Document (5256/00) from the Portuguese
Presidency of the Council of the European Union
Lisbon, January 2000
"Employment, economic reforms and social cohesiontowards
a Europe based on innovation and knowledge"
1. COORDINATING EFFORTS TO ACHIEVE A NEW STRATEGIC
1.1. A new strategic goal
Europe, as it enters the new millennium, demands
a new vision and a long-term strategy. While retaining all that
is best in its traditions and values, Europe must develop as a
civilisation which bases its economic and social prosperity on
the advancement of knowledge, cultural diversity and cohesion
and which plays an active role in promoting a more balanced, peaceful
and harmonious world order.
A new strategic goal needs to be defined for the
next ten years: to make the European Union the world's most dynamic
and competitive area, based on innovation and knowledge, able
to boost economic growth levels with more and better jobs and
greater social cohesion.
1.2. An affirmative strategy
A new period is beginning in the process of European
construction. The European Union is gaining substance economically,
socially and politically. Initiatives in the area of common foreign
and security policy and a common area of freedom, security and
justice add to the great achievements of the single market and
the single currency. The enlargement process too is now in full
swing. These are major historical milestones in the affirmation
of the European project.
Despite the economic recovery, serious social problems
continue to exist, such as unemployment, social exclusion and
the risks of future imbalance in social security systems - which
are also the reflection of deeper-seated structural difficulties
calling for bold reform. These difficulties are heightened by
the unavoidable challenges posed by globalisation, technological
change and an ageing population.
The economic and social strategy of the European
Union must not be devised solely as a defensive response to these
challenges but as an affirmative and creative response to the
new opportunities which are emerging. This means redefining Europe's
role in the world economy, building a new competitive platform,
opening the way for new and better jobs and organising this movement
with social cohesion.
It is essential that we regain the conditions
of full employment geared to the needs of the emerging society,
more open to the options of European women and men. This calls
for the creation of a growth dynamic ensuring a sustained average
annual rate of at least 3% for the whole of the European Union.
1.3. Towards a new paradigm
Macro-economic stability is fundamental to consolidate
the euro and ensure sustainable growth. It is also essential now
to foster a culture of dynamism and entrepreneurship and a culture
of strengthened social cohesion. The current improved economic
situation is the right time for the necessary reforms to be undertaken.
Throughout the world nations seek to progress while
maintaining the difficult balance between openness, diversity
and cohesion. In the context of globalisation companies are increasingly
defining their strategies in world terms and capital movements
are increasingly being controlled by the major financial centres
according to the level of national and business competitiveness.
This is increasingly dependent on the capacity to provide a swift
and innovative response to the more individual needs of the market,
and calls for the generation and dissemination of a vast store
of knowledge, made possible by the ongoing revolution in the field
of information and communications technology.
A new paradigm is emerging, encompassing both a technological
revolution and a major change in the social exchange of knowledge
affecting all institutions, from schools to businesses and from
public services to the media. The transition to an innovation
and knowledge-based society and economy is under way.
Innovation and knowledge are increasingly becoming
the decisive source of wealth and also the main source of difference
between nations, businesses and people. Fresh opportunities for
redefining European competitiveness and creating new jobs are
thus arising, but also new risks of social exclusion.
1.4. Coordinating policies
Despite a number of undeniable successes, Europe
is lagging behind in this transition to the innovation and knowledge-based
economy. This delay is apparent in the production and dissemination
of much information technology but also in adaptation of social
institutions and relations to the new potential opened up by such
technology. While this failure to adapt to the new paradigm continues,
there will be a shortfall in economic growth and an increased
risk of unemployment and social exclusion.
We need to increase the pace of technological
change but also of institutional reform and to learn best practices
more quickly, but also to create new best practices. Innovation
in political method is also necessary.
An economic and social strategy to renovate the basis
for growth in Europe must combine macro-economic policies, economic
reform and structural policies, active employment policies and
the modernisation of social protection.
Institutional processes for the development of these
policies, namely the Cologne process on macro-economic policies,
the Cardiff process on structural policies and reforms and the
Luxembourg process on employment policies, are now available to
the European Union. Our intention is not, therefore, to launch
a new Lisbon process.
However, we do see the Lisbon European Council
as a particularly good opportunity to create the conditions for:
(a) articulating, simplifying and extending
the existing processes through improved coordination, in order
to achieve a new strategic goal
(b) adding new dimensions in key areas such
as preparing for an innovation and knowledge-based economy, combating
social exclusion and modernising social protection
(c) developing coordination methods for formulating,
quantifying and monitoring policy objectives and instruments.
These methods may vary. For example: in the case
of social protection, joint analysis, cooperation and the
exchange of best practices; or, in the case of the information
society policy, the definition of European guidelines, national
plans and a benchmarking process with reference indicators permitting
intra-European comparison and a comparison with other areas.
