Source: EURLEX
Language: en
Format: md

*|*

# 52014DC0130R(01)

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Taking stock of the Europe 2020 strategy for smart, sustainable and inclusive growth /\* COM/2014/0130 final/2 \*/**

  

COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

Taking stock of the Europe 2020 strategy
 for smart, sustainable and inclusive growth

Introduction[1]

Early in 2010, the Commission
proposed the Europe 2020 strategy which was launched as the EU’s strategy for
smart, sustainable and inclusive growth.[2]
The aim was to improve the EU's competitiveness while maintaining its social
market economy model and improving significantly its resource efficiency. When
it was launched the Europe 2020 strategy was a front runner in advocating a
growth model going beyond simply increasing GDP. Today many bodies promote
smart, sustainable and inclusive growth as a crucial element of economic
development.

The Europe
2020 strategy was initiated against a background of lower growth and
productivity levels than in other developed countries and a rapidly
deteriorating economic and social environment, in the wake of the worst global
financial crisis the EU has ever faced. It drew the lessons from the Lisbon strategy for growth and jobs which was launched in 2000, renewed in 2005 and was in
place until 2010. The founding document made it clear that the "short-term
priority (was) a successful exit from the crisis", but that "to
achieve a sustainable future", the EU needed "to tackle its
structural weaknesses" and "already look beyond the short-term".
The ambition was to "come out stronger from the crisis and turn the EU
into a smart, sustainable and inclusive economy, delivering high levels of
employment, productivity and social cohesion."[3]

The strategy was
conceived as a partnership between the EU and its Member States, with a set of
goals focused around the priorities of smart, sustainable and inclusive growth,
and a dedicated delivery system. It set out five interrelated headline targets
for the EU to achieve by 2020 in the areas of employment, research and
development (R&D), climate change and energy, education, and the fight
against poverty and social exclusion. The targets were not exhaustive but
considered exemplary of the kind of dynamic change advocated in the strategy.

To catalyse progress
at EU level, the Commission set out seven flagship initiatives[4], which included
specific work programmes in areas identified as important levers for growth. In
addition, the strategy has served as a frame of reference for action at EU
level in the areas of the Single Market, the EU budget for 2014-2020 and the
EU’s external policy agenda.

Any review of the
Europe 2020 strategy must take account of the financial and economic crisis of
recent years and the EU's response to it (see box 1). As the crisis spread and
took on new forms, a particular challenge for the EU was to break
the vicious circle between rising levels of sovereign debt, contagious financial
instability and low or even negative growth. This required both short-term and systemic
action, notably within the Euro area, such as the establishment of a lending
capacity for countries in financial distress and stronger rules for economic
governance as well as enhanced financial supervision and regulation.

Box 1. EU action to overcome the financial and economic crisis 2008-2013 In November 2008, the Commission launched a European Economic Recovery Plan to increase investments in infrastructure and other key sectors, and it proposed that Member States co-ordinate their national budgetary stimulus packages. The total package represented around EUR 200 billion or 1.5 % of EU GDP. State aid rules and rules for the use of EU funds were also adjusted to facilitate the mobilisation of public funds. As the recovery was short-lived and as the risks of a fully-fledged sovereign debt, financial and economic crisis spread, several decisions were taken, among which: - A crisis resolution mechanism was set up to mitigate the risk of contagion and financial fragility across Member States. In May 2010, two temporary crisis resolution mechanisms were established: the European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF). In 2012, the Euro area Member States decided to create a permanent crisis resolution mechanism, and the European Stability Mechanism (ESM), with a financial firepower of EUR 500 billion, which was established in October 2013. Loans were granted to countries in financial distress. - The EU embarked on an ambitious and substantial reform of its financial system. The EU tightened supervision of financial markets by establishing a European System of Financial Supervisors (ESFS) composed of three sector-specific European Supervisory Authorities (ESAs) and of a macro-prudential watchdog, the European Systemic Risk Board (ESRB). Major steps were also taken towards a "Banking Union", comprising a single centralised mechanism for the supervision of banks, taking effect as of November 2014, and agreement on ways to restructure and resolve failing banks. - EU economic governance was reinforced significantly by fully integrating the various components of economic and budgetary surveillance under the European Semester of economic policy coordination. In 2011, a legislative package[5] introduced a new Macroeconomic Imbalance Procedure (MIP) to prevent and correct economic imbalances. The Stability and Growth Pact (SGP) was also reinforced. A complementary set of regulations[6] entered into force in May 2013, providing inter alia for Commission's scrutiny of draft budgetary plans of Euro area Member States. In the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (EMU), the Euro area signatory Member States (and some non-Euro area Member States) have committed to integrating the core principles of the SGP into their national legal order. In December 2013, a new scoreboard of key employment and social indicators was approved by the Council and integrated in the Joint Employment Report.

A crisis on the
scale of recent years required an immediate and strong policy response to supplement
the longer-term aims of the Europe 2020 strategy. From its Annual Growth
Surveys, where it set out EU-wide priorities for the coming year, to the
presentation of targeted legislative proposals and the issuance of
country-specific guidance, the Commission has been advocating a mix of actions to
stabilise
the financial sector combined with recovery strategies, fiscal consolidation
efforts and structural reforms adjusted to country specificities and reflecting
the interdependencies of EU economies.

To monitor and
advance national implementation of the Europe 2020 strategy, Member States were
invited to set their own targets and to spell out detailed actions as part of
their national reform programmes. These programmes are reviewed annually at EU
level as part of the European Semester of economic policy coordination.
Conceived as a way to reinforce EU's economic governance, the first European
Semester started early in 2011 and the mechanism has rapidly established itself
as
the new annual policy cycle of economic guidance and monitoring at EU level
(see below and annex 1). Reflecting the partnership approach, there is regular
dialogue with
the European Parliament and the various formations of the Council.

Four years after
launching the Europe 2020 strategy, the purpose of this Communication is to
take stock.[7]
The European Council is expected to hold a first discussion at its meeting in
March 2014, following which the Commission will launch a public consultation to
gather the views of all stakeholders to help it develop
the strategy for the 2015-2020 period.

1.           Where does Europe stand four years on?

In 2009, the
European economy suffered an unprecedented blow: a contraction of 4.5% in GDP.
A temporary respite in economic decline in 2010 proved short lived and the
negative trends continued through 2011 to 2012. A gradual recovery has set in
since 2013 and is expected to continue, with real GDP projected to grow again
by 1.5% in 2014 and 2.0% in the EU in 2015.[8]
The EU average expresses diverse growth trajectories and very different
experiences during the crisis across Member States, with some countries
particularly hard hit and others faring better over time.

At the launch of the
Europe 2020 strategy in 2010, the depth and length of the crisis were still
largely unknown. Various scenarios were considered for the following decade,
ranging from a return to " strong" growth, a scenario of "sluggish"
recovery or the risk of a "lost decade". A lot depended on the
ability of the EU to exit rapidly and strongly from the 2009 recession.[9]

Graph 1. EU and Euro area real GDP level over 2000-2020 (index 2010
= 100)

Four years on, it
has become clear that the likely growth trajectory for the EU over 2010-2020 is
closer to the second scenario (i.e. around 1.3% per annum). As graph 1
indicates, the economic output in the EU in 2014 is expected to reach the same
level as in 2008, with losses from the downturns now offset by the ongoing
recovery. However, the impact of the crisis is both immediate and longer-term:
it has already cost Europe a loss in wealth, and it has also eroded its
potential for future growth as jobs, firms and "know-how" have been
lost.

According to the
latest forecasts[10],
the EU's annual GDP growth could be in the order of 1.6% throughout the period
2014-2020, compared to 2.3% over 2001-2007 (prior to the crisis). Expressed in
GDP per capita, average annual growth in the EU would thus be in the order of
0.9% over 2014-2020, compared to 1.8% over 2001-2007.

A first critical
step in designing a post-crisis growth strategy for the EU is
to understand clearly the full impact of the crisis and to share a common
diagnosis of where Europe stands. In so doing, it is also important to bear in
mind that seeking
to return to the growth "model" of the previous decade would be both
illusory
and harmful: fiscal imbalances ; real estate bubbles ; widening social
inequalities ; lack of sufficient entrepreneurship and innovation ;
dysfunctional financial systems ; growing energy dependency ; multiple
pressures on the use of resources and the environment; sharp increase in unemployment;
weaknesses in education and training systems; underperforming public
administrations – these were
issues that could be observed but that were not resolved in the past. They
contributed to the collapse of parts of our economies when the full crisis hit.

Behind headline figures on GDP, it is also essential to look at, and sometimes
re-discover, the underlying trends and structural changes determining Europe’s ability to grow. This is also why understanding and stimulating the factors that
drive progress towards the Europe 2020 targets is of critical importance.

1.1.        The impact
of the crisis

The sustainability of public and
private finances is at stake

Government deficits
reached 6.5% of GDP on average in 2010 in the EU and are expected to decrease to
2.7% in 2015.[11]
This reflects the massive efforts made in several Member States, particularly
in 2011 and 2012, to restore the sustainability of their public finances.[12] However, given the
accumulation of deficits and the slowdown in growth, sovereign debt ratios have
increased markedly, from 60% of GDP on average before the crisis, to 80% in
2010 and they are forecast to reach 89.5% in 2015.[13] With growth resuming
and deficits shrinking, gross government debt is expected to start declining in
2015. Improving the quality of public expenditure and placing greater emphasis
on the efficiency of public administrations and making tax systems more
growth-friendly, including by further shifting the tax burden from labour to
tax bases linked to consumption, property and pollution, will play an
increasingly important role in safeguarding and shaping the future of the
European growth and social models.

Levels of private
debt – households and companies – were also particularly high in some countries
prior to the crisis and have increased further as a result. Reducing financial
exposure is a priority for many private actors. However, it may have
the adverse side effect of slowing growth for some time to come, particularly
in a context of low growth and low inflation.

Despite some stabilisation in the
financial sector, access to finance remains limited in some parts of the EU

The
overall situation in financial markets has shown encouraging developments in
recent months but these still need to translate into the real economy and some
fragilities remain within the financial sector. After 24 successive quarters of
tightening since 2008, bank lending to small and medium-sized enterprises
(SMEs) has shown some first signs of relaxation in the first quarter of 2014.[14] However,
access to finance remains a concern in large parts of the EU and varies between
Member States, pointing to an issue of market fragmentation.

Rising levels
of unemployment and poverty

Unemployment has
increased sharply in Europe as a result of the crisis, from a rate of 7.1% in
2008 to a peak of 10.9% in 2013. Given the time lag between recovery and net
job creation, the unemployment rate is expected to decline only slowly in
the foreseeable future (10.4% in 2015[15]).

The situation has
become more entrenched with time. Long-term unemployment – i.e. the percentage
of active population unemployed for more than a year – has increased by 2.1
percentage points between 2008 and 2012 (from 2.6% to 4.7%). This may point to
an increase in the level of structural unemployment, which has far-reaching
consequences for the labour force and the growth potential of the economy, and
also for the political and social fabric of the EU – notably in terms of rising
levels of poverty and social exclusion (see below).

The situation varies
very significantly across countries and regions, with unemployment rates
ranging from 5.0% in Austria to 27.6% in Greece in 2013. All age groups are
concerned but the situation is particularly difficult for persons over 55 and
for young people, with youth unemployment rates – the percentage of unemployed
young people aged 15-24 – reaching 23.3% on average in the EU in 2013, and as
much as 59.2% in Greece and 55.7% in Spain. The increasing share of young
people neither in employment nor in education or training (NEETs), at 13.2% in
2012, is another major source of concern.

Diverse
situations across the EU

Although significant
differences already existed across the EU prior to the crisis, its severity has
revealed a series of imbalances accumulated over the years. The crisis has amplified
a growing divergence across and often within Member States. Distinguishing
between cyclical and structural trends is particularly difficult in times of
extreme adverse circumstances, and there is a risk that several effects of the
crisis become long-standing. One of them is a more diverse EU in terms of
economic situation and performance. This diversity is also apparent when
reviewing progress towards the Europe 2020 targets.

