosted in a way which supports employees'
individual and collective resources whilst at
the same time
helping them to maintain their working ability and stay moti-
vated to work in the face of changing conditions.

3. Sustainable productivity growth as a factor for success

it

3.1 When analysing productivity and employment
is
important to distinguish between the short-term and long-term
impact. In the short term there may be a negative correlation
between productivity growth and employment. Structural
change in industry seems to increase average labour productivity
growth but to lower the employment rate (14). In these circum-
stances a major input is needed from labour market policy since
some workers' professional skills are outdated and as a result
they become unemployed. New forms of protection from redun-
dancy and unemployment are needed so that the skills and
knowledge of as many workers as possible can be harnessed in
a flexible manner. In its opinion on guidelines for employment
policies the EESC makes several recommendations for enhancing
the effectiveness of policy measures (15).

In particular,

In the long term it is possible to raise the employment
3.2
the
rate through labour productivity growth.
combined impact of
technology and certain work quality
components generate growth, which increases jobs and raises
the employment
rate. This does not happen automatically,
however; rather it depends on the ability of industry to increase
the labour intensity of growth and to boost long-term produc-
tivity growth, which is linked to both quality in work and job
satisfaction (16).

3.3
There are many ways in which companies can pursue
productivity growth. Some listed companies, in particular, assess
competitiveness in the short term on the basis of quarterly earn-
ings and costs. The ‘quick profits’ approach is evident in the
workplace in the fact that no productive investment is made
and no attention is paid to staff skills or work ability. In some
cases, companies do not have the financial capacity to take such

(14) The Employment Committee working group report on Enhancing
higher productivity and more and better jobs, including for people at the
margins of the labour market, EMCO/18/171006/EN-final, 2006.

(15) EESC opinion of 25 April 2007 on the Proposal for a Council Decision
on guidelines for the Employment Policies of the Member States, rappor-
teur: Ms O'Neill (OJ C 168, 20.7.2007, p. 477).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2007:168:0047:0049:EN:PDF

(16) See above.

action. Moreover, pay and employment conditions are frequently
set in accordance with minimum requirements, with serious,
long-term social consequences. This kind of approach poses a
danger to Europe's global competitiveness. Europe cannot beat
its competitors through a combination of
low-productivity
work, bad working conditions and low pay.

Traditionally, the efficiency of production capacity has
3.4
been improved by modernising production conditions and
developing production organisations to better match demand.
Investment has been made in machinery and equipment. As
result the overall level of productivity has risen. Productivity can
be increased in small steps through rationalising and stream-
lining techniques and developing products and services through
application of more intelligent production methods. This is not
enough, however,
if cooperation in the workplace does not
function effectively, employees are not motivated to work or
there are shortcomings in the working environment which
impair work performance.

growth
economic
reforms. Productivity can be

requires
deeper,
3.5 Maintaining
increased quickly
structural
through a jump-like strategic change where a company comple-
tely reorganises the way it is run and in so doing shifts on to a
new growth path. In that case jobs requiring old skills inevitably
disappear, but at that same time new jobs are created, which are
often better in terms of quality. Firms which renew themselves
create new products and new value chains. Key factors in this
process are speed, innovativeness, ability to change and involve-
ment of staff in the process. The Committee and its Consultative
Commission on Industrial Change (CCMI) are actively involved
innovation processes and the
in analysing structural change,
utilisation of technology (17). The Committee has highlighted the
importance of internal functional flexibility in promoting inno-
vation processes (18).

3.6
It is interesting to examine productivity as an aspect of
company performance. Performance can be divided into internal
and external aspects. External performance measures the compa-
ny's ability to perform in the surrounding environment.
However, productivity is most clearly seen as an internal charac-
teristic of a company, and even one which is associated with a
particular individual, machine or production cell (19).

