Evaluating the Lisbon Strategy
Background to request for advice
The Cabinet has asked the Social and Economic Council for its opinion on the way in which
the Lisbon strategy is being implemented by the Member States and the European Union. The
European Union will conduct a mid-term review of its Lisbon strategy in early 2005. A task
force chaired by former Dutch prime minister Wim Kok will carry out a preparatory
evaluation in late 2004. To ensure that the Netherlands’ position on this matter has been wellprepared, the Cabinet has asked the Social and Economic Council to provide its advisory
report in June 2004.
Core of the advisory report: European and national growth agenda through cohesive policy
The core of the Lisbon strategy involves making the Member States of the European Union
into dynamic and competitive, knowledge-based economies. The public interest is served by
doing so, as a modern knowledge-based economy can offer present and future generations
greater opportunities for prosperity, with a better quality of life for as many people as possible
while respecting social and cultural values and the natural environment. This development
model requires a clearly defined growth agenda based on a higher labour participation rate
and sustained growth in labour productivity. The growth agenda can only succeed if all the
parties involved – the Member States, the European Union, and the social partners – commit
themselves to it.
A modern knowledge-based economy must also be a competitive economy. At EU level, this
will require a well-functioning internal market; at national level, it will require reforms and
social innovation, for example with respect to the labour market. Such changes require a
better-educated, better-trained labour force and measures that offer employees and citizens
social protection. Cohesion between the economic and social dimensions of policy are vital if
the European development model is to be viable.
Lisbon goal still relevant
At the Lisbon European Council (March 2000), the European Union set itself a new strategic
goal for the next decade: 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. The Gothenburg European Council (March 2001) added an ecological
dimension to this strategy.
According to the Social and Economic Council, the aim of achieving sustainable economic
growth while acknowledging the social and ecological dimensions is more relevant today than
ever. It must be possible to guarantee a high standard of living and a good quality of life in the
future, even in a Europe with an ageing population and in the face of rapid technological
advances and the globalisation of the economy. That is why we must make every effort to
increase the labour participation and labour productivity rates within the context of the Lisbon
strategy.
The new Member States can and must make a substantial contribution to this European
development process by striving to close the gap between themselves and the rest of the
European Union. While the “old” Member States must work to get their economies back on
track, the new Member States must exploit every opportunity to bring their growth rate up to
speed.
Few results so far
Despite the positive start, the European Union has made very little progress in achieving its
Lisbon goals in the past four years. The first disappointment concerns the sluggish internal
market. The Member States are not doing enough to remove existing problems (labour
mobility, cross-border services, doing business in other countries, the Community patent, the
implementation and enforcement of internal market rules). The Member States and the EU are
making insufficient use of the internal market, which could make a significant contribution to
economic growth.
The second disappointment is that there are continuing problems with respect to Europe’s
knowledge and innovation policy. The level of investment in R&D and education is
inadequate, and labour productivity is not growing as quickly as it should. There are more
efficient ways of generating, disseminating and utilising knowledge, but they involve making
better use of the opportunities available at European level.
The final disappointment is the lack of progress in the open method of coordination. The
Member States have not taken the challenges facing them seriously enough. The problem in
the Netherlands is that the Lisbon agenda has not really been transformed into a growth
agenda that provides a context for the nation’s efforts. Given the way responsibility is shared
in the Netherlands, in those areas where the Lisbon goals touch on the domain of the social
partners, their active involvement and contribution are required at all levels.
A European growth agenda…
Achieving the aim of satisfactory trend-related growth will only be possible if the various
“problem owners” are prepared to redesign and coordinate their policies. This is particularly
true of the EU and the Member States, and in certain areas the social partners must also bear
some or all of the responsibility.
The envisaged trend-related economic growth must also be embedded in the broader concept
of prosperity. After all, there will be little added value to economic growth if it is achieved at
the expense of social cohesion and the quality of the environment. A satisfactory social policy
must enhance the Member States’ ability to adapt by supporting social innovation in such
areas as working life, education and social protection. In this way, social policy can serve the
interests of higher economic growth.
The notion that the Treaty makes the European Union responsible for achieving the broader
Lisbon Agenda is, in fact, untrue. In most policy domains, including social insurance,
employment, health care and education, it is up to the Member States to do so, with the EU
often playing a supporting role.
… along two tracks
The positive kick-off to the Lisbon strategy and the disappointing results of the past few years
have led the Council to propose pursuing the Lisbon goals along two separate tracks.
To begin with, by enhancing the internal market (while also making better use of Europe’s
knowledge and innovative capacity), the EU can improve its competitiveness and boost
growth, breathing new life into the Lisbon strategy through its core domain (the internal
market in the broad sense).
At the same time, if the Lisbon strategy is to be revitalised, the Member States must be placed
under stricter obligations. This second track is the national counterpart of the first track at EU
level. A dynamic internal market and critical competition on global markets require society to
be highly adaptable. The Cabinet, in consultation with the social partners, faces the challenge
of drawing up a suitable social and economic agenda ensuring that the process of economic
structuring is carried out in a responsible manner.
