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EFTA BULLETIN
GROWTH AND JOBS:
THE LISBON STRATEGY AND THE
EUROPEAN ECONOMIC AREA
1-2006 MARCH
EUROPEAN FREE TRADE ASSOCIATION
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EFTA Secretariat Editorial Team
Bulletin Editor
Sebastian Remøy
Copy-Editor
Jean Lusweti
EFTA BULLETIN 1-2006
2
Layout and Production
Pål A. Hvistendahl and Helena Saele
Authors of this Issue
Sebastian Remøy — Project Coordinator
Anne Camille Hilton
Tor Eigil Hodne
Ásta Magnúsdóttir
Richard Ragnarsøn (Part II)
Front cover photograph: Birkir F. Haraldsson
Krafla geothermal station in Iceland. Eco-technology
plays an important role in the Lisbon Strategy
Printed by Micrographex, Brussels
Layout by David Schürmann
March 2006
The EFTA Secretariat would like to thank all external authors for their invaluable
contributions to this issue of the Bulletin. The views expressed are not necessarily
those of the Secretariat.
FOREWORD
The last year was critical in the history of the Lisbon
Strategy, standing as the midway point in the first
decade of the Strategy. The EU undertook an extensive
mid-term review of its five year-old effort to become,
within the decade, the most competitive economy in the
world. The EEA EFTA States have supported the overall
aims of the Lisbon Strategy and provided input to the
mid-term review. On their behalf, Iceland's Prime
Minister, Halldór Ásgrímsson, sent a letter to Wim Kok
(the Chair of the High Level Group of Independent
Experts reviewing the Lisbon Strategy) in September
2004. This was followed up in March 2005 by another
letter signed by Norwegian Prime Minister, Kjell Magne
Bondevik, to EU President Jean-Claude Juncker, in the
run up to the EU´s spring summit (these letters are
copied in the annex of this edition of the Bulletin).
In the following pages, MP and former Norwegian
Industry and Trade Minister, Børge Brende, explains
why growth, employment and the Lisbon Strategy as a
whole are so important for the EEA EFTA States. EU
Vice-President Margot Wallström explains how the
Lisbon Strategy is ultimately intended to improve the
quality of life of Europeans. Georges Baur, Deputy Head
of Liechtenstein's Mission to the EU, argues that the
Lisbon Strategy needs to be made relevant to citizens
through concrete measures. Jon Vea, Chairman of the
EFTA Consultative Committee and International
Director of the Norwegian Confederation of Enterprise,
looks into the challenge of balancing policies to grow the
European economy with measures to preserve the
environment and provide long-term job and social
security to Europeans. Halldór Grönvold, ViceChairman of the EFTA Consultative Committee and
Deputy General-Secretary of the Icelandic
Confederation of Labour writes on the need to uphold
European social values in the effort to support growth
and employment. The EFTA Secretariat also provides
several examples of areas in which the EEA EFTA States
are playing an active role in programmes and policies
that are central to the Strategy for Growth and Jobs.
In the second part of the Bulletin, readers can compare
how EEA countries measure up against each other in
the statistical indicators that track the Lisbon Strategy's
progress.
What emerges clearly from this edition of the Bulletin
is that the Lisbon Strategy is relevant for EFTA, not
least because of its impact on the Internal Market.
Through both formal and informal channels, the EEA
EFTA States participate in many initiatives to stimulate
sustainable growth and employment in Europe.
Øystein Hovdkinn
Deputy Secretary-General of EFTA
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EFTA BULLETIN 1-2006
This edition of the EFTA Bulletin looks at the Lisbon
Strategy, or as it is increasingly referred to these day,
the Strategy for Growth and Jobs. Growth and jobs are
vitally important goals for the EFTA States in the
European Economic Area (EEA), as well as for
Switzerland. In these pages we will look at the
opportunities that the EEA Agreement gives all its 28
member countries to cooperate with each other to
achieve sustainable growth.
TABLE OF CONTENTS
Foreword
3
Øystein Hovdkinn,
Deputy Secretary-General of EFTA
PART I
The Lisbon Strategy and
the EEA EFTA States
Growth and Employment:
Goals for the EEA EFTA States
A European Model for
Sustainable Growth
15
Halldór Grönvold, Vice-Chairman of the EFTA
Consultative Committee, Icelandic Confederation
of Labour
5
The Lisbon Strategy in Brief
18
5
How the EEA EFTA States
participate in the Lisbon Strategy 21
7
The Internal Market
The Knowledge Society
Employment Policy
Social Inclusion
Sustainable Development
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Børge Brende, Member of the EFTA
Parliamentary Committee and former
Norwegian Minister of Industry and Trade
A Strategy for Europeans
Margot Wallström, Commissioner for
Institutional Relations and Communication
Strategy and Vice-President of the
European Commission
PART II
29
Measuring up —
Structural Indicators
29
Lisbon: Getting Down to
Business and Involving People
ANNEX
46
Letters from the EEA EFTA
States to the EU
46
10
Georges Baur, Deputy Head of Liechtenstein's
Mission to the EU
The Difficult Balance of
the Lisbon Strategy
Jon Vea, Chairman of the
EFTA Consultative Committee,
Confederation of Norwegian Enterprise
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GROWTH AND
EMPLOYMENT: GOALS FOR
THE EEA EFTA STATES
If we were to say that Europe is in a state of near
economic stagnation, we would probably not receive
many objections. If instead we were to say that over
the last twenty years, Europe has seen impressive
economic growth, wide-reaching deregulation and
unprecedented technological development, some
remarks of suspicion would perhaps arise. However,
both statements are true.
One could even say that at present, many European
countries are experiencing high economic growth and
relatively low unemployment. As we should know, this
is true as well. The EEA EFTA States can be proud of
themselves for having some of the best examples of
good economic governance in Europe. Unemployment
in our countries is low. The EEA EFTA countries are
experiencing high economic growth. In fact, this is the
case for many countries in the EU as well. Ireland has
been growing at an impressive rate for years. Some
new Member States, e.g., the Baltic countries, have
1
The Lisbon Strategy was launched in 2000 to make
Europe the most competitive economy in the world by
2010. This, at the best of times, was an ambitious
agenda, and was made even more challenging by the
economic downturn in 2001 and 2002. Looking back
at the achievements after five years, the mid-term
review of the Lisbon Strategy concluded that the
Strategy had too many goals and too little focus.
Economic growth had not improved and, in relative
terms, Europe had lost out to the US.
To me, the reorientation of the Lisbon Strategy,
focusing on jobs and growth, makes good sense.
Environmental policy and social integration are very
important topics. However, growth and employment
are vital to assure welfare and our ability to support a
clean environment. At the same time, demographic
changes create a great challenge for the years to come.
While the total population is stabilising — and even
expected to fall in some countries — the financial
obligations of the state are fast increasing.
But how shall we achieve more jobs and more growth?
Globalisation brings both challenges and
opportunities. On the one hand, we meet tougher
competition. On the other hand, larger markets are
opening up for our products and services. This implies
Mr Brende was Minister of Industry and Trade during Norway's chairmanship of the EEA Council, when the EEA EFTA States
presented input to the EU 2005 spring summit (the mid-term review).
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EFTA BULLETIN 1-2006
By Børge Brende,
Member of EFTA's
Parliamentary Committee
and former Norwegian
Minister of Industry and
Trade1
been among the frontrunners in adapting economic
reform. Although the unemployment rate for the EU as
a whole remains high, 'eurosclerosis' is certainly not a
term that defines the whole of the EU. Even among the
acknowledged slow-growth countries, economic
conditions might be improving.
that we have to compete by restructuring, by
innovating more and by working smarter. We must
focus on research and development (R&D) and the
utilisation of new technology.
I believe that the key resource to being competitive is
human capital. Nothing will prepare us better for the
future than a workforce that is well educated, adaptive
and innovative. The most important part of this is the
general level of education. A highly skilled population
is essential for realising the potential of the economy.
However, we also need to ensure that this human
capital is put to work. It is important that social
insurance systems do not significantly reduce the
incentives to work. Rules and regulations should allow
the workforce to be employed wisely. And we need
firms that are able to adapt to new environments, and
to meet new challenges. We must foster the ability to
innovate. And we must support creativity by
supporting research and development.
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on the individual need of each country. The topics
covered by the Lisbon Strategy are so general as to give
room for a wide range of different national strategies.
However, we need to recognise the interdependence
of European countries, whether or not they are
members of the EU. Increased European
competitiveness will benefit all countries in Europe.
If the EU can succeed in the goals set in the Lisbon
Strategy, the EEA EFTA countries will be among the
first to gain from it. But if we want to optimise our
economic potential, we will come even further if we
are able to work together. I view the Lisbon Strategy
as a further contribution to this process. It is
therefore important that the EFTA countries follow
the Lisbon Strategy closely.
When I was minister of industry and trade in an EEA
EFTA country, I looked at the part of the Lisbon
Strategy focusing on the Internal Market with special
interest. The Internal Market is perhaps the strongest
tool the EU has for creating jobs and growth. And it
is a tool we know works. If we really want to improve
our potential for higher growth and more jobs, the
Internal Market is certainly a good place to start.
The Internal Market is undoubtedly one of the EU's
greatest achievements. However, some obstacles
remain. One important goal is to extend the Internal
Market to trade in services. But there are others.
National regulation, tax systems and social insurance
systems in some cases still hinder the achievement of a
level playing field. Public procurement and network
industries are other areas. Several of the integrated
guidelines that form the basis for the Lisbon Strategy
focus exactly on these topics. This is a part of the
Lisbon Strategy where the EEA EFTA countries must
work together with the EU. A well functioning Internal
Market is a common good.
The Lisbon Strategy is an invitation to the EU Member
States to present programmes for reform. As the EU
itself certainly recognises, Member States are truly
diverse. A national reform programme must be based
Students in the EEA EFTA States can participate in all EU education
programmes. Since 1993 over 15 000 EEA EFTA students have spent a
semester at a university abroad through the ERASMUS student mobility
programme.
A STRATEGY FOR
EUROPEANS
In March 2000, the European Council met in Lisbon to
agree on a new strategic goal for the European Union:
“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 year after, an
important addition was made by the Gothenburg
Council as the environmental dimension was added to
the strategic goal and the Sustainable Development
Strategy was agreed. These were not only fundamental
policy objectives for the future, but they also
represented a new approach to policy-making. In terms
of policy mechanisms, it went beyond Community
harmonisation to introduce the best practices and
benchmarkings of the open method of coordination
(OMC). At its philosophical core was the requirement
of sustainability — that present needs be met without
compromising the ability of future generations to meet
their own needs. It also represented a 'European way',
drawing on the strengths of Europe — competitiveness
through welfare, high environmental standards, strong
infrastructure and an educated workforce — but also
on the principle that there can be important mutually
reinforcing mechanisms between policies.
At the time of the mid-term review of the Lisbon
Strategy, however, it was clear that results so far
were, if not insufficient across the whole board, then
at least worrying. Several key indicators, such as
rates of employment, economic growth and R&D
expenditure levels, showed that progress was falling
short of the mark. National as well as Community
reforms were not proceeding as planned. Leaving
aside the adverse effects on progress by external
factors such as adverse global economic cycles, there
was a clear lack of delivery on reforms. The High
Level Group of Independent Experts established by
the Commission pointed to a structural shortcoming
of the Strategy: the delivery gap was much due to a
lack of focus on reforms and political ownership of
the Strategy and its objectives.
This delivery gap presents itself at a time when
external as well as internal challenges point to the evergreater importance of keeping the Lisbon and
sustainability objectives alive. Europe has an ageing
population, and in parallel with stronger environmental
legislation, fossil energy dependence and pollution
levels are on the rise. In a world of increasing
competitive pressures, in particular on manufacturing
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By Margot Wallström,
Commissioner for
Institutional Relations
and Communication
Strategy and VicePresident of the
European Commission
As abstract as that principle might appear, it harbours
a rationale that can underpin concrete policy choices.
High environmental ambitions, for instance, are not to
be seen as the costly luxuries of societies that have the
economic growth to afford them, but rather as drivers
in themselves of increased productivity, growth and
more jobs. The 'European way' is to not make the
fallacy of choosing between growth or a healthy
environment, between jobs or social security. To me,
therefore, sustainable development has always been a
very powerful concept — a recipe for what we might
call 'smart growth'.
Iceland is the only country that produces all its electricity from emission-free and sustainable natural resources in the form of geothermal and hydro power.
EFTA BULLETIN 1-2006
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industries, Europe needs to step up the pace of
transition to become a knowledge-based economy.
Continuous lagging behind in economic performance
would simply erode the very base of prosperity on
which we have built our high social standards and
quality of life.
This increased sense of urgency did not, however,
diminish the Commission's conviction that any reform
of the Strategy needed to be faithful not only to the
original objectives but also to the core principles: that
whereas growth and higher employment are essential
for providing the means for maintaining social
cohesion and environmental sustainability, at the same
time social cohesion and environmental sustainability
too are drivers of growth and employment.
Not losing sight of this fact — that the Lisbon Strategy
itself is to be seen in the wider context of sustainable
development — is important not least because the
success of the Strategy very much depends on how
much consensus and ownership can be built around it.
The reform needed to be balanced and to reaffirm the
Strategy as a three dimension — economic, social and
environmental — political project, because otherwise it
simply would not have the broad support that it needs.
A concrete example of what it means to keep this
balance is that more flexible labour markets must go
hand in hand with better employment services, which
do not leave people that have lost their job in a
hopeless situation. Atypical working contracts must go
hand in hand with new solutions on pension rights, in
order to avoid many people's pensions being eroded. In
other words, the key challenge is to re-establish the
Lisbon Strategy as a positive and shared vision for
Europe's future, which is economically and
environmentally solid as well as socially desirable.
