1. F ACTORS FOR G ROWTH P RIORITIES FOR COMPETITIVENESS, CONVERGENCE & COHESION IN THE EU 27 April 2016 A Study commissioned by the European Economic and Social Committee at the request of the Employers’ Group

2. The Toolbox is an interactive tool That gathers together data on growth for the Employers’ Group and the EESC to explore and use in its work In a read-only Excel file T HE T OOLBOX 2

3. Currently 44 economic and political indicators affecting growth Grouped in 9 categories Based on widely recognised sources Data ranging from 2000 to 2015 Covering the European Union and its Member States, as well as the Euro Area That can be updated and widened to meet on-going needs A N EXTENSIVE DATASET 3 Economic aggregates Trade Foreign Direct Investment Energy costs Labour costsSocial policies Education Demographic change and migration Quality of institutions The 9 categories of the Toolbox

4. A single Excel file including a table of contents and an easy navigation system A readable format across indicators Including examples for future use A N INTERACTIVE TOOL 4

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6. U SING THE TOOLBOX (1) 6 Source: Eurostat

7. U SING THE TOOLBOX (2) 7 Source: European Commission

8. U SING THE TOOLBOX (3) 8 Source: Eurostat

9. U SING THE TOOLBOX (4) 9 Source: European Central Bank

10. D IVERGENCE WITHIN THE EU 10 Source: CEPS

11. An analysis of three key indicators – GDP, GDP per capita, and Public Debt-to-GDP – over the 2000-2014 period highlighted three groups of Member States in the European Union following three distinctive competitiveness patterns – Member States Leading in competitiveness – Member States Following in competitiveness – Member States Catching up in competitiveness This Study conducted 9 national Case Studies, analysing 3 Member States from each group M ETHODOLOGY 11

12. A M EMBER S TATE CLASSIFICATION (1) 12 Member States Leading in Competitiveness Germany (4) Netherlands (5) Finland (8) Sweden (9) United Kingdom (10) Denmark (12) Belgium (19) Luxembourg (20) Austria (23) Ireland (24) Member States Following in Competitiveness France (22) Spain (33) Portugal (38) Italy (43) Malta (48) Cyprus (65) Greece (81) Member States Catching up in Competitiveness Estonia (30) Czech Republic (31) Lithuania (36) Slovenia (39) Poland (41) Latvia (45) Romania (53) Bulgaria (54) Hungary (63) Slovakia (67) Croatia (77) World Economic Forum’s Competitiveness Rankings for 2015-2016 are shown in brackets

13. Member States Leading in competitiveness: – Dominated by Northern European countries – With a better position in terms of competitiveness and political acceptance of further reforms A M EMBER S TATE CLASSIFICATION 13 Germany United Kingdom Ireland Selected Member States

14. Member States Following in competitiveness: – Difficulties in implementing structural reforms – Adverse economic pressure to initiate the changes needed – Reluctance to implement additional policy changes A M EMBER S TATE CLASSIFICATION 14 FranceSpainGreece Selected Member States

15. Member States Catching up in competitiveness: – Low level of public debt – Lower wages – Positive attitude towards policy reforms A M EMBER S TATE CLASSIFICATION 15 PolandLatviaBulgaria Selected Member States

16. B EST AND WORST PRACTICES PER COMPETITIVENESS PATTERN M EMBER S TATES L EADING IN COMPETITIVENESS 16 R&D Labour Market Productivit y Product Markets Investment Education Public Deficit Country Germany Pensions Trade Reform Implement. Ireland United Kingdom * * Legend Good performance Average performance Low performance * Good performance subject to additional effort

17. B EST AND WORST PRACTICES PER COMPETITIVENESS PATTERN M EMBER S TATES F OLLOWING IN COMPETITIVENESS 17 Legend Good performance Average performance Low performance * Good performance subject to additional effort R&D Labour Market Productivit y Product Markets Investment Education Public Deficit Country Spain Greece Pensions Trade Reform Implement. France * *

18. B EST AND WORST PRACTICES PER COMPETITIVENESS PATTERN M EMBER S TATES C ATCHING UP IN COMPETITIVENESS 18 Legend Good performance Average performance Low performance * Good performance subject to additional effort R&D Labour Market Productivit y Product Markets Investment Education Public Deficit Country Latvia Bulgaria Pensions Trade Reform Implement. Poland * * *

19. EU policies originally based on convergence do not sufficiently take into account the deepening of divergences among EU Member States: one size does not fit all These divergences are political as well as economic – Political feasibility: reform implementation varies according to the efficiency of the political system and leadership in each Member State – Economic factors – such as education, labour costs, Euro Area membership, trade, or energy – influence EU growth potential A NEW PARADIGM FOR EU POLICIES (1) 19

20. This calls for: – An EU benchmark of good practices conducted at national level in each competitiveness category to diffuse across Member States – The EU to act as a coordinating actor to support reform implementation (e.g., the European Semester approach) and review on-going processes – The use of existing project-based tools – such as enhanced cooperation – to maximise convergence opportunities and the use of EU-funded programmes – Identifying relevant growth-enhancing reforms and projects to be implemented at EU level A NEW PARADIGM FOR EU POLICIES (2) 20

21. The economies of EU Member States, both in and outside the Euro Area, are diverging rather than converging Effective governance, as well as social and political cohesion, are increasingly at risk The link between competitiveness, convergence and cohesion must be re-established C ONCLUSIONS (1) 21

22. In the identification of causes and possible solutions, the classification between three groups of Member States proved to be useful Examination of their economic and financial performance before, during and after a series of crises, suggests that the groupings are valid – and therefore one set of solutions may not work for others The European Union is part of the solution but this will not happen until the citizens see its institutions as part of the solution, not the cause of their problems This in turn requires a change of approach from regulation to facilitation, to finding local or regional solutions and monitoring their outcomes, and to seeking for and sharing best practices from in or outside the EU C ONCLUSIONS (2) 22

23. C OMPETITIVENESS P ATTERNS (1) 23

24. C OMPETITIVENESS P ATTERNS (2) 24

25. F ACTORS FOR G ROWTH P RIORITIES FOR COMPETITIVENESS, CONVERGENCE & COHESION IN THE EU 27 April 2016 A Study commissioned by the European Economic and Social Committee at the request of the Employers’ Group