This involves an open method of coordination coupling coherence
with respect for national diversity. It also involves learning
how to respond more quickly to structural change.
The development of these methods will need backing
in its various stages from the European Commission, as an essential
Europe must find its own way of constructing an innovation
and knowledge-based society and economy. A rich scientific and
cultural heritage and an immense capacity for generating new knowledge
are available to it. The European way needs to open up opportunities
for accessing knowledge, value cultural diversity at its true
worth and use this transition in order better to forge a specific
European identity and to identify citizens more closely with a
European project which they themselves will define.
A way based on the gradual construction of a European
public area, the exercise of European citizenship and the promotion
of dialogue with the various actors, with the emphasis on social
partners. The High Level Forum in June, bringing together representatives
of Governments, the European Commission, the European Parliament,
social partners, the Economic and Social Committee and the European
Central Bank, will reflect this approach.
A major transformation is under way in Europe. It
is for us Europeans, with our creativeness and political will,
to endeavour to lend it shape and form.
2. TOWARDS AN INNOVATION AND KNOWLEDGE-BASED
ECONOMY AND SOCIETY
Faced with the digital revolution Europe, like the
United States, initially focused its response on information technologies,
then on the information highways, and subsequently on the information
society. Nowadays it is becoming clear that the problem is not
only about information, but about knowledge and innovation, and
not only about technological change, but also about economic and
All societies are knowledge-based. What is new is
that the information and communication technologies are changing
the way in which knowledge is accumulated. More and more knowledge
is being built into equipment, products and services. Knowledge
is increasingly becoming the raw material of work. However, this
newly emerging model is still giving rise to many dilemmas: how
to develop the strategic segments of the new value chains taking
shape worldwide? How to make room for cultural diversity in the
cyberspace now being built? How to stimulate innovation, not
only in processes, but also in products and services, in order
to boost job creation? How to equip the workforce for much more
rapid changes in occupational activities? How to cope with the
new social inequalities?
Thus, given the wider implications of the new paradigm
and the dilemmas created, the European strategy to be defined
(a) create a demand-driven dynamic stimulating
innovation in products and services, meeting citizens' requirements
and influencing technological choices on the supply side;
(b) create another competitive platform in infrastructure,
hardware and software, available knowledge, entrepreneurial capacity
and additional skilled jobs - which requires a major boost of
(c) mainstreaming the concern for social inclusion;
(d) play a pro-active role in organising cyberspace
(on-going negotiations on e-commerce, register of Internet fields).
Moreover, the widespread development of scientific
and technical skills must be recognised as a key factor of employment
policy in Europe. The consolidation and updating of scientific
and technical skills and the widespread acquisition of IT skills
are central to the creation of skilled employment and the construction
of a competitive economic and social base. In order to achieve
these objectives, the importance of a scientific and technological
culture for the entire population needs to be highlighted as does
the need for far-reaching scientific and technological development
supported by a strong and open European R&D policy.
In this wider framework the policy for an information
and knowledge-based society cannot be dissociated from S&T
policy, nor from the policy on education and training, and must
also be linked to the policies aimed at supporting innovation
(see point 3).
2.1. A European policy for an information
and knowledge-based society
Regarding the demand for knowledge, this policy must:
(a) encourage innovation in products and
services with a larger knowledge input which can improve the quality
of citizens' lives (in the field of transport, tourism, the environment,
public administration, health and assistance to the elderly).
This is a wide frontier to be explored with a view to boosting
(b) speed up the diffusion, in companies, of
information technologies linked to flexible production systems,
e-commerce, teleworking, telemedicine and also of information
and knowledge-management tools;
(c) improve training for workers to help them
cope with information technologies by adopting a reference frame
of basic skills, setting up a European network of open learning
centres equipped with multimedia technologies and distance teaching
facilities and encouraging continuing training and the creation
of learning organisations in companies; a "European passport"
for information technologies must be a priority objective. The
aim is to stimulate the acquisition and certification of basic
IT skills by the entire European population and, to make it compulsory,
for future generations of students;
(d) spread information technologies throughout
the education and training system by providing all establishments
with Internet-linked computers and suitably trained staff;
(e) provide guidance and educational and professional
support to encourage everyone to adjust to the new requirements
of information and knowledge-based society, giving particular
attention to those categories in danger of serious social exclusion;
(f) modernise public services by using information
technologies to improve citizens' and companies access to both
information and the provision of services.