1.2.        Long-term trends
affecting growth

The Europe 2020 strategy
was launched with a vision of the long-term challenges confronting the EU. Some
of these challenges were starkly highlighted during
the crisis, others have sometimes been neglected because of the many other
pressing issues topping the political agenda. Most of the challenges identified
in 2010 have not gone away and some have even intensified.

Societal
change

European society is
transformed by domestic and global forces, to which everyone is adapting: new
forms of urban and rural lifestyles, new consumption and mobility patterns, new
and more diverse family settings, the growing presence of technology in daily
lives, etc. Two trends, in particular, will frame the Europe 2020 strategy.

First, the ageing of
the European population creates a new context, with both opportunities and
challenges. Ageing is a gradual yet very palpable process:
the median age in Europe – the age which divides the population in two halves –
has increased from 35.7 years old in 1992 to 41.5 in 2012
and could reach 52.3 by 2050. The population aged 65
plus is expected to double in the EU from 1990 to 2050.

Ageing has a
far-reaching impact on Europe's society and economy. Net migration is and will
be necessary because of demographic developments. Net migration has exceeded
natural population increase (the difference between births and deaths) since
1992 and now accounts for two-thirds of Europe's population growth. Economic
dependency – the ratio between the number of people not in employment and those
who are – is expected to rise from 1.32 in 2010 to 1.47 in 2030, with old age
dependency creating unprecedented challenges for the social adequacy and
financial sustainability of welfare systems. The working age population is set
to decline and will increasingly consist of older workers. This will limit Europe's growth potential unless the EU is able to put more people to work and ensure that
they work more productively and for a longer time, in line with the increase in
life expectancy and healthy life years.

Second, the crisis has
brought to the fore the long-standing issue of the effectiveness and fairness
of the wealth produced and distributed through growth. While GDP and wealth
have continued to increase overall, inequality has risen in Europe – as in
other developed countries – since the mid-1980s. There are now wide
inequalities in
the distribution of income in the EU: on average, the top 20% earned 5.1 times
as much income as the bottom 20% in 2012. This ratio varied significantly
across the EU, from 3.4 in Slovenia and 3.5 in Czech Republic to more than 6.0
in Greece, Romania, Latvia and Bulgaria, peaking at 7.2 in Spain. The crisis is expected to have led to a further rise in inequality and to have constrained
redistributive systems even more. The issue of distributional
fairness, in turn, increases the difficulty of addressing the challenges faced
by Europe's economies.

Globalisation
and trade

The EU is the
world's largest exporter and biggest trader in goods. It is also the world's
largest trader in services where it still has a strong potential to grow. It is
estimated that in the next 10-15 years, 90% of the world’s growth will come
from outside the EU, so the EU has every interest in making sure that its
companies remain very competitive and are able to access new markets and
benefit from these sources of growth.

Globalisation is not
just about facilitating trade and exchanges. It is about joining global value
chains and delivering products, services and technologies that no individual
country would be able to produce on its own. It is also about creating
the conditions for a balanced partnership and development across countries,
starting with Europe’s neighbourhood.

The
ability of the EU to compete internationally starts at home. The EU benefits
significantly from its integration into the world economy, which is built on
its own internal market: two-thirds of the EU's merchandise trade currently
takes place within the borders of the EU. The global success of European firms in
international trade, therefore, reflects not only national strengths but,
through cross-border value chains, the involvement of suppliers in other EU
countries, which provide important contributions to competitiveness. In
addition, evidence shows that SMEs that are active on international markets
grow faster and are more innovative than those that limit their activities to
local markets.

In the crisis, the
EU benefitted directly from trade as an engine for growth and was able to
maintain a strong position on the world markets. In 2015, in spite of its large
dependency on energy imports, the EU economy is expected to register a current
account surplus of around 1.5% of GDP (adjusted for intra-EU trade) compared to
a deficit of 0.5% of GDP in 2010. This trend also reflects the fact that many
Member States have now managed to regain competitiveness and increase exports.

Productivity developments and use
of information and communication technologies (ICT)

Europe's growth has been lagging behind that of other advanced economies
for
the last thirty years and much of this widening gap is due to weak productivity
growth. Euro area output reached 90% of US per capita GDP in 1980 but now
stands at around 70% and for several Euro area economies at less than 60%.[16] It is often estimated that reforms in the product,
services and labour markets that are well calibrated and sequenced to the needs
of the economy, have the potential to trigger significant productivity gains in
the long term. The benefits would be larger in
the periphery countries due to a larger scope for reform but also to positive
spill-overs from the Euro area core. Enhancing the quality of human capital,
the performance of research, education and training systems and their capacity
to foster innovation is also key to foster productivity. Europe's ageing and
shrinking working age population makes it even more pressing to boost
productivity gains as a source of growth.

Modern electronic
communications and online services, including e-government, are important
economic sectors in their own right but they are also crucial levers of growth
and productivity for the economy as a whole. Lower investment in and use of ICT
in Europe account for a large part of the labour productivity gap between the
EU and the US. EU investment in state-of-the-art communications infrastructure
is also lagging behind that of its main competitors, especially as regards
mobile infrastructure. The average mobile data speed in the EU is half of that
of the US,[17] and Europe has only 6% of the world's 4G
mobile subscriptions. In South Korea, 58% of households are connected by fibre
to the home, but only 5% in Europe. 54% of European households have access to
next generation networks, able to deliver
30 Mbps. In the new, data-based economy,
European companies are almost absent from the value chain.

Pressure on
resources and environmental concerns

During the twentieth
century, the world increased its fossil fuel use by a factor of 12, whilst
extracting 34 times more material resources. Today in the EU, each person
consumes 15 tonnes of materials annually while generating 5 tonnes of waste,
with half going to landfill. Businesses are facing rising costs for essential
raw materials, energy and minerals, and the absence of security of supply and
price volatility has a damaging effect on the economy. Sources of minerals,
metals and energy, as well as stocks of fish, timber, water, fertile soils,
clean air, biomass and biodiversity are under pressure, as is the stability of
the climate system. Demand for food, feed and fibre may increase by 70% by
2050, yet 60% of the world’s major ecosystems that help produce these resources
have already been degraded or are used unsustainably.[18] Water
quality and air pollution levels are still problematic in many parts of Europe. Unsustainable land use is consuming fertile soils, while soil degradation
continues, and the use of green infrastructure remains suboptimal. Similarly, the unsustainable use of seas threatens the fragile
balance of marine ecosystems and affects related economic activities such as
fishing and tourism.

Our economic system
still encourages the inefficient use of resources by pricing some below true
costs. The World Business Council for Sustainable Development estimates that by
2050, a 4 to 10 fold increase in resource efficiency is necessary, with
significant improvements needed by 2020. Promoting a more efficient use of
resources makes a lot of business sense and should help improve competitiveness
and profitability. It can also boost employment and economic growth: during the
crisis, action to improve energy efficiency in the residential sector has
proved particularly helpful in boosting local demand for local jobs and in
producing financial savings over time.

1.3.        Progress towards the Europe
2020 targets

Against this background,
progress towards the Europe 2020 targets has inevitably been mixed (see annex
2). The crisis has had a clear impact, particularly on employment and levels of
poverty, and has constrained progress towards the other targets, with the
exception of its effect on the reduction of greenhouse gas emissions. It has
also exacerbated the differences in performance between Member States
in several areas, such as employment and R&D. Progress has also been
affected by the varying degree of policy response across the EU.

Despite the crisis,
there have been more positive structural trends, for instance
in education levels, building a more sustainable energy mix and the reduction
in the carbon intensity of the economy. The relative resilience of the
employment rate during the crisis in a number of countries, coupled with
progress achieved
in the previous period, can also be read as a sign of better labour market
performances compared to the past.

The following
section sets out the main developments in each of the five target areas.

Increasing the employment rate of
the population aged 20-64 to at least 75%

The EU employment
rate stood at 68.4% in 2012, compared to 68.5% in 2010 and 70.3% in the peak
year of 2008. Based on recent trends, it is expected to
increase to around 72% in 2020. The fulfilment of national targets would bring
it up to 74%, just below the 2020 target.

National
performances are very heterogeneous, with Sweden and Germany displaying high
employment rates and approaching their national targets, whereas Spain, Greece, Bulgaria and Hungary are furthest away. Most of the best performers in terms of
employment have registered notable progress since 2000. However, strong falls
in employment between 2000 and 2012 have hit most of the Member States which currently
have the lowest rates. The employment situation also varies a lot across
regions, pointing to mismatches and the reality of limited geographic mobility
across the EU.  However, during the crisis, many Member States have begun to
implement labour market reforms which will make labour markets more resilient
in the future, even if the results take time to work their way through.

Around 16 million
additional men and women in employment would be needed to meet the 75% target. A large share of young and well-educated people will be available
for work, nevertheless progress towards the target would also require tapping
into a potential labour force consisting largely of women, older people as well
as so far inactive adults, including migrants. The last two groups tend to be less
educated than the rest of the labour force on average. This means that
activating them may prove more difficult, but also that they are likely to join
the less-skilled part of the workforce, despite evidence suggesting that future
demand will concentrate on high-skilled rather than low-skilled
work. Active labour market policies, coupled with lifelong learning strategies
and comprehensive integration policies, thus remain essential for the
achievement of employment goals.

Increasing
combined public and private investment in R&D to 3% of GDP

With a level of
2.06% in 2012, and limited progress over time, the 3% target for 2020 is
unlikely to be met. Investment in R&D is forecast
to increase to 2.2% by 2020.
If Member States meet their national targets, this share could amount to 2.6%.

Since 2000, most
Member States have increased the level of public and private investment in R&D
(with the exception of some countries such as Croatia, Luxembourg, the United Kingdom and Sweden). Estonia has shown the fastest growth between 2000 and
2012 and currently stands above EU average in this area.

Reducing
greenhouse gas emissions by at least 20% compared to 1990 levels, increasing
the share of renewable energy in final energy consumption to 20%, and moving
towards a 20% increase in energy efficiency

These targets are
broadly achievable by 2020 and progress is already noticeable:

§ The EU already achieved an 18% reduction in greenhouse gas emissions
by 2012. Current climate and energy policies have delivered on progress, with
the economic slowdown also having a significant effect on emissions' reduction.
Notwithstanding the current recovery and due to structural improvements,
further progress can be expected by 2020 and could bring the reduction of
greenhouse gas emissions to 24% compared to 1990, thus over-achieving the
target.[19]
However, according to national projections, in 13 Member States the existing
policies would not be sufficient to meet national targets by 2020.

§ From 7.5% in 2000[20],
the share of renewables already reached 14.4% in 2012[21]. The target of a 20%
share by 2020 seems achievable and may be exceeded (around 21%). This progress
means that the EU is the world’s leader in terms of global investment in
renewables. For instance, the EU had installed about 44% of the world's
renewable electricity (excluding hydroelectricity) by the end of 2012.

§ Primary energy consumption fell by around 8% between the 2006 peak
and 2012. A further reduction of 6.3% would be needed by 2020 to meet the
target. A large part of the reduction in consumption is a function of the
economic slowdown and thus recovery could limit progress towards the target.
However, some structural shifts are also taking place: the energy intensity of
the EU economy has reduced by 24% between 1995 and 2011 whilst the improvement
by industry was about 30%.

Overall,
beyond the short-term impact of the crisis, the EU is steadily decoupling
growth in economic activities and greenhouse gas emissions – between 1990 and 2012, EU GDP grew by 45% and emissions decreased
by 18%.

Reducing
school drop-out rates to less than 10% and increasing the share of the
population aged 30-34 having completed tertiary education to at least 40%

These targets are broadly
achievable by 2020:

§ The share of early school leavers has fallen from 15.7% in 2005 to
12.7% in 2012, with half of Member States having already reached or approaching
their targets. While part of this reduction may be attributable to a more
difficult employment environment, there is also evidence of structural
improvements and the trend is expected to continue, albeit at a slower pace.