The Commission's proposal, presented in spring 2005
and which was subsequently endorsed by the European
Council and the European Parliament, was therefore a
renewed Strategy with an increased focus on growth
and jobs. The emphasis is on boosting knowledge and
innovation, making Europe a more attractive place to
invest and work in, and creating more and better jobs.
As much effort as possible must go into delivering on
those policies which have the greatest impact over the
years to come. But while being more targeted on these
areas — which are where Europe is lagging behind its
competitors — it is not decoupled from the principle of
sustainable development and the retention of a high
level of social cohesion and security.
Firstly, it is a communication challenge — in order to
achieve increased delivery, we need a stronger,
common European consciousness of what the
Strategy is for and why its ambitions are so crucial.
The Commission will in the near future establish a
communication strategy for Lisbon, including a
comprehensive analysis of how the Strategy can be
made to feel more tangible and relevant to
Europeans. The renaming of the Lisbon Strategy as
a Strategy for Growth and Jobs is just one change,
and — crucially — the benefits to the citizen and the
costs of inaction need to be highlighted. The
communication strategy must mobilise opinionmakers and influential groups in society, such as
political parties, the business community, trade unions,
trade associations, consumer organisations, NGOs and
existing European networks. Furthermore, in order to
better be able to convey the added value of European
action in conjunction with Member State reforms,
reporting on Lisbon progression is being split up into a
Community Lisbon Programme in parallel with the
national programmes.
Secondly, it is a challenge of governance — the
Commission needs to establish a new partnership
with Member States in order to increase their
ownership of the Strategy. In order to achieve that,
the respective responsibilities need to be clarified,
and the Commission's role as facilitator confirmed. It
needs to be clear how Community actions support
policy developments in Member States. The new
partnership also entails far-reaching simplification,
both in terms of policy priority-setting and in terms
of streamlining of procedures and reporting. A single
integrated national reform programme will replace
the many separate reports of before.
By improving governance, the aim is to facilitate the
identification of priorities while maintaining the
overall balance of the strategy and the synergies
between its various components. In short, any
impulse at Community level must be combined with
a real commitment and ownership at all levels of
government: European, national, regional and local.
At the end of the day, however, I believe that the
greatest challenge rests with European Union Member
States. It is they, after all, that retain the bulk of
influence over employment, social and macro
economic policies. They need to show their
commitment to the Lisbon objectives. I believe that the
renewed Strategy provides a second chance. More
focused and simplified, it can still be made into The
political strategy of the decade for Europe. It is still
faithful to the European way of marrying growth and
jobs with sustainable development and social cohesion
— now Europe just needs to be faithful to it.
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EFTA BULLETIN 1-2006
The Lisbon Strategy has from the outset consisted of a
comprehensive mix of measures of which very
significant parts are within the exclusive domain of
Member State policy. Therefore, from the point of
view of the European Commission, renewing the
Lisbon Strategy with an increased focus on growth and
jobs and on delivery represents a challenge.
LISBON: GETTING
DOWN TO BUSINESS AND
INVOLVING PEOPLE
EFTA BULLETIN 1-2006
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By Georges Baur, Deputy
Head of Liechtenstein's
Mission to the EU
When the EU set out, through the Lisbon Strategy, to
become the most competitive economy in the world
and to equal that of the United States within 10 years,
it was clear early on that this was an unrealistic goal
that was bound to fail. Not only was the Strategy too
ambitious, but it also did not consider the
readjustment of social and environmental policies
necessary for the achievement of its goals. Policymakers — quite understandably — were unable to
prioritise Lisbon's many goals.
Therefore, changes in the Strategy were necessary, with
several other factors having to be taken into account.
Among the challenges that most European economies
face are: the rapid globalisation of the world economy
with increasing trade and competition; increasingly
ageing populations; uncertain sustainability of public
finances and problems related to growth and job
performance.
EFTA countries are all small and have open economies.
They also have in common high levels of education and
income, and well functioning labour markets. These,
combined with active labour market policies, generate
high employment rates. Such forward-looking structural
policies are seen as the best policy response to the future
challenges related to jobs, growth, globalisation and
sustainable development. This need, however, not happen
to the detriment of a well developed welfare state.
Looking at Liechtenstein's experience, it appears that
in order to maintain the efficiency and competitiveness
of an economy, it is important to reduce the role of the
State. Furthermore, a tax system that guarantees a
sustainable level of income, combined with an equal
but moderate tax rate, is likely to set the best climate
for continuous growth.
The latter goes hand in hand with the scrapping of
complicated legislation and bureaucratic rules that
essentially prevent the sector of small and mediumsized enterprises from developing. The European
Union's initiative for better regulation, i.e., to further
reduce barriers to entry in network industries and/or
professional services; to ease the burden of regulation
on business operations arising from price controls or
administrative procedures; to consider reducing the
extent of public ownership and to lower the
administrative burden on business start-ups sets the
pace. Furthermore, the completion of the EU single
market for goods and services and the EEA Agreement
are expected to boost competitive pressure arising from
cross-border activities, even though important nontrade barriers remain and the introduction of rules on an
integrated market in services is still being discussed.
One of the concrete measures for enhancing the
creation of high quality jobs, and encouraging
innovation and competitiveness — the major aims of
the Lisbon Strategy — therefore is to rapidly create a
genuine single market in services. By fostering crossborder economic activity and stimulating competition
in this way, the aim of this proposal is to provide a
wider choice, improve quality and lower prices for
consumers and for enterprises using services.
The re-launch of the EU's Lisbon Strategy is certainly an
important step on the way to success. However,
countries should not only be involved at administrative
level but need also address the citizens. Only concrete
measures will appeal to people in Europe. Without their
support, the Lisbon Strategy will not achieve the success
expected by Europe's leaders. These may, in the case of
Liechtenstein, perhaps be subject to a referendum. This
would on the one hand require much explaining. On the
other, it is a possibility for gaining the people's support
and confidence necessary for the advancement of an
ambitious project such as the Lisbon Strategy.
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EFTA BULLETIN 1-2006
In the case of Liechtenstein, the economic policies as
described above aim at ensuring that the country
remains an attractive economic location and thus offers
conditions that make entrepreneurial activity viable
without state subsidies. Despite the high wage and
price levels, the Liechtenstein economy remains
internationally competitive.
Industry and manufacturing accounts for 40% of Liechtenstein's GDP. Liechtenstein industry employs over 100 000 people abroad,
three times the population of Liechtenstein.
© Hilti Corporation
THE DIFFICULT BALANCE
OF THE LISBON STRATEGY
the population in the US has a university degree
compared to only 19% in Europe. Further, the US, on
average, invests approximately twice the amount per
student, compared to European countries.
EFTA BULLETIN 1-2006
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By Jon Vea, Chairman of
the EFTA Consultative
Committee, Confederation
of Norwegian Enterprise
A European country that does not participate in the
effort to be part of the most competitive knowledgebased economy in the world might be ignored by
investors. We must not forget that the reason for the
launching of the Lisbon Strategy was the recognition
in the 1990s that a growing gap in economic growth
and competitiveness was evolving between Europe and
the USA and Japan.
Actually, the EU's productivity grew faster than that of the
US for 5 consecutive decades, but since 1996 the EU has
been lagging behind the US every single year. Labour
productivity in the US is now growing twice as fast as in
Europe. As a consequence, Europe's relative level of
wealth has also started slipping. Europe is not investing
enough: investment has, on average, been growing only
by 1.7% per year compared to 5.4% per year in the US.
As concerns research and development (R&D), Europe
is not spending enough. The US is spending about
100 billion euros more on R&D than Europe. The EU
has only 25% of the number of patents per head,
compared to the situation in the US. Finally, 32% of
The last decade has also shown rapidly increasing
competition from emerging economies like China and
India. Production is being moved or outsourced
to China. At the same time, low-priced, mostly high
tech, manufactured products are flooding Europe. In
European countries, the impact of this development is
reduced inflation, but on the other hand, it creates an
increased need for the renewal and restructuring of
industries. Several branches are affected and the shortterm result in many countries has been low growth and
a severe loss of jobs. The common challenge now in
Europe is to create new growth and new robust jobs
through innovation and entrepreneurship.
These trends, if not addressed, will drag down the
expected growth rate for 2005 to slightly more than
1%, i.e., a third of the Lisbon objective. In 2004, the
average growth in the euro area was a meagre 2.2%,
while it grew by 4.3% in the US, 4.4% in Japan, 6.4%
in India and 9% in China.
There was therefore an obvious need to revamp the
Lisbon Strategy because the ability to deliver the
necessary results had become too slow and
complicated. The urgency of the Strategy had not been
understood. The Strategy had generated much paper
and talk, but little action. Responsibilities between the
national and the European level became blurred.
A weakness of the original Lisbon Strategy was
obviously that the Strategy tried to incorporate too many
good intentions at the same time. It tried to equally
As Chairman of the EFTA Consultative Committee, I
believe that reforms have to be undertaken even if in the
short-term they could have a certain negative impact on
employment and the daily lives of the citizens of
Europe. The consequences of delaying necessary
reforms on our economies will probably be much more
serious. This view is in accordance with what is
expressed by the High Level Group of Independent
Experts, chaired by Wim Kok, in its report, “Facing
the Challenge — The Lisbon strategy for growth
and employment”, published in November 2004:
“… the delivery of such sustainable economic growth,
however well supported with growth oriented
monetary and fiscal policies, comes with tough options
and choices. Resources have to be refocused and
vested interests challenged. Structural change is never
easy. Nonetheless, security is not achieved by resisting
or delaying reform. It is by embracing change that the
social and environmental results Europeans value can
be preserved and even improved.”
efficient manner, and this will create opportunities for
economies of scale which will lead to lower costs and
prices. There will be a general uplift in real incomes,
profits and innovation. Sustainable economic growth
has always been associated with market opening and
strong growth in trade.
The Internal Market has so far not lead to an opening of
the services markets in Europe. This sector has become
the most important sector as concerns GDP shares, but
transnational trade in services is still very limited. If the
new focus on trade in services is to be successful, a
substantial contribution in the efforts to achieve the
goals of the Lisbon Strategy needs to be made.
The smooth functioning of the financial market is a
cornerstone in the Internal Market and in promoting
economic performances. The financial services action
plan is to be fully implemented. The EEA countries
should then implement this in their national
legislations. With regard to the services directive,
opinions are currently strongly divided and the
Consultative Committee has not managed to agree on
a common position on this initiative.
Also, the European spring summit in March in 2005
underlined this and concluded that focus has to be on
growth and employment.
To succeed with this new approach, a much more
decisive effort has to be launched. I believe that the
new initiatives to really implement the vision of a
really free and open Internal Market is one
precondition for success. Facilitating the free
movement of persons, goods, services and capital in
the EEA of 28 nations, without internal frontiers, is a
crucial mechanism that will generate economic
growth. A well functioning Internal Market permits
those companies and sectors that have comparative
advantages to build on them and thereby grow. This
becomes a self-reinforcing trend. Resources will be
used by those most capable of using them in an
Liberalising trade in financial services has been an important goal of the
Lisbon Strategy.
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EFTA BULLETIN 1-2006
balance growth and competitiveness with safeguarding
employment and the environment. To safeguard the
European welfare model is a vision we all can share, but
there is a real risk that equal attention to all the elements
might dilute the overall objective of recreating growth
and competitiveness in Europe. And there is also a risk
that such an approach might complicate attempts to
launch the necessary reforms that can create an
environment for growth and innovation.
Europe's future depends on its ability to create and
nurture high-value, innovative and research-based
sectors capable of competing with the rest of the world.
To obtain this, there must be an increased focus on the
creation of a world class knowledge society. Research
and development are essential ingredients in the
creation of new commercially viable products and
processes. The framework conditions and initiatives to
promote research, development and commercialisation
of innovations from R&D are therefore of vital
importance in the process of value creation and future
job opportunities.
EFTA BULLETIN 1-2006
14
All EEA States should create conditions for more
public and private investment in education, research
and the knowledge-based economy, as these are
essential for medium and long-term growth. Fiscal and
regulatory incentives, as well as a competitive
environment, are necessary measures for encouraging
private spending in these priorities. Establishing
bridges between knowledge and the market place and
creating the right environment for innovation, is the
new competitiveness challenge. A more coordinated
and consistent approach is needed if European
businesses are to take advantage of new opportunities,
create jobs and strive towards growth.
Knowledge and expertise are important factors
affecting competitiveness and location of enterprises
in a global economy with heightened competition
and rapid technological change. Europe needs to
develop an innovation policy that will put in place
the correct framework conditions for innovation,
especially focusing on the commercialisation of
innovations. It is of vital importance to ensure that
venture capital instruments are in place to facilitate a
successful conversion of R&D and innovation to
businesses producing goods and services and hence
jobs and growth. Private venture capitalists are often
reluctant to invest in the early stages of innovative
businesses and not patient enough to wait for the
return of their investment. Here, all the EEA States
have an important role to play either by establishing
investment funds directly or making it more
attractive through incentives for private venture
capitalists to invest directly or via funds. If not, the
chain from innovation to the market will be broken.
In January 2001, the EFTA Consultative Committee
first called on the EFTA States to become as closely
linked to the EU Lisbon Strategy as possible, and to the
new mechanisms of cooperation, amongst others the
benchmarking initiative. The new method would entail
a shift from traditional regulations, directives and
decisions which, depending on their EFTA relevance,
would be incorporated into EEA legislation.
Now, having been excluded from the spring report, I
would urge the EEA EFTA States to try to initiate closer
cooperation with the European Commission. EU
Member States have on several occasions stated that the
USA's and Japan's practices are not always the best and
that the Union should compare itself with other possible
contributors. The EEA EFTA countries can demonstrate
best practices in several areas. An inclusion in the
assessment, in one or two areas, in the spring report
gives the advantage that progress on the policy
proposals and legislation in the Lisbon Strategy can be
closely connected to the development of indicators.
