Annexes to COM(2011)642 - Industrial Policy: Reinforcing competitiveness - Main contents
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| dossier | COM(2011)642 - Industrial Policy: Reinforcing competitiveness. |
|---|---|
| document | COM(2011)642  |
| date | October 14, 2011 |
Access to non-energy, non-agricultural raw materials is another essential factor for the competitiveness of EU industry. The high and fluctuating prices for these raw materials, and their location mostly outside the EU poses risks to many firms and both the EU and the Member States – complementing EU's external policies – should design policies that address the scarcity of primary raw materials by exploiting European resources in a sustainable way; supporting research and innovation with the aim of generating alternative solutions; increasing resource efficiency; and promoting better recycling techniques on a wider scale, including for valuable materials used in small quantities.
The further integration of environmental and social issues into business operations and strategy is increasingly important to the competitiveness of European industry. The Roadmap to a Resource Efficient Europe[7] contains a set of actions at EU level and recommendations for Member State action to tackle the unsustainable use of resources.
Competitiveness would be strengthened by: Favouring energy and raw material efficiency and promoting innovation and deployment of cleaner technologies along value chains with the use of long-term incentives that encourage market creation and facilitate the participation of SMEs in these processes. As outlined above, many Member States have made considerable progress with these issues. Ensure fair and undistorted pricing of energy, and continue to work on upgrading and interconnecting energy distribution networks. |
- Developing social entrepreneurship, social businesses and the social economy is another important tool for strengthening the competitiveness and the sustainability of the European industry.
The social economy employs over 11 million people in the EU, accounting for 6 % of total employment[8] and approximately one in four businesses founded in Europe is a social enterprise. This figure rises to one in three in Belgium, Finland and France[9]. These companies are often highly productive and competitive, due to the very high level of personal commitment on the part of their employees and the better working conditions that they provide[10].
In order to reinforce a 'highly competitive social market economy', the Commission has placed the social economy, social responsibility and social innovation at the heart of its concerns for new solutions to a more sustainable economy, under the Europe 2020 strategy[11], the flagship initiative 'The Innovation Union'[12], the European Platform against Poverty and Social Exclusion[13] and the 'Single Market Act'[14] (SMA).
The public consultation for the SMA[15] revealed a high level of interest in the capacity of social enterprises and the social economy in general to provide innovative responses to the current economic and social challenges by developing sustainable jobs.
The Commission is therefore willing to launch an important debate on means to develop this new kind of economy and a first step will be achieved in some weeks with the Social Business Initiative Communication and the Corporate Social Responsibility Communication which will present key actions for promoting social business.
Competitiveness would be strengthened by: Favouring and promoting social entrepreneurship in Europe, in particular in enhancing its public profile and its access to public and private finance (especially through Social investment Funds). |
TOWARDS A MORE BUSINESS-FRIENDLY EUROPE
Business environment
- An open, efficient and competitive business environment is a crucial catalyst for growth in a global context. Improving the business environment covers policies in areas ranging from improving infrastructure to shortening the time needed to obtain a building license.
While all Member States have adopted national targets for reducing administrative burden , not all of them have made progress in measuring the current burden or proceeded to cut it. In 18 Member States impact assessments for new legislative proposals are mandatory, albeit not all of them comply with the requirement, and impact assessments are not always comprehensive in terms of economic, social and environmental aspects, limiting their effectiveness.
The high quality and availability of infrastructure (energy, transport, and broadband) make an important contribution to a business-friendly environment. Given that improving the transport infrastructure is a major challenge especially in the new Member States, significant investments for rebuilding and modernisation should continue, including with the support of Structural Funds and the Connecting Europe Facility.
Businesses need a modern public administration, able to deliver efficient and high quality public services. Reforms should emphasise e-government initiatives like unified service centres for the public, shared networks and data centres. Many e-government initiatives also allow enterprises to spend less time on administrative procedures and devote more resources to business opportunities. E-procurement must in this regard be promoted to the widest extent possible. Making available well-performing one-stop-shops (so-called "Points of Single Contact") to businesses seeking to operate across borders is also key to saving time and resources, and to reduce the room for corruption. While considerable progress has been made, there is still room for improvement.