As regards the supply of knowledge, the policy must:
(a) bolster European R&D networks through
closer cooperation and coordination not only under the Framework
Programme but also all other programmes for international scientific
and technological cooperation (e.g. EUREKA and COST), those of
intergovernmental scientific organisations (ESA, CERN, EMBL, ESRF,
etc.) as well as national programmes;
(b) develop content industries and set up a content
database accessible to the public. Here it will be essential
to take measures to promote digitalisation and accessibility of
all information of interest to the public, and to make any State-held
contents available to industry with a view to fostering added
(c) develop software for communicating and generating
knowledge (specifically in the field of computational processing
of natural languages, in order to boost interchange between languages
and cultures, content industries, e-commerce, telematics for educational
(d) speed up the construction of trans-European
broadband telecommunications networks (liberalisation, definition
of standards, interoperability) and promote their accessibility
on terms that are internationally competitive.
The e-Europe European initiative recently proposed
by the European Commission and the latter's communication on employment
strategy in the information society should act as catalysts for
the Action Plan to be prepared forthwith by the Presidency and
the Commission, as decided at the Helsinki European Council.
The Lisbon European Council will define the Action
Plan's objectives and guidelines in order to enable the Presidency
and the Commission to work out benchmarking indicators to be included
in national initiatives on the information and knowledge-based
society to apply from 2001, in accordance with the method
of open coordination among Member States to be approved by the
Feira European Council in June.
Reference indicators to assist benchmarking schemes
for genuine political advances should be developed as a matter
of urgency. The adoption of a Plan for an Information and
Knowledge-based Society should firmly commit Europe
to meeting identifiable targets and disseminating best practices.
This European Action Plan should serve as a guide to national
plans integrated into national development strategies and linked
to national employment schemes.
2.2. Creation of a Europe-wide learning society
European policies on education and training should
go beyond the successive reforms of the existing systems already
implemented. The aim should be to create a European area of life-long
learning and to bring about a learning society with opportunities
for all. Without a learning society, the changeover to a knowledge-based
economy will cause new breaches and new forms of social exclusion.
A learning society should be geared towards giving
diversified and relevant answers to a wide range of target groups:
young people, unemployed adults, workers at risk, but also businessmen
and middle and senior executives, not to mention the large mass
of workers who need to be given genuine life-long training opportunities.
This is also a key area for action by the social partners, since
there can be no life-long learning without the involvement of
enterprises. It should likewise be a central concern of youth
policies in the European Union.
Policies on education and training should, moreover,
be geared towards creating a large stock of skilled jobs. The
potential is already there. However, those jobs will only actually
be created if there are skilled human resources to fill them.
The differences between Member States' education
and training systems are huge; yet, notwithstanding the more general
aims of citizens' personal, social and cultural development, concerns
regarding the relevance of training for coping with the requirements
of the new jobs are shared by all. Thus, the education and training
input for the Luxembourg Process employment guidelines should
be reinforced, to meet shared problems, namely by.:
(a) developing schools and training centres,
into learning centres, using the most appropriate methods to cope
with a greater diversity of target groups; promoting cooperation
between education and training establishments and putting new
learning facilities to good use;
(b) fostering the mobility of students, teachers
and training staff, notably through recognition of diplomas and
periods of study and training;
(c) equipping the said establishments with computer
equipment and Internet connections and staffing them with teachers
and other experts with up-to-date training geared to the objectives;
(d) renewing content production in combination
with curriculum development and promoting the widespread development
of scientific and technical skills as the essential basis for
creating skilled employment;
(e) working out educational and vocational guidance
schemes of general application, based on the identification of
(f) setting up flexible schemes to certify knowledge
(g) introducing new forms of funding and time
management to facilitate access to life-long education and training.
The Socrates and Leonardo da Vinci programmes,
which are Commission initiatives, will be launched at the Conference
of Ministers for Education, Labour and Social Affairs on 17 and
18 March. These programmes will stimulate
the European dimension of education and training through the organisation
of exchange networks, the production of common content and reference
frames, the identification of training requirements and the promotion
of mobility and qualification equivalence. This fundamental action
needs to be reinforced; however, it would be even more effective
if it were supplemented by a method of open coordination between
The Lisbon European Council should take forward:
(a) the definition of the contribution
of education policies towards employment policies under the Luxembourg
(b) other forms of coordination between Member
States, particularly as regards mobility of teachers, students
and training staff and the possibility of drawing up a European
Charter of Basic Skills, with implications for curriculum updating.
Europe's population, and young people in particular, must have
extensive access to basic skills, such as being able to learn
and to resolve problems, develop scientific culture and technical
skills, use information technologies, speak foreign languages,
develop a sense of initiative and entrepreneurship and be active,
free and responsible citizens.
