Europe 2020 Green growth and jobs?

The EU's new strategy for sustainable growth and job comes in the midst of the worst economic crisis for decades. It puts innovation and green growth at the heart of its blueprint for competitiveness, but will have to include tighter monitoring if it is to succeed where the Lisbon Agenda failed.

CROATIAN CENTER of RENEWABLE ENERGY SOURCES

Europe 2020 Green growth and jobs?

The EU's new strategy for sustainable growth and jobs, called 'Europe 2020', comes in the midst of the worst economic crisis in decades.

The new strategy replaces the Lisbon Agenda, adopted in 2000, which largely failed to turn the EU into "the world's most dynamic knowledge-based economy by 2010" (see EurActiv LinksDossier).

The new agenda puts innovation and green growth at the heart of its blueprint for competitiveness and proposes tighter monitoring of national reform programmes, one of the greatest weaknesses of the Lisbon Strategy.

During a summit on 11 February, EU leaders broadly endorsed a paper by European Council President Herman Van Rompuy, which called for more rigorous implementation and monitoring procedures for the new strategy (EurActiv 11/02/10).

The European Commission unveiled the new strategy on 3 March 2010, defining five 'headline targets' that would need to be adapted at national level in order to reflect national differences:

• Raising the employment rate of the population aged 20-64 from the current 69% to 75%.
• Raising the investment in R&D to 3% of the EU's GDP.
• Meeting the EU's climate change and energy objective for 2020 to cut greenhouse gas emission by 20% and source 20% of its energy needs from renewable sources.
• Reducing the share of early school leavers from the current 15% to under 10% and making sure that at least 40% of youngsters have a degree or diploma.
• Reducing the number of Europeans living below the poverty line by 25%, lifting 20 million out of poverty from the current 80 million.

After heated discussions, EU heads of state and government signed up to the EU-wide targets at a summit in June 2010 and agreed on their national contribution to the European effort (see full table with targets broken down per country).

Some objectives were watered down during the negotiations. Germany, for instance, disputed the EU's right to set targets on education matters and only dropped its resistance after receiving assurances that it would maintain its national sovereignty on education and training.

Britain, for its part, simply refused to sign up to the education and jobs objectives, arguing that sovereign countries should "set their own level of ambition" when it comes to defining national policies.

Issues

An 'economic government' for Europe?

Meeting in February 2010, EU leaders endorsed the thrust of the European Commission's plan, with a number suggesting more attention should be paid to social aspects as unemployment is expected to reach new highs in 2010.

Paris and Berlin took the opportunity to present a united front in responding to the 2020 vision (EurActiv 05/02/10). France has long insisted on turning the euro zone's meeting of finance ministers into an 'economic government' for Europe, a view opposed by Germany due to concerns over the independence of the European Central Bank.

But Greece's debt problems and Europe's sluggish recovery from the economic crisis have given Berlin reason to soften its stance, with Merkel now accepting references to the term "economic governance". For Berlin, greater coordination of national economic policies and reform programmes appears to be acceptable as long as the Stability and Growth Pact is respected.

Herman Van Rompuy, permanent president of the European Council, suggested that EU countries submit their public debt management plans alongside national reform programmes next autumn.

In its 'Europe 2020' proposal, the European Commission took the idea on board, proposing to strengthen economic policy coordination between the 27 EU member states by linking national fiscal stabilisation programmes to expenditure in "growth-friendly" areas such as R&D and education (EurActiv 26/02/10).

But German Chancellor Angela Merkel appears sceptical, saying that linking the Stability and Growth Pact to the policy priorities of the 'Europe 2020' plan would make fiscal surveillance "unnecessarily political" (EurActiv 02/03/10).

Closer monitoring: Carrots, not sticks

At the February summit, EU leaders also broadly endorsed a paper by Herman Van Rompuy which called for more rigorous implementation and monitoring procedures for the new 'Europe 2020' strategy (EurActiv 11/02/10).

One major criticism of the Lisbon Strategy has been that national governments did not buy in to the process and monitoring was too loose and did not include sanctions for failing member states.

In his invitation letter to heads of state and government, Van Rompuy said the new strategy "requires ownership and commitment at the highest level". "The new strategy needs to become our joint responsibility," he stressed, suggesting that EU summits should become the place for European economic governance.

Germany had a public falling out with Spain over whether to set binding goals for member states to ensure the 2020 agenda is met. Spanish Prime Minister José Luis Rodríguez Zapatero, who holds the Union's rotating presidency, argued in favour of setting hard economic targets for member states, but Germany rejected the idea, fearing it would create unnecessary bureaucracy (EurActiv 12/01/10).

