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European Commission


Vice-President of the European Commission

Responsible for Interinstitutional Relations and Administration

Europe 2020 conference

Europe 2020 conference, Bratislava

18 June 2012

Prime Minister Fico

Ladies and gentlemen

First of all, I'd like to thank the organisers – the American Chamber of Commerce and the Representation of the European Commission in Slovakia – for their initiative and preparation of today's conference.

It's a pleasure to be back home once again to be with you here today to talk about the Europe 2020 strategy, and in particular how the EU's master plan for creating growth and jobs can benefit Slovakia.

It is more than two years ago that all 27 EU Member States adopted the Commission's Europe 2020 proposals, a ten-year plan to turn Europe into the most sustainable, inclusive and competitive economy in the world.

Those two years, of course, coincided with one of the greatest challenges that the European Union has ever encountered. The ongoing economic and financial crisis exposed structural weaknesses in Europe's economy, forcing us to take corrective action and leading to waves of austerity throughout the Member States. As if this were not enough, we also face a major debt crisis - a volatile situation where the views about what caused the crisis and how to act to overcome it differ wildly.

The political map of Europe has changed significantly. Parliamentary majorities have shifted many times during the crisis: altogether 11 governments have changed in Member States since 2008.

I can say without exaggeration that the topic of conversation has now moved on from the crisis to the future of the European Union as a whole. The crisis has not only undermined the confidence of world markets in our currency, but also underlined the need to strengthen the monetary and fiscal part of the European project.

One of the consequences of this development in Europe is the debate on how the austerity measures designed to cut debt levels can be complemented by other measures to bring back growth to our European economies Thankfully, we have a ready made programme in place, endorsed and agreed by every national government – Europe 2020. If it is properly implemented by every Member State, Europe 2020 will, I believe, help us to emerge stronger from the crisis.

So how does it aim to achieve this? Put simply, each Member State will be encouraged to make the necessary structural reforms and targeted investments to reach the five ambitious objectives - on employment, innovation, education, social inclusion and climate/energy – set at the European level by 2020. Each Member State has adopted its own national targets in each of these areas; and EU leaders have agreed a number of concrete actions at EU and national level.

As you can imagine, coordinating a programme as complicated as this across 27 Member States is not easy. That is why we have adopted the so-called 'European Semester', an annual timetable that ensures that EU countries publicly inform each other about what they are doing, so that they can learn from each other and detect problems in advance. The European Semester also introduced closer coordination during the preparation of national budgetary and structural policies in order to detect inconsistencies and emerging imbalances.

The process works as follows: reform priorities are identified every year at the beginning of the European Semester by means of the Commission's Annual Growth Survey. Based on these priorities, each April Member States draw up their reform plans, which are then presented to the Commission in the form of National Reform Programmes (focused on jobs and employment issues) and Stability Programmes (focused on economic issues). Based on its assessment of these programmes and the national economic situation in each Member State, the Commission proposes policy recommendations to each EU country (as we did just last month). At the end of June, the European Council – made up of the heads of state and government – endorses the recommendations.

As I've just said, the Commission presented its 2012 country-specific recommendations on 30 May. They show that although Member States are taking courageous action to correct public finances, they could do more to pursue this in a more growth-friendly way. For example, we can do more to help businesses develop; we can do more to open up new sources of jobs in sectors such as energy, services and ICT; we can do more to combat poverty and unemployment and to invest in education and R&D. Recommendations from the European Commission allow Member States to start very difficult political debates, as they do not represent the requests made by one political party or the government, but the recommendations of the European institutions, agreed upon by other partners within the eurozone.

So what did the Commission recommend specifically for Slovakia? In a nutshell, the seven recommendations for Slovakia this year reflect the main short-term challenges it faces to address the imbalances in public finances and improve levels of employment.

Although Slovakia's target for employment levels by 2020 is 72%, it is currently languishing at around 65%, with an overall unemployment rate of 14%, the third-highest youth unemployment rate and the highest long-term unemployment rate in the EU. That's why the Commission has recommended reforming the country's active labour market policies, ensuring that they are better targeted to the needs of the unemployed, as well as enhancing the employment capacity of the public sector. The Commission also pointed out that taxation levels for low-income workers in Slovakia is relatively high, and that as a result a considerable proportion of jobseekers have little incentive to move from social assistance to a low-paid job.

