EU2020 from failure to action

The heads of state or government reminded themselves of the comprehensive Europe 2020 growth strategy. In the European Council 1-2 March 2012 conclusions (EUCO 4/12, available in 23 languages) they assessed their own work to date:

3. However, efforts undertaken to date remain insufficient to meet most of these targets. It is therefore urgent to concentrate on the implementation of reforms, with a particular attention to measures which have a short-term effect on jobs and growth.

Insufficient reforms

The EU member states are lagging. Brownie points for honesty, although nothing more than the European Commission said in its second Annual Growth Survey 2012 (AGS), which kicked off the European Semester:

Annual Growth Survey 2012 VOL. 1/5; Brussels, 23.11.2011 COM(2011) 815 final (18 pages) 

Progress report on the Europe 2020 strategy VOL. 2/5 - ANNEX I; Brussels, 23.11.2011 COM(2011) 815 final (27 pages) 

Macro-economic report VOL. 3/5 - ANNEX II; Brussels, 23.11.2011 COM(2011) 815 final (21 pages) 

Draft joint employment report VOL. 4/5 - ANNEX III; Brussels, 23.11.2011 COM(2011) 815 final (16 pages) 

Growth-friendly tax policies in member states and better tax coordination in the EU VOL. 5/5 - ANNEX IV; Brussels, 23.11.2011 COM(2011) 815 final (13 pages) 

For those who think that the Commission is evil and biased, even the more recent (22 February 2012) synthesis report on the implementation of the European Semester (Council document 6662/12), prepared by the Danish Council presidency, is relatively open about less than brilliant progress (page 3):

The Annual Growth Survey shows that progress has been made in a number of areas, but much remains to be done.

In particular, measures announced or adopted during 2011 must now be implemented rigorously in all Member States. The economic climate makes this difficult, but should be seen as an incentive to further focus efforts, both at the national and the European level.

Returning to growth

Both the Annual Growth Survey 2012 and the Council synthesis report contained advice on further action. Let us here quote key points the Danish report made (pages 3-4):

Commitments regarding the objectives on poverty, education, innovation and green growth, in particular, should not be set aside while not endangering rigorous fiscal consolidation.

- Fiscal consolidation efforts have been undertaken by almost all Member States but further efforts appear necessary and, in several countries, medium-term budgetary frameworks remain to be strengthened. Ad hoc measures regarding VAT systems taken by some Member States have yet to produce results. There has only been limited progress across Europe as regards the shift of taxation away from labour. The coherence of the measures taken and their impact on growth and fiscal consolidation also remain to be analysed.

- Efforts to increase competitiveness are still needed, in particular, to increase competition in the retail, service and infrastructures sector. While the transposition of the Services Directive in Member States is progressing, more support needs to give to enhancing crossborder labour mobility including by revision of the EU rules on mutual recognition of professional qualifications.

- Improving the environment in which businesses, including SMEs, operate is important, in particular the reduction of unjustified administrative and regulatory burdens.

- Promoting employment is a key policy objective in all Member States. Nevertheless, in many countries, more could be done in terms of active labour market policies and to combat labour market segmentation and excessively rigid employment protection legislation, reform unemployment benefit systems to make work pay and enhance employability of vulnerable groups. Youth unemployment remains of critical concern. Progress on the inclusion of young people in the labour market is still insufficient in several countries.

- Dual training and other reforms are under way in education systems, but investment in education and training is affected by fiscal constraints in a number of Member States. Ensuring quality of public spending in these areas is a particular priority.

- Pension system reforms have been undertaken in some Member States and are under way in a number of others, but their impact is often hampered by early retirement opportunities and special schemes that are still in place.

- The number of people at risk of poverty is on the rise, and has not been effectively addressed. More focus on increasing labour market participation of vulnerable groups could help address this concern. Some countries still have to take action to address the interrelated issues of household indebtedness and housing markets.

Naturally, the countries with the greatest problems are the ones to need the fastest and most dramatic reform, although their past record is the least promising. However, given the sorry state of the economy in almost all of the EU member states, the need for structural reform in the European Union as a whole is profound.

The national leaders have spoken wisely. Now they must act.



Ralf Grahn
speaker on EU affairs, especially digital policy and law

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