Contribution by the Government of the Republic of Cyprus to the consultation by the European Commission on the Europe 2020 Strategy
1) Taking stock: the Europe 2020 strategy over 2010-2014 •
For you, what does the Europe 2020 strategy mean? What are the main elements that you associate with the strategy? The Europe 2020 strategy is the EU’s well designed ten year growth and employment strategy. The significance of the strategy has become more pronounced in the light of the effects of the economic crisis, which has led to high unemployment and has accentuated the need for reform and restructuring of the economy in many member states. The startegy comprises an overall framework which guides the main EU economic, environmental and social policies, aiming at achieving smart, sustainable and inclusive growth and jobs. Importantly, a dedicated delivery and monitoring system is in place, through the European Semester, in the context of which every year EU priorities for growth are established and progress in member states is evaluated.
•
Overall, do you think that the Europe 2020 strategy has made a difference? Please explain. External factors related to the global economic crisis have constrained the sustainability of public finances and the access to finance, leading to higher levels of unemployment and poverty and thus negatively affecting the progress in achieving the long-term goals set by the Strategy. The crisis has forced the EU to focus on solutions aiming at fiscal consolidation, to the detriment, sometimes, of growth. Consequently, four years after the launching of the strategy, progress has been less than anticipated. Many of the challenges facing Europe, such as high youth unemployment, the economic impacts of the ageing population, poverty and inequality have intensified. However, the strategy has made a difference, as member states have been working in a coordinated way towards achieving specific objectives, and has provided the framework for member states to proceed with a number of much needed reforms. The examination of progress in the context of the European Semester and the linkage with the priorities of the Structural and Investment Funds have been positive factors. The strategy has also put the environmental and the social targets into the agenda of discussions, notwithstanding the fact that these were not always given equal value in the monitoring process as the economic components.
•
Has the knowledge of what other EU countries are doing in Europe 2020 areas impacted on the approach followed in your country? Please give examples. Best practices in areas such as employment, education, health and energy, have been very helpful in designing and implementing national policies.
1
Through participation in Open Method of Coordination, Technical Committees and other Working Groups, Cyprus has gained from the experience of other countries. One example relates to benefiting from the experience of other member states in areas such as the National Qualifications Framework, Life Long learning, basic skills provision in adult education, PostSecondary Vocational Education and Training. Has there been sufficient involvement of stakeholders in the Europe 2020 strategy? Are you involved in the Europe 2020 strategy? Would you like to be more involved? If yes, how? A wide spectrum of stakeholders are invited to a public dialogue prior to the preparation of the National Reform Programme (NRP) in Cyprus for exchanging views on the main priorities and reforms and are engaged in the preparation of the NRP (except during the period when Cyprus is under the MoU when a fully fledged NRP is not required).The House of Representatives is also informed on the progress with respect to the national targets and the implementation of structural reforms. Furthermore, each Ministry/Service involves the relevant stakeholders in the implementation of its own respective targets. There is still room however for further enhancing the involvement of local authorities, and the civil society at large so as to enable them to have ownership and participation in the implementation of the strategy. Tools •
Do the current targets for 2020 respond to the strategy's objectives of fostering growth
and jobs? [Targets: to have at least 75% of people aged 20-64 in employment; to invest 3% of GDP in research and development; to cut greenhouse gas emissions by at least 20%, increase the share of renewables to 20% and improve energy efficiency by 20%; to reduce school drop-out rates to below 10% and increase the share of young people with a thirdlevel degree or diploma to at least 40%; to ensure at least 20 million fewer people are at risk of poverty or social exclusion]. The current targets for 2020 are considered satisfactory and they do respond to the strategy’s objectives for fostering growth and jobs. They are quantifiable and they are translated into member states’ national targets, taking into account each member states’ specific economic situation and environment, whilst allowing transparent cross comparisons. Apart from quantitative data, the use of more specific analysis as well as qualitative information is necessary in order to set and evaluate appropriately the targets and the actual situation in each member state.
2
•
Among current targets, do you consider that some are more important than others? Please explain. Every target is important in the represented area/sector and strong attention must be given to all of them for the EU as a whole, since they are all interlinked and all focus on the three dimensions of the smart, sustainable and inclusive growth model advocated by the strategy. The relative significance of the targets may vary through time and across countries, however overall they are all significant and it is their combination that can bring about success in all three overarching goals of the strategy.