Instead of sanctions, Van Rompuy proposed to reward governments with extra EU funding if they meet their targets under the strategy. This could come from the European Investment Bank (EIB) or the EU's regional and research budgets. However, the European Commission did not include this in its proposal.

'Country surveillance'

A big novelty would come from so-called "country surveillance" schemes that would encompass fiscal stabilisation programmes and growth-friendly expenditure, taking into consideration national constraints on public finances.

"To achieve this, the Europe 2020 and Stability and Growth pact reporting and evaluation will be done simultaneously to bring the means and the aims together," the Commission says in its 'Europe 2020' proposal.

Policy recommendations could be made to member states both under the Stability and Growth Pact – which carries legal weight – and under the thematic parts of national policy programmes.

Legally speaking, these recommendations would take the form of opinions related to the surveillance of member states' public finances, which already exist under the Stability and Growth Pact (Regulation 1466/97).

The new aspect is that if an EU country fails to meet its policy recommendation in the agreed timeframe, the Commission could issue a "policy warning" under Article 121.4 of the EU treaty. This warning, which would need approval by the member states, could be made public in order to give it more political weight.

But it seems Germany is still reluctant to agree to such a close review of national economic policies and other countries like Britain are likely to oppose it too.

Five headline targets

To ensure the member states' commitment to the new strategy, the EU president wants a maximum of five "quantitative targets with a deadline and possible immediate steps" on issues such as R&D spending, labour market participation rates, third-level education and poverty reduction.

The Commission's proposal defines five 'headline targets' to be adapted at national level in order to reflect "differing starting points":

• Raising the employment rate of the population aged 20-64 from the current 69% to 75%.
• Raising the investment in R&D to 3% of the EU's GDP.
• Meeting the EU's 2020 objectives to cut greenhouse gas emission by 20% and source 20% of its energy needs from renewable sources.
• Reducing the share of early school leavers from the current 15% to under 10% and making sure that at least 40% of youngsters have a degree or diploma.
• Reducing the number of Europeans living below the poverty line by 25%, lifting 20 million out of poverty from the current 80 million.

Monitoring those targets, the Commission says, "should be an integral part of our economic governance".

A series of seven flagship initiatives were identified where joint action will be initiated: on innovation, youth, the digital agenda, resource efficiency, industrial policy, skills and jobs and the fight against poverty.

Implementation at national level

After heated discussions, EU heads of state and government signed up to the EU-wide targets at a summit in June 2010 and agreed on their national contribution to the European effort (see full table with targets broken down per country).

A one-size-fits-all target was ruled out given the differences between the most and least-developed member states.

Some objectives were watered down during the negotiations. Germany, for instance, disputed the EU's right to set targets on education matters and only dropped its resistance after receiving assurances that it would maintain its national sovereignty on education and training.

Britain, for its part, simply refused to sign up to the education and jobs objectives, arguing that sovereign countries should "set their own level of ambition" when it comes to defining national policies.

A form of peer-review has also been mooted but has not materialised in any significant manner. In any case, reporting – which could be made public – is likely to be more frequent and rigorous than during the Lisbon Agenda process.

Despite scepticism from some, diplomats believe economic realities will give the 2020 strategy major political impetus, which will lend itself to the kind of buy-in from governments that the Lisbon Agenda lacked.

Positions

Member states' lack of determination in implementing the Lisbon Agenda frustrated business leaders, who have called for greater commitment to delivering on the objectives. "Many political leaders make European commitments but by the time they cross their own national border they forget about it," said Wim Philippa, secretary-general of the European Round Table of Industrialists (ERT), a powerful lobby group.

"If Europe wants to be competitive in 2020 or in 2025 then that should not happen," he told EurActiv in an interview.

The business group underlined the urgent need to encourage young people to study mathematics, technology and the sciences – even offering to throw its financial weight behind educational initiatives in member states. "We very much support the creation of a European coordinating body for education to promote MST [maths, science and technology], starting in primary school. We are prepared to play our part – financially – in cash and in kind," Philippa said.

John Monks, secretary-general of the European Trade Union Confederation (ETUC), declared himself an 'EU 2020 sceptic' and argued that the new strategy risked being "Lisbon as usual" – a repeat of its poorly-performing predecessor. He feared that the long-termism of this new vision ignores the need for concrete, speedy solutions to the current problems facing Europe. "I think it's a rush to judgement by a new Commission that feels naked without a 10-year strategy," he argued.