The Consultative Committee agrees that inclusion in
the assessment of all indicators would be difficult for
EFTA EEA members. A 'shadow report' would
probably be more useful, both as a tool for our
governments and as a way of showing examples of
best practices to the rest of the EEA members.
A EUROPEAN MODEL FOR
SUSTAINABLE GROWTH
Striking the right balance:
shaping a strong and social
Europe
When the EU leaders met in Lisbon, Portugal, in
March 2000, the European Council adopted a ten-year
programme aimed at revitalising growth and
sustainable development across the EU.
They noted the challenges Europe was facing from
globalisation, an ageing population, and the emergence
of a worldwide information society. They resolved that
economic and social reforms had to take place in the
context of “a positive strategy which combines
competitiveness and social cohesion”, and reaffirmed
that the European social model, with its developed
systems of social protection, must underpin the strategy.
At Lisbon 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 Council also adopted the open method of
coordination between Member States, at different levels
of decision-making, as a means to achieve these ends.
Ambitious Objectives
The Lisbon Strategy is about reaching ambitious
objectives in the economic, social and sustainability field
through a strategy of innovation and by investing in a
knowledge society. Lisbon is not about wage cuts or
competition on the basis of poor working conditions;
instead it is about economic, social and ecological policies
that are mutually strengthening. This is why the European
trade union movement led by the European Trade Union
Confederation (ETUC) welcomed the Lisbon Strategy
from the beginning and supported its aim.
Disappointing Results
In late 2005, it was clear that Europe would have great
difficulty, if any chance at all, in reaching the targets set
out by the Lisbon Strategy. This is also the conclusion
of the High Level Group of Independent Experts
chaired by Wim Kok. The Group's report, “Facing the
Challenge — The Lisbon strategy for growth and
employment”, published in November 2004, concluded
that the results had up to then been disappointing, and
that the EU was very unlikely to meet its 2010 goals,
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EFTA BULLETIN 1-2006
By Halldór Grönvold,
Vice-Chairman of the EFTA
Consultative Committee,
Icelandic Confederation
of Labour
This was to be achieved through a range of policies
including a sound macro economic policy mix that is
conducive to high growth, completing the Internal
Market, investing in people and combating social
exclusion. EU leaders pledged to aim for full employment
in Europe, in a society accommodating the personal
choices of women and men. The Lisbon Strategy sets
specific targets on economic growth, employment and
social cohesion that reflect the aim of the Strategy.
chiefly due to a lack of determined political action. It
highlighted an overloaded agenda, poor coordination,
and conflicting priorities. It also pointed out that
structural reform had become a codeword for
deregulation and weakening workers' rights, and noted
that policies should, instead, help workers to address
structural change by investing in skills and productivity,
instead of deregulating labour markets. The report also
underlined the vital importance of aggregate demand
management to exploit fully Europe's growth potential.
16
Looking Ahead
EFTA BULLETIN 1-2006
Furthermore, the Kok report stressed the importance of
sustaining the European social model, and advised against
copying the US system of minimal social welfare. The
High Level Group's proposals focused on the need to
communicate better with EU citizens, and obtain their
support for the reform process — something the
European trade union movement has repeatedly
emphasised. More importantly, the report stressed the role
that social dialogue and social partners, both at national
and European level, can play in delivering the Lisbon
objectives of high non-inflationary growth, more and
better jobs and strong social cohesion. These observations
made in the Kok report are of great importance as the
future of the Lisbon Strategy is on the line.
When the future of the Lisbon Strategy is debated, there
are two very different approaches. One calls for
deregulation, more labour market flexibility and less
security, lower taxes and cuts in the welfare system. On
the other hand are the policy and basic ideas of the trade
union movement arguing that Lisbon is and should be
about strengthening social cohesion and sustainability.
The movement also argues that Lisbon is about social
dialogue and social partnership as essential parts of
Europe's competitive advantage, and indispensable
means in reaching high growth and employment.
that is being pursued is not the right one. Too much
focus is put on deregulation and flexibility instead of
assisting workers to cope with change. Lisbon is also
not delivering because aggregate demand policies are
being distrusted and have been abandoned.
Put Social Europe at the heart of the Lisbon Strategy. It
is too facile to cry out for 'more reform' and then blame
governments for non-implementation. The reality is
that structural reform has become a code for
deregulation and unlimited flexibility, for weakening
workers' rights and lowering wages and for dismantling
the social welfare state. It should come as no surprise
that workers and the public at large are refusing an
agenda that is in fact leading to the destruction of the
European social model. For the Lisbon goals to be
delivered, massive investment needs to be made in
positive labour market institutions such as:
• active labour market policies with well functioning
employment services that provide guidance,
training and counselling;
• increased access to lifelong learning for all workers;
• improved social benefits regimes, supporting the
unemployed in their search for new jobs;
• policies to reconcile working and family life;
• policies to fight discrimination and gender gaps;
• initiatives to promote the participation of workers
in developing high performance work places;
• new forms of security for workers while maintaining
the principles of existing forms of workers' security.
The European trade union movement, led by the
European Trade Union Confederation (ETUC), has put
forward many constructive proposals aimed at giving
the Lisbon Strategy a clearer focus and making it better
equipped to meet its original purpose. Below are just a
few of these proposals.
By helping workers to accept and to be able to cope
with structural change, social Europe is not just a
financial or a regulatory burden. Instead, social Europe
is at the core of Europe's competitive advantage and
the growth and job creation process. This is in
particular true for investment in learning capacities in
general as it is essential for innovation and should
become a priority in innovation policies. Also, by
investing in learning for all workers, social cohesion
can be promoted and inequality can be avoided. This
corresponds to the original Lisbon idea: wages and
productivity should be brought in line with one
another, not by bringing down wages but by increasing
the skills and productivity of all workers.
It is important to learn the lessons from past experience
and to stop the mantra of unbalanced structural
reforms. The European economy is barely growing,
unemployment is edging up, labour productivity trends
are falling and workers feel more than ever insecure.
Lisbon is not delivering because the kind of reform
Sustainable development is a pillar for growth,
competitiveness and social cohesion. Like social
Europe, the environment is a source of competitive
advantage for Europe. Sustainable development
policies force the European economy to invest in those
sectors for which future world demand will grow most
• building a consensus between social partners on the
transition towards sustainable development in order
to manage potential tensions between environmental
and social goals;
• progressively including external costs in prices and
removing harmful subsidies;
• making the environment an integral part of European
industrial policy programmes;
• steering investments in European research and
development towards innovation in the areas of
energy efficiency, clean technologies and renewable
energies;
• making sure that the single European energy market
recognises that energy supply has to remain a
service of general interest with all consumers being
entitled to access;
• globalising sustainable development: the external
dimension of sustainable development including
the (non-) respect of core labour standards is an
issue for Europe's competitiveness and must be
addressed by the EU in its external policies.
The Lisbon Strategy must not be narrowed down to a
focus on competitiveness, a concept that needs to be
revised. The trade unions urge policy-makers to resist
the temptation of going for a 'quick economic fix'.
Achieving competitiveness and jobs on the basis of
social dumping is in flagrant contradiction with the
Lisbon model and will weaken the productive base and
the innovative capacity of the European economy in
the medium and long run. The Lisbon 'learning society'
will not be reached on the basis of poverty, insecurity
and sharp inequality.
industrial relations, collective bargaining and social
dialogue can alleviate workers' fears concerning
ongoing 'delocalisations' (relocations), and job
retrenchment, by helping workers to adjust to change
and to engage in the agenda of knowledge, and
innovation, instead of giving up their rights and
protection. This European framework, based on good
practice examples, should then be the basis for further
discussions and negotiations at the national level. Here,
synergies between national innovation bargaining and
the European Social Fund need to be explored.
What has the Lisbon Strategy to
do with the EEA EFTA States?
The Social Partners in EFTA have in the work of both
the EFTA and the EEA Consultative Committees
repeatedly stated that the ambitious goals of the Lisbon
Strategy should apply for the EEA EFTA States, as
they could have a positive economic, political and
social impact for the whole of Europe. This means that
the EEA EFTA States should commit themselves to the
goals of the Lisbon Strategy on the basis of the
constructive proposals listed above, aimed at giving
the Lisbon Strategy a clearer focus and making it better
equipped to meet its original purpose. The EEA EFTA
States should commit themselves fully to the open
method of coordination and take parallel actions in all
fields covered by the Lisbon Strategy, regardless of
each action's relevance from a legal point of view. And
the EEA EFTA States should also review structures for
the involvement of EFTA Social Partners supporting
the Lisbon Strategy, and establish a code of conduct for
setting minimum standards for the consultation of
social partners, specifically with regard to the national
follow-up of Lisbon initiatives.
Lisbon needs to be implemented with the involvement
of social partners. Lisbon will not be implemented if
policies are decided over the heads of workers.
Implementation implies 'ownership', which can only be
achieved on the basis of social dialogue. If there is a real
willingness to strengthen the European social dimension
as part of the Lisbon Process and to reform Europe's
macro economic policy framework, the European trade
union movement, led by ETUC, is prepared to explore
the possibility of a “European framework agreement for
innovation, social change and more and better jobs”,
within the common work programme of European
social partners. The aim is to foster a consensus between
European social partners as regards how the system of
Genetics research: the Lisbon Strategy focusses heavily on promoting
research and innovation as a means to stimulating growth and employment.
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EFTA BULLETIN 1-2006
('first mover' effect). Sustainable development policies
also improve present European competitiveness by
economising on expensive energy and materials input.
Sustainable development implies:
THE LISBON STRATEGY
IN BRIEF
What is the Lisbon Strategy?
EFTA BULLETIN 1-2006
18
The Lisbon Strategy is about getting from A to B, or
rather from B to A. At the end of the 20th century, the
EU's political leaders were very much in agreement
that Europe, in terms of economic performance and
competitiveness, scored a B in the global league table.
'Eurosclerosis' was a term coined to characterise
sluggish growth rates, especially in comparison to the
dynamic economies of major competitors, across the
Atlantic and in Asia. But the authors of the Lisbon
Strategy were not just concerned with the economy
and competitiveness. They were keen to ensure that
growth was combined with social cohesion and better
employment opportunities. In other words, the Lisbon
Strategy was about improving the lives of Europeans.
One year after the Lisbon Process was hatched, in March
2000, the European Council inserted a third pillar under
the Strategy. Not only was it important to promote
economic and social development in Europe, but it was
also necessary to ensure that this development could be
sustained for future generations, and without depleting
the resources and environment which fed the growth. So
by 2001, many people spoke of the three pillars of the
Lisbon Strategy, i.e., economic competitiveness, social
and employment policy, and sustainable development. In
the early stages of the Lisbon Strategy, the thinking was
that efforts needed to be addressed in all three pillars
simultaneously because they all supported the same goal:
“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.”
Seemingly unrelated topics were connected together
through this goal. For example, availability of
kindergarten places was viewed as a competitiveness
issue, because without sufficient access to childcare,
many highly qualified workers would be unable to
apply their skills in the workplace. The attempt to
apply such a holistic approach to social, economic
and sustainable development was ambitious. As the
Lisbon Process progressed, some had a problem
understanding what it actually was. They complained
that it encompassed so many policies that it lacked
focus and direction. There was confusion about
whether the Strategy was primarily social policy,
industrial policy or a drive to achieve environmental
sustainability. In the event of a conflict of interest, in
policy terms, people were uncertain what the
overarching objective was. Should, for example, the
goal to stimulate competitiveness precede the goal to
increase employment, or the goal to protect the
environment. Others argued that without a holistic
approach, European socio-economic values would be
sacrificed, and that any growth achieved would be
unsustainable and would also not be broad-based in
its benefit to society.
The Mid-term Review of the
Lisbon Strategy
At the midway point to 2010, the Lisbon Strategy has
undergone a comprehensive review, and has been
renamed the Strategy for Growth and Jobs.
This is the result of a report issued in November 2004,
produced by the 13-member High Level Group of
Independent Experts chaired by former Netherlands
Prime Minister, Wim Kok. The report, “Facing the
Challenge - The Lisbon strategy for growth and
employment”, identified the two major challenges
facing Europe as:
The Kok report therefore identified two major tasks for
the Lisbon Strategy: to promote long-term sustainable
growth and to promote growth in employment.
Whilst the Strategy has a more clearly defined focus, as
reflected by its new title, the EU is no less determined
to promote sustainable development or social cohesion.
As Margot Wallström's article explains, the Strategy for
Growth and Jobs clearly relates to social cohesion and
sustainable development. Today the Commission
refers 2 to the key areas of the Strategy as follows:
•
•
•
•
•
•
•
•
•
•
an effective Internal Market
free and fair trade
better regulation
improving European infrastructure
investing in research and development
boosting innovation
creating a strong industrial base
more and better jobs
an adaptable workforce
better education and skills
Another result of the mid-term review of the Lisbon
Strategy has been to improve governance of the Lisbon
Strategy not just at EU level, but to increase the onus
on Member States for achieving the goals of the
Strategy. For this reason, the European Council has
agreed that every Member State nominate a Ms or Mr
Lisbon. In each EU capital now, a key member of
government is coordinating the production of a plan to
tackle specific national challenges with regard to
promoting sustainable growth and employment. The
Strategy has gone over to a three-year cycle, starting in
2005 and running to 2008, when it will be renewed. In
June 2005 the Council adopted new Integrated
Guidelines for Growth and Jobs. These guidelines,
based on a Commission proposal, formed the basis for
the national reform programmes which Member States
issued in October 2005. At the end of January 2006, the
Commission issued a progress report and proposals
for an update of the Integrated Guidelines and
2
Recommendations. Various Council formations and
the European Parliament then submit their input for
discussions in the spring European Council. In June
2006 the Council will adopt updated Integrated
Guidelines and Recommendations, and in October
2006 Member States will submit implementation
reports. This cycle will continue until 2008, when a
more substantial review will take place.
