ommission staff working document accompanying the fifth progress report on economic and social cohesion - Growing Regions, growing Europe {COM(2008) 371final}
Date: 2008-06-19
Institutions: European Commission
Subjects: EU policy, economic and social cohesion, economic convergence, economic growth, economic sector, employment statistics, governance, regional economy

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.06.2008 
SEC (2008) 2047 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

FIFTH PROGRESS REPORT ON ECONOMIC AND SOCIAL COHESION 
Growing Regions, growing Europe 

{COM(2008) 371final} 

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COMMISSION STAFF WORKING DOCUMENT  
accompanying the Fifth Progress Report on economic and social Cohesion 
Growing Regions, growing Europe 

1. 

FIGURES AND TABLES 

Figure  1  –  Convergence  of  GDP  per  head,  employment  rates  and  unemployment  rates, 
2000-2006 

Figure 1 - Dispersion of regional (NUTS2) key indicators (%) (coefficient of variation)

115

110

105

100

95

90

85

80

75

70

GDP/head

Employment rate

Unemployment rate

2000

Source: Eurostat

2001

2002

2003

2004

2005

2006

Table  1:  Main  characteristics  for 
Competitiveness and Employment regions 

the  Convergence,  Transition  and  Regional 

Population share in 2005 in %
Average annual change in population 2000-2005 in % ***
Number of regions*
Employment rate in 2006 in %**
Change in employment rate 2000-2006 in percentage points 
**
Unemployment rate in 2006 in %***
Change in unemployment rate 2000-2006 in percentage 
points ***
GDP per head in 2005, EU27=100 ****
Change in GDP per head 2000-2005 in index points 
EU27=100 ****
R&D as % of GDP, 2004 or most recent year
* DEE0 (Sachsen-Anhalt) taken into account as Convergence region

** based on NUTS breakdown valid 1/1/2007
*** Excluding two UK, PT, DE and one Finish region (no data)

*** excl. UKM5 and UKM6 (no data)

Source: Eurostat and DG REGIO calculations

Conv

Transition RCE

EU27

31.4
-0.13
84
57.6

1.6
11.0

-2.9
58

4.3
0.77

7.2
0.75
28
62.8

5.2
8.8

-2.5
95

5.6
0.94

61.3
0.58
159
68.1

2.1
6.8

0.2
122

-3.7
2.07

100
0.37
271
64.4

2.2
8.2

-1.0
100

0
1.85

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Table 2: Employment and GVA share and change in six sectors, 2000-2005 

Share in 2005 in %

Employment
Conv

Agriculture, hunting and fishing           
Total industry, including energy
Construction
Trade, transport & communication
Financial and business services
Other services
Total  
Share of EU27

15.5
21.4
7.5
23.3
8.5
23.9
100.0
27.5

Transition
5.2
15.1
10.4
29.2
11.1
29.0
100.0
6.1

RCE

EU27

Conv

GVA

2.7
17.0
6.6
25.9
16.9
30.8
100.0
66.4

6.4
18.1
7.1
25.4
14.2
28.8
100.0
100.0

4.8
20.7
7.7
23.1
19.6
24.1
100.0
12.9

Transition
3.0
16.9
8.5
25.9
21.6
24.2
100.0
5.7

RCE

EU27

1.4
20.4
5.5
21.0
29.4
22.4
100.0
81.5

1.9
20.2
6.0
21.4
27.7
22.8
100.0
100.0

Average Annual Change 
2000 - 2005 in %

Employment

Conv

Agriculture, hunting and fishing           
Total industry, including energy
Construction
Trade, transport & communication
Financial and business services
Other services
Total  
Note: Due to the lack of regional data in the UK, national data was used and all of UK was considered as RCE.

-6.8
-0.6
0.5
1.3
3.8
0.9
-0.7

-2.0
-2.0
0.8
0.6
1.9
1.3
0.5

Transition
-4.8
-0.9
2.0
1.3
4.0
1.2
0.9

-5.5
-1.5
0.8
0.8
2.3
1.2
0.2

GVA

RCE

EU27

Conv

Transition
-1.5
1.7
3.0
3.3
4.1
2.8
2.9

0.9
3.3
0.9
2.8
2.9
1.8
2.4

RCE

EU27

-0.4
0.6
1.1
2.1
2.5
1.4
1.6

-0.1
0.9
1.2
2.2
2.6
1.5
1.8

Source: Eurostat and DG REGIO calculations

Table 3: Productivity by sector in 2005 by type of region 

Conv

2005 GVA per person employed EU27=100
Agriculture, hunting and fishing                          
65
Total industry, including energy
150
Construction
105
Trade, transport & communication
101
Financial and business services
217
Other services
91
Total  
125
Note: Due to the lack of regional data in the UK, national data was used and all of UK was considered as RCE.