The European Policy Centre, a Brussels think-tank, questioned whether the EU had the tools to deliver on its ambitious objectives. "Looking at the targets, it looks like the tools to deliver are mostly at member-state level so it remains to be seen how far member states will match action to aspiration this time around."

The EPC also questioned the wisdom of keeping the Stability and Growth Pact separate from the Europe 2020 policy objectives. "One crucial issue missing from the high-level targets is the sustainability of public finances, with the Stability and Growth Pact kept deliberately separate from Europe 2020. This means that Europe 2020 is not a comprehensive economic reform strategy and also makes it dependent on success in another policy field."

Indeed, it says the 'Europe 2020' policy objectives will largely depend on the public finance situation in the member states. The proposed governance mechanism "is still predominantly soft," says the EPC, relying on benchmarking, monitoring and recommendations.

"Yes, governments can be admonished if they do not take the right actions but is there really a will by member states to do this consistently, applied to all member states equally?" it said.

BusinessEurope, the EU's main employer lobby group, said the Europe 2020 proposal provided "a useful basis" for making Europe "a greater a player in the world". However, it said "the sense of urgency and focus should be reinforced […] in order to turn the Commission communication into a real roadmap for action".

Instead of waiting until 2020, BusinessEurope called for a rigorous mid-term assessment in 2014 which would judge whether the current Commission had done enough. "The Lisbon Strategy failed because the first five-year Commission mandate during that 10-year period did nothing," he claimed.

Former EU Commissioner Mario Monti, who is currently working on an official report aimed at reviving support for the internal market, said if Europe is to have a united position in external affairs it must avoid speaking with "a cacophony of voices" at home. European leaders, he said, have a bad habit of blaming the EU rather than accepting responsibility for joint decisions they have taken in Brussels.

However, Monti said Europe has emerged from the crisis with enhanced prestige as its social market economic model are now taken more seriously and its companies and citizens are not as indebted as those in the US.

The Commission was criticised for allowing a relatively short period for feedback on its consultation paper. A short summary of the 1,500 submissions was published by the EU executive, but social and environmental NGOs reacted angrily to claims by the Commission that they "broadly support" the draft plan (EurActiv 4/2/10). They called for a stronger social dimension to the strategy and said the Commission had presented a "rosy view" of NGOs' feedback.

Speaking on behalf of the Spanish EU Presidency, Miguel Sebastian, Spanish Minister for Industry, said structural reforms are needed in Europe given the challenge of emerging economies in China and India. He also noted that Lisbon is not seen as a "complete failure" by member states and that some moves in the right direction have been prompted by the strategy.

However, he acknowledged that more robust accountability measures will help implement EU 2020 – the successor to the Lisbon Agenda. "Business works towards quantitative measures of progress whereas governments do not always take that approach. I think that's wrong. We should have long-term targets," he said.

Joseph Daul MEP, leader of the centre-right European People's Party (EPP), the largest group in the European Parliament, said the new 'Europe 2020' should have a stronger governance. "The Lisbon Strategy was not successful due to weak governance structure and lack of accountability of the member states. This should not happen again", Daul said. The EPP stressed the importance of small businesses for the EU economy, saying more effort was needed to cut administrative burdens for SMEs.

The Socialist and Democrats (S&D) group in the European Parliament criticised the European Commission's proposed strategy for "lacking ambition"."The Commission's proposals are not green enough and not strong enough on jobs and social policy and overall too lukewarm," said Stephen Hughes MEP, S&D vice-president for economic and social affairs.

"Despite a welcome commitment to tackling poverty, the Commission has never been whole-hearted about throwing its energy into a strong social policy. It is clear that we have an important task in the coming years to make Europe put people, not markets, first," Hughes added.

In response, the S&D outlined its own priorities for the European economy, putting the emphasis on a "green new deal" that they said should create 10 million jobs in the economy by 2020.The group believes the priorities for the next decade must include the following:

• A new deal for sustainability.
• High-quality full employment with decent work and social inclusion for women and men.
• The fight against poverty, inequality and insecurity.
• A high-productivity knowledge economy.
• Social and territorial cohesion.

The Alliance of Liberals and Democrats group in the European Parliament (ALDE) welcomed the Commission's proposals, saying the proposed objectives are both "ambitious and realistic".

However, it said the strategy needed "more teeth" in order to make sure it is implemented at national level. "The emphasis of Europe 2020 is certainly striking the right chord," said ALDE group leader Guy Verhofstadt MEP. But he said he was "convinced" that the Commission "must be even more in the driver's seat" and offer sticks as well as carrots.