Why is the Lisbon Strategy relevant for the EEA EFTA States?
Some people might think that the sole impact of the
EEA Agreement on the EEA EFTA States is to merely
extend the effect of EU Internal Market regulations to
Norway, Iceland and Liechtenstein. Although
harmonisation of the regulatory framework within the
European Economic Area is important for the good
functioning of the Internal Market, the EEA
Agreement provides for much more than this. Aside
from providing immensely valuable opportunities to
trade, work and reside throughout the largest single
market in the world, the EEA EFTA States are also
closely integrated into efforts to improve European
competitiveness, and to stimulate growth and
employment through the EEA Agreement.
Through the EEA Agreement, Iceland, Liechtenstein
and Norway have the opportunity to cooperate with the
EU on areas outside the four freedoms, i.e., research
and technological development, information services,
the environment, education training and youth, social
policy, consumer protection, small and medium-sized
enterprises, tourism, the audio-visual sector and civil
protection. In addition, the EEA EFTA States, in very
close cooperation with Eurostat, contribute to the
production and dissemination of coherent and
comparable statistical information for describing and
monitoring all relevant economic, social and
environmental aspects of the EEA (see Part II). When
the EU established the Lisbon Strategy in 2000, it drew
together many of these policy fields, or threads, and
tied them together. The EU did this because it had
come to the conclusion that practically all of these
policies had a serious impact on the competitiveness of
European enterprises, and on their ability to promote
sustainable growth, employment and better quality of
life for Europeans.
As posted on the European Union’s website (http://europa.eu.int/growthandjobs/index_en.htm) for the Strategy, 20.01.2006
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EFTA BULLETIN 1-2006
• the intensification of international competition,
particularly from Asia and the United States;
• the greying of Europe: declining birth rates and
rising life expectancies resulting in a much higher
proportion of the population at retirement age.
One can assume that the EU did not much think of
EFTA when launching the Lisbon Strategy. However,
the fact that the EEA Agreement provided for
cooperation in all of the policy areas mentioned above,
meant that Iceland, Liechtenstein and Norway were de
facto participating in the Strategy, and if not in the
formulation of the Strategy as a whole, than certainly
in some of the most important of its elements.
This edition of the EFTA Bulletin highlights how the
EFTA countries are involved in many projects that are
central to the Lisbon Strategy, or as it is called today,
the Strategy for Growth and Jobs.
The Open Method of Coordination
EFTA BULLETIN 1-2006
20
In order to monitor progress of the Strategy, the EU has
developed new working methodologies, such as the open
method of coordination (OMC). The EU also
commissioned Eurostat to develop a new series of
statistics called the structural indicators, specifically
designed to measure the effect of its policies (See Part II).
The open method of coordination works as follows:
• Politicians, through discussions in the Council of
Ministers, establish common policy goals. For
example, in March 2002, at the EU's spring summit
in Barcelona, EU Member States agreed that overall
spending on R&D and innovation in the Union
should be increased with the aim of approaching
3% of the GDP by 2010, and that 2/3 of this
investment should come from the private sector.
• Member States then work out how to achieve such
objectives through the establishment of national
policies or national action plans.
• The Member States agree to use common
benchmarks and indicators (very often in the form
of statistics) in order to determine whether progress
is being made.
• Results are monitored and evaluated, and those
countries that have achieved good results exchange
best practice with their colleagues from other
Member States. On this basis, the process begins a
new cycle.
The open method of coordination permits the EU to
promote sustainable economic and social progress in
areas that normally are not governed by the
Community approach. In other words, in areas where
the Community cannot legislate because Member
States control policy in those areas. The OMC was first
applied in 1997 in employment policy, and the
EU officially endorsed its use as a policy tool at the
Lisbon Summit in 2000. It has since been used in a
whole range of other policy areas, such as social
inclusion, pensions, immigration and asylum policy,
education and culture, research and innovation policy,
and efforts to improve the regulatory environment in
the EU. It is not possible to make an exhaustive list of
policy areas where the OMC is employed because on
close inspection one sees that the method is being
applied in most policy fields now.
In this edition of the Bulletin, there are case studies
which demonstrate that the EEA EFTA States can
participate in the open method of coordination, either
through formal access to EU committees and working
groups, or through informal arrangements that have
been organised jointly by EFTA and the EU. There
have also been occasions in which it has not been
possible for the EEA EFTA States to participate in the
open method of coordination. A reason for this is that
the EEA EFTA States have limited access to working
groups which meet under the auspices of the Council
of Ministers. It is often in such working groups that the
OMC is managed. Fortunately, officials from EU
Member States and the Commission are practically
always willing to provide the EEA EFTA side with
information on progress achieved in a policy field
managed through the open method of coordination.
HOW THE EEA EFTA
STATES PARTICIPATE IN
THE LISBON STRATEGY
•
•
•
•
•
the Internal Market
the knowledge society
employment policy
social inclusion
sustainable development
This by no means represents the sum of policy areas
that make up the Lisbon Strategy, or the sum of areas
in which the EEA EFTA States cooperate with the EU.
For example, the EEA EFTA States cooperate on a
range of other issues that are central to the Lisbon
Strategy, such as the development of efficient
infrastructure, and the development and security of
essential services and networks.
The Internal Market
A core element of the Lisbon Strategy and the effort to
promote growth and employment is the effort to
complete the Internal Market. In the absence of a
properly functioning single market, companies and
3
Internal Market Strategy, Priorities 2003-2006; Com (2003) 238, Brussels, 07.05.03
citizens in the European Economic Area will continue
to bear the costs of technical barriers to trade and
restricted movement of goods, services, capital and
persons to where they are most required.
Even though much progress has been made in the past
years since the 1992 Internal Market initiative, it is
hard to imagine a day when people will be able to say
the Internal Market is complete. One or two decades is
a very brief period of time in comparison with the
many preceding centuries in which national trade and
regulatory regimes were administered. Add to these
cultural traditions, languages, and different work and
education practices, and one quickly understands the
scale of the project to develop one market for all 28
member countries of the EEA.
On 7 May 2003, the European Commission published a
new Internal Market Strategy, to run from 2003 to
2006 3, and to which the EEA EFTA States provided
substantial input. The EEA EFTA States were very
active in supporting the new Internal Market Strategy.
Well before its launch they supplied input to the
Commission on the further development and completion
of the Internal Market. On 23 January 2003, the EEA
EFTA States sent input to the Commission calling for
action in 5 areas that they felt were essential for
improving the good functioning of the Internal Market:
• timely transposition of Internal Market legislation
throughout the EEA;
• a stronger commitment to mutual recognition, the
New Approach, and the use of Europe-wide productmarking systems;
• better regulation and particularly the need to think,
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EFTA BULLETIN 1-2006
As mentioned in the introduction, the EEA EFTA States
are linked to the Lisbon Strategy through the EEA
Agreement. Whilst they have not participated in the EU's
annual spring summits dedicated to steering the Strategy,
they have provided input to the EU in the run up to each
yearly summit since the Strategy was launched. They
also participate in very many of the programmes and
policies of the Strategy as a natural part of their
participation in the European Economic Area. In this
section, the Bulletin has selected the following policy
areas to illustrate how the EEA EFTA States are involved
in key policies of the Lisbon Strategy:
when drafting new legislation, of the impact of new
laws on small businesses, rather than relying on
exemptions for the latter;
• removal of barriers to cross-border provision of
services;
• promotion of problem-solving networks such as
SOLVIT that support the quick resolution of
problems arising from incorrect implementation of
Internal Market rules and regulations.
It is clear that the Commission was thinking along
similar lines. The same points were reflected in the
Commission's ten-point action plan for the new
Internal Market Strategy. It aimed at putting the
remaining nuts and bolts in place and tightening up the
existing machinery of the Market:
EFTA BULLETIN 1-2006
22
•
•
•
•
•
•
•
•
•
•
facilitating the free movement of goods
integrating services markets
ensuring high quality network industries
reducing the impact of tax obstacles
expanding procurement opportunities
improving conditions for business
meeting the demographic challenge
simplifying the regulatory environment
enforcing the rules
providing more and better information
The EEA EFTA States have continued to provide input
to the EU throughout the course of the Strategy. They
participate in meetings of the Internal Market Advisory
Committee (IMAC) to which all 28 countries of the
Internal Market, in addition to EU candidate countries,
are invited. The EEA EFTA States, as well as the EFTA
Consultative Committee, are at time of writing,
preparing to send input to a new Strategy which the
European Commission plans to launch in 2007.
Better Regulation
An essential part of the Internal Market Strategy, not to
mention the Strategy for Growth and Jobs, is the effort to
improve the regulatory environment in the Internal
Market. Because, through the EEA Agreement, the EEA
EFTA States incorporate some 300 EU acts into their legal
systems each year, they share an undeniable interest in the
success of this project. Six consecutive presidencies
(Irish, Dutch, Luxembourg, UK, Austrian and Finnish) of
the European Union issued a joint statement in December
2004 declaring their intention to advance regulatory
reform. The European Commission in autumn 2005
launched a new Strategy to reduce the regulatory burden
on businesses operating in the Internal Market.
The Commission's new approach has three pillars:
• Pending legislation: the Commission has screened
all proposals that have been pending in the Council
and the Parliament for a significant length of time:
in total 183. One third of the tabled proposals will
be withdrawn, because they do not meet the criteria
for better regulation.
• Simplification: the objective is to screen all existing
legislation with a view to modernisation, with
special emphasis on economic consequences. The
automotive, construction and waste sectors were
identified as priority sectors, where there is a large
accumulation of single market legislation, and
where there have been considerable complaints from
industry. Other sectors will follow. Unwieldy laws
will either be codified (arranging more
systematically related legislation), recast (e.g., made
more concise), withdrawn, or modified (the most
difficult option). Consumer and environmental
protection will not be sacrificed in this process.
• Stricter testing of new legislative proposals: the
Commission issued updated guidelines for impact
assessment in June 2005. The Commission is also
working on a common EU method to assess
administrative costs. Also, the Commission will
only table new initiatives for legislation if other
means (e.g., voluntary agreements) have been ruled
out. The presidency conclusions of the European
Council meeting of 15-16 December 2005
underlined the importance of reducing regulation
on businesses and citizens.
The EEA EFTA States have followed these initiatives
closely. They participate in a Better Regulation Experts
Group, which meets under the auspices of the EU's
Internal Market Advisory Committee. EFTA
representatives were also invited to the ministerial
level conference on better regulation hosted by the UK
presidency in Edinburgh in September 2005. Through
such forums, the EEA EFTA States are able to
participate in exchanges of best practice for reducing
red tape, and are introducing (or considering
introducing) innovative approaches used by other EEA
countries to measure and reduce the administrative
burden of regulations on business.
The EEA EFTA States have also discussed how they
can best influence the quality of regulations that are
later incorporated into the EEA Agreement. One of the
most important ways to do this is to send well qualified
and well prepared experts to the EU's experts groups
and comitology committees. The EEA EFTA States
have access to about 400 of these committees.
Better Regulation: EFTA discusses Decision-shaping
50 experts from Iceland, Norway and Liechtenstein discussed how the EEA EFTA States could improve
their participation in the EU's committees at a seminar that the EFTA Secretariat organised in November
2005. The Norwegian Chairmanship of the Standing Committee in the spring, and the Liechtenstein
Chairmanship in the autumn had requested the seminar. After explanations of the EU's committee system,
the Secretariat and veteran experts from the EEA EFTA States explained to their colleagues how to
influence decisions in EU committees through well prepared interventions, good networking practices,
thorough preparation in capitals, and effective follow-up. The European Commission also presented its
expectations of EEA EFTA experts.
The Knowledge Society
From the outset, the EU identified strength in
education, research and innovation as essential for
competing in the global economy in the 21st century.
After the mid-term review, the focus on promoting the
knowledge society is just as strong. This was the first
priority listed by the High Level Group (chaired by
Wim Kok) on the Lisbon Strategy in their report
“Facing the Challenge — the Lisbon strategy for
growth and employment”.
The EEA EFTA States also solidly supported
strengthening the knowledge society in their input to the
mid-term review. In each of their three letters to Bertie
Ahern, to Wim Kok and to Jean-Claude Juncker (see
annexes), the EEA EFTA States put this as a top priority
after stating the need to improve the functioning of the
Internal Market. The EEA EFTA States are strong in
quite a few knowledge-intensive areas such as the
biopharmaceuticals sector, aquaculture, marine biology,
environmental technology, and information and
communication technologies. They are at the cutting
edge of developments in energy, transport, construction
and financial services. In order to sustain their
competitive edge in these areas and to grow in other
high value-added/high technology sectors, the EEA
EFTA States, similarly to the EU, need to strengthen
education, research and innovation.
It is important for all countries in the European
Economic Area to connect the three components of the
knowledge triangle:
4
• research as the creation of knowledge
• education as the dissemination of knowledge
• and innovation as the application of knowledge
Through the EEA Agreement, there is solid participation
by Iceland, Liechtenstein and Norway in the EU's
strategy to build a strongly competitive knowledge
economy. Researchers from the EEA EFTA countries
participate in hundreds of research and development
projects supported by EU framework programmes. They
are involved in efforts to measure and improve the ability
to innovate, to apply and to commercialise new
technologies. And the EEA EFTA States also participate
actively in the education, training and youth programmes
of the EU, improving mobility, effectiveness and quality
of education and training in the European Economic
Area, as well as making these opportunities accessible to
all and open to the wider world 4.
Research
The EEA Agreement provides for full EEA EFTA
participation in the EU's non-nuclear research activities.
