FACTORS FOR GROWTH
PRIORITIES FOR COMPETITIVENESS,
CONVERGENCE & COHESION IN THE EU
A Study commissioned
by the European Economic and Social Committee
at the request of the Employers’ Group
27 April 2016
THE TOOLBOX
• 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
2
AN EXTENSIVE DATASET
• 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
The 9 categories
of the Toolbox
Economic
aggregates
Trade
Foreign Direct
Investment
Energy costs
Labour costs
Social policies
Education
Demographic
change and
migration
Quality of
institutions
3
AN INTERACTIVE TOOL
• A single Excel file including a table
of contents and an easy navigation
system
• A readable format across indicators
• Including examples for future use
4
5
0%
Sweden
Belgium
Finland
Poland
Slovenia
Greece
17.3%
16.1%
26.5%
24.5%
30%
Spain
Croatia
Cyprus
14.1%
13.2%
Slovakia
20%
Portugal
12.7%
Italy
11.4%
8.7%
Hungary
Bulgaria
8.5%
Netherlands
11.3%
7.9%
Estonia
Ireland
7.7%
Romania
10.8%
7.4%
Denmark
Latvia
7.4%
United Kingdom
10.7%
6.8%
Czech Republic
Lithuania
6.1%
Luxembourg
10.3%
6.1%
Malta
France
6.0%
6.6%
9.7%
5.9%
9.0%
5.6%
11.6%
Austria
5%
5.0%
10%
Germany
Euro Area (19)
10.2%
15%
European Union (28)
USING THE TOOLBOX (1)
Unemployment rate
2014
25%
Source: Eurostat
6
USING THE TOOLBOX (2)
EU exports per destination country
€1,702.7 bn in 2014
United States
18.3%
Rest of the world
40.1%
China
9.7%
Switzerland
8.2%
Brazil
2.2%
United Arab
Emitares
2.5%
South Korea
2.5%
Norway
2.9%
Japan
3.1%
Turkey
4.4%
Russia
6.1%
Source: European Commission
7
USING THE TOOLBOX (3)
Energy dependence
%
European Union (28)
Euro Area (19)
70%
65%
60%
55%
50%
45%
40%
00
01
02
03
04
05
06
07
08
09
10
11
12
13
Source: Eurostat
8
USING THE TOOLBOX (4)
The role of the Euro in world financial markets
% of total use
Official use
Reminbi
Euro
US Dollar
0%
Anchor currency
Foreign exchange reserves
Private use
Global payment currency
Foreign exchange turnover
0%
International debt securities
0%
10%
20%
30%
40%
50%
60%
70%
Source: European Central Bank
9
DIVERGENCE WITHIN THE EU
5.0%
RO
LT
4.5%
LV
Average GDP per capita growth, 2013-2030
BG
4.0%
EE
PL
3.5%
SK
HU
CZ
3.0%
MT
HR
2.5%
SI
2.0%
UK
DE FI
EU
EL
BE
AT DK
1.5%
IE
PT
LU
SE
1.0%
CY
0.5%
FR
ES
NL
IT
0.0%
$0
$20,000
$40,000
$60,000
GDP per capita, 2013
$80,000
$100,000
$120,000
Source: CEPS
10
METHODOLOGY
• 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
11
A MEMBER STATE CLASSIFICATION (1)
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
12
A MEMBER STATE CLASSIFICATION
• Member States Leading in competitiveness:
– Dominated by Northern European countries
– With a better position in terms of competitiveness and
political acceptance of further reforms
Selected
Member States
Germany
United
Kingdom
Ireland
13
A MEMBER STATE CLASSIFICATION
• Member States Following in competitiveness:
– Difficulties in implementing structural reforms
– Adverse economic pressure to initiate the changes needed
– Reluctance to implement additional policy changes
Selected
Member States
France
Spain
Greece
14
A MEMBER STATE CLASSIFICATION
• Member States Catching up in competitiveness:
– Low level of public debt
– Lower wages
– Positive attitude towards policy reforms
Selected
Member States
Poland
Latvia
Bulgaria
15
BEST AND WORST PRACTICES PER COMPETITIVENESS PATTERN
MEMBER STATES LEADING IN COMPETITIVENESS
Country
Labour
Market
Productivit
y
Product
Markets
Investment
Education
R&D
Public
Deficit
Pensions
Trade
Reform
Implement.
*
Germany
United
Kingdom
*
Ireland
Legend
Good
performance
*
Good performance
subject to additional effort
Average
performance
Low
performance
16
BEST AND WORST PRACTICES PER COMPETITIVENESS PATTERN
MEMBER STATES FOLLOWING IN COMPETITIVENESS
Country
Labour
Market
Productivit
y
Product
Markets
Investment
Education
R&D
Public
Deficit
Pensions
France
*
Spain
*
Trade
Reform
Implement.
Greece
Legend
Good
performance
*
Good performance
subject to additional effort
Average
performance
Low
performance
17
BEST AND WORST PRACTICES PER COMPETITIVENESS PATTERN
MEMBER STATES CATCHING UP IN COMPETITIVENESS
Country
Labour
Market
Productivit
y
Product
Markets
Investment
Education
R&D
Public
Deficit
Poland
*
Latvia
*
Bulgaria
*
Legend
Good
performance
*
Good performance
subject to additional effort
Pensions
Average
performance
Trade
Reform
Implement.
Low
performance
18
A NEW PARADIGM FOR EU POLICIES (1)
• 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
19
A NEW PARADIGM FOR EU POLICIES (2)
• 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
20
CONCLUSIONS (1)
• 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
21
CONCLUSIONS (2)
• 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
22
COMPETITIVENESS PATTERNS (1)
Competitiveness and GDP per capita
100,000
LU
90,000
80,000
GDP per capita, 2013
70,000
60,000
IE
50,000
40,000
30,000
CY
EL
20,000
SK
HR
RO
SI
IT
PT
LT
HU
BG
DK
US
NL
DE
AT
UK
ES
FR
CZ
LV
MT
PL
FI
SE
BE
EE
10,000
0
3.90
4.10
4.30
4.50
4.70
4.90
5.10
5.30
5.50
5.70
Global Competitiveness Index, 2013
23
COMPETITIVENESS PATTERNS (2)
6.0
Developments in competitiveness between 2006 and 2015
Global Competitiveness Index (Value)
Countries that have
improved their
competitiveness over
the 2007-2015 period
5.5
NL
UK
US
DE
SE
FI
BE
DK
LU
AT
IE
FR
5.0
2015
EE
CZ
PL
4.5
LT
PT
RO MT IT
BG
CYHU
HR
4.0
ES
LV
SI
SK
Countries that have
worsened their
competitiveness over
the 2007-2015 period
EL
3.5
3.5
4.0
4.5
5.0
5.5
6.0
2006
24
FACTORS FOR GROWTH
PRIORITIES FOR COMPETITIVENESS,
CONVERGENCE & COHESION IN THE EU
A Study commissioned
by the European Economic and Social Committee
at the request of the Employers’ Group
27 April 2016