Arrivederci Lisbon?

The Financial Times reports today that the team lead by Wim Kok, set up after the March economics summit, and charged with carrying out a review of the Lisbon process, is likely to find that we are badly behind schedule. This is hardly surprising since the Lisbon agenda was rather stronger on rhetorical nicety (including the now famous objective of turning Europe into the ?most competitive and dynamic knowledge-based economy in the world? by 2010) and rather weaker on concrete policies and objectives.

The intention is now to change this balance:

:

European member states are to be charged with drawing up national plans to boost growth and jobs as the EU strives to meet its ambitious goal of outstripping the US as the world’s most competitive economy………

?There are too many targets,? said one close to the Kok team. ?The one very clear message that will come out is that this is about economics. The idea of the report is to bring the Lisbon process to life, and to get a political commitment at a high level on what individual member states are going to do.?

By focusing on fewer targets and requiring EU leaders to sign up to national action plans, the Kok team believes it could increase peer pressure on those who fail to deliver.
Source: Financial Times

Among specific proposals mentioned by the FT is the goal of raising EU employment rates to 70 per cent by 2010 (it was at 64.3 per cent in 2002) and raising potential growth from 2 per cent now to 3 per cent.

Now laudible as these objectives are, the proof of the pudding will be in the eating. Everyone would, of course, be happy to see our growth potential enhanced, but what we really need is a road map with milestones. In other words its easier said than done. Evidence with the late lamented growth and stability pact is not inspiring: agreed objectives were constantly pushed back, and the fiscal process is a much more tangible one to get to grips with.

Increasing participation rates (the percentage of the working age population actually working) is clearly vital to sustaining our welfare system, but again recent evidence is not encouraging. There have been a lot of moves in the direction of flexibilising labour markets, but unemployment is still in many cases stubbornly high, and participation rates stubbornly low.

Given that levels of education required for new entrants, and consequently preparation time involved, are likely to continue rising, we should not expect too much in the way of extra participation in the youth area. This leaves increasing participation from the over 50’s and female employment. The first is far from easy, and the second may in fact become more difficult to achieve as the relative quality of our care and health support for the aged comes under pressure from fiscal constraints. Essentially a growing proportion of care requirements are going to be met by female relatives (I’m not advocating this, I just see it as a plausible consequence of what we are doing). If this is the case, it is difficult for me to see how one and the same person is going to be undertaking active caring and vigourously seeking employment. We seem to be locked into something of a ‘double-bind’.

So, as I said, nice words, but lets judge them by the results.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".