Currently the EEA EFTA States are participating in the
Sixth Framework Programme (FP6).
A major part of the budget is allocated to research in:
• life sciences, genomics and biotechnology for health
• information society technologies
• nano-technologies and nano-sciences, knowledgebased multifunctional materials, and new production
processes and devices
• aeronautics and space
• food quality and safety
• sustainable development, global change and
ecosystems, including sustainable energy systems
• citizens and governance in a knowledge-based
society
For more detailed information on participation by EEA EFTA States in EU programmes, see EFTA Bulletin:“Activities and Financial Contributions under the EEA
Agreement”, 2-2002, November at: http://secretariat.efta.int/Web/Publications/EFTABulletin/
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A seminar organised by the EFTA Secretariat at the end
of 2005 (see box below) was the first attempt to provide
training to EEA EFTA experts on how to positively
influence legislative proposals that later could become
laws in Iceland, Liechtenstein or Norway.
• other parts of the programme include support to
mobility (Marie Curie actions), research infrastructure and activities related to science and society
For the Seventh Framework Programme (FP7), which
will run from 2007 to 2013, the EEA EFTA States called
for specific support for basic science at the European
level, to complement nationally funded research. They
also said that they hoped to see continued efforts to
improve the mobility of researchers in Europe 5. Specific
areas that the EEA EFTA States suggested should
receive support were research on oceans and the marine
environment, and on space, security, petroleum and CO2
capture and storage. It is too early to know what the final
shape of FP7 will be, but the Commission has proposed
to place greater emphasis than in the past on industryrelevant research, in order to develop its role as a world
leader in certain sectors. It has also called for the
establishment of a European Research Council.
EFTA BULLETIN 1-2006
24
Another major Lisbon Strategy objective is to raise
overall research and development investment to 3%
of the GDP, 2/3 of which should come from the
business sector. In a few countries there has been
some progress, but on the whole it is widely
acknowledged that there have been insufficient
advances. The chart in Part II of this edition of the
Bulletin shows that R&D intensity in Iceland has
risen to above 3% since 2000. In 2003 (the latest
available figures) Norway, however, was just below
the EU average, in spite of an increase to 1.9% from
1.6% in 2000. Recently introduced tax incentives (in
2002 and 2003) to stimulate research investment by
the business sector may not have been in place long
enough to have a significant impact on these figures.
The EFTA countries participate in the EU's Scientific and
Technical Research Committee (CREST), which plays a
central role in determining research policy and managing
scientific cooperation in the European Economic Area.
The committee has employed and manages the open
method of coordination in the initiative to achieve the 3%
target for R&D investment, writes progress reports on
the effort, and provides guidelines for the development
of national policy measures and recommendations for
EU action. The fact that EFTA countries are involved in
this process means that they miss out on little
cooperation to strengthen the research fundament
supporting European competitiveness.
Education and Training
The capacity to conduct useful research, and the ability
to turn the results of this research into necessary and
marketable innovations, depends on the existence of a
well educated and highly skilled workforce. This applies
equally to the EFTA States as to the EU and other
countries competing in the global economy. As part of
the Lisbon Strategy (Education and Training 2010), the
EU has established the goals to reduce the proportion of
early school leavers to 10%; to increase the proportion of
graduates in mathematics, science and technology and to
improve gender balance; to raise upper secondary
education attainment levels to 85%; to reduce the share
of 15 year-olds underperforming in literacy standards,
and to raise adult participation in lifelong learning.
On these benchmarks, the EEA EFTA countries are
providing several European best practices: Norway is
number one in secondary education attainment (95.3% of
the population having completed upper secondary
Best Practice: Learning from EU Internet Education
in Iceland and Norway
Safer Internet plus is a 50 million euro 4-year programme designed to make the Internet safer for children.
The EEA Agreement provides for this programme, which runs from 2005 to 2008 and targets parents,
educators and children. It aims to mobilise talent in the public, private and voluntary sectors to prepare
hard-hitting safety campaigns. The open method of coordination (OMC) has been used since 2003 to
develop the programme and EU policies in the area.
SAFT (Safety, Awareness, Facts and Tools) is a Safer Internet Awareness project based in Denmark,
Iceland, Ireland, Norway and Sweden. The European coordinator of SAFT is the Norwegian Media
Authority. The Icelandic parents' organisation, Heimili, is an active partner. After several peer reviews and
evaluation exercises, SAFT has been selected as an example of best practice in the areas of media strategy
and Safer Internet education.
5
In their letter to Luxembourg Prime Minister Jean-Claude Juncker in the run up to the EU's 2005 spring summit (see annex)
Norwegian project manager, Elisabeth Staksrud, said the SAFT starting point is that children belong
online: “It is our job as responsible adults coming from government, industry, research and educational
sectors to make children's online experience as safe and fun as possible. We have benefited from the
various differences between the SAFT consortium partners”.
In Iceland, SAFT partner Home and School hosted a Safer Internet conference on the theme: "Children's right
to safety on the Internet." The conference was broadcast through online streaming. The Minister of Education
launched the SAFT education programme, which has been tested in a number of schools in Iceland.
During 2003-2004, TV, radio and newspapers in northern Europe gave massive attention to the SAFT
project. Widely broadcast TV documentaries and numerous front page newspaper stories and
commentaries publicised the results of the SAFT survey, which had interviewed 8 000 parents and children
about their Internet usage. The SAFT survey was the most extensive Safer Internet study ever done in
Europe. It provides vital information on how children actually use the Internet, and how they communicate
with their parents about it.
For further information on SAFT see www.saftonline.org and www.europa.eu.int/saferinternet
The EEA EFTA States are closely integrated into the
EU's initiatives to promote education and training and
educational mobility. They participate in programmes
such as Erasmus, which enables higher education
students to study abroad for between 3 and 12 months,
and Leonardo da Vinci which supports exchanges and
national policies regarding employability, lifelong
learning and social inclusion. The EEA EFTA States are
also involved in the Youth Programme supporting group
exchange and individual voluntary work; as well as the
Europass initiative, aimed at promoting transferability of
qualifications and skills across borders. Not only do the
EEA EFTA States have an opportunity to learn good
practices from other EEA countries but they also provide
important best practice. The SAFT project is a case in
point (see box above).
Innovation
Perhaps one of the biggest challenges for European
competitiveness is the difficulty that entrepreneurs
meet when they try to commercialise their
inventions. There are numerous stories of inventors
who have taken their innovations to other countries
and to foreign investors, because their own domestic
environment does not support the risky business of
bringing new products and services to market.
Entrepreneurs in the EFTA States share many of the
same hurdles as their colleagues in the EU when
trying to launch new products and services. The
European Innovation Scoreboard, which covers
25 EU Member States, Iceland, Norway and
Liechtenstein, Bulgaria, Romania, Turkey, the US
and Japan, shows that the performance of EFTA
countries is close to the EU average.
Shortly after the 2005 mid-term review, the European
Commission proposed the Competitiveness and
Innovation Programme (CIP) as a practical response to
the Lisbon objectives, with a budget of 4.2 billion euros.
The CIP will work in close cooperation with the
7 th Framework programme for Research and
Development, the lifelong learning programme and
cohesion activities. The CIP is primarily geared toward
small businesses and entrepreneurs. In its 3 specific
programmes, the CIP will promote:
• start-up and growth of SMEs: the Entrepreneurship
and Innovation Programme to promote ecoinnovation, and facilitate access to finance and
support investment in innovation activities;
• information and communication technologies: the ICT
Policy Support Programme, which will contribute to
competitiveness, growth and jobs by stimulating a
wider adoption and more efficient take up of ICT;
• the Intelligent Energy Europe Programme, which
will support energy efficiency, new and renewable
energy sources, and technological solutions to
reduce greenhouse gas emissions caused by the
transport sector.
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EFTA BULLETIN 1-2006
education), while Iceland is performing within the EEA
top 3 on the lifelong learning benchmark.
EFTA experts are now examining EEA EFTA
participation in the CIP.
Employment Policy
Whilst strength in research, education and innovation
is bound to provide a strong basis for employment,
employment policies themselves must contribute to,
and not detract from, the effort of promoting
sustainable growth and jobs. Even though it is an area
in which the EU's Member States retain control,
employment policy is a central feature of the Lisbon
Strategy; all the more so after the mid-term review.
EFTA BULLETIN 1-2006
26
Those who negotiated the EEA Agreement could not
foresee the advent of the Treaty of Amsterdam and the
establishment of a coordinated strategy for
employment. The EEA Agreement does not provide for
the participation of the EEA EFTA States in
committees constituted under the Council of Ministers.
Consequently, the EEA EFTA States do not participate
in meetings of the Employment Committee, even
though they do participate in the Internal Market
(which is amongst other things an internal labour
market). Despite this, and possibly in recognition of
the close integration achieved through the EEA
Agreement, the Employment Committee and the EEA
EFTA States have found a very constructive approach
to cooperating on employment policy.
Three times since the Lisbon Strategy was launched,
the Employment Committee of the EU and EFTA's
Working Group on the Free Movement of Workers and
Employment have met jointly to promote cooperation
on employment policy. Through these meetings both
sides have exchanged valuable experience of concrete
actions to reform their labour markets. For example, at
their most recent meeting in September 2004, both
Iceland and Norway related experiences of recent
efforts to improve their unemployment benefits
systems. In return, the EEA EFTA States received
briefings on the pros and cons of various labour market
reforms in Spain, Sweden and Malta, amongst others.
They were also invited to participate in discussions on
the role of childcare facilities in promoting flexibility
in the labour market.
Although formally the EEA Agreement does not
underpin this dialogue, it certainly provides a platform
for exchanges of this sort. Much of its strength resides in
this very fact. By thinking creatively, and by
establishing such opportunities for dialogue as described
above, it is hard to imagine how the EU and the EEA
EFTA States could fail to find ways to cooperate on
issues of mutual interest within the Lisbon Strategy.
Social Inclusion
The effort to build an inclusive labour market goes
hand in hand with efforts to eradicate poverty and to
promote social cohesion. When the Lisbon Strategy
was launched, EU Member States agreed that efforts to
eradicate social exclusion should be based on the open
method of coordination. A quick glance at the
structural indicators (see Part II) shows that Norway
and Iceland have the lowest long-term unemployment
rates. Fortunately this has not led to complacency.
Since 2002 the EEA EFTA States have participated in
the Community Action Programme on Combating
Social Exclusion. The programme relies heavily on the
open method of coordination and aims to improve
understanding of poverty and social exclusion through:
The European Employment Strategy
During the 1997 Jobs Summit in Luxembourg 6, the structures and procedures were established to bring
forward a European Employment Strategy (EES), which in many ways served as a prototype for the
Lisbon Strategy. The EES involves the production of employment guidelines, reviewed annually, and
adopted by the Council on the basis of a Commission proposal. These guidelines are then used by Member
States when drafting national employment action plans which are submitted to the Commission for review.
The Commission drafts an annual employment report which reviews progress and makes country-specific
recommendations to Member States. Throughout this process Member States exchange their experiences
and discuss the effectiveness of the various practices they have tried in order to improve the quality of
employment opportunities in their national labour markets. In this way, best practice is exchanged between
Member States. The whole process is supported by an Employment Committee, established under the
Council, with a mandate to promote coordination between Member States on employment and labour
market policies 7.
6
7
And following the insertion of an Employment Title into the Treaty Establishing the European Community (Amsterdam) in which Member States and the Community
committed themselves to developing a coordinated strategy for employment
The European Employment Strategy has been reviewed and adjusted a number of times since 1997. Most recently it has been even more closely integrated into the
Lisbon Strategy, as a central pillar in the Integrated Guidelines for Growth and Jobs
This action programme compliments EU social policy,
and in particular the activities of the European Social
Fund, the EU initiative EQUAL and a number of
action programmes which the EEA EFTA States
participate in such as the Programme to Combat
Discrimination, the Programme for Gender Equality,
and the Employment Incentive Measures.
National action plans and the joint reports that are
produced for these programmes describe and analyse a
wide range of measures in place or planned in the
Member States. The EEA EFTA States are free to
decide whether they produce an action plan 8. By
participating in the EU Programme on Social Exclusion
through the EEA Agreement, the EEA EFTA States
have taken an active part in the open method of
coordination in this field. Peer reviews are an important
part of the OMC, and Norway was in 2004 and 2005
involved in several peer reviews together with EU
Member States. Each peer country presents a comment
paper and participates in peer review meetings in a host
country. The results are later presented in the synthesis
reports, which are the most coherent and relevant
outputs of the whole peer review process.
Norway Coordinates
Strategies for Inclusion
This programme evaluates and disseminates
successful pathways to obtain and keep a job.
Strategies for Inclusion consists of 10
organisations from 10 countries, an evaluator and
a Norwegian network with 7 partners (including
the coordinating organisation). The partner
organisations are non-governmental organisations
(NGOs), public authorities, research institutes and
social partner organisations. The partners work
with different target groups: immigrants, the longterm unemployed, potential school dropouts, early
school leavers without formal qualifications,
women on low incomes and people with
disabilities and health problems.
8
9
Norway has produced an action plan against poverty.
www.afi-wri.no
Strategies for Inclusion's objectives are:
• to analyse good practice examples and
describe their relevance for inclusion
pathways;
• to identify important elements in the
inclusion pathways and illustrate them
through case stories;
• to describe examples for coordination within
pathways to employment;
• to link these outcomes to regional/national
programmes and European social policies.
The partnership identified 20 factors for success
with regard to inclusion pathways, and these are
described and illustrated in a handbook,
available through the Work Research Institute's
website 9.
Two other peer reviews in which EEA EFTA recently
participated were in:
• assistance to young people with special needs in
their transition from school to working life, hosted
by Austria together with Estonia, France, Greece,
Italy and Lithuania;
• basic social services in rural settlements, hosted by
Hungary with Finland, Greece, Lithuania, Portugal
and Slovenia.