2.3 Developing a European research area open
to the world
European S&T policy has passed through various
stages: after focusing on major fundamental research projects
at European level and subsequently on major European pre-competitive
projects, it has recently switched to research linked to company
innovation. On the whole, and notwithstanding major national
differences, comparison between the EU and the US reveals some
significant shortcomings as things now stand:
- restrictions on innovative fundamental research;
- reduced sensitivity of public research to market
- reduced private-sector contribution to S&T
- fragile interface between S&T supply and
- less effort to promote a scientific and technical
- under-developed institutional capacity to conduct
European S&T policies.
Yet Europe, having an abundant heritage and capacity,
should strive to be in the forefront of the development of scientific
knowledge. This is an essential condition for renovating the
economic base for employment. An organisational effort is required
at two levels:
- fundamental research: here, an added European
dimension is needed to achieve scale and scope. This involves
organising a European research area using joint activity networks
and joint infrastructures in order to overcome the current situation
of fragmentation and overlapping of national institutions. The
R&D Framework Programme, in coordination with other policy
instruments, should serve as a stimulus to such networks;
- applied research and development: here it is
necessary to stimulate company-based R&D, to internationalise
- but also to develop the interfaces with companies and with regional
innovation systems, taking advantage of the diversity of competitive
factors in Europe in the case of both the high-tech industries
and the traditional industries undergoing modernisation, as well
as in the field of services.
The linkage between these two levels of R&D must
grasp with new opportunities. It is proving necessary nowadays
to set up more effective coordination mechanisms in many areas,
for example oceanography, meteorology, etc.
The following priorities should be emphasised:
(a) Stepping up European coordination with
regard to the various ways of organising S&T systems, combining
local, sectoral and international resources the in order to produce,
disseminate and adapt knowledge and exploit new opportunities
for scientific and technological development, adapting existing
coordination bodies or creating appropriate European bodies.
(b) Creating a high-speed, low-cost trans-European
data transmission network to provide support for the construction
of a European research area. This broad-band network will have
to support not only the development of European S&T cooperation,
but also cooperation between schools and training centres, libraries
and science centres and museums.
(c) Creating the conditions for encouraging the
mobility of S&T staff and opening up European systems to exchange
with the outside world. Europe must strengthen its role as a
major world centre for R&D, fully integrated into the big
international networks and able to attract new talent from anywhere
in the world.
(d) Promoting the scientific and technological
education of European citizens, stimulating cooperation between
research institutions and schools, encouraging the production
of multilingual scientific works, promoting their export outside
Europe and making careers in science and technology more attractive.
On the basis of the Commission communication on
a European Research Area, the Lisbon European Council will have
to define the medium-term joint European objectives and prepare
for decisions on the new European S&T initiatives, as well
as ways and means of coordinating national S&T policies.
3. ECONOMIC REFORMS FOR COMPETITIVENESS
The establishment of the single European market has
been essential for European construction. The gradual elimination
of barriers to the free movement of goods and services, together
with competition policy and privatisation procedures, has produced
very encouraging results for firms and consumers in various sectors:
suffice it to mention the recent case of telecommunications.
The economic basis for employment has been comprehensively improved.
But the aforementioned effort has to continue, as
indicated in the recently approved strategy for the internal market,
in conjunction with the Cardiff process of economic reforms, not
only in order to improve how the markets work, but also to create
new competitive factors, increase innovation potential and develop
entrepreneurship. European markets have to adapt to the prospects
opened up by an economy based on innovation and knowledge.
The Lisbon European Council will have to:
- Establish an open method of coordination to
provide impetus for the Cardiff process, organising a process
of benchmarking centred on sound practices relating to priorities
defined at European level and making use of initiatives launched
by the European Commission, such as the action plan for financial
services, the action plan for risk capital, the proposal on the
European patent and the initiatives relating to the policy of
support for enterprises.
- Define guidelines for the elaboration of a
European Charter for micro-enterprises for final evaluation at
the Feira European Council, with the aim of encouraging this new
potential for creating employment.
The following priorities have been identified in
the context of the Cardiff process:
(a) to increase the opportunities for trade
by developing telecommunications and e-commerce;
(b) to improve transport logistics and the transport
network to cope with the increase in trade;
(c) to modernise public services, in particular
by using various public-private partnership arrangements;
(d) to accelerate the integration of the financial
markets, implementing in full the action plan for financial services;
(e) to improve the sensitivity of the financial
markets to the value of intangible investments and investments
(f) to encourage access to risk capital at European
and local level, entirely in line with the action plan for risk
(g) to establish a single European patent system
and organise the technological know-how markets;
(h) to encourage entrepreneurial initiative and
Specific action by the Member States and the European
Commission is also needed to encourage the networks and dynamics
of innovation: entrepreneurial innovation, financial innovation,
human resources innovation and more efficient technology-transfer
mechanisms. There is a need to signal a new frontier to be explored
for entrepreneurial initiative: that of goods and services with
greater substance in terms of knowledge, in line with new needs.
