During their summit on 18 February in Berlin, German Chancellor Gerhard Schröder, French President Jacques Chirac and British Prime Minister Tony Blair signed a joint letter to the President of the European Council, Bertie Ahern, and to the Commission President, Romano Prodi, in which they set out their priorities for the Spring European Council of 25 and 26 March in Brussels (see EUROPE of 20 February, p.4). The full text of the letter is published in our series EUROPE/Documents (in French, German and English).
Europe has set itself the goal of becoming the world's most dynamic economic region by the end of the decade. It has made significant progress via the Lisbon Process and is poised to enjoy the vast economic potential of EU enlargement. The economic upturn, which is gradually taking hold, bolstered by the threefold approach of structural reforms, cyclical stimuli and consolidation in the member states, forms a good basis for further progress.
At present, in the context of demographic slowdown growth and productivity in Europe remain too weak:
The members of the EU too often fail to maximise the benefits of outstanding European research;
Too often, barriers are placed in the way of realising Europe's entrepreneural potential;
The more people we have in work, and the later their skills, the higher growth will be. We are indebted to the Employment Taskforce, chaired by Wim Kok, for heightening awareness of these simple truths.
Member States now need to focus on the key issues of innovation as a force to promote enterprise and the reform of product and labour markets. A further priority has to be modernising the European Social Model characterized by the workforce broadly sharing in the values and decisions of our societies, according to national traditions. A more innovative and employment-intensive economy will help us preserve our social protection systems for future generations. At the same time these systems need comprehensive reform to guarantee their long-term affordability, given the demographic trend.
For a more innovative Europe
With investment in research and development (RSD) at a level of 2 of GDP, Europe is still far from its strategic goal of 3% two thirds of which must come from the private sector. The European Growth Initiative adopted in December has to be geared more to industrial R&D projects focussed on key growth technologies such as life sciences, nano technologies, communications technologies, energy technologies and environmental technologies. In this framework the EIB has to play a key-role. Europe should also continue to participate in projects such as ITER or space systems research. Investment in R&D is only one part of the innovation process. Equally critical to success is the ability of business to transform research initiatives into commercially viable processes and products. In addition, to strengthen the knowledge-based economy, universities and European research centres will have to be encouraged to establish closer links with a view to forming high-level poles of education and research capable of competing at global level.
The European Framework Research Programme has to be simplified to make it more user-friendly for industry and science. The priorities should be to promote cooperation between business and research and boost future technologies. Support for basic and applied research has to be strengthened. In this context, we will examine with interest, the Commission's proposals for the future structure of European research, including a possible European Research Council.
The European framework of intellectual properly has to be improved. We are hoping for timely adoption of the computer implemented inventions Directive, and the enforcement directive, to bolster the fight against piracy and counterfeiting. The Community Patent has to ensure that the outcomes strike the right balance between the needs of business and consumers. It has to be inexpensive and economically attractive. Technology licensing from the technology sphere are also important for the dissemination, of innovative ideas. The Commission should work closely with me Member States and industry to revise the technology transfer block exemption regulation.
The Commission and the Member States should systematically assess the impact of draft legislation on the ability of companies to innovate and compete. In addition, the Commission should draw up a timetable with clearly defined goals with a view to abolishing regulations and reducing bureaucracy which unduly hamper competitiveness and innovation.
The Member States have to be able to support innovation more effectively. Member states also need the flexibility to develop effective interventions to support enterprise as the EU venture capital market evolves. Particular account must be taken of the problems of innovative small and medium-size enterprises, and new ways of helping micro-enterprises. Improved support for long-term high-risk research also deserves special attention. The Commission should review the state aids framework in close collaboration with the Member States to ensure that guidelines on state aid and risk capital are properly targeted at the key market failures that inhibit enterprise.
Finally, it is important that the competition policy implemented by the Commission takes more account of the characteristics of international competition and the necessary industrial development of Europe.
The promotion of enterprise is a vital element in delivering sustained employment and productivity growth. Enterprise and entrepreneurship play an important role in improving the efficient allocation of capital and through starting and growing businesses, generate new jobs. The creation of new businesses increases the competitive pressure on firms, generates new ideas and innovative approaches and can lead to greater choice and value for consumers.