Transition
54
106
77
83
183
78
94

15
46
49
47
111
48
48

RCE

EU27

30
112
84
85
192
79
100

Source: Eurostat and DG REGIO calculations

Table 4: Share of knowledge workers and population with high educational level by type 
of region, 2006 

Conv

Transition RCE

EU27

Share of knowledge workers (ISCO 1,2,3) as % of total 
employment
Change in share of knowledge workers 2000-2006 in 
percentage points 
Share of population 25-64 with high educational level (% of 
total population 25-64)
Change in share of population 25-64 with high educational 
level 2000-2006 in percentage points
Share of Human Resources in Science and Technology 
(core) (% of active population) 2006
Change in share of Human Resources in Science and 
Technology (core) 2000-2006
The breakdown by category does not include FR9, DE41, DE42, UKM6 and UKM5

30.6

3.5

17.0

3.1

12.4

3.1

Source: Eurostat and DG REGIO calculations

34.1

41.3

37.7

1.9

3.4

3.4

24.0

25.6

22.8

4.1

3.0

3.0

15.7

17.0

15.5

2.5

2.2

2.6

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2. 

IDENTIFYING EUROPEAN HIGH GROWTH SECTORS 

At the national and European level, total employment and GVA can be broken down into 
301  NACE  categories  based  on  the  national  accounts  data.  Regional  accounts  also 
provides a breakdown of employment and GVA but only in a six sector breakdown for 
NUTS2 regions.  

Therefore,  growth  sectors  are  first  identified  at  the  EU27  level  based  on  the  30  sector 
breakdown.  In  a  second  step,  these  growth  sectors  are  then  related  to  the  six  sector 
breakdown at the regional level.  

At  the  European  level,  several  sectors  experienced  high  growth  in  GVA  and/or 
employment. Figure 2 shows four quadrants according to GVA growth (above and below 
average) and employment growth (above and below) average. The quadrant where both 
employment  and  GVA  growth  is  above  the  EU  average  were  selected.  Two  more 
quadrants  were  partially  considered.  In  one  quadrant,  GVA  growth  was  above  average 
but  employment  growth  was  below.  The  sectors  where  GVA  growth  was  sufficiently 
high  to  compensate  for  lower  employment  growth  or  in  some  cases  even  employment 
decline were selected. In the other quadrant employment growth was above average, but 
GVA growth was below. Again in this quadrant only the sectors where high employment 
growth compensated for low GVA growth were included as growth sectors. The line on 
figure 2 shows this distinction. 

The  second  step  of  the  selection  involved  considering  whether  all  these  sectors  are 
drivers of economic growth. Two sectors were considered to be more beneficiaries than 
drivers  of  economic  growth:  Activities  of  households  and  Health  and  social  work. 
Activities  of  households  were  excluded  because  it  is  a  very  small  sector,  especially  in 
terms  of  GVA.  The  Health  and  social  work  sector  was  excluded  as  expenditure  in  this 
area contributes to well-being, but is not a main driver of the economy. Nevertheless, due 
to the ageing  of  the EU population, the Health and Social work sector will continue to 
grow and cover an important and growing share of total employment.  

The  Education  sector,  which  was  not  retained  as  growth  sector  due  to  its  low  GVA 
growth, is also likely to continue to grow given the increasing importance of education 
for the competitiveness of the EU, as mentioned in the Communication. 

The  education  and  the  health  and  social  work  sector,  however,  both  share  the 
characteristic  that  their  performance  cannot  be  determined  from  GVA  or  employment 
shares  or  growth.  The  main  goal  of  these  sectors  is  to  increase  the  health  and  the 
education  level  of  the  EU's  population.  Therefore,  increases  in  expenditure  and 
employment in these sectors have to be assessed in the light of these goals. As such an 
analysis  was  not  feasible  within  the  confines  of  this  communication  and  they  were  not 
included in the analytical section. 

As a result, nine sectors were identified as EU growth sectors (See Figure 2):  

–  Two  services  sectors  with  high  productivity  levels:  Business  activities  (K)  and 

Financial services. (J) 

1 

One  category  "Q:  Extra-territorial  organizations  and  bodies"  was  empty  both  at  national  and 
regional levels and has thus been excluded from this analysis. So the breakdown is officially in 17 
and 31 categories respectively. To avoid confusion, as the graphs only show 16 and 30 categories, 
the text refers to 16 and 30 categories. 