"The 2020 document offers some carrots but few sticks other than a possible warning from the Commission, which is unlikely to send a shudder down the spines of national finance ministries." "I maintain that the European Commission, not the European Council, is best placed to set the targets, oversee performance and name and shame underperformers because member states will always lack the political will for self-criticism."

Verhofstadt also believes that businesses "need a stable legal and macro-economic framework in which to thrive and invest. A single market and a single currency inevitably require some common approaches to broader macro-economic policy planning."

Referring to the Greek debt crisis, ALDE spokesperson Lena Ek said: "Cheating with statistics is unacceptable and countries that cheat should be punished. It is necessary to establish clear binding targets and make sure that oversight is the Commission's responsibility."

The Swedish MEP proposed creating "a European Monetary Fund" that can help stabilise markets in case of crisis.

The Green group in the European Parliament criticised the Commission proposal as "a myopic attempt" at defining a vision for 2020. "The Commission's rigid attachment to GDP growth as the driving target for economic development is a recipe for repeated failure," said Green MEPs Claude Turmes and Philippe Lamberts.

"GDP growth does not automatically provide improved social equality, better environmental protection or a happier life for citizens. New indicators are needed. We particularly call for a target for better distribution of income in the Europe 2020 programme," they said.

The Greens also criticised the strategy for being weak on national implementation measures. "The Commission is repeating the mistakes of the Lisbon Strategy by presenting a programme without demanding obligations. We need binding targets for critical issues such as resource and energy efficiency, as well as for social objectives."

Turmes, the Greens' vice-president, has been a strong proponent of using the crisis as a unique opportunity to move to a low-carbon economy but notes that the document does little to promote environmental technologies and hardly mentions renewable energies. The proposal, he points out, warns that the EU is in danger of losing its leadership on green technologies to the US and China but does not outline any measures to regain it.

The European Association of Employers and Enterprises in Public Services (CEEP) sees strong, effective public services as vital to a successful Europe 2020 strategy. CEEP secretary-general Ralf Resch said, "you cannot have 'smart, sustainable and inclusive growth' without functioning and high-performing education systems, adequate and efficient energy infrastructures or sustainable healthcare and social services".

Ben Butters, director of European affairs at Eurochambres, an association of more than 1,200 European Chambers of Commerce and Industry, said the new 2020 plan should be more robust than the last. "The 2000-2010 Lisbon Strategy was strong on ambition, but weak on action. Today, it is clearer than ever that reform is not an option, it is essential, so the EU 2020 strategy must be built on firmer foundations than its predecessor, based on strong ownership, effective implementation and robust monitoring and coordination."

Butters described the open method of coordination as "heavily flawed," saying it needs to be reinforced and re-branded to ensure implementation. EU 2020 should also be endorsed by all stakeholders from Brussels down to local level, according to Eurochambres, which said an effective communication strategy will play a big role in securing support for the new roadmap.

UEAPME, the European small business organisation, called for the removal of the remaining internal market barriers and further reductions of the administrative burden on businesses. They want policymakers to 'think small first' when designing regulation, access to finance and 'flexicurity'.

UEAPME highlighted the challenges SMEs face and calls for better market access (internal market and third countries' markets), fair competition and a level playing field. Referring to the Small Business Act, it emphasised the importance of implementing policy commitments effectively.

Klaus Klipp, secretary-general of the Assembly of European Regions (AER), said the process should take a "bottom-up approach" involving regional actors in defining and implementing governance structures.

Eucomed, which represents the medical technology sector, wanted to see more incentives for innovation in the strategy. In its submission to the European Commission, the group said it applauds the objectives of the plan but stressed the need for all policies to be consistent with EU 2020.

"It is important that procurement procedures are driven to incentivise innovation and are designed to particularly help SMEs unleash their innovation potential to launch new products on the market. This also applies to reimbursement schemes, which do not always recognise the entire care process and long-term patient outcomes," said John Wilkinson, chief executive of Eucomed.

The European Students' Union welcomed the attention given to education in the draft EU 2020 strategy. "ESU is, however, concerned that the document will fail to capture the essence of the strategy unless specific targets are drafted", said Ligia Deca, ESU chairperson. The ESU wants student mobility, changing skills needs and public investment in higher education to be considered by policymakers charting a long-term course forward for Europe.

The European Youth Forum (YFJ) has criticised the 'Youth on the Move' initiative for excluding young people who are not involved in higher education. Tine Radinja, president of the YFJ, said: "We urge President Barroso to revise and improve the youth dimension of the Europe 2020 Strategy Draft."

"Only about 30% of young people today complete higher education. If the 'Youth on the Move' project wants to make a real change it needs to focus on the young people that have now the least opportunities and are at risk of poverty and it should dare to set an ambitious benchmark for youth participation mobility," she added.