An important area providing scope for improvement is the taxation of businesses. While the overall effective corporate tax rate and the balance of taxes on labour as opposed to resource use are issues where further reflection is needed at the EU and Member State levels, the reduction of compliance burden deriving from taxation can greatly improve the business environment. This implies increasing transparency and reducing the complexities of tax codes and compliance regulations, simplifying payment procedures, including through the use of e-government, and ensuring the stability of taxation legislation. The Commission proposal on a Common Consolidated Corporate Tax Base is an important step forward.[16]
Competitiveness would be strengthened by: Reducing the administrative burden on businesses by evaluating the current burden (including that due to the tax code) and rapidly reducing burdens to targets. For example, the Netherlands has been a pioneer in measuring and evaluating the reduction of administrative burden and in setting ambitious targets, resulting in a globally recognised efficiency. Promoting competition among service providers that use the infrastructures in broadband, energy and transport. |
Promoting industry and services
- Services are the largest part of the EU economy and their integration with manufacturing has grown as specialised services are used to manage the production and product distribution processes. Manufacturing firms have started to offer services packaged with products and service providers use complementary products and integrate manufacturing within their value chain.
Service innovations that address customer needs can transform value chains, sectors and markets[17] irrespective of whether they come from service or manufacturing firms. The importance of business-related services is growing as a source of innovation, new technology and improved performance. These services have become integrated in the value chains of other industries by means of intermediate consumption, knowledge production and technology flows, which represents an opportunity for the European manufacturing sector to open up new markets and find new sources of revenue around their products.
The Single Market could contribute more to growth if all the European legislation currently in force was fully implemented by all Member States. The goal is to put an end to market fragmentation and to eliminate barriers to the movement of goods, services, innovation and creativity as noted in the Single Market Act.[18] The proposed Regulation on European Standardisation[19] has extended European standards setting to the services sector to reduce multiple and conflicting national standards.
Intra-EU trade in services lacks dynamism as it represents only one-fifth of total intra-EU trade. Since 2004, trade in services between the EU and the rest of the world has been growing faster than intra-EU trade. The implementation of the Services Directive[20] has been a critical milestone, although the recent mutual evaluation process[21] has identified a number of areas that still need improvement.
Competitiveness would be strengthened by: Developing support for innovative services based on measureable outcomes; and by participating in the Innovation Partnerships and in large-scale demonstration projects. Fully implementing the Single Market legislation, in particular the Services Directive and promoting business services. Malta is leading in transposing Single Market legislation with only two directives awaiting transposition. |
Small and medium-sized enterprises
- To fully unleash the potential of small and medium-sized enterprises requires coherent actions across the EU in line with the SBA Review Communication.[22] Large, exporting enterprises have been in the forefront of the recovery, but many SMEs still face lack of demand because of time lags, but also because of difficulties in accessing finance and export markets. Among high-growth firms, as measured by employment expansion rates, small firms exhibit higher net job creation rates than larger ones. High-growth firms are found in all industries and in all regions, and tend to be innovative.
The tightening of credit conditions during the crisis has made access to finance difficult, especially for SMEs. In response, many Member States have adopted corrective measures such as increasing the capacity of loan guarantee schemes, investing in equity funds and microcredit programmes, and facilitating bank lending through advantageous loan conditions or credit mediators. As access to finance continues to be difficult, further efforts should be made to facilitate the availability of appropriate forms of finance, including loans, equity and their combinations. In addition, the development of specialised finance providers for small businesses, including socially-oriented firms, should be encouraged. As mentioned in the Single Market Act[23], the Commission will adopt before the end of this year a legislative instrument to facilitate the development of Social Investment Funds in the European Union.
Trade promotion by Member States improves the global presence of European firms and most Member States support the internationalisation of SMEs, providing finance, information and support on market access and regulation. SMEs that use these services are relatively satisfied, although only 27 % of internationalised SMEs said that they were aware of existing public support measures and 7 % actually used them. These results suggest that the awareness and accessibility of public support could be further improved.