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–  Three  services  sectors  with  either  high  employment  or  GVA  growth  and  average 
productivity: Trade (G); Hotels and restaurants (H); and transport and communication 
(I) 

–  Construction  which  experienced  strong  employment  growth  combined  with  a  fairly 

strong, but below average, GVA growth (F) 

–  Three  manufacturing  sectors  which  achieved  high  GVA  growth  despite  a  decline  in 
employment:  Chemicals  and  man-made  fibres,  Electrical  and  optical  equipment  and 
Transport  equipment.  These  three  sectors  together  constitute  the  so-called  high  and 
medium-high tech manufacturing sector. (DG, DL, DM) 

In  order  to  fit  the  format  of  regional  data,  these  sectors  are  aggregated  under  broader 
categories.  The  first  group  falls  under  the  heading  Financial  and  business  services 
(J+K),  the  second  under  Trade,  transport  and  communication  (G+H+I),  and 
Construction (F) remains (See Figure 1).  

The  fourth  group  is  not  identifiable  at  the  regional  level.  Regional  data  combines  the 
three manufacturing sectors with all other manufacturing sectors, several of which are in 
decline (see Figure 2), as well as Mining and Electricity, gas and water supply under the 
heading Industry (C+D+E). As a result, this aggregate can not be considered as a pure 
growth sector (See Figure 1). 

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Figure 1: Table linking the NACE 30 sector breakdown at EU level to the 6 sector 
breakdown at regional level, identifying growth sectors 

Data at National and European Level 

Data at the regional level

NACE 
Code
A
B
C
D

DA

Full Name of Sector
Agriculture, hunting and forestry
Fishing
Mining and quarrying
Manufacturing
Manufacture of food products, beverages 
and tobacco

DB

Manufacture of textiles and textile products

DC
DD

DE

DF

DG

DH

DI

DJ

DK

DL
DM
DN
E
F

G
H
I
J

K

L
M
N

O
P

Manufacture of leather and leather products
Manufacture of wood and wood products
Manufacture of pulp, paper and paper 
products; publishing and printing
Manufacture of coke, refined petroleum 
products and nuclear fuel
Manufacture of chemicals, chemical 
products and man-made fibres

Manufacture of rubber and plastic products
Manufacture of other non-metallic mineral 
products
Manufacture of basic metals and fabricated 
metal products
Manufacture of machinery and equipment 
n.e.c.
Manufacture of electrical and optical 
equipment
Manufacture of transport equipment
Manufacturing n.e.c.
Electricity, gas and water supply
Construction
Wholesale and retail trade; repair of motor 
vehicles, motorcycles and personal and 
household goods
Hotels and restaurants
Transport, storage and communication
Financial intermediation

Real estate, renting and business activities
Public administration and defence; 
compulsory social security
Education
Health and social work
Other community, social and personal 
service activities
Activities of households

Growth 
Sector?

NACE 
Code

A+B

Full Name of Sector
Agriculture, hunting 
and fishing                  

Growth 
Sector?

No

Productivity 
(EU27=100)
29
66
216
101

90

54

58
64

114

415

205

Y

C+D+E Industry

In part

Y
Y

Y

Y
Y
Y
Y

Y

F

Construction

G+H+I

Trade, transport & 
communication

J+K

Financial and 
business services

Y

Y

Y

L thru P Other services

No

94

100

94

106

108
120
63
271
85

77
66
122
207

189

95
74
77

88
29

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Figure 2: Change in GVA and employment by sector in EU27, 2000-2006 

Change in GVA and employment by sector in the EU27, 2000-2006

5%

4%

3%

2%

1%

0%

-1%

-2%

-3%

-4%

-5%

.

5
0
-
0
0
0
2
,
t
n
e
m
y
o
p
m
e
n

l

i
e
g
n
a
h
C
e
g
a
r
e
v
A

l

a
u
n
n
A

EN 

This line shows distinguishes sectors with a combined above 
average growth on GVA and employment (above the line) from 
those sectors with a below average growth (below the line)

EU Growth sectors in Green

Activities of households

Hotels and restaurants

Business activities

Construction

Health and social work

EU27 Average change in employment 

Social and personal services

Education
Public administration etc

Trade

Manufacturing n.e.c.

Manufacture of 
basic metals

Manufacture 
of wood

Manufacture 
of food

Manufacture of coke,
petroleum and nuclear fuel

Fishing

Mining and quarrying

Manufacture of paper
 and publishing

Manufacture of 
other non-metallic 
mineral products

Electricity, 
gas and 
water supply

Agriculture

Manufacture of textiles

Manufacture of leather

Financial 
services

Manufacture 
of rubber & 
plastic products

Transport and communication

Manufacture of ransport equipment

Manufacture of 
machinery n.e.c.