§ The share of young people having completed tertiary education has
increased from 27.9% in 2005 to 35.7% in 2012. While this may vary from country
to country, the trend is also considered structural and the 2020 target is
expected to be met.

Lifting at
least 20 million people out of the risk of poverty and social exclusion

The number of people
at risk of poverty and social exclusion in the EU (comprising people at risk of
financial poverty, experiencing material deprivation or living in jobless
households) increased from 114 million in 2009[22]
to 124 million in 2012.

The EU has thus
drifted further away from its target – equivalent to a number of 96.4 million
people by 2020 – and there is no sign of rapid progress to remedy this
situation – the number of people at risk of poverty might remain close to 100
million by 2020. The situation is particularly aggravated in certain Member
States and has been driven by increases in severe material deprivation and in
the share of jobless households. The crisis has demonstrated the need for
effective social protection systems.

2.           Has the Europe 2020
strategy worked?

Whether, and to what
extent, the Europe 2020 strategy has played a role in the above trends is open
for scrutiny. The public consultation foreseen later this year will be
important to gather evidence and provide input for the review process. It is
nevertheless possible to draw a number of tentative lessons concerning the main
features of the strategy.

2.1.        The role of targets

The five headline
targets set in 2010 were put forward as ambitious yet attainable policy goals
for the EU. The indicators are also instrumental in tracking trends across
Member States. Beyond what is quantifiable, they also contribute to changing
the quality and nature of Europe's growth model. As shown above, mixed progress
has been achieved so far.

The use of targets
and indicators is regularly a matter for discussion at EU level. It has
received particular attention lately in the context of work on the
reinforcement of EU's economic governance and deepening of Economic and
Monetary Union (EMU). The Commission has reported on the breadth of indicators
in use and available at EU level.

The Europe 2020
headline targets present several intrinsic limitations:

The targets are
not exhaustive. Many quantified objectives and indicators exist at EU
level to monitor performance over time, between countries and across
policy areas. Among the most commented, some key indicators are used for
assessing public finances under the SGP. A new scoreboard was also
developed to support the prevention and correction of macroeconomic
imbalances, as part of the new EU Macroeconomic Imbalance Procedure,
alongside a new scoreboard of key employment and social indicators. Other
targets also exist in several policy areas, often agreed by Council
formations over the years, for example for internet broadband coverage in
the context of the "Digital agenda for Europe" flagship initiative.
There is thus a tendency to suggest adding or substituting indicators over
time, but the challenge – as was the case for the Lisbon strategy – is to
avoid a dilution of priorities and to maintain focus on the essentials.
The targets are
politically binding. Contrary to the SGP, or even the new EU Macroeconomic
Imbalance Procedure, where reference values or benchmarks are set in a
legally binding framework, including possible sanctions,
the Europe 2020 targets are essentially political objectives. There are,
however, two notable exceptions: the targets on greenhouse gas emissions'
reduction and on the use of renewable energy, which are supported by a
legally binding framework at EU level, including values to be reached at
national level by 2020. The political nature of the targets reflects the
primary role that national governments are expected to play in the
strategy, in line with the principle of subsidiarity. For instance, it
proved difficult to agree on education targets at EU level and it was not
possible for Member States to agree on a single indicator to express the
target on the reduction of the number of people at risk of poverty, hence
an indicator made up of three components is commonly used.
A qualitative
assessment remains necessary. Each target has its limits.
The target on R&D is essentially an "input" target where the
share of public and private expenditure is reported. This is why, as a
complement to this target, the European Council requested, and the
European Commission is developing, a complementary indicator also looking
at innovation "outputs"[23].
Likewise, the targets on employment and education do not say much about
the quality of the work occupied or the levels or adequacy of skills
achieved. Moreover, averages at EU or national level often hide very
significant age, gender or regional differences. Complementary indicators,
more specific analysis as well as qualitative information are thus
important to interpret the targets and the actual situation in Member
States. It is also important to bear
in mind that some targets – such as the ones on education – are more
directly within the realm of public authorities, while others – such as
employment or spending on R&D – reflect broader economic trends.

The headline
targets, however, have several clear advantages:

The targets are illustrative
of the dynamic change promoted by the Europe 2020 strategy. Although the
EU has no shortage of indicators, the current set of targets has allowed
for a sense of focus on the three dimensions of
the smart, sustainable and inclusive growth model advocated by the
strategy.
In this respect, the targets express the longer-term direction necessary
to sustain Europe's future and serve as benchmarks to guide policy.
Moreover, they are closely interrelated and self-reinforcing, with
progress in one dimension feeding into progress in another.
The targets play
their role as policy anchors. As can be seen from the annex, Member States
translated EU targets into their own targets at national level. Their
existence allows for a transparent cross comparison, across themes and
countries, although the degree of publicity given to them and levels of
ambition vary between countries. For instance, in addition to the general
employment target, some Member States (Belgium, Czech Republic, Germany, Spain, France, Lithuania) have chosen to set national targets broken down by gender, thus
providing employment rate targets for women. However, national targets are
not sufficiently ambitious to cumulatively reach the EU-level ambition.
They also help to monitor and discuss progress at EU level. For instance,
they have already been instrumental in the analysis underpinning
country-specific recommendations and in the discussion on priorities for
the programming of the European Structural and Investment Funds over
2014-2020 (see below).
The targets are
easy to monitor. Facts and figures about the targets – as well as a wealth
of related indicators – are easily accessible through Eurostat,
the statistical office of the EU. The experience of other international
institutions, such as the OECD in its work on "quality of life"
or the PISA survey on literacy, or the World Bank’s work on the ease of
doing business, has also shown that focused analyses are effective
communication tools.

The targets are not
ends in themselves. While being aware of their limitations, it can be said that
the Europe 2020 headline targets help to measure and guide the different
aspects of the strategy, thus helping to steer political awareness and policy
focus at both national and EU level.

2.2.        The role of flagship
initiatives and related EU-level levers

The flagship
initiatives presented in 2010 were mini work programmes for the key areas of
the strategy. They set out a number of specific actions at both EU and national
levels in thematic areas (see annex 3). Most of the initiatives envisaged at
the outset have by now been presented by the Commission and many have been
adopted, but it is too early to be able to assess their follow-up and impact.

Major EU-level policy
and legislative actions were put forward by the Commission as part of its
annual work programme and discussed with the other institutions, so inevitably
some time was needed for their adoption and implementation. Other “soft-law”
initiatives, sometimes backed up by EU funding,  were also developed, often in
close collaboration with sectoral ministries and stakeholders in the respective
policy fields, and may have had a more immediate impact on the ground. During
the consultation period the Commission will work to gather evidence on their
impact.

In addition to their
role as catalyst for action at EU level, the flagships carry a certain legacy:

They have contributed
to mutual learning and thematic knowledge at EU level, including through
networking and collection of evidence. For example, a dedicated monitoring
mechanism has been developed to assess Member States' progress in the
implementation of the European Research Area. Other examples are the
Digital Assembly bringing together digital stakeholders, the annual
Digital Agenda scoreboard and increased focus on industrial
competitiveness issues across several policy areas.
They have at times
served as a guide for the use of EU funding for the 2007-2013 period and provided
a framework for the design of EU funds for 2014-2020. One such example is
the launch, by the Commission in January 2012, of Youth Action Teams to
help Member States most hit by rising levels of youth unemployment to
re-programme EU funds towards this priority. Other examples regard the
new, integrated approach of the Erasmus+ programme and the new Horizon
2020 programme – the EU funding programme for research and innovation –
which puts the emphasis on excellence in science, industrial leadership
and the importance of tackling societal challenges and thus complements
the objectives of the Innovation Partnerships foreseen in
the flagships. In addition, specific earmarking of the European Regional
Development Fund for investments in low-carbon economy was introduced.
Several of them
have triggered or inspired policy action in the Member States, including
at regional and national levels to complement the EU initiatives, e.g. in
areas such as the digital economy or research and innovation. For
instance, the development of smart specialisation strategies at national
and regional level contributes to place-based growth. In addition, more
than 20 Member States, as well as regions, have launched digital agenda
programmes.

In addition to the flagships, the goals
and means of the Europe 2020 strategy have been promoted through three major
EU-level policies:

The European
single market, with more than 500 million consumers, remains the most
powerful lever of growth at EU level and new steps have been taken to tap
more of its potential. The Single Market Acts I and II identified 24 key
actions, such as in the field of the digital economy, energy, transport,
public procurement and consumer protection, which are adopted or close to
adoption by the legislator. An annual report on the state of integration
is produced to monitor progress and identify areas for action. Competition
policy has also been supporting the objectives of the single market. Strategic
thinking and consultation have been launched in areas such as the
long-term financing of the economy. 
Although the EU
budget amounts to only about 1% of EU GDP, it can act as an important
catalyst for growth. The new EU financial framework for 2014-2020 is
closely aligned to the priorities of the Europe 2020 strategy, as
illustrated in the re-design of EU-level programmes and the choice of
priorities for investing EU funds in the Member States, including in terms
of conditionality of EU aid. 
The EU external
agenda is an important source of potential growth and jobs, although there
is room to go further in linking the internal and external EU agenda
better and ensuring that Europe speaks with one voice. Trade has become a
crucial lever for growth and jobs due to the role of external demand and
the wide scale of the EU agenda. Negotiations with the United States and Japan should deliver ambitious agreements and generate sizeable economic gains. In
areas such as development policy, global standards, disaster risk
reduction or combatting climate change, the EU has been and will remain a
very active partner on the global scene, promoting its goals, values and
interests.

2.3.        The role of the
European Semester

Since the adoption
of the Europe 2020 strategy, the EU's economic governance has been
significantly strengthened (see box 1). The European Semester has become key
for delivering reforms between the national and the EU levels, through economic
policy coordination, ensuring that EU and its Member States co-ordinate their
economic policies and their efforts to promote growth and jobs.

The main steps of
the European Semester are described in annex 1: the cycle is launched every
year by the Commission’s Annual Growth Survey, which sets out the priorities
for the EU; these feed into the discussion of the Member States in the run-up
to the Spring European Council and into the preparation of their national
reform programmes and stability or convergence programmes, which are presented in
April. The Commission’s assessment of the programmes is reflected in country-specific
recommendations and then endorsed by the Council and the European Council.
The European Parliament has also become actively engaged in the process, for
instance through its “parliamentary week” early in January to debate broad
priorities as well as through the regular “economic dialogues” it organises
with key actors at EU and national level. The social partners' involvement in
the European Semester has also been strengthened.[24]

The goals of the
Europe 2020 strategy are discussed as part of the European Semester and
embedded in its various steps: they feed into the choice of priorities of the
Annual Growth Survey; they are part and parcel of the analysis backing up the
annual country-specific recommendations; Member States are invited to report on
progress towards their targets in their national programmes.

Some first
achievements can be recognised:

The European
Semester provides a credible framework for policy implementation, with the
annual country-specific recommendations delivering first results in terms
of policy reforms, as shown in the 2014 Annual Growth Survey.[25]
The combination of EU priorities and country-specific recommendations is
essential to take account of the specific
circumstances of each Member State. While common goals set the direction and help facilitate progress towards a shared reform and
modernisation agenda, the EU does not follow a
"one-size-fits-all" approach but rather tailors its guidance to
each Member State, as well as over time.
The European
Semester provides integrated surveillance and helps to reconcile economic
and budgetary priorities. In other words, it highlights the importance of
achieving and maintaining sound public finances and unleashing the growth
potential of the economies, taking into account EU-level and
country-specific considerations.
The Semester has
contributed to a reinforcement of contacts between the EU and the national
level and greater interaction between Member States, helping the EU to
stick together. The timetable and procedures of the European Semester have
been refined and are now stabilising. The Semester provides for pro-active
discussions at EU level to prevent problems from emerging or developing 
(before national decisions are taken) and regular monitoring of progress
(with guidance and the possible imposition of sanctions in cases where corrective
action is needed).
Analysis and
monitoring capacities have been strengthened at EU level. The new EU economic
governance builds on a stronger and more integrated evidence base for
implementation, making better use of shared analytical frameworks,
indicators and policy evaluations. The experience of countries under macro-economic
adjustment programmes, thus outside the formal procedures of the European
Semester, provides an extreme yet significant test case: the Commission
and many Member States have had to deploy important resources, including
on the ground, to provide direct and concrete support to these Member
States, through policy advice and technical assistance at administrative
level. This is exemplary of the scope of shared expertise that can be
mobilised within the EU.
Some ideas are
still being discussed to complete the EMU architecture, such as a mechanism to facilitate the ex-ante coordination of major
economic reform plans that can have significant spill-over effects on other
Member States, as well as ideas of mutually agreed contractual
arrangements and associated solidarity mechanisms (i.e. financial
incentives).

