From the Lisbon strategy to Europe 2020

The European context isual/index_en.htm isual/index_en.htm

The Lisbon Strategy The Lisbon strategy was launched in 2000 by the heads of States and Governments of the European Union The Lisbon strategy was the answer to the problems of slow growth and loss of competitiveness of the European economy Its aim was to make the EU "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion", by This strategy was revised and re-launched in 2005

The Lisbon Strategy STRATEGIC CHALLENGES Globalization Technological innovation (new economy) Aging of population Climate change and exaustion of natural resources RISKS Loss of market shares Productivity slowing down Financial unsustainability of the welfare system Global warming and environmental unsustainability STRATEGIC PRIORITIES Knowledge society Creation of a friendly environment for firms To deepen the single market To reform the labour market and the welfare system Sustainable development. Environment as a constraint and as an opportunity

Strategic challenges Globalization – Increasing competition in the home and in the world markets by the United States, China, India and other emerging countries – United States took the lead on information and communication technologies – China increased competitiveness in most traditional sectors and in some high valued added industries – India has specialized in advanced services thanks to a rich endowment of human capital

Strategic challenges Aging of population – High and rising dependency ratio – Growing difficulties to find the resources to finance the welfare system

Strategic challenges Technological innovation – European delay in the adoption and diffusion of information and communication technologies

Strategic challenges Global warming of the planet Depletion of nonrenewable natural resources

Risks Competition from emerging countries can produce a loss in the world share of markets and a fall in the world demand for European goods and services The delay in the adoption of information and communication technologies may slow down productivity growth Aging of population may make untenable the current levels of funding of the welfare systems and lead to a reduction and deterioration of the services provided Global warming is bound to produce disastrous effects on the whole planet. Depletion of nonrenewable natural resources constrains economic development and threatens even the achieved levels of income and wealth

Risks At risk is the ideal “European social model” based on – Fast growth – High level of employment – High social cohesion – Environmental protection and improvement

Strategic priorities Knowledge society: investment in research and development for innovation Friendly environment for employers: to create a favourable administrative, fiscal and financial context for the starting up of new firms Reform of the labour market and welfare state: increase in the rate of employment, flexibility, adaptability and employability, reform of the social security system

Strategic priorities To deepen the single market: market liberalization in all sectors, reduce trade administrative and legal costs, to improve accessibility Environment as a constraint and as an opportunity: to focus on sustainable development and exploit the opportunities of green technologies

The targets The Lisbon strategy identified a large number of quantitative targets to be achieved by 2010 in almost all possible fields: economic performance and public budget, employment, research and innovation, education, internal market, social cohesion and environment

The open method of coordination The fields of intervention of the Lisbon strategy were mainly national competence The governance of the Lisbon strategy could not be based on the classic communitarian method Instead, the Open Method of Coordination was adopted

The open method of coordination The OMC has the aim to converge national policies to achieve common goals It is applied in fields that fall under national responsibility such employment, social protection, social inclusion, education It implies the use of soft laws such as guidelines, recommendations, opinions

The open method of coordination It is based on – Identifying and defining jointly the objectives to be achieved (adopted by the Council) – Defining jointly guidelines, targets and other measuring tools – Peer pressure and benchmarking to compare the results achieved by different countries and to exchange best practices

The assessment of the Lisbon strategy The Lisbon strategy did not reach the expected results for various reasons It was too ambitious; nation states did not comply with the decisions taken; the OMC proved to be ineffective The economic crisis that began in 2008 bears an important responsibility in the failure of the Lisbon strategy

From Lisbon to Europe 2020 “Europe 2020” is the designation of the strategy of the European Union's growth from 2010 to 2020 It contains the final goals, the targets, the tools and the system of governance of the overall strategy

From Lisbon to Europe 2020 Europe 2020 shares with the Lisbon strategy the goals of growth, competiveness and employment and it is based very much on the same analysis of the causes behind the European economic difficulties

From Lisbon to Europe 2020 It differs from the Lisbon strategy for two main aspects: – It is less ambitious with a reduced number of objectives and targets – It links the medium-long run growth strategy with the exit strategy from the present economic crisis. It embodies then objectives such as the reform of financial system and the reduction of public debt and deficit

