Lisbon Strategy or Bust

The EU’s ambitious goals, contradictory objectives, modest performance
In January of this year, the European Commission issued a rather downbeat assessment of the progress the EU has been making toward the goals of the Lisbon strategy. The strategy aims at creating conditions for the EU to become within a decade “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.” As President Romano Prodi stated in his speech, “Four years after Lisbon it is clear that we are going to miss our mid-term targets.” As a result, the Commission urged member states to improve investments in knowledge and technology, strengthen the competitiveness of the EU economy and increase labor market participation.
The Lisbon strategy (after the city where the EU summit in March 2000 took place) has been presented as one of the EU’s most ambitious projects of this decade. It aimed to reduce a growing gap between a more productive economy in the US and a lagging economy in the EU, to give a fresh impetus to the integration process after the move to the monetary union had been completed, and to respond to the common problems faced by most of the EU member states (such as their aging population and brain-drain). The strategy is based on setting recommended targets, sharing best practices and regular monitoring of progress. It includes policy areas as diverse as entrepreneurship, employment, pension reform, education, macroeconomic policies, health protection and others.
A closer look at the strategy reveals several features which are quite characteristic of EU policy making. First is the obvious attempt to combine policy objectives which are hardly compatible. On one hand, the emphasis is on the need to boost entrepreneurship, productivity, employment and competitiveness growth in the EU; on the other hand, every time such objectives are raised, they are accompanied by assurances that they include “an adequate level of security.” Put simply, it’s US growth and competitiveness, but with European social guarantees. Some people call it “the third way” and others simply point out that this is the kind of compromise between different interests and member states which is so common to EU policies, and which results in a muddling through without achieving any of the objectives.
But it is clear that without member states undertaking reforms to allow for more flexibility and competition in so-far protected markets, in particular the labor market, the EU has little hope of catching up to the US. Efforts to keep labor markets closed to citizens from new EU countries or the continuous breach of the Stability and Growth Pact rules show that the political rhetoric remains detached from the actual policies in a number of member states and encourages similar behavior in new members. Although structural reforms are being initiated in Germany and France, the political opposition makes them slow and piecemeal. It should be noted that the Lisbon strategy with its time schedule and concrete recommendations could be used by willing member states’ governments as an additional argument to justify necessary reforms in the face of domestic opposition. Although in such a way the EU might be seen as a scapegoat in the eyes of some people, this could bring concrete long term benefits.