Many quality jobs can be created through this dynamic.
Another significant impulse for competitiveness and
employment will be provided by the definition under elaboration
of the policy for support to enterprises with a view to preparation
for the new multiannual plan. That policy should place emphasis
on the following priorities:
(a) support for the incorporation of new
technologies and the creation of intensive knowledge services
for support to firms;
(b) development of clusters and innovation networks;
(c) encouragement of partnership and associative
relations, both locally and internationally;
(d) organisational innovation and new instruments
for knowledge management;
(e) development of certification procedures linked
to the promotion of total quality;
(f) adapted financial instruments;
(g) adapted schemes for the training of human
(h) simplification of administrative procedures
and modernisation of public support services.
It is also important to see to specific needs in
each standard case. For example:
- SMEs of a high technological level give rise
to development needs and appropriate procedures for access to
the capital market and additional technological capabilities.
- Start-up companies must be stimulated on the
basis of strengthened risk capital, technical and logistical support
and the simplification of procedures and obligations.
- Besides simplification of procedures and obligations,
micro-enterprises may encounter encouraging prospects with the
development of e-commerce and the upgrading of local networks
and entities. This new potential to create micro-enterprises
and proliferate small-scale entrepreneurial initiative should
be given impetus by the European charter for micro-enterprises.
4. RENEWING THE EUROPEAN SOCIAL MODEL:
MORE JOBS AND GREATER SOCIAL COHESION
The European Union has already defined, notably in
the context of the European employment strategy, the major priorities
for the employment objective. The twofold strategic objective
of combating unemployment and increasing the employment rate requires:
- the creation of jobs in the services sector,
in which Europe has significant deficits and opportunities for
- a resolute inversion of the trend towards early
retirement from the labour market, promoting the employment of
- an increase in the rate of female employment,
encouraging equal opportunity of access to the labour market and
positive action in favour of the employment of women.
To make use of the above employment potential also
requires stock to be taken of the European social model, which
is one of the strong suits of the European project. But there
are two prerequisites for its continuation in the context of globalisation:
the renovation of its economic base, building new competitive
factors, and the modernisation of its very structure. This will
make it possible to find a new synthesis with more jobs and greater
Understanding the contemporary problems of the European
social model and finding solutions to them requires starting from
an adequate concept of welfare. Welfare is not only a guarantee
of income in the face of social risks. Welfare is also based
on personal services, quality of work and living opportunities.
And all this contributes to the cohesion of a society.
A positive strategy of renewal of the European social
model needs to be adopted:
- aimed at raising employment levels and creating
job opportunities for all;
- combining the principles of initiative, responsibility,
social justice and solidarity.
The above renewal endeavour should involve not only
the official authorities, but also the remaining protagonists
at the various levels, with the accent on the social partners
and the role of the European social dialogue. The contributions
secured in this way could be used to develop a European social
agenda, along lines to be defined during the French Presidency.
Apart from reconsideration of the concepts of employment,
work and activity, new ways of regulating the labour market will
have to be developed, combining flexibility and security, an area
which will require a significant contribution from the social
partners. In addition to the progress made in the field of working
conditions and minimum standards, there is a need to:
- strengthen the role of active employment policies;
- modernise social protection systems, consolidating
- increase the efficacy of policies to combat social
exclusion, which should ensure a solution when the foregoing fail.
4.1. Active policies and the European employment
The Luxembourg process has made a significant contribution
to strengthening active employment policies in the framework of
the European employment strategy.
A mid-term review of the Luxembourg process will
be carried out during the Portuguese Presidency. That review
should contribute to a major rationalisation of the guidelines
and to more detailed indicators, but it should also coincide with
strategic discussions. It is not a matter of revising the guidelines,
but first of examining the synergies between these guidelines
and between employment guidelines and broad economic guidelines.
It is therefore a matter of harmonising the methodology for the
involvement of other protagonists, in particular the social partners.
The Lisbon European Council will have to lay
down orientations for the aforementioned mid-term review.
From the point of view of creating employment and
renewing the European social model, four areas warrant priority:
(a) Improving the efficacy of active employment
policies as regards employability. Guaranteeing a prompt
response, using information technologies in employment services,
diversifying alternatives and making full use of the local level
are basic elements for success. It is particularly important
to agree on programmes which enable the direct conversion of the
unemployed through qualifications
which are in a shortage on the labour market.
(b) Strengthening the synergies between adaptability
and lifelong learning. The development
of learning organisations, recourse to the ongoing training network,
management of working time, job rotation and cost-sharing should
be central to the redefinition of the labour contract and to negotiations
between social partners at all levels. The official authorities
should also contribute, with specific support, to facilitating
such negotiations. Firms which invest in their human resources
should benefit from fiscal and parafiscal incentives.
