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In focus - European Economic Policy

Europe 2020

Introduction

On 17 June 2010, the European heads of state and government who form the European Council adopted the Europe 2020 strategy - a new European Union strategy for jobs and smart, sustainable and inclusive growth. Aside from helping Europe to fully overcome the financial and economic crisis, the primary objective of the Europe 2020 strategy is to boost the EU's competitiveness, productivity, growth potential, social cohesion and economic convergence - both internally and at the international level. In this way, the strategy aims to contribute to Europe's ability to cope successfully with long-term economic and labour market challenges.

Two key factors have had a formative influence on the new strategy: (i) the EU's experience with the Lisbon Strategy, which expires at the end of 2010 and (ii) the lessons that have been drawn from the financial and economic crisis. Where action is needed is not so much in the content of the strategies - after all, the final version of the Lisbon Strategy was targeted toward the overriding objectives of growth and jobs as well - but rather in the consistent and vigorous application and monitoring of the existing legislative framework.

The main documents outlining the Europe 2020 strategy are the European Commission's Communication dated 3 March 2010 on "Europe 2020: A strategy for smart, sustainable and inclusive growth" (PDF: 1.2 MB) and the conclusions of the European Council dated 26 March 2010 (items 1-6 and annex) (PDF: 120 KB) and 17 June 2010 (items 1-8 and annex)(PDF: 70 KB). A discussion process lasting several months helped to shape the new strategy, and the German government contributed its own position paper (PDF: 25 KB) to these deliberations.

The Europe 2020 Strategy is to be reviewed in 2014. It is important that it should remain focused on delivering sustainable growth and employment.

The most important modification introduced by Europe 2020 compared to the Lisbon Strategy involves the creation of five quantifiable EU-wide headline targets. These targets fulfil a dual purpose:

  • They will enable the transparent monitoring of the progress that individual member states and the European Union as a whole are making toward meeting the targets.
  • They will also make clear how much the individual member states will have to contribute to the overall effort by undertaking national structural reforms and investments. In this way, the targets will constitute an important management tool for the Europe 2020 strategy.

Through its five headline targets, the European Union aims:

  1. to increase the employment rate among women and men aged 20-64 to 75%, including through the increased labour market participation of young people, older workers and low-skilled workers as well as the better integration of legal migrants;
  2. to improve the conditions for research and development - in particular by aiming to raise combined public and private R&D investment levels to 3% of GDP. In addition, the European Commission will develop an indicator to reflect R&D and innovation intensity;
  3. to reduce greenhouse gas emissions by 20% compared to 1990 levels; to increase the share of renewable energy sources in final energy consumption to 20%; and to move toward a 20% increase in energy efficiency;
  4. to improve education levels - in particular, by aiming to reduce school drop-out rates to under 10% and by increasing the share of persons aged 30-34 who have completed tertiary education or equivalent to at least 40%;
  5. to promote social inclusion - in particular through poverty reduction, with the specific aim of lifting 20 million people out of the risk of poverty and exclusion.

To provide an EU-level contribution toward fulfilling the targets and to reinforce growth, the Commission is elaborating seven flagship initiatives within the framework of three thematic priorities:

Smart growthSustainable growthInclusive growth

Innovation Union

Youth on the move

A digital agenda for Europe

Resource-efficient Europe

An industrial policy for the globalisation era

New skills and jobs

European platform against poverty


Along with adopting the Europe 2020 strategy (PDF: 1.2 MB), the June 2010 European Council also adopted the Integrated Guidelines for Europe 2020. They are comprised of the treaty-based "broad guidelines for economic policies" (PDF: 45 KB) and the "guidelines for employment policies" (PDF: 42 KB). The Integrated Guidelines reflect the targets of the Europe 2020 strategy and provide the member states with orientation on how to design their medium-term economic and employment policies. The current guidelines are to apply for five years.

Once pan-EU targets have been agreed and national targets defined, it is time for implementation. The new structure of the European Semester maps out a binding timetable for the monitoring of economic, employment, and fiscal policies in Europe. The European Semester is designed to run in parallel with the Europe 2020 process, the Stability and Growth Pact, and the new mechanism for monitoring macroeconomic imbalances. The annual cycle of the European Semester, which coincides with the first half of the calendar year, is as follows:

  1. Each autumn (usually in November), the European Commission presents its Annual Growth Survey for the following year, laying out the key challenges the EU faces in terms of its economic, employment, and fiscal policies, and mapping out the recommended routes for action. In recent years, the focus has been squarely on implementing the measures agreed to stabilise the situation in the eurozone – mostly by means of boosting growth.
  2. Each year in April, the Member States submit their Stability and Convergence Programmes (which focus on fiscal developments) as well as their National Reform Programmes (which set out the country's national structural reform agenda) to the European Commission.
  3. Based on its review of these programmes, the European Commission makes country-specific recommendations as to how each Member State can address the specific challenges it faces.
  4. The European Semester ends with the approval of the country-specific recommendations by the heads of state and government at the European Council in summer.

Under the Treaty, the Member States are to draw up National Reform Programmes in which they demonstrate how much progress they have made towards achieving the EU 2020 objectives and what further action they are taking in this direction. The National Reform Programmes state the Member State's progress in terms of implementing

  • the guidelines for growth and jobs (part of the Europe 2020 Strategy),
  • the country-specific recommendations issued by the European Commission (usually published in July of the previous year),
  • the country's Action Programme for the Euro Plus Pact, (published in the preceding year's National Reform Programme), and
  • the recommendations set out in the latest Annual Growth Survey published by the European Commission.

The Action Programmes for the Euro Plus Pact are particularly important for the National Reform Programmes. The Euro Plus Pact, a Franco-German initiative that was adopted by the European heads of state and government, is designed to help its signatories achieve higher levels of competitiveness. Competitiveness is a key prerequisite for job creation and faster and more long-lasting growth, which will enable all the Member States to bring down their public deficits to sustainable levels. Every year, the heads of state and government of the Euro Plus Pact come together to agree on a host of specific measures to be taken in the interest of achieving the objectives of the pact. The German Euro Plus Pact Action Programme is always set out in the National Reform Programme for the current year. The Europe 2020 Strategy is to be reviewed in 2014. It is important that it should remain focused on delivering sustainable growth and employment.

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