(17) EESC opinion of 25 September 2003 on Industrial change: current
situation and prospects, rapporteur: Mr Van Iersel, co-rapporteur:
Mr Varea Nieto (OJ C 10, 14.1.2004, p. 105).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2004:010:0105:0113:EN:PDF.
EESC opinion of 29 September 2005 on Social dialogue and employee
participation, essential for anticipating and managing industrial change,
rapporteur: Mr Zöhrer (OJ C 24, 31.1.2006, p. 90).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2006:024:0090:0094:EN:PDF.
EESC opinion of 14 December 2005 on the Communication from the
Commission — Restructuring and employment — Anticipating and
accompanying restructuring in order to develop employment: the role of the
European Union, rapporteur: Mr Zöhrer, co-rapporteur: Mr Soury-
Lavergne (OJ C 65, 17.3.2006, p. 58).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2006:065:0058:0062:EN:PDF.
EESC opinion of 14 September 2006 on Susstainable development as
a driving force for industrial change, rapporteur: Mr Siecker, co-rappor-
teur: Mr Činčera (OJ C 318, 23.12.2006, p. 1).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2006:318:0001:0011:EN:PDF.

(18) EESC opinion of 11 July 2007: Flexicurity (internal flexibility dimension
— collective bargaining and the role of social dialogue as instruments for
regulating and reforming labour markets), rapporteur: Mr Janson.
http://eescopinions.eesc.europa.eu/viewdoc.aspx?doc=//esppub1/
esp_public/ces/soc/soc272/en/ces999-2007_ac_en.doc

(19) Rantanen, Hannu. Tuottavuus suorituskyvyn analysoinnin kentässä.

Lappeenranta University of Technology, Lahti Unit 2005.

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3.7
The internal aspects of company performance are innovation and productivity, the prerequisites for
which are skills and know-how, staff satisfaction and a positive attitude to change, and technology. From
these follow quality and cost-effectiveness. The external aspects are competitiveness, customer satisfaction
and market share, from which follow liquidity, profitability and solvency (see Figure 1).

Figure 1: Aspects of company performance and how they interlink

3.8
The various aspects of performance affect each other in a
spiral-like manner. For example, productivity growth leads to
lower unit costs, as a result of which company competitiveness
improves. This, in turn, means that the company succeeds in
the market and profitability increases further. As a consequence,
the company accumulates wealth, which can be spent on such
things as training, means of production and management
i.e. on improving the prerequisites for produc-
support tools,
tivity. This can be referred to as an upward spiral in produc-
tivity.
it is possible to describe a process
leading to a downward spiral in productivity.

In a similar way,

Thus sustainable productivity is a wider concept than
3.9
simply measuring productivity or analysing labour productivity.
At company level productivity is an indicator of how success-
fully a company can combine various production factors to
improve efficiency and become competitive in the market.
Sustainable productivity covers not only the physical working
environment but also the psychosocial working environment,
from which spring efficiency, creativity and innovativeness (20).

The innovativeness of a company and its staff

3.10
is
reflected in the ability to develop and renew product or service
concepts so that they create added value for customers. Innova-

(20) Professori Mika Hannula, Tampere University of Technology, lecture,

29 January 2004.

tiveness is also the ability to continually improve operational,
production and distribution processes together with staff and
partners. Thus innovation can be a tool, a piece of equipment, a
machine, a combination of these, a service model, a new way of
performing an old task, or a different solution to problems. The
ability to change is a key element of productivity.

3.11
On the basis of their innovative capability, organisations
can be classified into different categories according to level of
development. Organisations can consciously develop their inno-
vative capability and move up from one level
to another
through learning. The more advanced the practices an organisa-
tion applies in its innovation activity, the better its ability to
implement innovations (21).

(21) Bessant, John (2003): High-Involvement Innovation (translated into
Finnish by Tuomo Alasoini). Innovative capability has eight dimen-
sions:
— there is an understanding in the organisation of the strategic
importance of innovation activity which gets people involved
and is based on small steps (understanding)

— the organisation has procedures which enable people to partici-
pate in the organisation's innovative activity (getting the habit)
— the organisation's innovation activity is geared to the organisa-

tion's strategic objectives (focusing)

— the organisation's management provides adequate guidance and

support for the organisation's innovation activity (leading)

— the organisation's

are
structures, practices
designed in such a way that there is the best possible mutually
supporting relationship between these and innovation activity
and the values which guide the latter (aligning)

and processes

— in problem-solving there is networking across units within the
organisation and outside the organisation (shared problem-solving)
— the improved efficiency brought to the organisation by innova-
evaluated and developed

constantly monitored,
tions
(continuous improvement of the system)

is

— the organisation is able to able to learn continuously and
comprehensively from its experiences (the learning organisation).