Sustainable Development
The environment came in as a sort of straggler to the
Lisbon Strategy. It was introduced as the third pillar
at the Stockholm Spring Council in 2001. At the time
it was feared that the Strategy risked failure unless it
also tackled unsustainable consumption and
production trends. At the Gothenburg Summit later
that year EU leaders adopted the Sustainable
Development Strategy which was based on the idea
that economic growth, social cohesion and
environmental protection were mutually supportive
factors in the effort to improve the long-term quality
of life for Europeans.
Effective incorporation of environmental legislation,
and integration of environmental concerns into other
policies, have for the past decade been two of the
primary goals of the EU's Environment Action
Programmes. At the Cardiff Summit in June 1998, EU
Member States agreed to promote the integration of
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EFTA BULLETIN 1-2006
• indicators that allow for comparisons;
• exchanges on implemented policies and promotion of
mutual learning in the context of national action plans;
• developing the capacity of actors to address social
exclusion and poverty effectively;
• identifying innovative approaches, in particular by
promoting networking and dialogue with all
stakeholders.
EFTA BULLETIN 1-2006
28
environmental considerations into other policy
initiatives. This goal was consolidated in the EU's
Sustainable Development Strategy, launched in 2001.
to the creation of new jobs. It invited the Commission
and the Member States to implement the action plan
for eco-technology as a matter of urgency.
The EEA EFTA States have consistently stressed the
importance of environmental sustainability when
presenting input to the EU on the Lisbon Strategy, as
can be seen in the last three letters they sent to the EU
(see annex). They have stated that development of
and investment in eco-efficient technologies is
essential, and that it provides multiple benefits. Not
only will such investments reap long-term benefits to
the environment, but they will also result in growth
and jobs. Competitiveness in eco-innovations
and environmental services will generate export
opportunities for those who can provide them. Building
on already ongoing cooperation, the EEA EFTA States
have offered to share their experience in sectors where
they are competitive, such as marine research, clean
sustainable energy, pollution prevention, remediation
and clean production technologies.
The EEA EFTA States are very interested in the
environmental element of the Strategy for Growth and
Jobs. Through their cooperation on fields outside the four
freedoms (EEAArticle 78), and through their participation
in the Framework Programme, they are closely integrated
in much of the work that makes up the environmental
pillar of the Strategy. As the need to tackle environmental
sustainability becomes more and more pressing, the
channels for cooperation (both through the EEA
Agreement and through bilateral and other multilateral
means) will become more and more important.
The Environment in the Strategy
for Growth and Jobs
The Kok report focused on how environmental policies
could help to achieve core Lisbon Strategy objectives
of growth and jobs. It stated that well thought out
environmental policies provided opportunities for
innovation, created new markets, and increased
competitiveness through greater resource efficiency
and new investment opportunities. The Kok report
called for concerted support and follow up of the EU's
Environmental Technology Action Plan (launched in
January 2004), as well as national and local action
plans to green public procurement by the end of 2006.
The Kok report got mixed reactions over its treatment
of environmental issues. While some said that it
sacrificed jobs and the environment on the altar of
economic performance, others were happy with the
review saying that is took the environment seriously
and and welcomed its recommendations on ecoinnovation and support for green technologies.
At the Spring Council 2005, the EU leaders reiterated
the important contribution of environment policy to
growth and employment. In particular, it was pointed
out that the development of eco-technology, and the
sustainable management of natural resources, can lead
Choice and Commitment
This review of the EEA EFTA States' relationship to
various components of the Lisbon Stategy shows that
they have their own unique connection to the Strategy.
They have some commitments, through the EEA
Agreement, to participate in projects that are central to
Lisbon reforms, but these commitments were often
entered into before the Lisbon Strategy was launched,
because the EU and the EEA EFTA States decided that
it was in their mutual interest to cooperate on those
areas. At another level, the EEA EFTA States have
some freedom to decide the extent to which they
immerse themselves in the coordination of policies at a
European level.
Whether or not the EEA EFTA States decide to
participate in or lead peer reviews, or whether they
wish to share and receive best practice, is very much
decided by ministries in Oslo, Reykjavik and Vaduz.
The same goes for the decision to produce national
action plans that correspond with the plans the EU
Member States commit themselves to produce. In this
sense, the EEA Agreement provides the EEA EFTA
States a good degree of flexibility in their approach to
participating in Lisbon Strategy reforms. One could
perhaps sum this up by saying that the EEA EFTA
States decide themselves what level of investment they
will make in the Lisbon reform process, and they can
choose themselves in what areas they wish to focus
their attentions, according to their strengths and the
challenges that they face.
MEASURING UP —
STRUCTURAL INDICATORS
The Lisbon Council invited the Commission of the
European Union to draw up an annual spring report on
the progress of the Lisbon Strategy based on a set of
commonly agreed indicators covering the main policy
areas. These areas were social cohesion, employment,
economic reform and innovation. Later, the environment
and general economic background were identified and
adopted as policy areas.
The indicators are called structural indicators as they
describe structures and key aspects within each domain.
Structures are basic characteristics which do not in general
change rapidly, and structural indicators describe the more
long-term evolution in the society. For instance a shortterm indicator like the consumer price index has effect on
policy and the economy on a monthly basis, while labour
productivity is mainly measured on an annual basis and
policy actions are typically aimed at measures taking
years, for instance increasing R&D efforts.
The EFTA Statistical Adviser's Office has played an
active role as coordinator between the EFTA National
Statistical Institutes and Eurostat for the integration
and dissemination of EFTA data on an equal footing
with the EU countries.
In advance of the first spring report, there was a lack
of comparable and harmonised statistics in key policy
areas and there were some doubts as to whether the
ESS would be able to produce the 35 selected key
indicators. A long process of coordinating the data
collection needed for the indicators throughout
Europe began and with a specific focus on data
quality. Today, quality certificates which contain
assessments of comparability and accuracy exist for
almost each indicator. Eurostat is responsible for
compiling the data for the statistical annex in the
spring report.
The Shortlist Indicators
The indicators are selected in an interactive process.
The Commission proposes the set of indicators to the
Council, and the indicators reflect changes and
extensions in the different policy areas within the
Lisbon Strategy. Prior to the communication from the
Commission to the Council on the indicators, the
European Statistical System (ESS) was involved in the
development and validation of the indicators.
The number of indicators has more than tripled since
the first spring report in 2001, thus reflecting the
additional policy areas and the general need for more
indicators. Though some indicators have been deleted,
the total number of indicators was 117 in 2005. Due to
the expansion of the list, it was decided to establish a
shortlist of structural indicators in order to focus the
policy messages for the spring report and present a
clear picture of the Member States' progress.
The European statistical system is a network which
comprises the Statistical Office of the European
Communities (Eurostat) and the national statistical
institutes (NSIs), as well as other bodies that collect
official statistics in the 28 EEA Member States. The
Statistical Programme Committee coordinates the
ESS, and is chaired by Eurostat.
The shortlist consists of 14 indicators that reflect key
Lisbon targets. These 14 indicators were also selected
because they were relatively well-known and easy to
understand. To maintain stability, it was decided that the
shortlist indicators would remain unchanged for 3 years.
To ensure flexibility, the shortlist is supplemented by the
whole database of structural indicators.
29
EFTA BULLETIN 1-2006
Background
List of indicators on the shortlist:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Today, the structural indicator database contains data
for all the EU 25 countries, the candidate countries and
Iceland and Norway. For comparison, data for Japan
and the USA are added where available. Due to the size
of the country, Liechtenstein is in general not included
as data needed for many of the indicators are not
produced. It is foreseen that Switzerland will be
included in the database as soon as the bilateral
agreement on statistics between the European Union
and Switzerland comes into force in 2007.
The EFTA countries were not included in the spring
reports of the Commission in 2004 and 2005. The
following charts of shortlist indicators are based on
extractions from Eurostat's database on structural
indicators of May and June 2005. Data were
extracted for the most recent year with available
data. The data for year 2000 were also extracted for
reference. As a result, the data are in some cases
more up to date than in the statistical annex of the
Commission's spring report for 2005.
General Economic Background
Gross Domestic Product Per Capita
in Purchasing Power Standards
The gross domestic product (GDP) measures the
overall economic activity in a country and is defined as
the value of all goods and services produced less the
value of any goods and services used in production. It
is the most important indicator as it comprises
information from all sectors of the economy. In order
to eliminate the differences in price levels between
countries, the GDP is measured in purchasing power
standards (PPS). The average GDP per capita in PPS is
set to 100 for EU 25, meaning that a country with a
GDP per capita in Purchasing Power Standards (PPS)
(EU-25=100)
250
200
2000
2004
150
100
50
Norway
Ireland
Canada
Denmark
Austria
United Kingdom
Netherlands
Japan
Iceland
Belgium
Sweden
Finland
France
Germany
EU (15 countries)
Italy
EU (25 countries)
Spain
Greece
Cyprus
Slovenia
Portugal
Malta
Czech Republic
Hungary
Slovakia
Estonia
Lithuania
Poland
Croatia
Latvia
Romania
Bulgaria
Turkey
0
Luxembourg
EFTA BULLETIN 1-2006
30
GDP per capita in PPS
labour productivity
employment rate*
employment rate of older workers*
educational attainment (20-24 age group)*
research and development expenditure
comparative price levels
business investment
at risk-of-poverty rate*
long-term unemployment rate*
dispersion of regional employment rates*
greenhouse gas emissions
energy intensity of the economy
volume of freight transport
Source: Eurostat
* Indicators disaggregated by gender
To become the most competitive and dynamic economy
in the world, the EU has to narrow the gap between its
main competitors and itself. Although this indicator is
more suited for spatial comparisons than comparability
over time, the situation did not improve between 2000
and 2004, as shown in the chart below. Furthermore,
the enlargement from EU 15 to EU 25 implied a
considerable reduction in the EU average as all the new
countries were below the EU 15 average. The GDP per
capita in the USA was more than 50% higher than in the
EU 25 in 2004. Future enlargements will not improve
the situation as 3 of the candidate countries have
substantially lower GDP per capita than Latvia, the EU
Member State with the lowest GDP per capita.
Iceland and Norway were both well above the EU
average in 2004, but compared with 2000, the relative
strength of the economies declined marginally.
Norway had the second highest GDP per capita
among the EEA countries. One of the main factors
behind the high level of GDP in Norway is the
income from the oil and gas sector. Luxembourg had
the highest level of GDP per capita in 2004, which is
partly explained by the large number of commuters
from neighbouring countries. These workers
contribute to the country's GDP but are not
accounted for in the resident population. Iceland was
ranked 6th among the EEA countries in 2000 but fell
to 8th position in 2004 10.
Labour Productivity
per Person Employed
Productivity is a basic factor for the long-term
development of welfare in an economy and the general
economic growth. It is important both for increasing
employment and improving competitiveness, which
are the key targets in the renewed Lisbon Strategy.
Labour productivity per person employed is a
frequently used indicator for productivity and it is
measured by GDP in purchasing power standards per
person employed relative to the EU 25 (EU 25 = 100).
The GDP per person employed is intended to give an
overall impression of the productivity of national
economies expressed in relation to the EU 25 average.
The United States had the highest labour productivity
per person employed in 2004, and the gap to the EU
average had even increased from 2000. Iceland's
productivity was higher than the EU 25 average and
slightly above the EU 15 average in 2004.
Labour productivity per person employed — GDP in PPS per person
employed relative to EU-25 (EU-25=100)
180
160
140
2000
2004
120
100
80
60
40
20
Belgium
Norway
Ireland
France
Canada
Finland
United Kingdom
Italy
Iceland
EU (15 countries)
Sweden
Denmark
Netherlands
Austria
Spain
Japan
Germany
EU (25 countries)
Greece
Malta
Slovenia
Cyprus
Hungary
Portugal
Czech Republic
Slovakia
Poland
Estonia
Lithuania
Latvia
Turkey
Romania
Bulgaria
United States
0
Source: Eurostat
10
Preliminary figures for 2005 show a very strong growth rate of 6.2% in real GDP for Iceland, thus improving Iceland's ranking for that year
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EFTA BULLETIN 1-2006
higher index number has a higher GDP per capita in
PPS than the EU 25 average.
Although the productivity levels of all the new EU
Member States and the candidate countries were
below the EU average, all of them, except Malta and
Cyprus, improved their productivity to levels higher
than the EU average between 2000 and 2004.
employment rates were respectively 61, 58 and 52 % in
2004. Iceland had by far the highest employment rate
with 83% in 2004, followed by Denmark and Norway.
Norway experienced a reduction in the employment
rate from 2000 to 2004 by 2.5 percentage points.
One main objection to this indicator is that it does
not take into account the structure of employment
and therefore does not reflect for instance part-time
or standard working hours. Consequently, labour
productivity per hour worked could be a better
indicator in the sense that it reflects the actual hours
spent on production. This changes the picture
completely, particularly between a country like
Norway where a worker works relatively fewer hours
a year than for instance a worker in the USA for the
same length of time. When productivity is measured
per hour worked, Norway has by far the highest
productivity of all the countries, and 20% higher
than the USA.
Additionally, the Lisbon Council set a target to increase
the employment rate of women to over 60% by 2010
and with an intermediate target of 57% in 2005. In
2004, the employment rate for women was almost 56%
compared with 71% for men. The countries with the
highest employment rates for women were in Iceland
and Norway, respectively 79% and 72%.