Some initial
challenges and limitations are also evident:

The need to address
the immediacy of the crisis sometimes made it challenging to reconcile
short-term urgencies with longer-term needs. It is the nature of the
country-specific recommendations to focus only on selected areas and
suggest concrete steps to be taken within the coming year, with a clear
understanding that not everything can be done at once. At the same time,
it is essential that such steps are underpinned by a clear vision of where
they are leading in the longer term. In a number of instances, the 2013
country-specific recommendations emphasise the need to preserve certain
growth-enhancing expenditure while complying with the fiscal targets. As Europe recovers from the crisis, the choice of priorities should be able to move away from
emergency situations.
To be effective,
the Semester depends not just on the commitment of each Member State,
notably for the delivery of its recommendations, but also on the
collective capacity of EU actors to treat these issues as matters of
common interest and ensure a strong multilateral surveillance. In this
respect, the role of the different actors could be further clarified and
enhanced. For instance, the different Council formations have strengthened
peer-reviews and multilateral surveillance.
Awareness and ownership
by all relevant actors – governments, parliaments, regional and local
authorities, social partners and all stakeholders – is a crucial
prerequisite for success. In many Member States, the involvement of
the different stakeholders in the implementation of the strategy could
still be improved. In this context, the role of the national reform
programmes should be re-assessed. At European level, the European Economic
and Social Committee and the Committee of the Regions have been
particularly active through close monitoring of the implementation of the
Europe 2020 strategy and through mobilising action in the Member States,
including at regional and local levels and reflecting the multi-level
governance structure of the EU. The Commission has also reinforced its
representations in the Member States to enhance the quality of its
engagement with authorities and stakeholders in Member States.
The multiplication
of procedures, documents and legal steps at EU level risks overloading the
process and damaging its clarity. Changes in the timetable can also be
detrimental to the ownership of certain actors. The challenge in the
coming years is thus to reinforce the institutional and administrative
infrastructure underpinning the European Semester, while making sure it
remains a politically-driven and focused process (not a bureaucratic one).

The review of the
European Semester in conjunction with the review of the Europe 2020 strategy
this year is thus timely.

Conclusion

The reasons for
having a Europe 2020 strategy are equally pressing in 2014 as they were in
2010.

Over several decades,
the EU has been synonymous with deeper economic integration, resulting in
increasing flows of goods, services, labour and finance across the EU. This has
fuelled convergence in incomes and living standards across countries, which led
to the EU being characterised as a "convergence machine"[26]
unique in the world. This convergence process has slowed and even gone into
reverse in parts of Europe as a result of the accumulation of imbalances and under
the pressure of the crisis.

Emerging from the
worst economic and financial crisis in a generation, the EU needs to strengthen
its smart, sustainable and inclusive growth strategy so that it can deliver on
the expectations of its citizens and maintain its role in the world. Now is a
good time to review the strategy so that the right post-crisis policy
priorities can be set for the EU in the second half of the decade leading to
2020.

The analysis set out
in this Communication shows that experience with the targets and flagships of
the Europe 2020 strategy has been mixed. The EU is on course to meet or come
close to its targets on education, climate and energy but not on employment,
research and development or on poverty reduction. Yet, having EU targets has
helped to focus on longer-term, underlying features which are crucial to the
future of the EU's society and economy. Translating these targets at national
level has also helped to highlight several uncomfortable trends – a growing gap
between the best and least well performing Member States and a widening gap
between regions inside and across Member States. The crisis has also
highlighted growing inequalities in the distribution of wealth and of income.
Experience has also shown that the active engagement and participation of
regions and cities – which are responsible for delivering many EU policies –
has been crucial in pursuit of Europe 2020 objectives.  These are challenges to
be addressed in the review and subsequent adjustment of the strategy.

The economic
governance of the EU, implemented annually through the European Semester, was
considerably strengthened in recent years and is a potentially powerful
instrument for pursuing the post-crisis priorities that will be needed to meet
the objectives of the Europe 2020 strategy. Key EU policies such as the 2014-2020
multi-annual financial framework and its various programmes have been
constructed to take account of the lessons emerging from the European Semester
and to support the achievement of the Europe 2020 targets, providing a basis on
which future policy can be built at both EU and national levels.

In this
Communication, the Commission has set out its analysis of what has happened in
the framework of the Europe 2020 strategy so far. In many respects, this period
has been used to lay the foundations for results that should come through in
the coming years. The Commission has also sought to show the impact of the
crisis on the expected results.

The Commission has
not drawn policy conclusions nor made policy recommendations at this stage.
Given the enormity of the change that the EU, its Member States, cities and
regions have undergone as a result of the crisis, the Commission considers it
necessary to launch an EU-wide consultation of all stakeholders on the lessons
to be learned and on the main factors that should shape the next stages of the
EU's post-crisis growth strategy. The Commission will run a public
consultation, based on the analysis in this Communication, inviting all
interested parties to contribute their views. Following the consultation, the Commission
will make proposals for the pursuit of the strategy early in 2015.

[1]               Unless otherwise indicated, the source of the figures
quoted in this Communication is Eurostat, the statistical office of the EU, and
EU averages refer to EU28.

[2]               Commission's Communication COM(2010)2020 of 3 March
2010. The overall strategy and its targets were discussed by the European
Parliament and endorsed at the meetings of the European Council respectively in
March and June 2010. More information can be found at: http://ec.europa.eu/europe2020/index\_en.htm

[3]               COM(2010)2020 of 3 March 2010.

[4]               "Digital agenda for Europe",
"Innovation Union", "Youth on the move", "Resource
efficient Europe", "An industrial policy for the globalisation era",
"Agenda for new skills and jobs", "European platform against
poverty".

[5]               OJ L306, 23 November 2011.

[6]               OJ L140, 27 May 2013.

[7]                      More information on the Europe 2020 targets and flagship initiatives
is provided in annex.

[8]               For latest and more detailed data, see the Commission's
winter 2014 economic forecast, European Economy 2/2014.

[9]                      See presentation of J.M. Barroso to the informal European Council of
11 February 2010, available at: http://ec.europa.eu/europe2020/documents/documents-and-reports/subject/europe-2020-presentations/index\_en.htm#top

[10]             For latest and more detailed data, see the Commission's
winter 2014 economic forecast, European Economy 2/2014.

[11]             For latest and more detailed data, see the Commission's
winter 2014 economic forecast, European Economy 2/2014.

[12]             COM(2013)800.

[13]             For latest and more detailed data, see the Commission's
winter 2014 economic forecast, European Economy 2/2014.

[14]             European Central Bank, Bank Lending Survey, January
2014.

[15]             For latest and more detailed data, see the Commission's
winter 2014 economic forecast, European Economy 2/2014.

[16]             IMF, "Jobs and Growth: supporting European
Recovery", 2014.

[17]             "The state of the Internet", Akamai (Q4
2012), Cisco VNI Mobile forecast (2013).

[18]             COM(2011)571.

[19]             In January 2014 the Commission launched a framework for
energy and climate policies up to 2030. A reduction in greenhouse gas (GHG) emissions by 40% below the 1990 level, an EU-wide
binding target for renewable energy of at least 27%, renewed ambitions for
energy efficiency policies are among the main objectives of the new framework –
COM(2014)15.

[20]             Study commissioned by the European Commission

[21]             EurObserv'ER.

[22] EU27 data.

[23]             COM(2013)624

[24]             COM (2013) 690, Strengthening
the Social Dimension of the Economic and Monetary Union, 2.102.2013.

[25]             COM(2013)800.

[26]             The World Bank, "Golden growth – restoring the
lustre of the European economic model", 2012.

Annex I: Main steps under the European Semester

Annex II: Overview of progress
towards the Europe 2020 targets

Background:

For each of the Europe 2020 targets, this Annex reviews:

§
Progress
to date at EU level and illustrates possible scenarios until 2020.

§
Latest
data available on performances at national level and national targets for 2020.

§
Trends
in national performances, with some international comparisons where possible.

The
graphs are based on the latest data available as of February 2014. EU averages
correspond to EU28, unless otherwise indicated.

Detailed data, with more variables, are regularly updated and available on
Eurostat's website at: http://epp.eurostat.ec.europa.eu/portal/page/portal/europe\_2020\_indicators/headline\_indicators

Additional
information and details on the targets are available at: http://epp.eurostat.ec.europa.eu/portal/page/portal/europe\_2020\_indicators/headline\_indicators/targets

A
complete report, with further methodological and statistical explanations, was
produced in Autumn 2013 and is also available at: http://epp.eurostat.ec.europa.eu/cache/ITY\_OFFPUB/KS-02-13-238/EN/KS-02-13-238-EN.PDF

EUROPE 2020 TARGET
ON EMPLOYMENT

Raise the employment rate of the
population
aged 20-64 to at least 75%

1.
State of play at EU level

The employment rate in the EU has been stagnating for
the last few years and remains below the Europe 2020 target of 75% of the
population aged 20-64 in employment by 2020. Following a
steady upward trend between 2000 and 2008, when it rose from 66.6%[1] to 70.3%, the employment
rate in the EU fell to 68.9% in 2009 as a result of the deep contraction of the
economy. It decreased further to 68.5% in 2010 and has since then broadly
stabilised at this level. At 68.4% in 2012, the EU employment rate currently
stands 6.6 percentage points below the 75% target. This is due to the
combination of the negative impact of the crisis and the time needed before
improvements translate onto labour markets, as well as the slow pace of labour
market reforms in some Member States.

Significant progress, particularly in action to favour
the return to growth and job creation, would be required to reach the
employment rate target by 2020. On the basis of the current state
of play and the slight increases in the employment rate expected over the
coming years, the Europe 2020 target would not be met and the employment rate
would reach 71.8% in 2020. The EU would need to have around 16 million additional
people in employment to meet the target by 2020.

EU
employment rate in 2000\*, 2012 and 2020
(share
of people employed, 20-64 age group)

Source:
European Commission

Reading: on the basis of current commitments, the EU employment rate
could reach 71.8% by 2020.

\* 2000 and 2001: EU27 data.

\*\* Estimated values based on Commission 2013
Autumn Forecast for 2014-2015, assuming an employment growth to the levels of 2014-2015,
taking into account a 1.0% reduction of the active population during the decade.

\*\*\* No target set by the UK: the projection for the EU assumes 75% for the UK in 2020.

2.
State of play and progress at national level

Most Member States are a long way off from their Europe
2020 target. The employment targets set by Member States for 2020
range from 59% and 62.9% in Croatia and Malta respectively (with the latter
already reaching this target), to 80% in Denmark, the Netherlands and Sweden. Sweden and Germany show employment rates of 79.4% and 76.7% in 2012 and are thus approaching their
objectives of 80% and 77%. The distance between 2012 performance and the
national Europe 2020 target is the highest in Spain, Greece, Bulgaria and Hungary, with a gap of more than 10 percentage points, which raises doubts about their
ability to meet their objective by 2020. In terms of progress achieved, Germany and Austria appear as the best performers, with high employment rates and relatively strong
growth since 2000. At the other end of the spectrum, Greece, Spain, Croatia, Romania and Ireland have been affected by sharp falls in employment and still have
low employment rates compared to the other Member States.