Track 1: let the EU do what it’s good at: completing the internal market…
The first track is that the European Union must be allowed to excel in those areas of policy
where it is far preferable for action to be taken at EU level. The key is to enhance
competitiveness by allowing market forces to exercise their disciplinary effect. This involves,
for example, completing the internal market, liberalising product markets, updating
competition law, and liberalising trade within the context of the WTO. This track makes
stringent demands on the ability of businesses and their employees to adapt, and encourages
the adaptation processes for which the Member States are accountable.
In the view of the Council, the European Union should be given more decision-making power
when it comes to lifting long-standing roadblocks that prevent the completion of the internal
market. These concern the cross-border elements of tax law (for example cross-border
company mergers), the coordination of social insurance schemes (for example supplementary
pension schemes for foreign workers), the common trade policy and the protection of
intellectual property (the Community patent). Decisions on these matters should no longer be
taken on the basis of unanimity, but by qualified majority.
In addition, the Member States must be more aware that timely implementation and proper
enforcement of internal market regulations are ultimately in their own interests. Because the
Member States – the Netherlands included – consistently fail in this respect, the internal
market lacks the necessary vitality. In the end, it is the Member States who must pay, in the
form of slower economic growth.
… including a greater emphasis on knowledge and innovation
A dynamic and competitive knowledge-based economy needs specific measures aimed at the
development and use of knowledge. Such measures can give businesses in Europe and their
employees the opportunity to meet the demands of a market economy. Specifically, what is
required is investment in education and training, skills acquisition at all vocational levels,
more effective and efficient use of expertise (including at universities), and the introduction of
a European dimension in research projects.
The Council is in favour of creating a single European Research Area (free movement of
students, researchers and ideas) as part of the internal market. It supports the Cabinet’s plan to
propose setting up an independent European Research Council with a substantial budget
during the Netherlands’ Presidency. Research projects should be allocated funds purely on the
basis of quality, in the Council’s view. It also believes it is vital to learn lessons from the
United States and elsewhere when designing and setting up the new Research Council.
A further point is the pressing need to improve the design of the Framework Programmes, the
most important instrument of the EU’s knowledge and innovation policy. Three points stand
out: the lack of involvement of trade and industry; the bureaucratic working methods; and the
overly long list of objectives. The Council further proposes that evaluations should be carried
out systematically (with a view to the learning effects), and it would like to see more cohesion
between the various pan-European programmes.
If the EU hopes to create a European Research Area, it will have to make more funding
available. The Council advocates taking a more forward-looking approach to the EU’s
financial resources by setting aside a larger share of the budget for knowledge and innovation.
Another strategy would be to gradually shift part of the national budgets for research to the
EU as the European Research Area becomes a reality.
Track 2: more obligation at national level
One important issue is that national policy-makers do not regard the Lisbon agenda as their
own. As a result, it has been difficult getting implementation off the ground, particularly
because the EU itself has very few opportunities to force the issue. The second track therefore
involves national policy-makers becoming owners of the Lisbon agenda. National
governments and parliaments must place the common Lisbon goals at the top of a national
policy agenda focusing on growth. In the Netherlands, that agenda would be set out in the
Coalition Agreement, the Queen’s Speech and the National Budget, giving the Lisbon
strategy a much more prominent place in the debate between the Cabinet and Parliament.
The social partners also have an important role to play in the Lisbon process. Some of the
Lisbon goals involve increasing the labour participation rate and labour productivity.
Achieving these goals will require policy on various issues to be amended, for example the
workings of the labour market, opportunities for lifelong learning, investment in R&D and the
modernisation of social insurance, tax and pension systems. Further adjustments will also
have to be made within employing organisations.
In order to ensure an effective adaptation policy in a number of these fields, governments
depend on the cooperation of the national social partners. It is important for the social
partners, individually and as a group, to feel responsible for the success of those elements of
the Lisbon strategy that fall within their remit in their own country.
In this respect, the Council proposes drawing up a national action plan aimed at achieving the
Lisbon strategy. The plan should specify which Lisbon goals apply to the Netherlands, how
they are to be achieved, who is to do so, how and when. Such a plan will make the Lisbon
strategy more transparent and promote cohesion; in addition, the Member States, the
Netherlands included, will be more likely to conduct themselves as “problem owners” if they
have defined their own Lisbon goals.
The second track fits in with the idea of the European Commission taking a more active role
in monitoring the implementation of the common Lisbon goals in the individual Member
States. The confrontation between the national and Community perspectives can become a
fruitful topic of discussion for national parliaments, making implementation of the Lisbon
strategy part of normal communication between cabinets and parliaments. Where necessary, a
Commission representative could be invited to attend the discussions and explain the
European perspective in more detail.
Translator: Balance Texts and Translations, Maastricht