Employment
Total Employment Rate
EFTA BULLETIN 1-2006
32
An important aspect of economic performance is
how the resources are utilised, and human capital
is society's main resource. Consequently, the
employment rate and its development are crucial
both for economic growth and social cohesion. The
Lisbon European Council stated that more and better
jobs should be created and the overall target was to
increase the employment rate to 70% by 2010. An
intermediate goal for the employment rate was to
reach 67% by January 2005. In addition, the
relaunching of the Lisbon Strategy by the European
Council in 2005, following the mid-term review of
the Strategy, has put even more importance and focus
on growth and employment.
The employment rate is calculated by dividing the
number of persons aged 15 to 64 in employment by
the total population of the same age group. The
employed population is defined as persons who
during a week did any work for pay or profit for at
least one hour, or were not working but had jobs
from which they were temporarily absent.
The EU employment rate was just above 63% in 2004,
only slightly over the 2000 rate of 62.5% and well
below the mid-term target of 67%. Only the UK, of the
major economies, had an employment rate over 70%.
In big countries like Spain, Italy and Poland, the
The differences in employment rates between the sexes
were smallest in Sweden, where the employment rates
for men were 3 percentage points higher than for
women. In Norway and Iceland, the differences
between men and women were respectively 6 and 8
percentage points. In general, the gender gap in
employment rates was lowest in the Nordic and Baltic
countries and was highest in some Mediterranean
countries. The gap was largest in Malta, Greece, Spain
and Italy and varied by 42 percentage points.
Total Employment Rate of
Older Workers
In light of the ageing population in Europe, it will be
essential to stimulate workers to work longer in order
to underpin economic growth and to counteract the
effects of the ageing population on the social security
systems.
The employment rate of older workers is defined as the
percentage of employed persons aged 55 to 64 of the
total population of the same age group.
A specific target of 50% inclusion of older workers by
2010 was set, and in 2004 the EU employment rate of
older workers was just above 40%. This represents an
increase from 2000, when the employment rate of
older workers was 37% in the EU.
Iceland had by far the highest employment rate of older
workers, with almost 82% of the labour force in
employment in the relevant age group. Sweden was
second with an employment rate of older workers of
69%, and was followed by Norway with 66% in 2004.
Although the employment rate of older workers
increased between 2000 and 2004 in almost all
countries, it was still rather low in a number of countries
— under 40% in 12 out of the 25 EU Member States.
Iceland
Norway
Denmark
Sweden
Netherlands
United Kingdom
Finland
Portugal
Austria
Slovenia
Estonia
Germany
Cyprus
Latvia
Lithuania
France
Ireland
Czech Republic
EU (25 countries)
Belgium
Romania
Slovakia
Hungary
Luxembourg
Bulgaria
Spain
Croatia
Poland
Greece
Italy
Malta
70
Source: Eurostat
Employment rates by sex in 2004
100
90
Women
Men
80
70
60
50
40
30
20
10
0
Source: Eurostat
EFTA BULLETIN 1-2006
Iceland
Denmark
Norway
Netherlands
Sweden
United Kingdom
Cyprus
Austria
Portugal
Finland
Ireland
Germany
Slovenia
Czech Republic
EU (25 countries)
France
Estonia
Latvia
Luxembourg
Lithuania
Spain
Belgium
Greece
Romania
Italy
Slovakia
Hungary
Croatia
Bulgaria
Malta
Poland
Total employment rate — employed persons aged 15-64 as a share of the
total population of the same age group
90
80
2000
2004
60
50
40
30
20
10
0
33
34
Iceland
Sweden
Norway
Denmark
Finland
Estonia
United Kingdom
Portugal
Latvia
Lithuania
France
Ireland
Netherlands
Romania
EU (25 countries)
Cyprus
Germany
Czech Republic
Hungary
Spain
Bulgaria
Greece
Luxembourg
Belgium
Croatia
Italy
Poland
Austria
Slovenia
Slovakia
Malta
EFTA BULLETIN 1-2006
Iceland
Sweden
Norway
Denmark
United Kingdom
Estonia
Finland
Cyprus
Portugal
Ireland
Latvia
Lithuania
Netherlands
Czech Republic
Spain
EU (25 countries)
Greece
Germany
France
Romania
Bulgaria
Hungary
Malta
Luxembourg
Italy
Belgium
Croatia
Slovenia
Austria
Slovakia
Poland
Total employment rate of older workers — employed persons aged 55-64 as
a share of the total population of the same age group
90
80
70
2000
2004
60
50
40
30
20
10
0
Source: Eurostat
Employment rates of older workers by sex 2004
100
90
Women
Men
80
70
60
50
40
30
20
10
0
Source: Eurostat
Innovation
Youth Education Attainment Level
In a knowledge-based economy, human resources are a
key element. Obviously, the population's level of
education is important for the development of human
capital and there are also strong indications for a
positive relation between education and economic
growth. Completed upper secondary school is in
general considered to be the minimum required
education for participation in the knowledge-based
society either for an entry into the labour market or for
further/higher education. However, the indicator does
not say anything about the quality of the education or
about how many continue with higher education.
The indicator "Youth education attainment level" is
defined as the share of young people between 20-24
years having attained at least upper secondary education
level of the total population of the same age group. A
target has been set to reach an attainment level of 85%
in the EU by 2010. In 2004 the EU youth education
attainment level was 76%, exactly the same as in 2000.
Norway had the highest level of youth educational
attainment among all the countries, i.e., over 95 %. This
was well ahead of the other Nordic countries. Iceland
attained the relatively low level of 51% 11.
In all countries with available data, apart from
Luxembourg, more young women than young men had
completed upper secondary education. For the EU, 79%
of the young women had attained this level of education
versus 74% of the men in 2004. In some countries, this
gender gap was quite large. For instance in Estonia and
Portugal, almost 20% more of the women had achieved
this level of education compared with the men. In
Iceland and Spain, the levels of education were around
15 percentage points higher for women than for men. In
Norway, the difference was just above 2%.
35
Youth education attainment level — total — percentage of the population
aged 20 to 24 having completed at least upper secondary education
120
2000
2004
100
80
60
40
20
Norway
Slovakia
Czech Republic
Croatia
Slovenia
Poland
Sweden
Lithuania
Austria
Ireland
Finland
Hungary
Estonia
Belgium
Greece
Cyprus
France
Latvia
United Kingdom
EU (25 countries)
Denmark
Bulgaria
Romania
Netherlands
Germany
Italy
Luxembourg
Spain
Iceland
Portugal
Malta
0
Source: Eurostat
For Luxembourg, the Netherlands, Croatia and Iceland, the latest figures are from 2003.
11
The definition of this indicator and variations in national school systems could be a reason for some of the differences between the countries. In Iceland, upper
secondary education lasts for 4 years and is generally completed around the age of 20. This partly explains the lowness of the figure for Iceland.
EFTA BULLETIN 1-2006
Split by sex, Iceland had the highest employment rate of
older workers both for women and men, respectively 76%
and 87% in 2004. Norway had the third highest
employment rate — behind Sweden — with 61% for
women and 71% for men. In the EU, only 31% of women
between 55 and 64 were working. For men, the
employment rate of older workers was 50% in the EU in
2004. Consequently, the gender gap in employment was
even larger for older workers than for all workers, both in
the EU and in the two EFTA countries Iceland and Norway.
Iceland
United States
Denmark
Germany
Belgium
France
Austria
EU (25 countries)
Norway
United Kingdom
Slovenia
Czech Republic
Italy
Ireland
Croatia
Spain
Hungary
Portugal
Estonia
Lithuania
Turkey
Greece
Poland
Slovakia
Bulgaria
Romania
Latvia
Cyprus
Sweden
Netherlands
Luxembourg
36
Finland
EFTA BULLETIN 1-2006
Norway
Slovenia
Estonia
Croatia
Poland
Slovakia
Czech Republic
Lithuania
Ireland
Finland
Sweden
Greece
Belgium
Austria
Hungary
Cyprus
Latvia
France
EU (25 countries)
Denmark
Bulgaria
Netherlands
United Kingdom
Romania
Germany
Italy
Spain
Luxembourg
Iceland
Portugal
Malta
Youth education attainment level by sex in 2004
120
Women
Men
100
80
60
40
20
0
Source: Eurostat
For Luxembourg, the Netherlands, Croatia and Iceland the latest figures are from 2003.
Gross domestic expenditure on R&D (GERD) — as a percentage of GDP
4,5
4
3,5
3
2000
2003
2,5
2
1,5
1
0,5
0
Source: Eurostat
For Greece, Portugal and Norway, there were no figures for 2000. The data are from 1999.
For Sweden, the only figures available are for 2001.
For Italy, UK, Croatia, Turkey, Iceland and Japan, the latest figures are from 2002.
Research and Development
Research and development (R&D) is a key factor for
growth in a knowledge-based economy and consequently
at the heart of the Lisbon Strategy. The R&D intensity is
measured as gross domestic expenditure on R&D as a
percentage of the GDP (see graph at bottom of page 36).
The R&D expenditure expresses efforts to create new
knowledge, which is important for developing new and
improved products and processes. Research conducted by
both the public and private sectors is accounted for
through this indicator. R&D surveys are based on the
harmonised methodology described in the Frascati
manual. R&D is defined as the creative work undertaken
on a systematic basis in order to increase the stock of
knowledge, including knowledge of man, culture and
society and the use of this stock of knowledge to devise
new applications.
R&D is considered as so important that the Barcelona
European Council set a distinct target to increase its
intensity to 3% by 2010. In 2003, the EU expenditure
on R&D was just below 2% of the EU GDP 12. In fact
only 2 EU Member States — Finland and Sweden —
had levels of R&D above 3%. Iceland also had a high
R&D intensity with over 3%, which was up compared
with the figures for 2000. Norway's R&D intensity was
still below the EU's, in spite of an increase from 1.6%
in 1999 to 1.9% in 2003. It is worthwhile to notice that
both Japan and the USA had R&D intensities well
above the EU's, and that the US figures did not include
capital expenditure.
Economic Reform
Comparative Price Levels
The comparative price levels are measured as the
ratio between the purchasing power parities (PPPs)
and the market exchange rates for each country. The
PPP is a currency converter which aims at adjusting
for different price levels in the countries. The price
level index is measured in relation to the EU
average (EU 25 = 100). A country is relatively more
expensive or cheaper than the EU average if the index
is higher or lower than 100.
Through more efficient and integrated markets
initiating more competition and trade, the price levels in
the countries ought to converge. However, one observes
a correlation between high income levels and high price
levels. Norway and Iceland had the highest and the
third highest price level of the EEA countries both in
2000 and 2003. The fall in relative price levels in Japan
and the USA is partly due to a depreciation of the
currency, while for Norway and Iceland, the general
price level has increased or remained at a high level.
EFTA BULLETIN 1-2006
Comparative price levels of final consumption
by private households including indirect taxes (EU-25=100)
250
200
2000
2003
150
100
50
Norway
Denmark
Japan
Iceland
Ireland
Finland
Sweden
Germany
France
Austria
Netherlands
Luxembourg
EU (15 countries)
Belgium
United Kingdom
Italy
United States
EU (25 countries)
Cyprus
Spain
Greece
Portugal
Slovenia
Malta
Estonia
Hungary
Czech Republic
Latvia
Turkey
Lithuania
Poland
Slovakia
Bulgaria
Romania
0
Source: Eurostat
12
Preliminary data for 2004 show a stagnation of the EU 25 R&D intensity at 1.9%.
37
Business Investment
Capital is a key production factor and through
investment capital is produced. Consequently, capital
formation is vital for future production, and investments
are important for economic growth. The indicator
business investment is defined as the gross fixed capital
formation by the private sector as a percentage of GDP.
The gross fixed capital formation includes acquisitions
by the private sector less disposals of fixed assets.
Iceland had the lowest level of business investment as a
share of GDP in 2004 with just above 12%. Sweden had
a marginally higher share of business investments. Also,
business investment in Norway was rather low in 2004,
i.e., around 15% of GDP. This was 2 percentage points
below the business investment in the EU, which was
17% in 2004. Estonia had the highest share of private
sector business investment with 25% of GDP in 2004.
Social Cohesion
At-risk-of-poverty Rate after Social
Transfers
One of the EU's main policy objectives is to fight
poverty and reduce social exclusion. The Lisbon
The at risk-of-poverty rate after social transfers is an
indicator of poverty. This indicator measures the share
of persons with a disposable income below the risk-ofpoverty threshold, i.e., 60% of the national median
disposable income after social transfers. Consequently,
the indicator says more about the income distribution
and relative poverty within a country than between
countries. Comparability is limited between countries
because only a relative threshold is used, there being
no common absolute one.
In Turkey, one quarter of persons had less than 60% of
the median disposable income after social transfers in
2003. In Greece, Slovakia and Ireland, more than 20%
of the persons were below the at-risk-of-poverty
threshold. However, the median disposable income in a
high income country like Ireland is higher than for
instance that in Turkey or Slovakia. The indicator
reflects more biases in the distribution of income within
a country than absolute poverty between countries.
In contrast to its neighbour Slovakia, only 8% of
persons in the Czech Republic were below the poverty
Business investment — gross fixed capital formation by the private sector
as a percentage of GDP
30
25
2000
2004
20
15
10
5
0
Estonia
Spain
Latvia
Czech Republic
Slovakia
Slovenia
Greece
Austria
Ireland
Portugal
Hungary
Lithuania
Denmark
Netherlands
EU (25 countries)
Belgium
Italy
Malta
France
Germany
Finland
Norway
United Kingdom
Poland
Cyprus
Luxembourg
Sweden
Iceland
Canada
Romania
Bulgaria
EFTA BULLETIN 1-2006
38
targets focus not only on growth and competitiveness
but also on social cohesion, which is not always linked
to the general economic welfare of a country.