•
Do you find it useful that EU-level targets are broken down into national targets? If so, what is, in your view, the best way to set national targets? So far, have the national targets been set appropriately/too ambitiously/not ambitiously enough? It is useful that EU-level targets are broken down into national targets so as to enable each member state to set the appropriate for it level of the targets, determine the national policies and action plans that will allow their achievement, evaluate the results of the efforts exerted and take corrective measures in the process, as needed. The best way to set these targets is by taking into consideration each member state’s starting point, as well as its specific challenges such as the size and structure of its economy, as well as the prevailing economic circumstances and its external environment. The aim in setting the national targets should be to strike the right balance between being ambitious and realistic. What is of equal importance at the national level is to pay attention to the qualitative aspects of the targets. In relation e.g. to the target on Research and Development, it is the quality of expenditure that matters, especially in terms of its relevance and potential to be translated into innovation that can directly be linked with the businesses processes, productivity, and competitiveness. Equally, in the case of education, a member state may exceed the target in terms of the proportion of tertiary education graduates, however, a qualitative analysis may point to a skills mismatch that does not allow the reflection of target achievement into growth. This must be taken seriously into account by the member states themselves in designing and setting the level of ambition in their own strategies and national targets; the ambition may need to focus on the qualitative and not the quantitative aspect.
•
What has been the added value of the seven action programmes for growth? Do you have concrete examples of the impact of such programmes? [ "Flagship initiatives": "Digital agenda for Europe", "Innovation Union", "Youth on the move", "Resource efficient Europe", "An industrial policy for the globalisation era", "Agenda for new skills and jobs", "European platform against poverty"]. Although the flagship initiatives perform well, it is probably still early to be able to fully assess their impact. They have contributed to mutual learning and thematic knowledge at EU level and
3
they have enhanced policy action in member states, including at regional and national levels to complement the EU initiatives. There are some overlaps within the flagship initiatives and also between these and other strategic agendas of the EU. This might give the impression of a fragmented view of the EU2020 strategy. It would serve clarity and transparency to enhance the integration of the flagship initiatives and other relevant strategic agendas. One specific point to make is that even though the strategy has placed a milestone in the social sphere by introducing the poverty and social exclusion target, the added value of the flagship initiative on the European platform against poverty and social exclusion is not clear, as it was not, in our view, appropriately linked to the headline targets.
2) Adapting the Europe 2020 strategy: the growth strategy for a post-crisis Europe •
Does the EU need a comprehensive and overarching medium-term strategy for growth and jobs for the coming years?
•
What are the most important and relevant areas to be addressed in order to achieve smart, sustainable and inclusive growth?
•
What new challenges should be taken into account in the future? Despite the first signs of recovery, the economic situation in the EU remains difficult, with high unemployment and large disparities across member states underpinned by different structural, financing, and public finances challenges. At the same time, Europe is faced with continued competitiveness pressures in the global context. It is therefore essential for the EU to set postcrisis priorities and address its longer term challenges. The EU2020 Strategy encompasses all the main elements that can enable the EU to deal with the challenges it is faced with, whilst it has the built-in flexibility for member states to determine the strategy and policy mix that is most appropriate for their individual circumstances. What is needed is a combined emphasis on further reforms and direct investment in order to achieve growth and jobs. Special focus needs to be given on the following: •
Promotion of innovation. In order to enhance its competitiveness, the EU must promote innovation across sectors through the whole cycle from idea generation to product or service
•
development. Achievement of a fully integrated Single Market, by reducing barriers to entry which will
•
create new job opportunities, sustainability and growth. Empowerement of SMEs and abolition of unnecessary administrative burden and resulting
•
cost especially for SMEs. Promotion of the use of ICT aiming at developing the digital citizen, enterprises as well as government. 4
•
Achievement of modern and transparent governments with the provision of all government services online.
•
The demand side of employment must be paid added attention.
•
The areas of poverty and social exclusion must be given due consideration as well as the social impact assessment of policies.
•
Promotion of Culture must be addressed since, it can play a major role in fostering social and economic development and improving the quality of life and social welfare.