The regulatory framework, at European and member state level, must promote and not inhibit enterprise. Action is required by Member States and at the Community level to modernise the regulatory framework to provide the best possible opportunities for entrepreneurship and competitiveness. At the EU level, Member States should commit not to consider any proposals not accompanied by an adequate impact assessment, and competitiveness-proofing should be developed. To improve existing legislation, the Council and Commission should set a clear timetable for improving the current European regulatory framework. Member states should act to improve their own regulations.
To raise the profile of pro-enterprise policies, and to celebrate success in enterprise across the Union, the Commission should bring forward proposals to establish a competition to identify “European Centres of Enterprise”.
For more employment in Europe
The report drawn up by the Kok Taskforce makes clear that urgent action is needed if Europe is to reach the Lisbon target of a 70 employment rate by 2010 and ensure its prosperity and its social model in the long term. We very much welcome the concrete and specific recommendations for action in the report. These will give a much-needed boost to the European Employment Strategy. At the upcoming Spring Council, all Member States should commit to urgent and relevant action in the light of these recommendations, and stepping up the exchange of best practice.
The quality of our human capital has to be further improved through better education and continued promotion of the principle of lifelong learning.
We must increase the ease with which businesses can start up. This includes a more favourable regulatory framework and improved availability of risk capital, above all for new firms. The latter is also of great importance from the point of view of innovation. At the same time we have to ensure that our tax and benefit systems offer sufficient incentives for employment to be made available and taken up.
We need modernised employment services in the Member Slates which effectively meet the needs of both job seeker and employer. Advice and support with job search have to take place at an early stage to prevent unemployment. In the spirit of lending support, yet demanding a matching effort in return, the services provided by an active labour market policy have to be more strongly geared to the individual needs of the unemployed and inactive people of working age. We have to focus on providing appropriate incentives for people to remain longer in work and for employers to recruit and retain older workers.
The success of these reforms supposes a high involvement of the social partners at every level.
Modernising the European Social Model
No-one must be excluded from participating in life in society due to serious illness, long-term inability to work, family circumstances or age. The best way to ensure that at the EU level is via the exchange of best-practice, ensuring that all can use the best possible techniques to suit the different circumstances encountered in 25 Member States. Europe is currently faced with a demographic slowdown and an ageing population. This situation is troubling and calls for an urgent response.
Comprehensive support for families can improve the demographic pattern in the long term. An improved system of childcare for working parents can increase the employment rate, particularly amongst women. The demographic trend necessitates fundamental reform to maintain our pension systems. To secure pensions, we need more people in employment. The proportion of older persons in work also has to grow through promoting active ageing and senior workers employment. Our goal remains establishing long-term equilibrium between the social adequacy of benefits and the financial sustainability of old-age security.
We need to focus on providing broad access to a top quality health service. The challenge of keeping health care costs under control is a great concern here. The OECD average has increased from 7.1 % of GDP in 1988 to 8.4% in 2001. Member states have to improve spending efficiency in their healthcare systems. Preventive measures have to become more of a priority, above all to fight cancer where smoking is one of the most important risk factors. All measures should be taken to reduce tobacco consumption. Finally, an urgent EU solution is needed to address the impact of the recent ECJ judgements on the Working Time Directive, particularly but not exclusively in the health sector.
Europe has to actively promote public health and prevention, particulary to counter new viral risks. Similarly it must make a major effort to engage in research on a vaccination against AIDS and on rare diseases.
In an EU of 25, we need to look to the future, to ensure that we have the best possible mechanism for achieving the EU's goals. The policy we have outlined extends well into the period of the next EU financial framework. It can be financed using 1% of EU GNP as it is essentially a matter of establishing improved framework conditions and more efficient allocation of resources. We welcome the initiative of the Irish and the three subsequent presidencies on the reform of the regulatory framework in Europe as a means of achieving our goals on growth.
Similarly, as a means of helping achieve our goals on growth, we call for the appointment of a Vice-President of the Commission to focus exclusively on economic reform. This person would push ahead with the Lisbon Agenda and coordinate the work of Commissioners whose portfolios are particularly important for its realization. The Vice-president should have a voice in all decisions on EU projects which impact on the targets of the Lisbon Agenda.
We hope that the European Council will take up our approach of setting clear priorities to achieve the Lisbon targets including those of sustainable development. Growth remains the key to achieving our goals for a dynamic, employment-rich and thus social Europe. We invite the members of the European Council to submit farther proposals with this in mind on 25-26 March 2004. Our Ministers, who have further outlined our ideas in three working papers, will feed our proposals into the relevant specialized Councils.