Radinja also believes that Europe 2020 needs to have a clear benchmark for youth employment and wants the European Youth Pact to be included in the guidelines to ensure the integration of youth-related policy in the overall EU strategy.

BEUC, the European consumers' association, supports the proposed EU 2020 objectives, whilst advocating a stronger focus on social inclusion and consumer rights. It also takes the view that more should be done to empower citizens. The single market should be deepened and consumer protection made a cross-cutting priority in the new strategy, it said.

Several national consumer organisations also contributed to the consultation. They share the general views expressed by BEUC on the importance of consumer policy in the new strategy. They equally underline the importance of guaranteeing adequate legal protection.

The Eurosystem, which is the monetary authority of the euro zone, submitted a contribution fully supporting the integration of social and environmental objectives into the EU 2020 strategy, while maintaining its overall focus on growth and jobs.

Particular attention should be given to a well-functioning labour market, internal market policies, competition and innovation, sound financial systems and the strict implementation of the Stability and Growth Pact, it said.

Social and environmental objectives should rely as far as possible on market-based instruments, according to the Eurosystem, which broadly agrees with the governance structures proposed by the Commission.

The European Centre for Development and Vocational Training (CEDEFOP) believes the EU 2020 strategy should include detailed policies on innovation and creativity and in particular on education and training, including vocational education and training. Partnerships between businesses and research bodies should include education and training authorities to help match skills with jobs.

The European Research Council (ERC) underlines the importance of generating knowledge leadership as a basis for innovation, greening the economy, competitiveness and prosperity. It calls for the development of world-class knowledge infrastructures and the retention and repatriation of top scientific talent from the EU and beyond.

Philippe Herzog, founder of the Confrontations Europe think-tank, said the 2020 strategy is too "short-termist". Herzog, a former French MEP for the far-left GUE group in the European Parliament, said the public consultation period was far too short, and the plan fails to take a long-term view of investment.

"Concretely, you don't see any policy prescriptions for restructuring in the next two or three years," he said. What is required is "a complete review of productivity in the EU," outlining which parts of the productive sector should be sustained.

Hans van der Loo, head of European Union Liaison at Royal Dutch Shell, has stressed the importance of improving Europe's competency in mathematics in order to improve competitiveness. He draws a direct link between technical knowledge and economic growth, but notes that interest in maths and sciences tends to decline as countries become more prosperous.

"Education has long been acknowledged as the cornerstone of Europe’s success. With the challenges ahead, it will become even more important in determining the future of Europe’s prosperity and role in the world. Competency in mathematics, science and technology (MST) is becoming more and more fundamental as strategic enabler for a sustainable, innovative and competitive Europe. Yet shortages in these disciplines are already imminent, calling for measures to substantially curbing this downward trend in enrolment in technical studies and restore the health of the European talent pipeline," said van der Loo.

The European Telecommunications Network Operators' Association (ETNO) believes that the digital agenda must be given a central role if Europe 2020's goals are to be achieved. ETNO director Michael Bartholomew said that success will depend greatly on the development of high speed broadband infrastructure and the capacity of the private and public sector to exploit its benefits.

"In order to accelerate private investment in high speed networks, these objectives must be translated into practice by national regulators, under the guidance of the European Commission, by developing a more targeted and proportionate regulatory environment," he added.

European standards organisations (CEN, CENELEC, ETSI) highlight the role standardisation can play to support the objectives of the EU 2020 strategy and in particular the further development of the single market.

WWF, the global conservation organisation, said the Commission's Europe 2020 plans showed "little ambition". "We welcome some of the bolder elements such as resource efficiency, but there isn't sufficient guidance for such a long-term strategy," said the WWF in a statement. "The real regret is that the strategy fails to give any clear direction on some of the biggest policy overhauls coming up in the next few years, including agriculture (Common Agricultural Policy reform), fisheries (Common Fisheries Policy reform) and rural development, which are barely mentioned in the document."

The European Environmental Bureau (EEB), a network of green NGOs, welcomed the central place in the proposal for promoting a more resource efficient, greener and more competitive economy, including in the research and industry "flagship initiatives". However, it regretted that there was "nothing new" on climate change and deplored the "very weak reference to the role of biodiversity protection as a basis for a healthy economy".

"Respecting ecological limits by enabling economic activity without depleting natural resources or burdening our planet’s ecosystems, are key to the sustainable creation of jobs and a sustainable economy," the WWF said. "Instead of exploiting nature, we should be making space for it."More info at: solarserdar@gmail.com.

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)