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3.12
Increasing sustainable productivity means that compa-
nies and organisations prepare for future risks by anticipating
changes and adapting quickly and flexibly to changes. In these
companies everyone is committed to the ongoing development
of skills and know-how, the well-being of staff is taken care of
and employees take an active part in decision-making, especially
decisions affecting the work they do. Workers are ready and
committed to make their own input and make their skills avail-
able to further the success of the company. Management is
based on mutual recognition and cooperation, not on a position
of dominance vis-à-vis staff. Managers are able to work in part-
nership with customers, the business network in the company's
sector and research centres.

3.13
A key question in the future as regards productivity
growth and boosting productivity growth is the ability of work-
places to devise and deploy technological innovations and the
business, organisational and other social innovations in working
life which complement them. Productivity growth achieved in
this way is sustainable. It influences economic growth via two
channels: by improving the long-term productivity of work-
places/companies and by boosting labour supply, as the oppor-
tunities and desire of employees to stay longer in work increase.

4. Sustainable productivity in the workplace

4.1
A study by the European Agency for Safety and Health at
Work (22) takes a closer look at the link between the quality of
the working environment and productivity. A key research
finding is that, in today's heightened competitive conditions, a
company's success can no longer be measured solely in terms of
business indicators.

4.2
According to the study, customer satisfaction, optimising
relations within the company, innovative capacity and flexible
organisational structures are becoming increasingly important
factors. The research findings show that there is a close link
between good working conditions and a company's business
performance. The quality of the working environment strongly
influences productivity and profitability.

4.3
Productivity growth in Europe in recent years can by no
means be described as clearly sustainable in qualitative terms.
Companies still have too little knowledge about and too few
practical arrangements for improving the quality of the working
environment and identifying the positive effects this can have.
According to a survey by the European Foundation for the
Improvement of Living and Working Conditions, there have not
been any major changes in the quality of work in one direction
or the other, taken overall (23). Analyses and comparisons of

(22) European Agency for Safety and Health at Work: Quality of the
Working Environment and Productivity — Working Paper (2004).
URL: http://osha.eu.int/publications/reports/211/quality_productivi-
ty_en.pdf.

(23) European Foundation for the Improvement of Living and Working
Conditions: Fourth European Working Conditions Survey (2005).
URL: http://www.eurofound.europa.eu/publications/htmlfiles/ef0698.
htm.

conditions across the Member States show that job satisfaction
is linked to job security, a positive working atmosphere, and
good opportunities to learn and grow in one's job. Work in
itself is changing, at a faster pace than expected, becoming more
knowledge and technology based and developing a stronger
customer orientation.

The survey further

4.4
that very little progress
shows
has been made in reconciling work and family life. Flexible
working-time arrangements geared to the needs of the indivi-
dual have not become widespread. Although the occupational
health of European workers has improved, 35 % of all workers
still perceive that their health and safety are at risk because of
the work they do. The intensity of work is increasing, with
rising numbers working at high speed and to tight deadlines.
Although the performance of work requires autonomy, levels of
autonomy are not increasing. Most workers find their work
interesting and feel
it offers new challenges. Access to
training at work has not improved and is particularly difficult
for older and less qualified workers. One of the most important
changes in the workplace is the increasing use of information
technology (24).

that

In the future, a shortage of skilled labour could limit the
4.5
scope for productivity growth. However, it is worth bearing in
mind that the jobs of the future and the skills they require will
be different from today. Moreover, new ways of organising work
and more effective application of technology will reduce the
amount of labour needed. Many companies are networking on
a Europe-wide basis and the movement of workers between
Member States is increasing. For this reason, the Committee has
suggested that, despite the differences in their educational estab-
lishments, Member States must think of themselves as forming
a European ‘training area’ and recognise that there is a European
dimension to the development of working life (25).

4.6
There is therefore a need to examine more closely what
skills and knowledge will be required in working life in the
future, both in private and public sector jobs, and also how
quality of working life and productivity aspects could be incor-
porated into education and training. Degree and qualification
structures, curricula content and teaching methods, and lifelong
learning goals should be planned and implemented on this
basis. It is important to guarantee the financial possibility to
participate in education and training. The social partners have a
crucial role to play here in discussing these issues and imple-
menting measures. The European social partners have laid good
groundwork by evaluating key features of lifelong learning and
national practices (26).

