EU commission president José Manuel Barroso is not abandoning social aspirations but trying to find a way to pay for them, writes Maria Cronin.
On 22nd-23rd March this year the prime ministers of all 25 EU member states will formally meet in Brussels at an EU summit to discuss a mid-term review of the Lisbon process. Five years after the targets were first outlined and mid-term through the plan, economically the EU is not even half way to meeting the targets set.
In February 2005, the president of the EU Commission, José Manuel Barroso, launched a new strategy to reinvigorate the Lisbon process. This strategy called for a new focus on growth and jobs and was met with a mixed reaction. Forces from the left, in particular, have dubbed it as a downgrading of "social Europe".
The reality is quite different. If social Europe is to mean anything to future generations, we need to act now to improve the EU's economic performance. In the absence of serious and urgent reform, our ageing European society will fail to maintain its standard of living in the globalised economy of the 21st century.
Let's start with some facts about the Lisbon process. Firstly, the core objective outlined in 2000 was to become "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". Somehow this objective translated (over the past five years) into 28 core objectives with 117 indicators.
This, in a union of 25 member states, leads to some 300 annual reports which take substantial time, and no doubt resources, to prepare. We could ask who actually gets to read these 300 reports? And how do they really contribute to the practical achievement of the overriding objective identified quite clearly back in 2000? Are we all spending more time form-filling and writing reports than actually trying to achieve something?
The Irish presidency, in 2004, attempted to bring focus to the Lisbon debate and suggested, for the first time, that we should try to identify priorities and focus on real and measurable objectives. The commission's strategy, launched by Barroso on February 2nd, builds strategically on the practical groundwork started by the Irish presidency.
A problem with the Lisbon process is that, in an effort to try to please everyone, the strategy has been extended and watered down until it has become an unworkable piece of bureaucracy that is achieving little. Significant problems abound.
The recent review of the process, conducted by former Dutch prime minister, Wim Kok, confirmed that Europe's performance is now even worse than it was in 2000, in terms of productivity, growth and unemployment.
Although EU productivity levels were growing faster than those in the US for five decades, this changed in 1996, and since then the EU has lagged behind the US each year. As a result, our relative wealth levels have also started slipping. The average growth in the EU area is 2.3 per cent (in 2004) while growth in the US and Japan are closer to our own Irish growth levels at 4.4 per cent and 4.2 per cent respectively.
In areas where there have been improvements, they have not been of an order that would help overall competitiveness. For example, investment in the EU has been growing, but only by 1.7 per cent a year compared to 5.4 per cent in the US. The US is spending about €100 billion more on research and development than Europe and we have only 25 per cent of the number of patents per head of population found in the US.
Under these circumstances, it is time for some straight talking and that is the general tone of Barroso's strategy for growth and jobs. The glaring reality facing all of us as EU citizens is that social policies must be paid for.
This becomes more difficult and potentially unsustainable in the absence of economic growth, coupled with high unemployment and an ageing population. If Lisbon is to deliver social progress, it will be by creating employment.
But it is difficult to increase employment in an EU where the regulatory burden is such that it takes longer on average to start a business than in most other parts of the Organisation for Economic Co-operation and Development. It is also unhelpful that entrepreneurs have become scarcer in recent years in the EU and are now less than half as numerous as in the US.
The Wim Kok report of last December tells us that "job creation in the EU stopped in 2001, and the risk is apparent that the 2010 employment targets (70 per cent of total workforce) will not be reached". The earlier Kok report on how to boost employment in the EU (Jobs, Jobs, Jobs - 2003) highlighted the need to reform Europe's rigid labour markets to increase employment.
Employment is the best way to ensure social cohesion and what Barroso's strategy is attempting to do, is to make this the priority. Concerns expressed, both in Ireland and abroad, that the commission is abandoning or "downgrading" the social pillar are misplaced. Rather, the commission's strategy highlights for us, that without economic reform, our social aspirations will remain just that: aspirations. They will not be a reality for the generations ahead.
Maria Cronin is director of European and social policy at Irish Business and Employers' Confederation.