The average payment delays can be very long in some Member States, threatening the survival of small firms. The situation has not improved during the last year, and has even deteriorated in some Member States for payments from public administrations (Czech Republic, Greece, Cyprus, Hungary, Austria, Slovakia). The late payment directive[24] requires payments by public authorities to be processed within 30 days. Meeting this objective will be a challenge for many Member States, but in particular for Greece, Spain, Italy and Portugal.
Competitiveness would be strengthened by: Facilitating the growth of SMEs by ensuring that regulations do not pose obstacles to expansion; by favouring access to appropriate finance; and by providing support services for accessing new markets, and publicising these. Ensuring that public administrations reduce payment times and adhere strictly to the Late Payments Directive. |
CONCLUSIONS
- This Communication has argued that to achieve sustainable growth and to kick-start the economy require coherent and coordinated industrial policies from the Member States as well as deep structural changes. A considerable impact can be had by facilitating change, enabling innovation, promoting sustainability, improving the business environment and benefiting from the single market. The implementation of these policies should be a priority in national capitals as it is at the Commission.
A greater coordination of policies at national level can leverage scarce funds to foster innovation and growth in times of budgetary austerity. At EU level, the Commission’s proposal for the Multiannual Financial Framework[25] has been designed to prioritise these objectives, strengthening the capacity of the EU to invest in industrial innovation by reducing fragmentation, simplifying rules for beneficiaries and increasing the focus on bringing innovation to the market.
The Commission will strengthen its support for the Member States’ efforts within the context of Europe 2020, based on a coherent approach to monitoring progress over time, and providing the necessary forum for identifying good practices.
The Commission will: Strengthen the coordination of Member States’ industrial policies by promoting and monitoring growth-enhancing structural improvements to achieve the targets of the Europe 2020 strategy. By first quarter of 2012 provide a forum for identifying and discussing good practices in promoting growth through industrial policies. |
- [1] http://ec.europa.eu/economy_finance/sgp/index_en.htm
[2] An Integrated Industrial Policy for the Globalisation Era. Putting Competitiveness and Sustainability at Centre Stage, COM (2010) 614.
[3] http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
[4] http://ec.europa.eu/enterprise/sectors/ict/files/kets/hlg_report_final_en.pdf
[5] Proposal for a Regulation of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection. COM(2011) 215 final, 13.4.2011.
[6] http://ec.europa.eu/energy/technology/set_plan/set_plan_en.htm
[7] Communication "Roadmap to a Resource Efficient Europe", COM(2011) 571 final, 20.09.2011
[8] CIRIEC 'The Social economy in the European Union' page 48
[9] Global entrepreneurship Monitor, Executive report 2009
[10] For example, in France, absence due to sickness is significantly less than in companies in general: 5.5% as opposed to 22%, 'Absence from work for health reasons in the social economy', Chorum, April 2011, http://www.cides.chorum.fr
[11] Europe 2020 – A strategy for smart, sustainable and inclusive growth, COM(2010) 2020
[12] Communication on the Innovation Union COM(2010) 546 final, 6 October 2010
[13] Communication on the 'European Platform against Poverty and Social Exclusion: a European framework for social and territorial cohesion' COM(2010) 758 final of 16 December 2010
[14] 'SMA – Twelve levers to boost growth and strengthen confidence', COM(2011) 206 final of 13 April 2011
[15] http://ec.europa.eu/internal_market/smact/consultations/2011/debate/index_en.htm
[16] Proposal for a council Directive on a Common Consolidated Corporate Tax Base (CCCTB), COM (2011)121 of 16.03.2011.
[17] http://www.europe-innova.eu/web/guest/innovation-in-services/expert-panel/about
[18] Single Market Act. Twelve levers to boost growth and strengthen confidence - "Working together to create new growth", COM(2011) 206 final, 13.4.2011.
[19] Proposal for a regulation of the European Parliament and of the Council, COM(2011) 315 final, 01.06.2011
[20] Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market.
[21] “Towards a better functioning Single Market for services – building on the results of the mutual evaluation process of the Services Directive”, COM(2011) 20 final, 27.1.2011.
[22] Review of the “Small Business Act” for Europe, COM(2011)78/3, 23.02.2011.
[23] Key action of lever 8 on Social entrepreneurship
[24] Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast).
[25] A Budget for Europe 2020, COM(2011) 500 final.