(24) See above.
(25) EESC opinion of 28 October 2004 on Training and productivity,

rapporteur: Mr Koryfidis (OJ C 120, 20.5.2005, p. 64).
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:
C:2005:120:0064:0075:EN:PDF.

(26) Framework of actions for the lifelong development of competencies
and qualifications, Evaluation report 2006/ETUC, UNICE, CEEP.

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4.7
Often the skill gaps are not in areas where skills are
measurable. In addition to basic skills, key skills in the work-
place of tomorrow will be e.g.
interactive skills, self-manage-
ment, the ability to learn and acquire new knowledge, extracting
the essential from a complex flood of information, and the
skills needed to work in multi-cultural workplaces and networks.
In this kind of environment, young people who leave school
early or with inadequate knowledge pose a special challenge.

promoting productivity, quality of working life and cooperation
in the field of productivity. The members of the round table are
representatives of the highest executive bodies from all of the
In some
central organisations of employers and employees.
Member States the social partners also play an active part in
national enterprise development programmes. Good case studies
can be found in all of the Member States (28).

4.8
In business management, the skill gaps are found particu-
larly in the areas of strategic business skills and innovation
management. Human resource management should be seen as a
strategic aspect of management. These skills could act as a new
kind of stimulus to economic growth.

5. Promoting sustainable productivity

5.1 Policy and practical measures

5.1.1
SMEs and large companies with a network of subcon-
tractors have the capacity to harness the potential for success
offered by sustainable productivity growth. Other beneficiaries
are service organisations in the public and third sectors which
need and want to improve their productivity in a sustainable
and qualitative way and ensure that they continue to have at
their disposal a high-quality, professional workforce.

5.1.2
Sustainable productivity growth can be promoted by
policy measures which target the whole of society, companies
and public organisations, workplaces and individuals. Because of
their wide scope, social changes relating to e.g. training, indus-
trial relations, measures to reconcile work and family life, health
and safety at work, occupational health care, vocational training,
professional
retirement
rehabilitation, pension benefits, or
opportunities, are important in the long term. Legislation can
be used to encourage good projects. By contrast, improvements
in well-being at work at the level of the individual have a rapid
impact but are insufficient by themselves and their overall
impact in the workplace can be rather small.

5.1.3
Sustainable productivity growth can best be fostered by
promoting company and workplace practices and procedures in
such a way that they better support and enhance workers' indi-
vidual resources, workplace resources and innovation skills. The
social partners have a special role to play in this regard.

5.1.3.1
At European level, the social partners agreed in their
new work programme for 2006-2008 to make a joint analysis
of the key challenges facing Europe's labour markets (including
such issues as promoting lifelong learning, competitiveness and
innovation) (27). At national level, for example, the central orga-
nisations of the Finnish social partners set up a Productivity
the beginning of 2007 with a view to
Round Table at

(27) Work programme of the European Social Partners 2006-2008.

URL: http://www.etuc.org/IMG/pdf/Depliant_EN_HD2006-2008.pdf.

5.1.4
In some cases, legislative changes relating to environ-
mental protection have triggered innovation needs. For example,
the ban on asbestos use has prompted the need to develop
replacement technologies, stricter noise regulations have spurred
the development of technical equipment with low noise emis-
sions levels, energy technology needs have led to the introduc-
tion of new equipment and building insulation needs to the
development of new materials. Thus legislation has supported
industry's own efforts and encouraged innovation.

5.1.5 Member States have adopted various economic instru-
ments designed to improve the quality of working conditions or
to support companies investing in innovative work organisation
models. Among the instruments used are public aid and subsi-
dies and funding (cheap bank loans). By way of example,
mention may be made of Ireland's National Workplace Strategy,
the New Quality of Work Initiative (INQA)
launched by
Germany and Finland's Workplace Development Programme, in
all of which government initiative and public funding play a
central role (29). The great advantage of such programmes is that
the development work takes place in workplaces. Crucial to the
programmes is a strong commitment to them at the political
in development
level and motivating workers to take part
projects.