Manufacture of chemicals & man-made 
fibres

High and medium-high 
tech manufacturing

Manufacture of 
electrical and 
optical equipment

E
U
2
7
A
v
e
r
a
g
e
c
h
a
n
g
e
i

n
G
V
A

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

Annual Average Change in GVA, 2000-06

Bubble size reflects average employment 
and GVA share in 2005/2006

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3. 

SOURCES OF DATA AND REFERENCE YEARS 

The data presented in the fifth Progress Report is derived mainly from three sources: National 
accounts, Regional accounts and the Labour Force Survey. 

Due  to  the  different  rhythms  at  which  these  data  sources  are  updated,  the  report  contains  a 
mix of end years. Below follows an overview of the availability of data by source: 

(1) 

National accounts 30 sector breakdown of GVA and employment 

From  this  source  GVA  was  available  up  until  2006,  while  employment  was  only 
available up until 2005 

(2) 

Regional accounts  

Regional accounts provides data on employment and GVA by sector, population and 
GDP up until 2005.  

–  Population  and  GDP  are  almost  complete  with  only  two  new  NUTS  regions  in 

Northern Scotland missing 

–  GVA for the 6 sector breakdown is complete with the exception of the UK 

–  Employment for the 6 sector breakdown is complete with the exception of the UK 

(3) 

Labour Force Survey 

This  source  provides  a  wide  range  of  data 
including  employment  rates, 
unemployment  rates,  education  levels,  knowledge  workers  and  employment  by 
sector. Data is available up until 2006. Due to changes in the NUTS boundaries, time 
series may not cover the entire period 2000-2006. 

–  Unemployment rate is complete with the exception of two new NUTS regions in 

Northern Scotland  

–  Employment by sector is complete. However to ensure a sufficiently large sample, 
the  average  of  2005-2006  was  used  for  employment  in  Trade,  Hotels  and 
Restaurants,  High  and  medium-high  manufacturing  and  Knowledge  intensive 
services.  

–  Change in employment by sector could not be calculated for the smaller sectors as 
the  changes  were  almost  always  within  the  margin  of  error.  Therefore,  national 
employment  data  from  national  accounts  was  used  instead.  This  is  the  case  for 
Trade, Hotels and Restaurants and High and medium-high tech manufacturing.  

–  Share of Knowledge workers is complete. 

–  High Education level is complete 

4. 

4.1. 

DEFINITIONS 

Human Resources in Science and Technology Core 

The  group  is  defined  by  the  OECD  publication:  "Manual  on  the  measurement  of 
human resources devoted to S&T "Canberra Manual" 1995 

This indicator covers people who have successfully completed education at the third 
level  in  an  S&T  field  of  study  and  are  employed  in  an  S&T  occupation.  It  is 
measured as a share of the economically active population. 

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4.2. 

Knowledge Workers 

This defines employment by the type of occupation in all sectors. It covers the first 
three  classes  of  the  International  Standard  Classification  of  Occupations  (ISCO)  as 
defined by the International Labour Organisation classification: (1) legislators, senior 
officials  and  managers,  (2)  professionals  and  (3)  technicians  and  associate 
professionals. 

4.3. 

High and medium-high tech manufacturing 

Eurostat defines this group as the following NACE 2 digit codes:  

24 Manufacture of chemicals and chemical product,  

29 Manufacture of machinery and equipment n.e.c.; 

30 Manufacture of office machinery and computers; 

31 Manufacture of electrical machinery and apparatus n.e.c.; 

32 Manufacture of radio, television and communication equipment and apparatus; 

33 Manufacture of medical, precision and optical instruments, watches and clocks; 

34 Manufacture of motor vehicles, trailers and semi-trailers; 

35 Manufacture of other transport equipment, excluding 35.1 Building and repairing 
of ships and boats 

This  group  can  be  aggregated  to  the  NACE  codes  DG,  DL  and  DM  with  the  only 
issue that it does not excluding 35.1 Building and repairing of ships and boats. This 
aggregation means that this sector can be identified in the 30 sector breakdown. This 
is also the definition that was used to measure employment. 

4.4. 

Knowledge intensive services 

Eurostat defines knowledge intensive services as following: 

61 Water transport; 

62 Air transport; 

64 Post and telecommunications; 

J: 65 to 67 Financial intermediation; 

K: 70 to 74 Real estate, renting and business activities; 

M: 80 Education; 

N: 85 Health and social work; 

92 Recreational, cultural and sporting activities 

Due to the detailed breakdown of the NACE codes, only employment data based on 
the LFS is available.  

GVA can only be provided for a proxy which included 63 (Supporting and auxiliary 
transport  activities;  activities  of  travel  agencies)  and  excludes  92  (Recreational, 
cultural and sporting activities), which was not used in this report. 

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