Source: Eurostat and Statistics Iceland
At-risk-of-poverty rate after social transfers — total — the share of persons
with an equivalised disposable income below the at-risk-of-poverty threshold
30
25
2003
20
15
10
5
Norway
Czech Republic
Slovenia
Hungary
Luxembourg
Finland
Sweden
Netherlands
France
Bulgaria
Denmark
Cyprus
Austria
Germany
Latvia
Belgium
Poland
Lithuania
Croatia
Romania
Estonia
United Kingdom
Italy
Portugal
Spain
Ireland
Slovakia
Turkey
Greece
0
Source: Eurostat
For France, Latvia, Lithuania, Hungary, the Netherlands, Poland, Slovenia, Sweden, Bulgaria, Romania and Turkey, the data are for 2002.
For Italy the data are for 2001.
No data for Iceland were available for this indicator.
EFTA BULLETIN 1-2006
39
At-risk-of-poverty rate after social transfers by sex 2003
30
Women
Men
25
20
15
10
5
Source: Eurostat
For France, Latvia, Lithuania, Hungary, the Netherlands, Poland, Slovenia, Sweden, Bulgaria, Romania and Turkey the data are for 2002.
For Italy the data are for 2001.
No data for Iceland were available for this indicator.
The data for this indicator for the years 2002 or 2003 for Portugal are not split between the sexes.
Hungary
Czech Republic
Norway
Slovenia
Luxembourg
Sweden
Finland
Denmark
Netherlands
France
Austria
Bulgaria
Latvia
Belgium
Poland
Germany
Cyprus
Lithuania
Romania
Croatia
Estonia
United Kingdom
Spain
Italy
Slovakia
Ireland
Turkey
Greece
0
threshold. In Norway, 10% of persons were in the atrisk-of-poverty group.
that resources are insufficiently utilised and that
there is a risk that people become permanently
excluded from the active population.
In almost all the countries with comparable data, the
women were at greater risk of poverty than the men.
The only exception was Poland, where 17% of men's
income was lower than the threshold, compared with
16% of women. Several countries had only marginal
differences between the sexes. The inequality with
respect to poverty was largest in Germany, where 17%
of women were at risk of poverty versus 11% of men.
Norway had also a relatively higher share of women
than men at-risk-of-poverty.
The long-term unemployment rate was lowest in
Iceland and in Norway, respectively 0.4% and 0.8% in
2004. However, this represented an increase from the
low rates in 2000 when 0.2% and 0.3% of the active
population in Iceland and Norway were unemployed
in the long-term. Compared to the situation in the EU,
where the average long-term unemployment rate was
just over 4% in 2004, the two EEA EFTA countries
had remarkably low rates in spite of the increase
between 2000 and 2004. Slovakia and Poland had the
highest rates with over 10% in both countries.
Total Long-term
Unemployment Rate
Total long-term unemployment rate — long-term unemployed (12 months
and more) as a percentage of the total active population
14
12
2000
2004
10
8
6
4
2
Iceland
Norway
Luxembourg
Austria
United Kingdom
Sweden
Denmark
Netherlands
Ireland
Finland
Hungary
Slovenia
Portugal
Spain
Source: Eurostat and calculations based on data from the Directorate of Labour of Iceland
Malta
Belgium
Italy
France
EU (25 countries)
Romania
Latvia
Czech Republic
Estonia
Germany
Greece
Lithuania
Poland
Bulgaria
0
Slovakia
EFTA BULLETIN 1-2006
40
The long-term unemployment rates for women in 2004
were lowest in Iceland with 0.5%, followed by
Norway and the UK with 0.6% in both countries. In
fact, the long-term unemployment rates for men were
higher than for women in Norway and the UK. In
Iceland, the rate was slightly higher for women than
for men. Generally, long-term unemployment rates
were rather similar between the sexes in Europe, and
only in some countries like Greece, Italy and Spain
were the rates clearly higher for women.
Employment is considered to be important for
social inclusion. Consequently, unemployment, in
particular long-term unemployment, has negative
impacts on social cohesion and also on poverty. A
long-term unemployed person is defined as a person
who is actively seeking work but has been
unemployed for 12 months or more. Long-term
unemployment as a share of the total active
population gives the total long-term unemployment
rate. A high long-term unemployment rate indicates
Long-term unemployment rate by sex in 2004
14
12
Women
Men
10
8
6
4
2
Iceland
Source: Eurostat and calculations based on data from the Directorate of Labour of Iceland
Dispersion of Regional
Employment Rates
In order to increase employment and ensure social
cohesion, it is important to reduce the regional
imbalances in employment. It is also a priority to
stimulate employment and fight unemployment in
deprived regions.
The dispersion of regional employment rates is an
indicator that aims at measuring the variation in
employment between the regions. The employment rate in
a region is the share of employed persons aged 15-64 of
the population in the same age group. The dispersion of
regional employment rates is zero when the employment
rates in all regions are identical. If the differences among
the regions increase, so will the indicator.
The regions are defined at level 2 of the classification
of territorial units for statistics (NUTS). At this rather
aggregated level, the indicator is not applicable for
Denmark, Ireland, Luxembourg, Cyprus, Estonia,
Latvia, Lithuania, Malta, Slovenia and Iceland because
these countries comprise only one or two NUTS level
2 regions. Nevertheless, the employment rates of these
countries are used to compute the dispersion of
regional employment rates for the EU 25. The regions
at level 2 are rather large. For instance for Norway,
counties are combined to make the NUTS 2 regions. At
this level there are 7 regions in Norway.
The dispersion of employment rates in 2003 was rather
substantial across Europe, and by far highest in Italy.
At the other end of the scale was Norway with the
smallest regional differences in employment the same
year. The dispersion had even decreased from the
rather low level in 2000.
In all the countries apart from Germany, the
differences in employment rates between the regions
were in 2003 higher for women than for men.
This difference was particularly large within Italy,
where the variation was 3 times as high for women as
for men measured by the coefficient of variation.
Norway had the lowest employment dispersion rate for
women and the difference between men and women
was also among the lowest ones in this respect.
41
EFTA BULLETIN 1-2006
Norway
Ireland
United Kingdom
Sweden
Luxembourg
Austria
Denmark
Finland
Netherlands
Malta
Hungary
Slovenia
Portugal
Romania
Estonia
Belgium
Latvia
France
EU (25 countries)
Czech Republic
Italy
Spain
Lithuania
Bulgaria
Germany
Poland
Greece
Slovakia
0
Source: Eurostat
Norway
Netherlands
30
Norway
Netherlands
Austria
Romania
Greece
Portugal
Sweden
France
Czech Republic
Germany
United Kingdom
Finland
Bulgaria
Poland
Slovakia
Belgium
Hungary
Spain
EU (25 countries)
Italy
16
Austria
Sweden
Germany
Romania
Portugal
Finland
France
United Kingdom
Greece
Czech Republic
Poland
Bulgaria
Slovakia
Belgium
Hungary
Spain
EU (25 countries)
42
Italy
EFTA BULLETIN 1-2006
Dispersion of regional employment rates — total — coefficient of variation of employment rates (of the age group 15-64) across regions (NUTS 2 level) within countries
20
18
2000
2003
14
12
10
8
6
4
2
0
Source: Eurostat
Dispersion of regional employment rates by sex 2003
35
Women
Men
25
20
15
10
5
0
Emissions of greenhouse gases are measured in
aggregated CO2 equivalents and weighted by their global
warming potentials. If the Kyoto target is not fulfilled, the
emissions exceed the target value. A negative percentage
indicates the distance to the target. However, 10 out of 23
EU countries with defined targets fulfilled the aims in
2002. Several of the less developed economies in Europe
have targets which allow for considerable growth not only
in the economy but also in the emissions.
The Environment
Total Greenhouse Gas Emissions
Emissions of greenhouse gases pollute the environment
and contribute to climatic change, specifically potential
global warming. The negative impacts of the emissions
of such gases on the environment are so severe that they
could affect the main targets of the Lisbon Process,
namely sustainable growth. Emissions have effect
locally, regionally and globally, and consequently
reducing them calls for international cooperation.
In 2002, the countries that were farthest from the
Kyoto targets were Spain, Austria and Denmark. Also,
the USA and Japan's emissions have to be reduced
according to the objectives in the Protocol. The USA
has not signed the Kyoto Protocol. Norway's emissions
were higher than the target in 2002, while Iceland's
were considerably lower.
The Kyoto Protocol quantifies the commitments of
industrialised countries to reduce their greenhouse gas
emissions. The countries are to individually or jointly
ensure that their aggregate emissions do not exceed
their assigned amounts.
The EU has agreed to an 8% reduction in the emissions
of its greenhouse gases by 2008-2012, compared to the
base year 1990. Furthermore, reductions for each of
the EU 15 countries have been agreed under the EU
Burden Sharing Agreement, which allows some
countries to increase emissions, provided these are
offset by reductions in other Member States.
EFTA BULLETIN 1-2006
43
France
Croatia
United Kingdom
Iceland
Slovakia
Sweden
10
Czech Republic
20
Poland
30
Hungary
40
Estonia
Lithuania
Romania
50
Bulgaria
60
Latvia
Distance to Kyoto targets for greenhouse gas emissions in 2002
-50
Source: Eurostat
Austria
Spain
Italy
Ireland
Japan
Luxembourg
Finland
Belgium
Norway
Slovenia
United States
Denmark
-40
Netherlands
-30
Germany
-20
EU (15 countries)
-10
Greece
0
Energy Intensity of the Economy
The consumption and production of energy very often
imply negative effects on the environment. It is the EU's
- and also the Kyoto Protocol's — to enhance energy
efficiency in order to achieve sustainable growth.
Energy intensity is measured as gross inland
consumption of energy divided by the GDP at constant
prices. The consumption of energy is calculated in
kilograms of oil equivalent and includes coal, electricity,
oil, natural gas and renewable energy sources.
Several countries with low GDP levels had the highest
energy intensities. Bulgaria had the highest
consumption of energy relative to the GDP, i.e., the
least efficient energy use. Norway was relatively
energy-efficient according to this indictor, and
consumption was below the EU average. Iceland had a
relatively high consumption of energy. However, this
rough indicator, as mentioned earlier, takes neither the
climatic nor industry structure into account.
The ratio between the gross inland consumption of
energy and gross domestic product provides a rough
indicator of the overall energy efficiency. However, it
does not take into account differences in the countries'
industry structures, climatic or the actual negative
effects of the consumption of different energy types.
Energy intensity of the economy — gross inland consumption of energy divided by
GDP (at constant prices,1995=100) — kgoe (kilogram of oil equivalent) per 1000 euro
2000
2000
2002
1800
1600
1400
1200
1000
800
600
400
200
0
Bulgaria
Lithuania
Romania
Estonia
Slovakia
Czech Republic
Latvia
Poland
Hungary
Ireland
Turkey
Slovenia
United States
Cyprus
Finland
Malta
Greece
Portugal
Spain
Sweden
United Kingdom
Belgium
EU (25 countries)
Netherlands
Luxembourg
France
Norway
Italy
Germany
Ireland
Austria
Denmark
Japan
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Source: Eurostat
Volume of Freight Transport
Economic growth will often result in the increased
transport of goods, and more transport has an effect on
the environment. The indicator volume of freight
transport relative to GDP is defined as the ratio
between inland transport in tonne-km and the GDP in
constant prices. Transport by road, rail and inland
waterways is included in the indicator.
The indicator does not take geographical or industry
structure into account, and it does not distinguish
between more or less pollutive means of transport.
Both Norway and Iceland were above the EU average
in terms of freight transport relative to the GDP in
2003. Both countries experienced a small increase
compared with 2000.
Volume of freight transport relative to GDP — index of inland freight transport volume relative to GDP; measured in tonne-km/GDP (in constant 1995 euro), 1995=100
200
180
2000
2003
160
140
120
100
80
60
40
20
Estonia
Ireland
Spain
Latvia
Norway
Greece
Lithuania
Austria
Portugal
Luxembourg
Germany
Iceland
Turkey
EU (25 countries)
Cyprus
Czech Republic
Romania
Belgium
France
Italy
Slovenia
Finland
Sweden
Netherlands
Hungary
Denmark
United Kingdom
Poland
Slovakia
Bulgaria
Japan
United States
0
Source: Eurostat
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ANNEX
Letters from the EEA EFTA States to the EU
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The European Free Trade Association (EFTA) is an international organisation comprising four states: Iceland, Liechtenstein, Norway and
Switzerland, which have eliminated barriers amongst themselves for industrial products but do not apply a common external tariff. Apart
from Switzerland, the EFTA States base their relations with the European Union on the European Economic Area Agreement allowing for
their participation in the single market.Switzerland’s relations with the EU are based on bilateral agreements.The EFTA States have developed an extensive network of free trade agreements with non-EU countries and regional groupings in Europe and beyond.EFTA has headquarters in Geneva and offices in Brussels and Luxembourg.
The EFTA Bulletin is intended to serve as a platform for discussion and debate on topics of relevance to European integration as well as the
multilateral trading system constantly being re-shaped and transformed by the twin forces of globalisation and interdependence. In this
endeavour, the EFTA Bulletin draws on the experience and expertise of academics, professionals and policy-makers alike.
ISSN 0258-3860
Previous Issues:
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EFTA and EU Enlargement, 1-2004 September
The European Economic Area and the Internal Market – Towards 10 Years, 1-2003 June
Activities and Financial Contributions under the EEA Agreement, 2-2002 November
The European Economic Area: Decision Shaping and Participation in Committees, 1-2002 June
Opportunities in an Enlarged Europe:EFTA Parliamentary Committee Conference on EFTA-EU Relations and Enlargement,2-2001 November
The Updated EFTA Convention, 1-2001 September
New Economy – New Borders: EFTA Consultative Committee Business Workshop, 3-2000 December
Special Relationship: EFTA and the European Community as Actors in European Free Trade, 2-2000 October
EFTA: 40 Years of Free Trade, 1-2000 September