5.2 European quality of work index

5.2.1
In order for Europe to be able to respond to the chal-
lenges of globalisation and successfully achieve the Lisbon
Strategy objectives, it is important to monitor improvements in
the quality of work in Member States and at European level and
their links to productivity growth. Accordingly, the EESC has
earlier suggested that a European index measuring quality of
work is needed for this purpose. The index would be developed
applying various criteria for ‘good work’ on the basis of relevant
studies, and would be regularly collated and published (30). Such
an index could help raise the profile of changes and progress
and their effects on productivity, and at the same time form the
basis for new initiatives to improve the quality of working life.
At present, quality of work and productivity are analysed in
many different ways and different organisations are developing
indicators of their own independently of each other. The new
European index could incorporate elements from these indica-
tors.

(28) For example, at the hearing held by the study group on 10 May 2007
Mr Santo Portera, finance director of the Maltese company STMicroe-
lectronics, explained how the company had successfully responded to
the challenges of globalisation by putting emphasis on high
ethical standards in its activities, ensuring and improving staff skills,
well-being at work and work organisation, and encouraging innova-
tion.

(29) Ireland: www.workplacestrategy.ie, Cathal O'Reagan, at the hearing

held on 10 May 2007.
http://inqa.de, Kai Schäfer, representative of the German government
and presidency, at the hearing held on 10 May 2007.
http://www.mol.fi/mol/en/01_ministry/05_tykes/index.jsp.

(30) See footnote 10.

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5.2.1.1
In accordance with a Council Decision, an assessment
was made in 2003 of the progress made by Member States
using a set of indicators built on ten dimensions of quality in
work. Although some progress had been made, it emerged that
there was considerable scope for improvement. In particular, the
trend in productivity growth was disappointing.
It was
concluded that there was a need for more determined policy
action, especially with respect to encouraging investment by
firms in training and supporting the working ability of an
ageing workforce (31).

According to the European Foundation for

5.2.1.2
the
Improvement of Living and Working Conditions (the Dublin
Foundation), innovative firms and workplaces are characterised
by freedom to learn and a sense of autonomy at work, team-
work, the possibility to rotate job tasks and multi-skilling. Thus
a key factor here is enhancing employees' skills and allowing
them to be
actively involved in developing production
in spring 2007 the Foundation launched
processes. Besides,
extensive new research on the links between innovation,
productivity and employment which is due to last for three
years. The first stage is concerned with mapping existing
research on the subject in order to prepare for adding a produc-
tivity and performance dimension to the Foundation's European
Company Survey in 2008. The Foundation is also actively
involved in development of a new quality of work index (32).

5.2.1.3
Studies by the European Agency for Safety and
Health at Work on the importance of quality of work for
productivity clearly show that there is a close link between the

Brussels, 26 September 2007.

quality of the working environment, productivity and business
performance. The Agency concludes that, if risks associated with
safety and health at work are not examined in detail in work-
places, or nothing is done to deal with them, it is impossible to
achieve productivity targets (33). This year's European awareness-
raising campaign focuses on the prevention of musculoskeletal
disorders (MSDs). The aim is also to identify examples of good
practice for the rehabilitation of people with MSDs. Preparations
are already under way for the 2008 European Week, which will
focus on workplace risk assessment.

5.2.1.4
The workplace development programme launched by
the Germany presidency includes a research project which aims
to define more precisely what is meant by ‘good work’. The
programme also includes an index developed by the German
Trade Union Association (DGB) for evaluating the quality of
jobs. The index is based on employees' own assessments, where
they rate their work according to 15 criteria. The aim is to
calculate the index annually, and the first results will be available
in autumn 2007 (34).

The development of a European quality of work index
5.2.2
requires the creation of a broad forum. The strong and wide-
ranging expertise which the European Economic and Social
Committee possesses with regard to the challenges of a changing
workplace and responding to such challenges would serve as a
good basis for such a forum. The Labour Market Observatory
could also examine this issue if its work programme permits.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(31) Communication from the Commission to the Council, the European
Parliament, the European Economic and Social Committee and the
Committee of the Regions: Improving quality in work — a review of
recent progress, COM(2003) 728 final.

(32) www.eurofound.europa.eu; Radoslaw Owczarzak, EMCC, at

the

hearing held on10 May 2007.

(33) www.osha.europa.eu; Brenda O'Brien, at the hearing held on 10 May

2007.

(34) http://inqa.de; Kai Schäfer, representative of the German government

and presidency, at the hearing held on 10 May 2007.