Europe 2020 In summary the Europe 2020 includes:  Three priorities  A system of targets  Seven flagship initiatives  A new system of delivery

The Europe 2020 priorities Europe 2020 identifies three priorities: – Smart growth- developing an economy based on knowledge and innovation – Sustainable growth- promoting a more resource efficient, greener and more competitive economy – Inclusive growth- fostering a high employment economy delivering economic, social and territorial cohesion

Smart growth Smart growth means strengthening knowledge and innovation as drivers of our future growth. This requires improving the quality of our education, strengthening our research performance, promoting innovation and knowledge transfer throughout the Union, making full use of information and communication technologies

Smart growth Europe needs smart growth because its low growth is due to a productivity gap caused by  Insufficient use of information/communication technologies  Lower level of investment in R&D and innovation  Difficult access to innovation in some sections of society The three main fields of investment to achieve smart growth are: Research and development, Education and training, Digital society

Smart growth Within this priority the EU promotes three “flagship” initiatives – Innovation Union – Youth on the move – A digital agenda for Europe

Smart growth Innovation Union has the aim to re-focus R&D and innovation policy on the challenges facing our society, such as climate change, energy and resource efficiency, health and demographic change. Youth on the move has the aim to enhance the performance and international attractiveness of Europe’s higher education institutions and raise the overall quality of all levels of education and training in the EU by promoting student mobility and trainees’ mobility and improve the employment situation of young people

Smart growth A digital agenda for Europe has the aim to deliver sustainable economic and social benefits from a Digital Single Market based on fast and ultra fast internet and interoperable applications, with broadband access for all by 2013, access for all to much higher internet speeds by 2020 and 50% or more of European households subscribing to internet connections above 100 Mbps (megabit per second)

Sustainable growth Sustainable growth means building a resource efficient, sustainable and competitive economy exploiting Europe’s leadership in the race to develop new processes and technologies. It implies investments in green and renewable technologies, search for energy efficiency, decoupling growth and use of energy resources, combating climate change, increasing capacity for disaster prevention and response.

Sustainable growth Europe needs sustainable growth:  To reduce the over dependence on fossil fuels  To reduce the pressure on natural resources  To deal with the challenges of climate changes  To improve productivity and competitiveness

Sustainable growth Within this priority, the EU promotes two flagship initiatives: – Resource efficient Europe – An industrial policy for the globalization era

Sustainable growth Resource efficient Europe has the aim to support the shift towards a resource efficient and low carbon economy. The aim is to decouple economic growth from resource and energy uses, reduce CO2 emissions, enhance competitiveness and promote greater energy security

Sustainable growth An industrial policy for the globalization era has the aim of implementing a modern industrial policy, supporting entrepreneurship, guiding and helping industry to meet the challenges of globalization, promoting the competitiveness of Europe’s primary, manufacturing and service industries and helping them to exploit the opportunities of the green economy. This implies to improve the business environment, to promote the restructuring of sectors in difficulty towards future oriented activities, to promote technologies and production methods that reduce natural resource use, to promote the internationalisation of SME, to enhance competitiveness of the tourism sector

Inclusive growth Inclusive growth means empowering people through high levels of employment, investing in skills, fighting poverty and modernising labour markets, training and social protection systems.

Inclusive growth Europe needs inclusive growth:  Europe’s workforce is shrinking as a result of demographic change  The employment rate is particularly low for women and older workers  Europeans work short hours  High youth unemployment  High share of low skill workers  80 millions people at risk of poverty, 19 millions of children and 8% of working poor

Inclusive growth Within this priority the EU promotes two flagship initiatives: – An agenda for new skills and jobs – European platform against poverty

Inclusive growth An agenda for new skills and jobs has the aim to create conditions for modernising labour markets with a view to raising employment levels and ensuring the sustainability of our social models. This means empowering people through the acquisition of new skills to enable our current and future workforce to adapt to new conditions and potential career shifts, reduce unemployment and raise labour productivity

