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European Commissioner for Economic and Monetary Policy
Concluding remarks at the Conference "Economic Growth for Better Quality of Life in Europe"
Conference on Economic Growth for Better Quality of Life in Europe
Brussels, 14 September 2010
Ladies and Gentlemen,
Thank you for inviting me to make some concluding comments at the end of this important conference on economic growth and quality of life.
I would like to start with a link with our current policy efforts, especially the Europe 2020 Strategy, and the ongoing work on the statistical front such as defined in the "GDP and Beyond" Communication.
Quality of life is one of those concepts that trigger lively debates when you aim at reaching a precise definition of the subject. However, it reflects the important notion that well-being goes well beyond mere income and material consumption, and hence beyond economic growth.
You may recall that the report "Our Common Future" by the Brundtland Commission, presented in 1987, was very influential in launching the concept sustainable development: it called for such economic advance that provides us human beings with a high quality of life and social justice, while not compromising the ability of future generations to meet their own needs. As a proud owner of a first edition of the report, I still subscribe to this goal, both in principle and in practice.
Of course, we have moved on in the past 23 years. As explained in the Stiglitz report last year, there is now a broad consensus on what constitute the essential dimensions of quality of life: they include sound standards in education, health, the environment and social inclusion.
I want to stress that Community policy has always aimed for much more than just economic growth and GDP. Its point of departure has been a broad concept of welfare, i.e. sustainable development, which is composed of an economic, environmental and social pillar. It is true that this should be reinforced and become more visible. Both the Europe 2020 Strategy and the "GDP and Beyond" Communication demonstrate this ambition. They build on the wide consensus that GDP is an incomplete and thus insufficient measure of social progress.
Nevertheless, economic growth matters. We are acutely aware of this basic truth today as we recover from a very deep economic recession: economic growth is still an essential pre-condition for well-being. Growth brings more jobs and more prosperity, which directly and indirectly improve people's lives. It also brings more public resources which can finance policies aimed at enhancing the quality of life.
Of course, from the well-being perspective, the quality and sustainability of economic growth matter at least as much as its quantity. As outlined in the Europe 2020 Communication, growth has to be "smart, inclusive and sustainable". 'Smart' by being knowledge-based and providing a high value-added. 'Inclusive' by giving all citizens a stake and keeping the society together. 'Sustainable' by providing economic stability and ensuring sound public finances. Such sustainable growth should of course not jeopardise the needs of future generations.
Therefore, the Europe 2020 strategy has formulated key policy objectives, or so-called "headline targets", which the EU as a whole and Member States individually are committed to achieve by 2020.
As agreed with the Member States, four of the five headline targets are directly related to key quality of life aspects: (1) on employment, raising the employment rate to 75 per cent for men and women aged 20-64 years, (2) on education, reducing school drop-out rates to less than 10 % and increasing the share of 30-34 years old with tertiary education to 40 %, (3) on social inclusion, lifting at least 20 million people out of risk of poverty, and (4) on abatement of climate change by reducing carbon emissions and increasing the share of renewable energy. Also the fifth target on research and innovation is closely linked to the quality of life.
Member States need to translate these five inter-related targets into their own National Reform Programme, which should set out a coherent set of national targets and corresponding policies.
In June, the European Council agreed on the main outline of the strategy, its objectives and these headline targets.
Making the strategy operational is a challenging balancing act. We must balance the need for restoring macroeconomic stability and sound public finances with the need to support smart, sustainable and inclusive growth. These aims are not contradictory, but complementary.
At the current juncture, it is essential to proceed quickly so as to consolidate the current economic recovery and alleviate the present high unemployment and the social ills associated with it.
These urgencies make a strong case for frontloading some growth-enhancing elements of the Europe 2020 strategy as a coordinated EU-level initiative. The 30 September ECOFIN Council will discuss how to best advance structural reforms at a high level of ambition already in the draft reform programmes to be submitted by mid-November. The aim must be to increase our average growth rate by 1/3 to around 2 per cent, which could create 10 million new jobs over the coming decade.
By frontloading Europe 2020, we want to identify common reforms for an early adoption to lift both productivity growth and our economies capacity to create jobs. The concrete benefits of structural reforms in the product and labour markets, the innovation system and the public sector will take time to materialize. Nevertheless, enhanced confidence in our societies' capacity to address the key economic challenges can contribute to better material and subjective well-being even in the short run.
It is widely recognised that sound and timely statistics are essential for making the Strategy a success. This implies a better use of all the available statistics, and developing new statistics and concise indicators. The Commission's "GDP and Beyond" Communication has taken up this challenge. The Eurostat actions under this agenda include much work on social indicators.
As regards developing new quality-of-life statistics, I am glad to note that the work is already fully under way, as testified by the recent publication of Eurostat's feasibility study on well-being indicators. In line with the conclusions of the Stiglitz report, the work addresses the many dimensions of well-being; it combines various objective and subjective measures; and it tries to deepen our understanding of the relations between the various quality-of-life and well-being dimensions.
I welcome this study as a substantial step forward. But it appears that much more work lies ahead for both policy-makers and the statistical community. While there are many thorny issues to be solved, in my view the most challenging one is how best to aggregate the information of the various sub-indicators that are needed to capture many dimension of well-being and the quality of life. Given the progress that has been made, I'm sure we can find good alternatives to choose from here, too.
While we obviously need to develop our knowledge further, we also need to start exploiting now all that is already available today since it strengthens the basis for policy development. There is no contradiction between the two objectives.
Therefore, I am pleased to see that so much work on quality-of-life statistics takes account of our current policy concerns and needs. I hope that the launch of the Europe 2020 Strategy and the conference today will give a further boost to this important work, and I hope that policy makers all over the EU will make good use of the results.