Among the other recommendations from the Commission was a greater investment in education and skills. According to the Commission's assessment, the low quality of the general and tertiary education system is holding back Slovak growth potential. Similarly, the country's innovation capacity is being held back by the lack of an adequately skilled workforce, as is the level of R&D spending in Slovakia (just 0.63% of GDP in 2010), which is one of the lowest in Europe. The 2020 target for investment in R&D set by Slovakia is just 1% of GDP – a modest figure by any standards – and yet you are still some way from reaching that!

The Commission has also called for more action on tackling unemployment levels, pointing out that the high unemployment figures for Slovakia actually exclude a high percentage of the so-called 'economically inactive'. Among the 9% of population that are Roma, for example, 80% of adults are inactive and children are largely excluded from the normal schooling system. Specific measures are needed for their re-inclusion.

As far as the Slovak budget deficit is concerned, the Commission noted that it is still rather high considering the short time that remains for it to be brought under the 3% threshold by 2013, and to the level of 2.3% and 1.7% in the next two years. I would like to emphasise, that any government in Slovakia would have to tackle the issue and consolidate the public finances in order to reach the above-mentioned threshold of 3%

The Commission also recommended continuing consolidation and improving the quality of fiscal revenues, notably by improving tax collection. Better tax collection would also improve the fairness of the tax system, with less tax avoidance and evasion, an area in which Slovakia annually loses 2.3 billion euros.

Finally, the Commission's assessment showed that the Slovak public administration suffers from high a turnover of staff and insufficient capacity building. Building on the recent reforms, there is still a need to shorten the length of judicial proceedings and strengthen the role of the public procurement office as an independent body.

These recommendations might seem harsh – and it is certainly not easy for me as the Slovak Commissioner to stand here and list all the apparent weaknesses in my own country, as I hope you can understand! – but they are really made with the country's best interests at heart.

I'm pleased to say that the Slovak government has accepted our assessment of the situation, and that it will bring forward its action plan for the implementation of the recommendations before the end of June. This prompt and decisive approach is very much welcome, and I hope that other Member States will follow the Slovak approach of a concrete action plan whose implementation is closely monitored.

Because let's not be under any illusions – our success depends wholly on the commitment of each Member State to accept its shortcomings and to take decisive action to address them on the ground. Don't forget, Europe 2020 is not the first strategy for growth and jobs adopted by the EU – between 2000 and 2010 we had the Lisbon Strategy, that was designed to create much the same sort of economic development as the current strategy but which fell far, far short of expectations because of a lack of ownership by the Member States. Let's not fall into that trap once again – I am sure we won't, as the crisis has helped to sharpen the focus on the need to push through the reforms!

Ladies and Gentlemen, I'd like to conclude with a quick glance into the crystal ball, to see what Europe might be like in 2020 if we achieve all that we set out to on the basis of the Europe 2020 programme. For Europe 2020 is not the be-all and end-all – it is a solid platform on which to build other measures to stimulate growth in the European economy and create jobs.

For example, in 2020 not only do I hope to see each and every Member State meet its targets for debt reduction, investment in innovation and all the other goals set out their individual reform programmes but also that a number of pan-European milestones might have been met. For example, the opening up of the EU-wide markets for services and energy and the creation of a true digital single market. According to conservative estimates, the potential economic benefits of completing the single market for services alone could range between 60-140 billion euros, representing a growth potential of 0.6-1.5% GDP! And estimates suggest that the EU could gain a further 4% of GDP by stimulating the fast development of the digital single market by 2020. This corresponds to a gain of almost € 500 billion. This is where I hope we will be by the end of this decade – but it will depend on the good will and concerted efforts of the Member States.

They can take the first step towards achieving this goal at the end of this month, when the European Council will, hopefully, endorse the country specific recommendations. All Member States will then be expected to implement their recommendations without delay and to reflect them in the next year's budgets.

Given that all Member States have already agreed on Europe 2020, this should not be too much to expect. But there are other measures, more controversial perhaps, that I hope EU leaders will also be able to agree. For example, the Commission has asked the June Council to back its proposal to increase in the capital of the EIB by at least 10bn euro to enhance its lending capacity. And it is no secret that the Commission is in favour of gradual steps towards a full economic union to complete our monetary union, starting with a banking union with integrated financial supervision and single deposit guarantee scheme – measures that I hope will also receive the backing of national governments in the interests of future prosperity for all.

Let me close with a word of thanks to you all for coming here today to this important conference on Europe 2020, and a word of encouragement to you all, to do your utmost to make sure that Europe 2020 succeeds. We owe it to the people of Europe, both current and future generations, to make sure that it does.

Thank you for listening.

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