Inclusive growth European platform against poverty has the aim to ensure economic, social and territorial cohesion, combating poverty and social exclusion. This implies implementing programmes to provide innovative education, training and employment opportunities for deprived communities, to fight discrimination, to foster migrants’ integration, to deal with problems of groups at particular risk

The targets A limited number of targets for 2020 have been selected. They are representative of the three strategic priorities (smart growth, sustainable growth, inclusive growth). They are measurable, capable of reflecting the diversity of Member states situations and based on sufficiently reliable data for purposes of comparison

The targets Increase the rate of employment of population aged from 69% to 75% Increase investment in Research and Development up to a share of 3% of GDP Reduce greenhouse gas emissions by at least 20% compared to 1990 levels, increase the share of renewable energy sources in our final energy consumption to 20% and a 20% increase in energy efficiency Reducing the drop out rate to 10% from the current 15% and increasing the share of population aged having completed tertiary education from 31% to at least 40% in 2020 Reducing the number of Europeans living in poverty by 25%, lifting over 20 million people out of poverty

The system of governance There are two important novelties in the system of governance of the Europe2020 strategy and, more in general, in the system of governance of the economic policies of the European Union in the last years The first novelty is the effort to refocus all policies of the European Union towards the goals of the Europe 2020 strategy with the aim of making the growth strategy more effective relatively to the past

The system of governance The second novelty is to achieve a strict coordination between the delivery of the policies aimed at boosting economic growth with the policies aimed to exit from the present crisis, to guarantee budgetary discipline and to reduce macroeconomic unbalances. This coordination has been further emphasized by the strengthening of the Stability Pact in 2011.

The system of governance As far as the first novelty it includes:  The deepening of the single market. This implies to eliminate all residual bottlenecks to cross border activity; the creation of a single market for services; the Services Directive fully implemented; the huge potential of information and communication technology exploited; access for SME to single market improved; competitiveness of the markets preserved against any temptation of economic nationalism

The system of governance  The refocus of all economic policies to the achievement of the Europe 2020 objectives. Cohesion policy and structural funds should be used to achieve the priorities of Europe 2020; the European Investment Bank and the European Investment Fund should focus on funding innovation and entrepreneurship; the EU multiannual budget should reflect the long term growth priorities

The system of governance  The deployment of all instruments of external economic policy to foster European growth. This applies to the external aspects of all various internal policies and for trade and international macroeconomic policy coordination. The EU must assert itself more effectively on the world stage, playing a leading role in shaping the future global economic order through the G20

The system of governance As far as the second novelty, the governance of the Europe 2020 strategy follows a dual track: a thematic approach that focuses on the three priorities of smart, sustainable and inclusive growth and on the five targets; a national approach that focuses on the exit strategies from the crisis of each member state dealing with macroeconomic stability and sound public finance

The system of governance The second track, that of stabilization policies, have been reinforced in 2011 by a new set of rules which include a reform of the Stability and Growth Pact and the introduction of a Macroeconomic Imbalance Procedure

The system of governance Stabilization policies are implemented under the Stability and growth pact (SGP) The SGP was approved in 1997 and reformed in 2005 and It clarifies the provisions of the Maastricht Treaty regarding the surveillance of Member States budgetary policies and monitoring of the budget deficits The SGP contains two arms, the preventive arm and the corrective arm

The system of governance The preventive arm is the country specific medium term budgetary objective outlined by the Member States in their Stability/Convergence programmes and submitted to the European Commission. The Commission and the Council will eventually assess whether member states have reached their objectives in the context of multilateral fiscal surveillance

The system of governance The corrective arm is made operational by the Excessive Deficit Procedure, that is the procedure for correcting excessive deficits that occur when one or both of the rules that the deficit must not exceed 3% of GDP and public debt must not exceed 60% defined in the Treaty on the functioning of the EU are breached

The system of governance Along the Stability Pact, the new set of rules approved in 2011 contains also the Macroeconomic Imbalance Procedure This is a surveillance mechanism that aims to identify potential risks early on, prevent the emergence of harmful macroeconomic imbalances and correct the imbalances that are already in place An excessive imbalance procedure consists in a set of agreed actions between the Commission and the member states to correct the imbalances

The system of governance The non compliance with the prescriptions under the excessive deficit procedure or under the excessive imbalance procedure can lead to the imposition of sanctions for euro area countries

The system of governance The best way to describe the process of implementation of European economic policies is to follow the timetable of the so called “European semester” The European Semester represents a yearly cycle of EU economic policy guidance and country-specific surveillance.