(c) Increasing employment in services, facilitating
entrepreneurial initiative, decreasing the administrative burden
on SMEs, reducing the non-wage costs of the less qualified and
encouraging equal opportunities. As regards
personal services, where there are major shortages, private, public
or third-sector initiatives can be associated, possibly using
a social voucher in favour of the least-favoured categories.
(d) Developing mainstreaming to promote equal
opportunities, with particular implications for all aspects which
help to reconcile working life and family life. Strengthening
the family-support services, in particular child care services,
is of special importance.
4.2. Modernising social protection, consolidating
Where the population is ageing, where new forms of
family are emerging, where new risks on the labour market are
surfacing, the tension arising therefrom tends to centre on social
security benefits schemes, in particular pensions. This trend
is becoming burdensome and is today of concern to all European
governments, irrespective of the great diversity of social protection
schemes. For that reason, a cooperation process at European level
was recently initiated for the modernisation of those schemes.
Taking into account the recent communication from the European
Commission on a concerted strategy for modernising social protection,
the High-Level Working Party now set up will have to opt for evaluation
of the long-term sustainability of those schemes as a priority.
Under the present circumstances, bolstering the sustainability
of protection schemes depends to a large measure on one factor:
increasing the rate of employment of European populations, which
is at a particularly low level. The rate of employment in the
European Union at the end of the 1990s was little more than 60%,
as against figures in excess of 75% in the USA and Japan.
An increase in the rate of employment implies a considerable
improvement of the net creation of jobs. To achieve that goal,
in addition to the need to ensure macro-economic stability and
galvanise growth factors, it is necessary to improve the actual
operation of the labour market, in particular by:
(a) strengthening employability and adaptability
on the basis of lifelong education to prevent unemployment;
(b) increasing the efficiency of active employment
policies, activating social policies;
(c) modernising fiscal and parafiscal systems
so that employment is of benefit to all citizens;
more active ageing, combating early retirement from the labour
(e) making working time flexible throughout working
life, enabling a better balance between working life and family
life and more flexible careers based on upholding basic social-protection
and access-to-training rights.
But consolidation of the sustainability of social
benefits is not the only issue. Welfare is not only guaranteed
income. It is also access to services. The crisis for the traditional
family unit needs to be offset by the development of family-support
services, especially for children and the elderly. A large range
of services should therefore be encouraged for that purpose, with
the advantage of also being very intensive in the creation of
The above therefore seem to be some of the basic
components for a positive strategy for the modernisation of social
protection and the renovation of the European social model. It
is a positive strategy because:
- it bolsters the sustainability of social protection
- it strengthens support for families;
- it reinforces equality of opportunities for men
- by introducing greater flexibility, it maintains
basic security and opens new prospects for upward mobility in
the labour market;
- it is based on the creation of more jobs.
- That strategy will improve the overall outcome
for welfare and social cohesion, in line with the broad concept
referred to above.
The Lisbon European Council will:
(a) approve the setting up of a high-level
working party on the modernisation of social protection and will
define its working priorities, with emphasis on the carrying out
of a forecast study on the sustainability of the pensions scheme
for the period 2010-2020;
(b) define the forms of cooperation and of
exchanges of best practices between Member States;
(c) call upon the European Commission to
develop the procedures necessary for strengthening information
systems on social protection.
4.3. Stepping up the fight against social
Europe in the 21st century needs to have a systematic
policy to combat poverty and social exclusion in their old and
In spite of the high levels of economic development
of the EU as a whole and the existence of significant social protection
instruments, social exclusion still abounds in various forms.
The above phenomenon affects all Member States, albeit
in various forms and intensities, in particular the most vulnerable
social groups, the most deprived economic areas and those citizens
who are particularly disadvantaged as regards the labour market.
On the other hand, social dynamics continue to give
rise, with some frequency, to the emergence of child poverty and
social integration problems for children and young people.
The intensity of the changes which are foreseen from
the point of view of the qualifications required by new technological
challenges facing firms also involve the risk of developing new
social exclusion processes.
The problem of social exclusion therefore requires
major coordination at European level.
On the basis of the report on the social situation
and of the Commission communication "Towards a Europe
for all", the Lisbon European Council will define the open
method of coordination which will have to be applied respectively
to two forms of action to be combined by each Member State, involving
the other active partners in promoting social inclusion:
(a) to mainstream this objective in education,
training, employment and social protection policies;
(b) to develop integrated, targeted programmes
for social groups in situations of major social exclusion, with
the top priority of eradicating child poverty by 2010.
The Lisbon European Council will also call upon
the High-Level Working Party and the European Commission to prepare
a monitoring panel with indicators for monitoring the social situation,
making it possible to set policy objectives which can draw on
the experience of the various Member States.