Employment rates in EU Member States

(share of people
employed, 20-64 age group)

Source: European Commission

Reading: in 2012, the employment rate in the
EU was 68.4%, against a target of 75% for 2020.

\* No target set by the UK. SE: target well above 80 %. IE: 69-71% (70%
assumed); IT: 67-69% (68% assumed); CY: 75-77% (76% assumed); AT: 77-78% (77.5%
assumed).

Situation
in 2012 and progress since 2000, by country

Progress
between 2000 and 2012 (% point change)\*

Progress
over 2000 to 2012 (% point change)

Source: European Commission

Reading: for the EU as a whole, the
employment rate increased by 1.8 percentage points over 2000-2012 (horizontal
axis), to reach 68.4% in 2012 (vertical axis).

\* 2000: EU27 data; HR: 2002-2012

Performance gaps between Member States are widening and
regional discrepancies remain in Southern Member States. In
2012, the gap between the highest and the lowest values was 24.1 percentage
points, with employment rates varying from 55.3% in Greece to 79.4% in Sweden. This can be compared to the situation in 2000, where 22.7 percentage points
separated the lowest from the highest performance, with employment rates going
from 55.3% in Bulgaria to 78% in Denmark. Generally, Northern and Central
European countries tend to have higher employment rates than Southern and
Eastern Member States. Furthermore, Southern and Eastern European countries
display strong variations in terms of regional employment rates. The regional
performance of Northern and Central European countries is rather homogeneous,
with high employment rates.

EUROPE 2020 TARGET
ON RESEARCH AND DEVELOPMENT

Invest 3% of GDP in Research and
Development

1.
State of play at EU level

Expenditure on research and development (R&D) in
the EU has recently been slightly increasing, but remains lower than the 3%
Europe 2020 target. The R&D objective set at EU level is
expressed in terms of R&D intensity, which measures gross domestic
expenditure of the public and private sector on R&D as a percentage of GDP,
i.e. the share of GDP invested in R&D. Public funding of R&D is a
direct measure of the level of public effort in support of R&D activities.
Monitoring private funding of R&D allows for the assessment of the
effectiveness of policies aimed at attracting and fostering business R&D
investments and the development and growth of knowledge-intensive firms. After
remaining flat at around 1.85% between 2000 and 2007, EU gross domestic
expenditure on R&D as a share of GDP rose to 2.01% in 2009 and has only
moderately increased since then. With a share of GDP amounting to 2.06% in
2012, EU gross domestic expenditure on R&D as a percentage of GDP remains
almost 1 percentage point below the 3% target and visibly below the performance
of the United States.

Recent progress towards the 3% target results mainly
from policies at EU and Member State level. They aim to
foster private investment in R&D (notably through increased leverage via
public funding, improved framework conditions and fiscal incentives) and to
protect and promote public funding of R&D despite the crisis, in line with
the principle of growth-friendly fiscal consolidation. Compared to
international competitors, Europe's shortfall mainly derives from low levels of
private investment.

Under current circumstances, the Europe 2020 target on
R&D is unlikely to be met by 2020. According to the latest
projections and if current reforms and financial efforts continue, gross domestic
expenditure on R&D as a percentage of GDP is expected to remain below the
3% threshold until 2020. To meet this target, the average annual growth rate of
R&D expenditure in the EU would need to double compared to the 2007-2012
period. Progressing more rapidly towards the 3% target needs faster structural
change towards more knowledge-based economic activities.

EU gross domestic
expenditure on R&D as a % of GDP in 2000, 2012 and 2020

Source: European Commission

Reading: on the basis
of current commitments, EU investment in R&D could reach 2.2% by 2020.
\* Scenario based on the continuation of ongoing reforms and
financial efforts.
\*\*No targets sets by CZ and the UK: 2020 figures were estimated by
Commission services.
\*\*\*The EU target includes R&D expenditure by intergovernmental
research infrastructures, which is not included in the R&D expenditure of
the Member States.

2. State of play and progress at national level

Levels of ambition and progress towards the Europe 2020
targets differ across Member States. The national
targets in terms of R&D highlight various levels in ambition of the Member
States: Finland and Sweden, which already show the greatest R&D intensity
in the EU, have set the highest targets of 4% of GDP invested in R&D by
2020. With targets of 0.50% and 0.67% respectively, Cyprus and Greece have the lowest objectives. Other countries have defined achievable but not overly
ambitious goals, such as Italy with a target of 1.53%. Greece has already achieved its target of 0.67% of its GDP expenditure on R&D in 2012. Germany, Denmark and Cyprus are getting close to their respective objectives. Romania, Portugal, Malta and Lithuania remain far from their targets, with values at least 1
percentage point below their goal. Progress made since 2000 across countries is
mixed: Estonia combines a performance above the EU average in 2012 with the
biggest increase in investment in R&D as a share of GDP, whereas Croatia,
Luxembourg and the United Kingdom display R&D intensity below the EU
average and negative growth in this area.

R&D investment in EU Member States as a % of GDP

Source: European
Commission

Reading: in 2012, R&D intensity in the EU amounted to 2.06% of GDP, against
a target of 3% for 2020.

\* LU: 2010.

\*\*No targets set by CZ (only for the public sector) and
the UK. IE: the target is 2.5% of GNP, which is estimated to be equivalent to
2% of GDP. LU: the target is between 2.30% and 2.60% of GDP (2.45% assumed).
PT: the target is between 2.70% and 3.30% of GDP (3%  assumed).

Situation in 2012 and progress since
2000, by country\*

Average annual
growth in investment in R&D, 2000-2012 (%)

Source: European Commission

Reading: investment
in R&D in the EU has increased at an annual growth rate of 0.9% over
2000-2012 (horizontal axis), to reach 2.06% in 2012 (vertical axis).

\*Performance: EL, SI: 2007; LU, NL, RO: 2010; US, JP, CN: 2011. Progress:
SI: 2000-2007; LU, NL, RO: 2000-2010; CN: 2000-2011; EL: 2001-2007; HR:
2002-2012; HU, MT: 2004-2012; SE: 2005-2012; US: 2006-2011; DK: 2007-2012; JP:
2008-2011; PT: 2008-2012; FR: 2010-2012.

There is a North-South divide in R&D investment. The
inter-country performance gap for R&D intensity has been widening over the
last decade: on the basis of available data, gross domestic expenditure on
R&D as a share of GDP ranged from 0.37% in Romania, to 3.35% in Finland in 2000, a difference of 2.98 percentage points. This gap increased to 3.13
percentage points in 2012, between 0.42% in Romania and 3.55% in Finland. Generally, Northern European countries show the highest levels of R&D
intensity, whereas Eastern and Southern Member States score lower on this
indicator. At regional level, the countries with the lowest levels of R&D
intensity are rather homogeneous and predominantly made up of regions with low
levels of investment in R&D. In Member States with the highest levels of
R&D intensity, a number of regions remain below the ambitious national
target.

EUROPE 2020 TARGET ON CLIMATE AND ENERGY
(1)

Reduce greenhouse
gas emissions by at least 20%
compared to 1990 levels

1.
State of play at EU level

Following a sizeable reduction of greenhouse gas
emissions, the EU is close to achieving its Europe 2020 target of a 20%
reduction compared to 1990 levels. Between 1990 and 2012, greenhouse
gas emissions at EU level decreased by 18% Current climate and energy policies
have delivered on progress, with the economic slowdown also having a
significant effect on emissions reduction. A slight increase in greenhouse gas
emissions was observed in 2010, during the temporary recovery. This performance
is all the more significant as the European economy has grown by around 45% in
real terms since 1990 and it shows a clear decoupling of economic growth and
greenhouse gas emissions. As a result, in 2012 the European economy was almost
twice less carbon-intensive – carbon intensity refers to the amount of
emissions released per unit of GDP – than in 1990.

Based on the latest trends, the Europe 2020 target
related to greenhouse gas emissions seems within reach. In
line with the encouraging developments of recent years, the reduction of
greenhouse gas emissions could exceed the target and reach 24% by 2020.

Greenhouse gas emissions in 2000, 2012 and 2020

(index 1990=100)

Source: European Commission

Reading: if the climate and energy 2020 package is
fully implemented, the EU could reduce its greenhouse gas emissions by 24% by
2020, compared to 1990 levels.

2.
State of play and progress at national level

Around half of the Member States have already reached
their Europe 2020 target for reduction of greenhouse gas emissions in
non-Emissions Trading Scheme (ETS) sectors[2]. The national
targets in this area measure greenhouse gas emissions in sectors not covered by
the EU ETS, compared to 2005 levels. They range from an objective of a 20%
reduction of emissions to a 20% increase. According to 2012 data, for 15 Member
States (Cyprus, Hungary, Italy, Greece, Spain, Portugal, Czech Republic, Romania, Slovakia, Lithuania, Slovenia, Malta, Latvia, Bulgaria and Poland) greenhouse gas emissions were below their respective targets for 2020. Most of the
other Member States have also lowered their emissions and thus achieved some
progress, without meeting their target so far. Luxembourg, Denmark, Germany, Belgium, Finland and the Netherlands are the most distant from their objectives.
According to the latest available national projections, in 13 Member States (Germany, the Netherlands, Latvia, Bulgaria, Italy, Finland, Austria, Spain, Lithuania, Belgium, Ireland, Slovenia and Luxembourg) the existing policies would not be sufficient
to meet the national targets by 2020.

Change
in greenhouse gas emissions in non-ETS sectors in EU Member States

Source: European Environmental Agency

Reading: in 2012, greenhouse gas emissions in non-ETS sectors were 10%
lower than in 2005 in the EU.

\*Non-ETS, compared with 2005, based on
approximated data.

Between 2000 and 2011, carbon intensity decreased in
all Member States, although progress varies a lot. Highly
carbon-intensive countries have generally achieved a sizeable reduction; low
carbon-intensive countries display more limited progress.

Situation
in 2011 and progress in terms of carbon intensity since 2000, by country

Reduction in carbon
intensity between 2000 and 2011 (%)

Source: European Commission

Reading: in 2011, most Member States were close to the EU average in
terms of carbon intensity and progress.

EUROPE 2020 TARGET ON CLIMATE AND ENERGY
(2)

Increase the
share of renewable energy
in final energy consumption to 20%

1.
State of play at EU level

There has been a steady increase in the use of
renewable energy at EU level since 2000 and, provided it is sustained, the EU
is on the way to reaching the Europe 2020 target of increasing the share of
renewables in final energy consumption to 20%. From 7.5% in 2000[3], the share of renewables
in gross final energy consumption increased to 8.5% in 2005 and 14.4% in 2012[4], i.e. 5.6 percentage
points below the Europe 2020 target, because of the deployment of support
schemes and the introduction of incentives to foster the use of renewables. The
EU is now in the lead in terms of investment in renewables, in particular a
rapid development of wind and solar energy.

Based on the latest trends, the Europe 2020 target
related to renewable energy sources seems within reach. In
line with the encouraging developments of recent years, the share of renewables
in gross final energy consumption might approach 21% in 2020, if the effort of
recent years is maintained.

EU share of renewable energy in gross final energy
consumption, 2000-2020

Sources: European Commission, study
commissioned by the European Commission

Reading: based
on current developments and policies, EU share of renewables in energy
consumption could reach 20.9% by 2020.

2.
State of play and progress at national level

Overall progress has been observed but efforts are
still needed in most Member States. The national targets range from
10% for Malta to 49% in Sweden. Generally, all Member States have increased the
use of renewable sources of energy since 2005, however only three of them, Sweden, Estonia and Bulgaria, have so far reached their national targets. Finland, Austria and Czech Republic are very close to their respective objectives. France and the United Kingdom stand around 10 percentage points away from their targets.

