EU industry: boosting growth and jobs

Since 2008, output and employment in European industry have declined. To stimulate recovery, the European Commission (EC) has proposed a series of measures focused on improving industrial competitiveness and investment in innovation. Budgetary constraints, slow implementation and complex regulation pose challenges to the success of these initiatives.     

Between 2008 and 2011, industrial production fell from 20% to 16% of EU GDP while jobs in the sector decreased by 11%. The EC’s 2012 industrial performance scoreboard divided Member States (MS) into “consistent performers”, with technologically advanced firms and highly skilled workforce; “uneven performers”, good only on some criteria; and a “catching-up” group, with weak innovation capacity, knowledge transfer and efficiency. This reflected to some extent groupings from the 2011 innovation scoreboard, which measured research and innovation in the EU.  

Key EU initiatives

In the Europe 2020 growth strategy, the Commission proposed developing a new industrial policy and enhancing innovation. In a later 2010 communication, the EC proposed to integrate policies affecting industry better, and focus on competitiveness, in particular when preparing future policy proposals and trade agreements. Its first efforts concentrated on bettering business regulation, facilitating access to finance, improving standardisation and facilitating access to raw materials. 

The Innovation Union initiative aims to match innovative firms, investment and research, to accelerate the process of developing an idea to getting it onto the market, as well as sharing the accompanying risks. The EC also proposed a growth strategy for key enabling technologies (KETs), such as advanced materials and microelectronics. The European Council backed strengthening of industrial innovation and KETs in the Compact for Growth and Jobs.

In a 2012 industrial policy update, the Commission set the target of increasing the share of industry to its pre-crisis level of 20% of EU GDP by 2020. To achieve this, the EC proposed to focus investment and innovation on six priorities: advanced manufacturing technologies, KETs, bio-based products, sustainable policy, clean vehicles (CARS 2020) and smart energy grids.            

In October 2012, the European Council included support for industrial competitiveness and investment in new technologies on the list of areas requiring greater effort.

Plans for investment in industrial innovation and research are based on the EC’s 2014-2020 budget proposals, which several net-payer MS wish to reduce. Trade unions underlined that the current austerity policy is contradictory to boosting industrial growth.

In a 2011 Eurobarometer survey of businesses, only 20% of respondents found procedures for obtaining financing easy, and only 25% thought that government programmes support innovation well.     

Observers claim that excluding social policy from recent efforts to revive EU industry, despite wide recognition of the need to do so, creates a missing link and reflects deadlock on social issues among the MS.

Commentators also say that the Commission’s target is not consistent with individual performance, as some MS with industrial activity already exceeding 20% of GDP are in the weakest ‘catching-up’ group. 

In a resolution of 9 March 2011, the EP called for more funding for research and for small and medium-sized business. MEPs proposed using EU project bonds to finance reindustrialisation. The EP also called for promotion of the emergence of EU industrial “champions”.