•
Stronger emphasis attachment to gender equality, aiming at limiting the underutilisation of female human capital, which negatively affecs the supply side of the economy. The gender dimension should be mainstreamed when implementing and evaluating policies developed within the strategy.
•
Raising the acquisition of basic and transversal skills by all citizens and development of entrepreneurial and other skills in line with the needs of the economy.
•
Health policy to be addressed as an important element of growth since a productive and active population is safeguarded through prevention of diseases and promotion of health throughout the lifecycle.
In addition, the EU needs to consider ways to better coordinate actions and policies among the different sectors and use the strategy and its targets on an equal footing so that it can deliver on the expectations of its citizens on all strands of the strategy. The strategy should continue to provide for flexibility with respect to the national targets to allow member states to take actions most suited to them. Last but not least, the poor performance in relation to the employment and social policy Europe 2020 targets needs to be addressed, by ensuring better functioning labour markets, sustainable and adequate social protection systems and by stepping up the fight against poverty, inequality and social exclusion. •
How could the strategy best be linked to other EU policies? The EU’s Multiannual Finanacial Framework 2014-1020 is already geared towards the EU2020 strategy goals, as reflected in the allocation of funds to the various areas, as well as by connecting the use of the Structural and Investment Funds to the implementation of the Country Specific Recommendations and EU policy priorities. In order to improve the linkages to sectoral policies efforts could be promoted through the European semester for closer cooperation between competent Council formations, whilst the goals of the strategy should bear a large weight in the formulation of sectoral policies.
5
•
What would improve stakeholder involvement in a post-crisis growth strategy for Europe? What could be done to increase awareness, support and better implementation of this strategy in your country? Tangible results for the citizens which are communicated on a frequent and simple basis are essential for encouraging stakeholder ownership and involvement. Effective communication of concrete positive results of the strategy at EU and national level would be helpful.
•
What type of instruments do you think would be more appropriate to use to achieve smart, sustainable and inclusive growth? The current tools of the strategy (EU headline and national targets, flagship initiatives) should remain the instruments of the strategy. The flagship initiatives in particular, whilst being useful instruments, they may however require some improvements in order to fulfil the targets of the strategy. Enhanced transfer of knowledge and sharing of best practices between member states on the implementation of the flagship initiatives would also contribute to the achievement of the strategy’s goals.
•
What would best be done at EU level to ensure that the strategy delivers results ? What would best be done at Member State level? In the context of the strengthened European Economic Governance framework, the European Semester should remain the key process at EU level responsible for the monitoring of progress and the delivery of results. Enhanced coordination of economic, fiscal employment and social policies (while fully respecting the principle of subsidiarity) would strengthen the delivery of results. In view of the drastic impact of the economic crisis on Investment, which needs to complement structural reform and fiscal sustainability in order to achieve sustainable growth and job creation, it is also important at both the EU and national level to find ways to attract and finance investments. In this respect, it would be very beneficial for growth if the announced Investment package for jobs, growth and competitiveness is developed and implemented as early as possible. At EU level it is also important to facilitate member states to have ownership of appropriate strategies able to address their socio economic circumstances and external environment. At the same time, at national level member states should also aim at increasing ownership of the strategy by enhancing the involvement of all relevant stakeholders.
6
• Are targets useful? Please explain. Despite their intrinsic limitations, targets are useful as they serve to express the long term direction of the EU’s smart, sustainable and inclusive growth model. They also serve as benchmarks to guide policy and enable the monitoring of progress. The national targets allow member states to take ownership and responsibility to deliver results and adjust policies and as such should be flexible and relate to each country’s starting point and specific challenges. Additional actions should be taken for targets to be effective and sufficient. Major targets for instance may need to be broken down into more specific and disaggregated country based targets. However, the targets are not ends in themselves. Their effectiveness and impact should be assessed through quantified and qualitative assessments and modifications should be allowed based on measurable criteria and national specificities. •
Would you recommend adding or removing certain targets, or the targets in general? Please explain. The Government of Cyprus supports maintaining the current small number of targets which are transparent and provide for a balance between the three priorities of the strategy 2020 (smart, sustainable and inclusive), which are still valid. With respect to the Research and Development target in particular, the current target is an input rather than an output indicator. However at the national level, it can by appropriate complementary policy measures be linked to innovation that can relate to business processes and outputs, productivity and competitiveness.
7