Looking at developments over time, the
group of best performers comprises Sweden, Austria and Estonia, which combine the greatest progress since 2005 and high levels of renewables’ use. Malta, Luxembourg, Belgium, the United Kingdom, the Netherlands and France show both low
performances and only moderate progress since 2005. As regards the divergences
across the EU, the inter-country gap has increased since 2005, from 40.4
percentage points to 52.1 percentage points in 2012, with values ranging from
0.3% in Malta to 52.4% in Sweden.

Share of renewables in EU Member States

(%
of gross final energy consumption)

Sources: European Commission, EurObserv'ER

Reading: in 2012, EU share of renewables in energy consumption amounted
to 14.4%, against a target of 20% for 2020.

Situation in 2012 and progress since 2005, by country

Progress over
2005-2012 (% point change)

Sources: European Commission, EurObserv'ER

Reading: EU
share of renewables in energy consumption has increased by 5.9 percentage
points over 2005-2012 (horizontal axis),
to reach 14.4% in 2012 (vertical axis).

EUROPE 2020 TARGET ON CLIMATE AND ENERGY
(3)

Achieve a 20%
increase in energy efficiency

1. State of play at EU level

Some progress has been achieved recently as regards
energy efficiency, but needs to be consolidated over the coming years to meet
the Europe 2020 target of a 20% increase in energy efficiency, corresponding to
1 483 Mtoe of primary energy consumption[5]. Between 2000 and
2006, primary energy consumption has steadily increased, from 1 617.8 Mtoe
in 2000 to a peak of 1 711.6 Mtoe in 2006. As of 2007, the onset of the crisis
led to an almost uninterrupted fall in primary energy consumption, to
1 583.5 Mtoe in 2012. As for greenhouse gas emissions, a slight rebound in
primary energy consumption was seen in 2010, as a result of the temporary
recovery. A large amount of this fall in primary energy consumption can be
explained by the contraction of economic activity generated by the crisis.
However, some structural changes are also taking place. Reaching the 2020
target would mean cutting primary energy consumption by a further 6.3% by 2020.

Based on the latest trends, further efforts are needed
to meet the energy efficiency target. The recent
decrease in primary energy consumption needs to be pursued and anchored in
long-lasting shifts in energy consumption patterns. Generally, the crisis has
had an impact on primary energy consumption. Therefore, the durability of the
encouraging latest developments, as well as the respective weight of the
cyclical and structural factors can be questioned. Avenues for further action
exist in all sectors, in particular in transport, where little progress has
been obtained so far.

EU primary energy consumption, 2005-2020

                                                                                                                                                                                                                                                           Source:
European Commission

Reading: EU
primary energy consumption could reach 1 542 Mtoe by 2020.

\* 2013 projections (business as usual) are made on the basis of current
policies.

2.
State of play and progress at national level

The picture regarding energy efficiency is mixed. The
Energy Efficiency Directive[6]
defines the energy efficiency target at European level and requires the Member
States to have an indicative national target for 2020. This needs to be
translated into levels of primary and final energy consumption for
comparability reasons. Overall, in 2012, Cyprus, Estonia, Greece, Finland,
Croatia, Hungary, Ireland, Lithuania, Latvia, Portugal, Romania, Slovakia,
Luxembourg, Poland, Spain, Italy and Slovenia had levels of primary energy
consumption below their indicative national targets.

Primary energy consumption in EU Member States

Source: European Commission

Reading: in 2012, 17 Member States had reached their indicative national
targets on energy efficiency.

Energy intensity[7] – the amount of primary
energy consumption per unit of GDP – improved in all Member States between 2005
and 2011.
Overall, the countries with the highest energy intensity have sizeably reduced
it. The decrease is more moderate for less energy-intensive Member States.

Situation in 2012 and progress since 2005, by country

Reduction in energy
intensity between 2005 and 2012 (%)

Source: European Commission

Reading: in 2012, most Member States were close to the EU average in
terms of energy intensity and progress.

EUROPE 2020 TARGET ON EDUCATION (1)

Reduce the share of early school leavers
to below 10%

1.
State of play at EU level

Positive steps have been taken on early leaving from
education and training: the share of early school leavers has been steadily
declining since 2000, but the rate remains above the 10% Europe 2020 target so
far.
By 2020, the EU wants to bring down the share of early leavers from education
and training aged 18-24 (those with at most lower secondary education and not
in further education or training) to below 10%. This indicator has followed a
steadily decreasing trajectory since 2000 and has declined from above 17% in
2000[8], to 15.7% in 2005 and
12.7% in 2012 in the EU. This however remains 2.7 percentage points above the
Europe 2020 target. Part of this positive performance can be linked to the
effect of the crisis, where worsening employment conditions and prospects,
notably for young people, have encouraged them to stay longer in the education
and training system.

The Europe 2020 target on early school leaving is
achievable by 2020. Although the Europe 2020 target on early
leaving from education and training seems within reach, this is not a given.
Recent reductions in early school leaving due to the crisis, together with
demographic projections, cast doubt on the ability of the EU to decrease the
share of early leavers to less than 10% by 2020. Reaching the target will
require a sustained, if not increased, effort from the EU and its Member States.

Early leavers from education and
training in the EU in 2000\*, 2012 and 2020

(aged
18-24, with at most lower secondary education and not in further education or
training)

Source: European Commission

Reading: on the basis of current commitments, early school leaving rate
in the EU could reach 10.1% by 2020.

\* 2000 and 2001: EU27 data.

\*\* Business as usual corresponds to an extrapolation of the 2000-2012
developments.

2.
State of play and progress at national level

Ambition in terms
of reducing early leaving from education and training varies across Member
States.
With national targets ranging from 4% in Croatia to 16% in Italy, the Member States have shown different levels of ambition, which makes the path to the target
more or less difficult. In 2012, 9 Member States, namely Denmark, Slovenia,
Czech Republic, Sweden, Luxembourg, Austria, Latvia, Lithuania and Slovakia,
had already met their respective targets, nevertheless some of these countries
had set less ambitious targets than other Member States. Croatia, Germany, the Netherlands and Finland are also approaching their targets, whereas Spain, Portugal, Malta and Romania remain far from their objectives. This can partly be explained by
the fact that these countries have set somewhat ambitious targets.

Looking at
developments over time, four main groups of countries can be identified: some
Member States such as Spain, Romania and Italy, display high rates of early
leaving from education and training and relatively slow progress. Portugal and Malta also show high rates of early school leaving, but have achieved substantial
progress since 2000. On the other end of the spectrum, some good performers
have only made slight progress since 2000 – in the case of Luxembourg and Croatia, the rate of early leaving from education and training even increased between
2000 and 2012. Denmark and Lithuania stand as the best performers, combining
low early school leaving rates with notable progress since 2000. By 2020,
according to the latest projections, most of the Member States are likely to
meet their target, with the exception of Spain, Portugal and Romania.

Early leavers from education and
training in EU Member States

(aged
18-24, with at most lower secondary education and not in further education or
training)

Source: European Commission

Reading: the EU average rate of early leavers from education and
training was 12.7% in 2012, against a target of 10% for 2020.

\* EU28, DK, DE, LU and SE: <10%; LT: <9%; SK: <6%. The UK has not set a target.

Situation in 2012 and progress since 2000\*, by country

% point annual change
in the rate of early leaving from education and training (2000-2012)

Source: European Commission

Reading: the
rate of early leaving from education and training in the EU was reduced by
around 0.4 percentage point every year over 2002-2012 (horizontal axis), to
reach 12.7% in 2012 (vertical axis).

\* EU: 2002-2012

Early school leaving is marked by gradually decreasing variations across the EU.  The
gap between the lowest and the highest early school leaving rate has declined
by more than half between 2000 and 2012. With the lowest rate for Sweden, at 7.3% and the highest for Malta, at 54.2%, the gap reached 46.9 percentage points in 2000.
In 2012, it decreased to 20.7 percentage points, with the lowest value at 4.2%
for Croatia and the highest at 24.9% for Spain. Overall, Southern European
countries tend to have highest shares of early leaving from education and
training. Reflecting this pattern, regions in Northern and Eastern European
countries have predominantly low rates of early school leaving, in contrast
with Southern European regions.

EUROPE 2020 TARGET ON EDUCATION (2)

Increase the share of the population
aged 30-34
having completed tertiary education to at least 40%

1.
State of play at EU level

Good progress has been made towards the Europe 2020
target of 40% of tertiary (or equivalent) educational attainment and needs to
be pursued.
The second indicator related to education aims to raise the share of young
people aged 30-34 having completed tertiary (or equivalent) education to 40%.
With a rate of 22.4% in 2000[9],
27.9% in 2005 and 35.7% in 2012, corresponding to an increase of 13.3
percentage points in 12 years, the EU has significantly advanced towards its
target and the number of tertiary graduates has rapidly increased. Only 4.3
percentage points separate the current EU performance from the 40% Europe 2020
target.

The Europe 2020 target on tertiary attainment rate is
within reach by 2020. On the basis of the latest
developments where significant progress has already been achieved, and assuming
that the past trend will continue, there are good chances that the target on
tertiary (or equivalent) attainment can be met.

Tertiary
educational attainment rate in the EU, 2000-2020\*

(% of population
aged 30-34 with completed tertiary education – ISCED levels 5 and 6)

Source: European Commission

Reading: on the basis of current commitments, EU tertiary attainment
rate could reach 45.1% by 2020.

\* 2000-2001: EU27 data.

\*\* Business as usual corresponds to an extrapolation of 2000-2012
developments.

2.
State of play and progress at national level

Good progress has been achieved towards raising
tertiary educational attainment, although some Member States are more ambitious
than others. Mirroring the different levels of ambition of Member States, the national targets range between 26-27% in Italy and 60% in Ireland. In 2012, 9 Member States comprising Latvia, the Netherlands, Denmark, Finland, Sweden, Lithuania, Cyprus, Germany and Austria[10]
had already reached their targets. Hungary, Slovenia and Estonia are just behind and stand very close to their respective targets. Malta, Slovakia,
Luxembourg, Portugal and Croatia are the furthest away from their targets and
Ireland also stands at 9 percentage points from its objective; some of these
countries like Slovakia, Portugal, Ireland and Luxembourg have defined
ambitious targets, at 40%, 60% and 66% respectively, contrary to Italy's less
ambitious target for instance, set at 26%. In terms of progress achieved over
the last decade, four groups of countries can be distinguished: some Member
States, notably Bulgaria, Greece, Croatia, Austria, Italy, Czech Republic and
Romania, are characterised by both low tertiary educational attainment and low
progress since 2000. Despite a low performance, other countries have made
considerable progress since 2000. This is especially the case for Portugal and Hungary. Among the better performers in terms of tertiary educational attainment, slow
progress in Finland, Belgium or Spain differs from the high progress reached by
Luxembourg, Lithuania, Ireland and Sweden. As regards the projections for
2020, most Member States, aside from Malta, Portugal and Slovakia, are expected to meet their target.

Tertiary
attainment rate in EU Member States

(population aged
30-34 with completed tertiary education – ISCED levels 5 and 6)

Source: European Commission

Reading: tertiary
attainment rate stood at 35.7% in the EU in 2012, against a target of 40% for
2020.

\* EU28, DK: at least 40%; DE: 42%, including ISCED 4; IT: 26-27% (26.5%
was assumed); LV: 34-36% (35% was assumed); NL: more than 40%; AT: 38%,
including ISCED 4/4a; SE: 40-45% (42.5% was assumed); the UK has not set a target; FI: 42% (narrower definition); FR: population aged 17-33

Situation in 2012 and progress since 2000, by country\*

% point annual
change in the tertiary attainment rate (2000-2012)

Source: European Commission

Reading: the
tertiary attainment rate in the EU has increased by more than 1 percentage
point annually since 2000 (horizontal axis), to reach 35.7% in 2012 (vertical
axis).