The system of governance It is named “European semester” because the E.U. institutions play the main role in the first part of the year while member states play the main role in the second part of the year From the analysis of the European semester you can appreciate  the role and the sharing of responsibility of each institution in the process of implementation of the policies.  The strict coordination between growth policies and stabilization policies

The system of governance The cycle starts in November/December. The Commission publishes the Annual growth survey and the Alert Mechanism Report. The Annual Growth Survey is a document containing the main policy priorities for the coming year. It launches the European semester (See AGS 2014). These priorities relate both to issues of long run growth and to issues of exit from the current economic crisis

The system of governance The Alert Mechanism Report (AMR) is the starting point of the yearly cycle of the MIP, which aims at identifying and addressing imbalances that hinder the smooth functioning of the EU economies and may jeopardise the proper functioning of the Economic and Monetary Union. The AMR identifies the Member States for which further analysis (in the form of an in-depth review) is necessary in order to decide whether an imbalance in need of policy action exists. (See AMR 2014)

The system of governance The Commission expresses its opinion on the draft budget plans of Euro Member States (November- December) The Council (Finance Ministers) discuss the Commission opinion on draft budget plans of Euro Member States (November-December) Member States approve their national budget plans (December) The Council and the European Parliament discuss the AGS (December-February)

The system of governance The European Council discusses and adopts the priorities of the Annual Growth Survey (March) The Commission publishes the in-depth reviews of countries with potential economic risks within the MIP (March)

The system of governance Member States publish their Stability/Convergence programme and their National Reform Programmes (April, May). The Stability/Converge Programmes contain the plans for sound public finances. It contains the medium term budgetary objective The National Reform programmes contain the plans for smart, sustainable and inclusive growth

The system of governance The Commission publishes the Country- Specific Recommendations for budgetary, economic and social policies (June) The Council discusses the Country Specific Recommendations (July) The European Council discusses and endorses the Country Specific Recommendations (July)

The system of governance Member states under excessive deficit procedure submit to the Commission and the Council “Economic partnership programmes” which detail the economic reforms necessary to ensure a durable and effective correction of the excessive deficits (September-October) Member States submit to the Commission the draft of their budget plans

The system of governance Throughout the year: peer review of Member States’ compliance with recommendations and consideration of possible enforcement measures (Excessive Deficit Procedure or Excessive Imbalance Procedure) The European Parliament is involved in all phases of the implementation of the policy

The system of governance Who does what The Commission monitors the situation each year on the basis of a set of indicators showing overall progress towards the Europe 2020 headline targets; produces the annual growth survey and assesses national reform programmes and stability / convergence programmes; assesses the budgetary plans of the euro member states; issues country specific policy recommendations and, if necessary, policy warnings to Member States.

The system of governance The Council discusses and adopts the Annual Growth Survey and the Country Specific Recommendations. It has the main task of monitoring and peer review. National ministers responsible for the relevant policy areas discuss implementation of the national reform programme in their area of competence.

The system of governance The European Council adopts the economic priorities based on the AGS and endorses the CSR. The European Parliament is involved in all phases of the process in a continuous dialogue with the Council, the European Council and the Commission

The system of governance Member States must produce two reports each year, explaining what they are doing to move closer to the Europe 2020 national targets:  Stability / convergence programs focusing on public finances and fiscal policy  National reform programs focusing on progress towards the Europe 2020 national targets for smart, sustainable and inclusive growth. Member States must implement the prescriptions contained in the country specific recommendations ensuring their compliance

Bibliography The simplest way to analyse the Europe 2020 strategy is to look at the EU website and at the official document on Europe2020