5. MACRO-ECONOMIC POLICIES FOR SUSTAINABLE
There is one central item on the European political
agenda: achieving a policy mix which stimulates growth and employment,
ensuring macro-economic stability and consolidation of the euro.
This means, in the context of the Stability and Growth Pact,
stimulating growth and the transition to an economy of innovation
and knowledge. This will in particular mean assigning a more
important role to structural policies and reforms.
A fundamental pillar of the policy mix is monetary
and exchange policy. The main aim of monetary policy, defined
and implemented by Eurosystem, is to guarantee price stability.
The extent to which it can support the Community's general economic
policies depends on what happens in the other fundamental pillars
of the policy mix. The second pillar is fiscal policy defined
and implemented by national governments, in the light of the provisions
of the Stability and Growth Pact. The third pillar consists of
wage developments, chiefly determined by negotiations between
the social partners.
It is important to continue to monitor budgetary
policies on many fronts, in particular
(a) Improve methods of monitoring expenditure,
debt and deficit, as regards not only level, but also content.
(b) Adjust the monitoring of deficits so as to
maximise the room for manoeuvre of automatic stabilisers.
(c) Improve the quality of public spending, redirecting
it towards promoting public investment and meeting new priorities
(R & D, education and training, modernisation of the public
administration, affordable telecommunications, etc.).
(d) Define new methods of public-private partnership
so as to speed up investment necessary to the modernisation of
economies, while also making use of new products to be launched
on the financial markets.
Specifically with regard to tax policy:
(a) Develop tax coordination, endeavouring
to overcome problems of harmful competition as yet unresolved.
(b) Make progress as regards changes in taxation
more friendly to the aims of employment and social cohesion.
(c) Reinforce those tax incentives which encourage
firms and individuals to adapt to an economy of innovation and
(d) Promote a tax system more favourable to SMEs.
However, it is also vital to improve multilateral
coordination of macro-economic policies so as to make full use
of Economic and Monetary Union to encourage growth on a sustainable
Economic coordination may take place in successive
stages. Some stages are already taking
place: the setting of common objectives, their translation into
national plans and multilateral monitoring of their implementation.
However, it is possible to move on to further levels of coordination:
(a) Evaluation of the aggregate effects of
the various choices made at national level.
(b) The development of strategies for coping
with problems such as asymmetric or global shocks and the creation
of large-scale infrastructure at European level. In order to
exercise a greater effect on such large-scale infrastructure,
we must consider making greater use of the role of the EIB and
the EIF, of public-private partnerships and of other financial
instruments, and strengthening the trans-European networks programme,
particularly with regard to "knowledge structures".
On the other hand, it is vital that we define and
coordinate more clearly the role of each of the bodies and protagonists
involved: ECOFIN, Euro-11, EFC , SCE , ECB, the social partners,
macro-economic dialogue. The aim is to create a relationship
of trust and interchange between all the parties involved, and
in this context macro-economic dialogue may play an important
6. METHODS FOR ACHIEVING A EUROPEAN DIMENSION
The political construction of Europe is a unique
experience. Its success has been dependent on the ability to
combine coherence with respect for diversity and efficiency with
democratic legitimacy. This entails using different political
methods depending on policies and the various institutional processes.
For good reasons, various methods have been worked out which
are placed somewhere between pure integration and straightforward
- Monetary policy is a single, common policy within
the euro zone.
- National budgetary policies are coordinated at
European level on the basis of strictly predefined criteria.
- Employment policies are coordinated at European
level on the basis of guidelines and certain indicators, allowing
some room for adjustment at national level.
- A process of cooperation is beginning with a
view to the modernisation of social protection policies, with
due regard for national differences.
Policies aimed at building the single market, such
as monetary policy or competition policy are based, as is logical,
on a stricter method of coordination as regards the principles
to be observed. However, there are other policies which concentrate
more on creating new skills and capacities for making use of this
market and responding to structural changes. They involve learning
more quickly and discovering appropriate solutions. Such policies
have resulted in the formulation of a coordination method which
is more open to national diversity, the best example of which
currently is the so-called "Luxembourg process" relating
to employment policies.
It is a case of defining strategic guidelines at
European level for coping with structural change and then organising
a process whereby Member States emulate each other in applying
them, stimulating the exchange of best practices, while taking
account of national characteristics. Despite some difficulties,
the results obtained have been stimulating and encouraging.
The open method of coordination varies in intensity
depending on the subject areas to which it is applied and on how
the subsidiarity principle is expressed in each of them. In its
most complete form, this open method of coordination consists
of the following steps:
(a) In the light of diagnosis and evaluation,
setting of Europe-wide guidelines with the political commitment
to apply them being assumed into at the highest level.
