European competitiveness is not good enough for Lisbon target - report
The Lisbon summit's target of making Europe the most competitive knowledge-based economy by 2010 will not be met unless improvements are made in its competitive and productivity growth levels. This is one of the main conclusions of the European Commission's 2002 competitiveness report, published on 23 May. 'The recent productivity and growth performance suggests that this strategic [Lisbon] goal will be missed, unless the Member States and the Commission show more determination in pursuing economic reforms,' said EU Enterprise and Information society Commissioner, Erkki Liikanen. The report focuses on the specific areas of skills and education, productivity in the services sector, sustainable development in manufacturing and the relationship between competition and enterprise policy. Skills shortages are evident in Europe in the fastest growing service sectors: general business services and health and social work, as well as in manufacturing. Medium and high skills demand has already outstripped demand in all Member States with the exception of Austria and Sweden. There is a more refreshing detail to come out of the report - skills matches between the 25 to 34 year old age group and skills demands are substantially better than for populations as a whole. This could indicate that matching performances could improve if this trend is maintained. But more mobility is necessary, as there are already imbalances on a national scale which could be addressed by an increased flow of skills across borders. Productivity of services in Member States did not compare favourably with one of the EU's main competitors, the USA. Data showed that while the USA showed a rise in service sector productivity growth from1.3 to 3.5 per cent from the first to the second half of the 1990s, most EU Member States with comparable data experienced a decline. Service productivity growth was also lower than manufacturing growth. Innovation is a key to increasing this level, but as the report states, this may need to be done in ways such as acquiring new technology, rather than the traditional increase in R&D (research and development) spending. 'The service sector is an important user of ICT (information communications technology) and lower levels of ICT expenditure are at the source of the recent slowdown in productivity growth in the EU,' states the report. The link between enterprise and competition policy is addressed for the first time in the report and it highlights the need to encourage firms to innovate whilst ensuring that competition policy protects firms. 'We need to ensure a proper balance between the goal of effective competition in Europe whilst working towards the goal of a globally competitive European industry on the other,' said Mr Liikanen. Finally, the report welcomes the progress that the manufacturing sector has made in decoupling growth from environmental factors. While growth in the sector has risen, the environmental impact of its activities has declined.