\* 2000: EU27 data

Inter-country performance shows a varied picture within
the EU.
Overall, Northern Europe shows the highest tertiary attainment levels, also
reflected in the regional performances of the different countries. The large gap
in tertiary outcomes, amounting to 35.2 percentage points between the weakest
performance of Malta and the strongest results of Lithuania in 2000, has been
declining over the years, reaching 29.4 percentage points in 2012. Italy has the lowest tertiary attainment rate, standing at 21.7%, whereas Ireland is the best
performing country, with a rate of 51.1%. Regional outcomes show some
intra-country dispersion, notably in Spain and Germany. In addition, the
various ambitions of the Member States also translate to the regional
performance, with some countries displaying a high number of well-performing
regions, although they remain below the national target.

EUROPE 2020 TARGET ON POVERTY AND SOCIAL EXCLUSION

Lift at least 20 million people out of
the risk of poverty or social exclusion

1.
State of play at EU level

The social impact of the crisis has been significant
and the number of people exposed to poverty or social exclusion has increased,
thus undermining progress towards the achievement of the Europe 2020 target of
lifting 20 million people out of the risk of poverty or social exclusion. The
target set by the EU corresponds to a situation where 96.4 million people are
at risk of poverty or social exclusion in 2020[11].
When referring to the number of people at risk of poverty or social exclusion,
the indicator includes the number of people affected by at least one of the
three types of poverty, namely income poverty (people at risk of poverty after
social transfers[12]),
material poverty (severely materially deprived people[13]) and people living in
households with very low work intensity[14].

People
at risk of poverty or social exclusion in the EU, 2012

                                                      
Source: European Commission

Reading: based
on three different ways of measuring poverty, a total of 124.2 million people
were at risk of poverty or social exclusion in the EU in 2012 (with 9.3 million
people belonging to the three groups).

Given the harsh impact of the crisis, the Europe 2020
target on poverty seems out of reach. The years until
2009 were marked by a steady decrease in the number of people exposed to
poverty or social exclusion. The lowest level was reached in 2009, with around
114 million people at risk of poverty or social exclusion[15], against more than 124
million in 2005[16].
However, the crisis offset these positive developments and led to a rise in the
values of the EU28 aggregates, with the number of people at risk of poverty or
social exclusion increasing to more than 118 million in 2010, more than 121
million in 2011 and more than 124 million in 2012. Monetary poverty affects the
highest number of people and severe material deprivation has increased most
rapidly, by 7.1 million people since 2010. Based on recent trends and according
to the latest projections, the EU target of reducing the number of people at
risk of poverty or social exclusion to 96.4 million by 2020 is unlikely to be
met and the indicator might remain close to 100 million.

People
at risk of poverty or social exclusion and its sub-indicators, 2005-2020\*

Source: European Commission

Reading: in 2012, 124 million people were at risk of poverty or social
exclusion in the EU, namely 28 million more than the Europe 2020 target.

\*2005-2009: EU27 data, 2010-2012: EU28 data. The 2020 target of 96.4
corresponds to the 2008 figure for EU27 (116.4) minus the 20 million people
that the EU aims to lift out of poverty and social exclusion. HR excluded from
the calculation of the target.

2. State of play and progress at national
level

As a consequence of the crisis, progress on reducing
poverty and social exclusion has been very limited. Compared to the
European target of lifting 20 million people out of poverty and social
exclusion, the aggregated national targets are less ambitious and correspond to
reducing the number of people at risk of poverty or social exclusion by around
12 million. As a result of the crisis, vulnerability to poverty and social
exclusion has increased in most Member States. Therefore, in 2012, only two
countries, Germany and Latvia had met their targets[17]. Poland is very close to achieving its target while Bulgaria, Lithuania, Czech Republic and Finland are moving in the right direction. Italy, Hungary, Greece and Spain are furthest from their respective targets.

Disparities between Member States are on the rise. The
crisis has not affected all Member States to the same extent nor with the same
intensity and has exacerbated the differences between Member States. In 2008,
the distance between the two extremes, namely the Netherlands with 14.9% of the
population at risk of poverty or social exclusion and Bulgaria with 44.8%, amounted to almost 30 percentage points. This gap rose to 34.3 percentage
points in 2012, from 15% in the Netherlands to 49.3% in Bulgaria.

People at risk of poverty or social
exclusion in EU Member States\*

(%
of population)

Source: European Commission

Reading: in 2012, 24.8% of the population was at risk of poverty or
social exclusion in the EU, which is about 5 percentage points over the Europe 2020
target.

\*2020 target refers to at risk of poverty or social exclusion rate if
2020 target achieved  - UK, SE not included due to the specificity of their
national targets; IE: 2011.

Situation in 2012 and progress since 2008, by country

% point change
(2008-2012)

Source: European Commission

Reading: the
share of population at risk of poverty or social exclusion increased by more
than 1 percentage point between 2008 and 2012 (horizontal axis), to reach 24.8%
of the population in 2012 (vertical axis).

2008: EU27 data.

Annex III: State of play on Flagships initiatives

FLAGSHIP INITIATIVE
"AGENDA FOR NEW SKILLS AND JOBS"

1. Objective of the flagship initiative

"An
agenda for new skills and jobs" is an overarching
initiative on employment, encompassing the issues of flexicurity, skills,
working conditions and job creation. It aims to
raise the employment rate with more and better jobs, help people anticipate and
manage change by equipping them with the right set of skills and competences,
modernise labour market and welfare systems, and ensure that the benefits of
growth reach all parts of the EU. The flagship initiative set out four major
priorities, (i) to make European labour markets function better through the
adaptation of flexicurity policies to a post-crisis context, (ii) to endow
people with skills adapted to labour market needs, (iii) to improve work
quality and working conditions and (iv) to promote job creation and labour
demand.
The agenda
was set as a joint effort between the Commission and European institutions,
Member States, social partners, as well as education and training institutions
to deliver 13 key actions accompanied by other support measures.

2. State of play in 2014

2.1 Deliverables and impact

Progress in the delivery of the initiative has been
mixed.
All actions in the areas of flexicurity and skills have been completed, with
adaptations to the new economic context. Results in the area of quality of work
and working conditions are more varied, with little progress in relation to working
time and health and safety. No progress has been made in relation to a proposal
for guiding principles to promote enabling conditions for job creation, even if
this key action is addressed to a certain extent in the context of the European
Semester.

2.2 Lessons learnt

The impact of the flagship initiative at a
macroeconomic level has been limited. The individual
initiatives that have been put in place will help improve the functioning of
the labour market over time and tackle the main bottlenecks, especially in the
areas of skills and mobility. Yet, against the background of the crisis, the
overall macroeconomic effects of the flagship initiative have been limited.

Awareness
of the flagship initiative has been hampered in several respects. In 2012,
the deepening of the crisis made it necessary to complete the flagship with a
comprehensive agenda for a job-rich recovery. The adoption of
the Employment Package[18]
in April 2012 and the Youth Employment Package[19]
in December 2012 have to a large extent shifted the policy focus and
communication efforts away from the flagship initiative. The flagship
initiative did not fully succeed in creating a coherent framework for
employment policies and exploiting the synergies between the different actions.
The link with the European Semester has been limited, in particular between
EU-level initiatives adopted in the context of the flagship initiative and the
country-specific analysis and recommendations of the European Semester.

FLAGSHIP INITIATIVE "YOUTH ON THE
MOVE"

1. Objective of the flagship initiative

"Youth
on the move" covers education and employment and is intended to upgrade
the performance of education, address the challenges faced by young people on
the labour market and facilitate school-to-work transition.
"Youth on the move" has set four priority areas, embracing the
importance of (i) supporting the acquisition of skills through learning
(formal, non-formal and informal), (ii) fostering the participation of young
people in higher education, (iii) encouraging learning and job mobility and
(iv) supporting youth employment. The initiative aims to use EU funds as
catalysts for improving the education and training opportunities, the
employability and the employment of young people.

2. State of play in 2014

2.1 Deliverables and impact

 "Youth
on the move" has adopted a comprehensive and integrated approach. By
bringing together the issues of education and employment and striving to
achieve smooth bridges between them, "Youth on the move" has opted
for an all-embracing logic. This has allowed bringing together a set of EU
actions relevant for young people and putting youth-related issues high on the
European and national agendas.

Thorough
implementation of "Youth on the move" has been achieved. All
follow-up actions in the flagship initiative have been delivered, with the
exception of the "Youth on the move card", which has been replaced by
other tools. Actions were deployed in each of the four pillars of the
initiative: (i) a Council Recommendation targeting early school leaving was
formulated in 2011[20]
and gave impetus to national action to reduce dropout rates, and cooperation at
European level in the field of vocational education and training was
strengthened; (ii) modernising higher education has been at the core of a
Communication from the Commission; (iii) mobility was fostered through a range
of instruments, notably the new integrated approach of the Erasmus+ programme,
the European Skills Passport or the scheme "Your First EURES job"
aimed at providing labour market opportunities for young people in the 28
Member States; (iv) to fight against youth unemployment and inactivity, a
Council Recommendation[21]
establishing Youth Guarantees[22]
was adopted and Youth Guarantee schemes were launched – they can be supported by
the European Structural and Investment Funds and the Youth Employment
Initiative, for Member States with regions showing a youth unemployment rate of
above 25%.

2.2 Lessons learnt

Communication
on "Youth on the move" has been affected by several weaknesses. The
framework agenda nature and long-term orientation of the actions contained in
the initiative have contrasted with the expectations of some stakeholders of an
operational spending programme. Communication on the programmes and initiatives
launched in the education and youth employment area has created some confusion
with the flagship initiative itself.

FLAGSHIP INITIATIVE "INNOVATION UNION"

1. Objective of the flagship initiative

"Innovation
Union" is a comprehensive package of actions aimed at achieving an
innovation-friendly environment within the EU. "Innovation Union" strives to boost research and innovation in the EU through a series of measures
to the benefit of public authorities, entrepreneurs, researchers and engineers,
and citizens. Priority is given to challenges of common interest, with the
objective of improving framework conditions and access to finance for research
and innovation activities, and in turn paving the way for a single innovation
market. To achieve this objective, "Innovation Union" builds on 34 commitments
and funding from the "Horizon 2020" programme among other instruments.

2. State of play in 2014

2.1 Deliverables and impact

The
delivery of the initiative is well on track. 100% of the
actions set out in the context of "Innovation Union" are on course,
with different levels of implementation. In particular, five European
Innovation Partnerships, dealing with (i) active and healthy ageing, (ii)
agricultural sustainability and productivity, (iii) smart cities and communities,
(iv) water and (v) raw materials, have been established in order to foster
cooperation of EU, national and subnational stakeholders. Measures reinforcing
the use of public procurement for innovation, introducing a passport for
cross-country venture capital investment or creating unitary patent protection
go in the direction of improving the innovation-friendliness of the business
environment. Steps have also been made towards the achievement of the European
Research Area in 2014, which aims at increasing the efficiency and
effectiveness of public research systems to generate higher productivity,
competitiveness and growth in the EU.

Monitoring
tools have been set up. A comprehensive Innovation Scoreboard
provides an assessment of the innovation performance of EU Member States and
the respective strengths and weaknesses of their research and innovation
systems. In addition, a new indicator of innovation output – work is however
still ongoing to address some of its limitations – has been designed with a view
to monitoring the EU's and its Member States' innovation outcomes against their
main trading partners. It relies on four main dimensions, namely technological
innovation, employment in knowledge-intensive activities, competitiveness of
knowledge-intensive goods and services and employment in fast-growing firms of
innovative sectors.

2.2 Lessons learnt

Full
implementation of measures is key. The measures set out in the
framework of "Innovation Union" go in the right direction; however,
the materialisation of the associated benefits crucially depends on proper
implementation.

"Innovation
Union" has not prevented the increasing risk of innovation divide inside
the EU.
Since 2008, the EU has managed to close almost half of its innovation
performance gap with the United States and Japan. Yet, within the EU, the
dynamics of convergence between the innovation performance of Member States has
come to a halt and disparities between countries are growing.