(b) Identifying good practices and reference
indicators for benchmarking purposes in these
(c) Preparing national plans for applying
these guidelines in a suitable way so as to involve all the various
protagonists, identifying intermediate goals and learning processes.
(d) Organising the various partnerships responsible
and implementing the national plan.
(e) Monitoring and evaluating the results
obtained, allowing for discussion and peer pressure and possibly
formulation of recommendations.
In this context, the European Commission initiative
programmes may gain additional scope and effectiveness. As well
as promoting a typically European dimension, as is their aim,
they may play an extremely important role in supporting the whole
process of the open method of coordination between Member States.
Thus, it will be possible to step up the efforts made on the
basis of the Community budget and the efforts made by the Member
States, depending on their own circumstances.
Here the European Parliament should also be encouraged
to become involved and the other European Union institutions consulted.
If economic and social innovation is to be stimulated,
there is also a need for innovation in the political method.
This open method of coordination also makes it possible to progress
with due regard for diversity. It will have to be applied with
the necessary adjustments in new areas, as proposed in the previous
In order to ensure that there is overall coherence
and that objectives are the same in all areas in which this method
is applied, the Lisbon European Council will have to ask the European
Commission to draw up a proposal for a monitoring panel of the
most important indicators for structural change, showing their
effect on the rate of economic growth and the rate of employment
throughout the European Union.
7. COORDINATION OF POLICIES FOR A EUROPEAN
A European growth and employment strategy requires
better coordination between macro-economic policies, structural
policies and reforms and active employment policies, based on
the Cologne, Cardiff and Luxembourg processes.
These processes overlapped in time and their procedures
and timetables arose from their beginnings and specific motivations.
Taking into account the framework set by the Treaties and the
different levels of subsidiarity and specialised Councils they
involve, there is justification for preserving them as three distinct
processes. However, the time now seems to have come for their
coordination, synergy and joint efficiency to be improved.
The Lisbon European Council will have to develop
the conclusions adopted at the Helsinki European Council so that
the Broad Economic Policy Guidelines (BEPG) carry even more weight
as a framework document, as regards not only the various macro-economic
policies, but also political and structural reforms, and also
the connections with the employment guidelines. The coherence
and synergy between these three components must be dealt with
explicitly and systematically.
For that purpose, ECOFIN will have to receive
contributions from other Council formations, particularly from
Labour and Social Affairs, but also namely from Internal Market
and Industry, as part of a coordination process subject to the
political guidance of the European Council. The Cardiff and Luxembourg
processes will make it possible for us to deal with their subject
matter in greater detail.
In addition, the BEPG must define the guidelines
to be adopted by the EU and the recommendations to the Member
States, providing a framework for next year and looking forward
to the years ahead, while taking into account recent developments
in the Member States.
The importance of the BEPG justifies more substantial
involvement by the European Council in their general drafting.
More political weight should also be given to the
mechanisms for monitoring the formulation and implementation of
recommendations, with the involvement of the relevant specialised
On the other hand, it will be important to inform
and consult the social partners on the basis of the structures
provided for in the social dialogue, the Standing Committee on
Employment and the macro-economic dialogue, so as to identify
the contribution they can make to the guidelines to be adopted
and to the implementation of the European Employment Pact.
It will be for the Portuguese Presidency to conduct
the first practical exercise in applying this new concept of the
BEPG, in terms to be defined by the Lisbon European Council.
Another coordination instrument which must be given
more weight is the annual report prepared by the European Commission
based on Article 127 of the Treaty, on "Community policies
in support of employment", which explains how to use mainstreaming
to achieve the aim of employment on the basis of Community policies.
The setting up of an Observatory on Industrial
Change on a proposal from the European Commission to be approved
by the Lisbon European Council must also reinforce the exchange
of best practices for the management of change, with the involvement
of the various actors, in particular the social partners and enterprises
The quest for concerted action must involve many
other actors in addition to governments and the European Commission,
starting with the major institutions such as the European Parliament
and national parliaments, the European Central Bank, the social
partners, the Economic and Social Committee and the Committee
of the Regions. A High-Level Forum will take place before
the June European Council in order to review the various processes
and share out responsibility for directing them. The aim is to
enhance the content of the European Employment Pact adopted in
Cologne. The Lisbon European Council will consider the possibility
of holding this Forum annually.
Finally, such action depends to a large extent on
the initiative of the actors in civil society, the social partners,
enterprises, associations, regions and the citizens in a European
civil society, which we must continue to build.
Europe's capacity to influence its own mode of
development depends on all of the above. The Portuguese Presidency
is counting on the participation and commitment of all these actors
in order to give a new long-term impetus to the construction of
Europe. The time has come.