FLAGSHIP INITIATIVE "DIGITAL AGENDA
FOR EUROPE"

1. Objective of the flagship initiative

"Digital
agenda for Europe" was designed to help the EU and its Member States to reap the benefits of a competitive digital single market. Faced
with the fragmentation of European markets, preventing the EU from grasping the
advantages of the digital economy in terms of increased productivity,
employment and growth, "Digital agenda for Europe" aims to unleash
the digital potential and diffuse the digital culture widely across the EU. 101
actions, grouped around seven pillars, were initially identified to reach this
objective. Following a review of the initiative carried out in December 2012,
seven new key actions were flagged. They mainly highlight the importance of
fostering digital infrastructure, improving the regulatory environment,
promoting digital skills and jobs and implementing focused strategies in the
areas of cyber-security, cloud computing and microelectronics.

2. State of play in 2014

2.1 Deliverables and impact

The
flagship initiative managed to give the digital economy the necessary political
attention.
Its main strengths relate to the creation of a coherent and forward-looking
framework for action. The annual publication of a Digital Agenda Scoreboard and
the yearly "Digital Assembly" stakeholder meeting helped to attract
political and media attention. "Digital agenda for Europe" also gave
impetus to national replication and action in 20 Member States and a number of
regions who set up their own digital agendas.

Progress
has been achieved in the delivery of the planned actions. In
January 2014, more than 90% of actions foreseen in the flagship initiative were
completed or on track. The use of the internet has now become widespread across
the EU, ecommerce is gaining strength, although its cross-border take-up
remains limited so far, e-government services have been developed and basic
broadband coverage across the EU is complete.

2.2 Lessons learnt

The
digital single market is not yet a reality and more investment is needed in
high-speed infrastructure. The persistence of obstacles such as
fragmentation of European markets, infrastructure gaps and lack of consumer
confidence still hampers the completion of the digital single market. The lack
of high-speed broadband infrastructure is a serious concern as it could generate
a new digital divide and foster social exclusion in certain areas, particularly
in rural areas.

Efficiency
of the "Digital agenda for Europe" was affected by a number of
weaknesses.
Visibility of the flagship initiative suffered from a lack of focus due to the
high number of specific measures. The flagship initiative was also unable to
bring information and communication technology topics to the core of structural
reform agendas.

FLAGSHIP INITIATIVE "INDUSTRIAL POLICY
FOR THE GLOBALISATION ERA"

1. Objective of the flagship initiative

"Industrial policy for the globalisation era"
strives to improve the competitiveness of European industry through a
coordinated approach. This initiative puts the emphasis on the
need to combine innovation, diversification and sustainability and to encourage
the creation and development of SMEs. Building on 70 actions to increase
European industrial competitiveness, the initiative aims to achieve a more
business-friendly environment and to accompany and support industry to cope
with the new global challenges.

2. State of play in 2014

2.1 Deliverables and impact

Notable
progress has been achieved towards the implementation of the initiative. 90% of
the 70 key actions initially identified in the initiative have been completed or
are ongoing. The Industrial Policy Communications released in 2010, 2012 and
2014 have supported the translation of the flagship initiative's objectives
into policy. Many actions of the initiative are oriented towards support for
SMEs: the Small Business Act for Europe was reviewed, and an Action plan to
foster SMEs' access to finance and a strategy to promote SMEs'
internationalisation were adopted in 2011; a standardisation package was
presented in 2012 to make standard-setting more efficient; the Competitiveness
and SME (COSME) programme was adopted in 2013 to buttress competitiveness and
with Copernicus and Galileo, space policy initiatives provide a new dimension
for service industries. A Communication to encourage entrepreneurship was
presented in 2012. Other actions aim to improve the regulatory environment for
businesses, notably by streamlining legislation through regular
"fitness checks" and reducing the time and cost needed to set up a
business, to reinforce and deepen the single market with the adoption of the
Single Market Acts I and II in 2011 and 2012 and to boost innovation and the
modernisation of industry. A number of sector-specific initiatives have also
been undertaken.

2.2 Lessons learnt

"Industrial policy for the globalisation era"
has adopted a medium- to long-term approach and a number of action strands will
take time to deliver results. National budgets' investments in
necessary network infrastructures have dwindled, the internal market is still
insufficiently complete, conditions for access to finance for SMEs have
experienced a setback through the crisis and progress in ensuring that
adequately skilled labour is available for industrial jobs has been slow. Most
of the actions included in the flagship initiative have a 3- to 10-year horizon.
Only a minority of them have a short-term, operational orientation. Against the
background of the economic crisis having a strong negative impact on several
sectors of industrial activity in the EU, the flagship actions needed to be
complemented by actions on key priority areas, which could produce a shorter or
medium-term effect.

FLAGSHIP INITIATIVE
"RESOURCE-EFFICIENT EUROPE"

1. Objective of the flagship initiative

The flagship initiative "Resource-efficient Europe" supports the shift towards a resource-efficient and low-carbon economy.
"Resource-efficient Europe" aims to decouple growth and resource use
and provides a long-term framework for embedding resource efficiency as a key
principle in the design of policies, notably on climate change, energy,
transport, industry, waste and raw materials, agriculture, fisheries,
biodiversity and regional development. In light of the increasing strain on
natural resources and the international dimension of this issue,
"Resource-efficient Europe" aims to promote a smarter use of
resources by 2020, and anchor this logic to achieve further results in the 2050
horizon. To this aim, it includes a series of initiatives launched since 2011.

2. State of play in 2014

2.1 Deliverables and impact

A range of actions contained in
"Resource-efficient Europe" have already been initiated at EU level. Among
the main measures covered by the initiative, all of them have already been
tabled by the Commission. In particular, a long-term policy framework up to
2050 was presented in 2011. It consists of four roadmaps, namely the
"Roadmap for moving to a competitive low-carbon economy in 2050"[23], the "White Paper –
Roadmap to a Single European Transport Area – Towards a competitive and
resource-efficient transport system"[24],
the "Energy Roadmap 2050"[25]
and the "Roadmap to a Resource Efficient Europe"[26]. This strategic framework
was complemented by a number of mid-term initiatives, including a new
biodiversity strategy "Our life insurance, our natural capital: an EU
biodiversity strategy to 2020"[27]
and "A Blueprint to Safeguard Europe's Water Resources"[28] and the new "Clean
Air Programme for Europe"[29].
The reform of the Common Agricultural Policy, with the introduction of a
greening component, and the Common Fisheries Policy also derive from the
initiative. The Commission will continue working on the follow-up actions
announced in the roadmaps or action plans delivered as part of this initiative.
Moreover, the Commission further specified the 2050 roadmaps on climate and
energy in its Communication on "A policy framework for climate and energy
in the period from 2020 to 2030" presented on 22 January 2014[30].

2.2 Lessons learnt

A more
comprehensive approach is needed to measure resource efficiency.
Resource efficiency spans many different policies and related resources.
A single or limited set of indicators would be useful to monitor improvements
in the use of resources such as energy, materials, land and water in an
operational manner to drive policy development. However, it is difficult to
analyse changes in the use of resources in a simplified way and to design
sufficiently precise indicator(s). Work thus needs to be pursued. The
resource-efficiency scoreboard published by Eurostat with resource productivity
as lead indicator is an important step in this direction. Systematic monitoring
with key indicators is also needed to assess progress towards a competitive,
secure and sustainable energy use, as underlined in the 2030 climate and energy
policy framework.

FLAGSHIP INITIATIVE "THE EUROPEAN PLATFORM AGAINST
POVERTY AND SOCIAL EXCLUSION"

1. Objective of the flagship initiative

"The
European platform against poverty and social exclusion" aims to ensure
economic, social and territorial cohesion. Building on the
2010 European Year for combating poverty and social exclusion, it strives to
raise awareness and recognise the fundamental rights of people experiencing
poverty and social exclusion, in order to enable them to live in dignity and
take an active part in society. The goal of the flagship initiative was to come
to an integrated approach to fight poverty, by joining up various policies in
the economic, fiscal, social or single market areas. It also relied on a
partnership approach between civil society, social partners and Member States.
The initiative identified the commitments for the Commission in 5 areas, (i)
delivering actions across the policy spectrum, (ii) ensuring greater and more
effective use of EU funds to support social inclusion, (iii) promoting
evidence-based social innovation, (iv) working in partnership and harnessing
the potential of the social economy and (v) fostering enhanced policy
coordination among Member States. In particular, "The
European platform against poverty and social exclusion" identified
64 actions to be delivered by the Commission.

2. State of play in 2014

2.1 Deliverables and impact

Delivery of the initiative is happening at a
fast pace.
The Commission has delivered approximately two thirds of the 64 actions. To
help Member States address these challenges through structural reforms in the
context of a protracted crisis, the Commission has issued policy guidance in
the form of the Social Investment Package[31] and the
Recommendation "Investing in children: breaking the cycle of
disadvantage"[32], the
"EU Framework for National Roma Integration Strategies up to 2020"[33] and the White Paper on
"An Agenda for Adequate, Safe and Sustainable Pensions"[34]. The Commission has
presented a proposal for a directive on payment accounts. To support the social
economy and social entrepreneurs, it has published the Social Business
Initiative and established an EU Social Entrepreneurship Fund. The Commission
has also published guiding principles for active ageing and solidarity between
generations and launched an Active Ageing index. Another distinctive
initiative carried out in the context of "The
European platform against poverty and social exclusion" is the
Annual Poverty Convention.

2.2 Lessons learnt

A
number of obstacles have hindered full efficiency of the flagship initiative. The
adoption of the Social Investment Package has to a large extent shifted the
policy focus and communication efforts away from the flagship initiative. The
flagship initiative also did not fully succeed in creating a coherent and
integrated framework for social policies and exploiting the synergies between
the different actions; it is rather a collection of initiatives and the value
added of the flagship initiative is not self-evident.

[1] EU27 data.

[2] The EU ETS sets a cap on overall emissions from high-emitting industry
sectors. Companies may buy and sell emission allowances within this cap.

[3] Study commissioned by the European Commission.

[4] EurObserv'ER.

[5] As opposed to final energy consumption, primary energy consumption
refers to energy that has not been subject to any conversion or transformation
process.

[6] OJ L315, 14 November 2012.

[7] The energy intensity indicator depends on the industrial structure
of the economy and thus is not an exact proxy for energy efficiency in Member
States.

[8] EU27 data.

[9] EU27 data.

[10] It must be noted that the targets of Germany and Austria are different from those of the other Member States since they include
post-secondary attainment.

[11] 2008 is used as base year.

[12] “Persons with an equivalised disposable income below the risk-of-poverty
threshold, which is set at 60% of the national median equivalised disposable
income (after social transfers)”. Source: European Commission.

[13] “Severely materially deprived persons have living conditions
severely constrained by a lack of resources, they experience at least 4 out of
9 following deprivation items: cannot afford (i) to pay rent or utility bills,
(ii) keep home adequately warm, (iii) face unexpected expenses, (iv) eat meat,
fish or a protein equivalent every second day, (v) a week holiday away from
home, (vi) a car, (vii) a washing machine, (viii) a colour TV, or (ix) a
telephone”. Source: European Commission.

[14] “People living in households with very low work intensity are
people aged 0-59 who are not students and live in households where the adults
work less than 20% of their total work potential during the past year”. Source:
European Commission.

[15] EU27 data.

[16] EU27 data.

[17]             These countries had met their national targets, which
are not expressed in terms of people at risk of poverty or social exclusion.

[18] COM(2012)173.

[19] COM(2012)727.

[20] 2011/C191/01.

[21] 2013/C120/01.

[22] Youth Guarantees ensure that all young people under the age of 25
years receive a good-quality offer of employment, continued education, an
apprenticeship or a traineeship within a period of four months of becoming
unemployed or leaving formal education.

[23] COM(2011)112.

[24] COM(2011)144.

[25] COM(2011)885.

[26] COM(2011)571.

[27] COM(2011)244.

[28] COM(2012)673.

[29] COM(2013)918.

[30] COM(2014)15.

[31] COM(2013)83.

[32] 2013/112/EU.

[33] COM(2011)173.

[34] COM(2012)55.

[Top](#document1)