Industrial competitiveness is the solution to ensure sustainable economic recovery

17 Oct 2011 09:49 AM

The European Commission presented recently its Communication on "Industrial policy: Reinforcing competitiveness", which looks specifically at the industrial competitiveness performance of the Member States.

The EU economic recovery has been relatively slow and remains fragile. This is reflected in the worsening sentiment across the European economy. Moreover, there are clear downside risks stemming from financial markets, rising energy and raw materials prices, and the need for budgetary consolidation. However, EU industry is in good shape and has the potential to push the European economy back to growth.

There are considerable differences among Member States: the average labour productivity in manufacturing ranges from almost 125% of gross value added per person employed in Ireland to below 20% in Bulgaria. The share of innovating companies varies from 80% in Germany to 25% in Latvia. The business-friendliness of regulation gets highest scores in Finland whereas Italy is in last position. Faced with this scenario today’s communication encourages Member States to rapidly implement policies to converge to competitive levels coherent with participation in the euro and the Internal Market.

This requires robust and coordinated industrial and SMEs policies from the Member States. To this end, the Commission is ready to promote and monitor structural improvements as the European economy urgently needs to get back to a growth path.

European Commission Vice President Antonio Tajani, responsible for Industry and Entrepreneurship said: " European industry is in a good shape and ready to compete. However, the slowdown of the recovery should push us to put even further competitiveness and growth at the top of the political agenda. We need structural reforms aimed at freeing the potential of our entrepreneurs, the main actors for recovery".

recent communication is accompanied by the "European Competitiveness Report 2011" and the report on "Member States competitiveness performance and policies 2011". More information

Industrial Competitiveness: "An Industrial Policy for the Globalisation Era"

Key areas for action

Enhancing the global competitiveness of European industry is essential, as 75% of EU exports come from manufacturing firms, who also undertake 80% of industry R&D. The Communication has identified the following key areas where the competitiveness of the EU economy could be further strengthened in order to make significant progress towards the Europe 2020 goals:

(1) facilitating structural changes in the economy, in order to move towards more innovative and knowledge-based sectors that have higher productivity growth and which have suffered less from global competition (such as eco industries, electrical and optical equipment);

(2) enabling innovation in industries, in particular by pooling scarce resources, by reducing the fragmentation of innovation support systems and by increasing the market focus of research projects. The markets for key enabling technologies (e.g. nanotechnologies, advanced materials, industrial biotechnology), for example, are expected to grow by up to 50% by 2015, creating thousands of high value-added new jobs.

(3) promoting sustainability and resource efficiency, in particular by promoting innovation and the use of cleaner technologies, by ensuring fair access and undistorted pricing of raw materials and energy and by upgrading and interconnecting energy distribution networks;

(4) improving the business environment, in particular by reducing the administrative burden on businesses and by promoting competition among service providers that use broadband, energy and transport infrastructure;

(5) benefiting from the Single Market, by supporting innovative services and by fully implementing the Single Market rules, in particular the Services Directive. Fully implementing the Services Directive could bring up to €140 billion of EU-wide economic gains, representing a growth potential of 1.5% of GDP;

(6) supporting small and medium-sized enterprises (SMEs), in particular by favouring access to finance, by facilitating internationalisation and access to markets, and by ensuring that public administrations reduce payment times.

The main results of the reports

  • Labour productivity (per person employed in manufacturing): the productivity rate is above the EU average in Ireland, The Netherlands, Austria, Finland, Belgium, Luxembourg and Sweden whilst it is below the average in Slovakia, Poland, Slovenia, Cyprus, Hungary, Czech Republic, Portugal, Estonia, Lithuania, Romania, Latvia, and Bulgaria.

  • The EU has fewer young innovative firms: EU companies have a poorer performance in terms of the applications and commercialisation of research and innovation relative to the US and Japan. The share of innovating companies among all companies is especially high in Luxembourg, Germany, Belgium and Portugal, whilst it is low in Hungary, Poland, Latvia and Lithuania.

  • Industry is increasingly intertwined with services: in particular knowledge intensive business services are increasingly used as direct and indirect inputs by industry, accounting for up to 9% of EU-12 and 18% of EU-15 exports.

  • EU industry is improving raw material efficiency: it is increasingly using recycled and innovative substitute materials, but accessibility and affordability of non-energy raw materials are crucial for the competitiveness of several raw material intensive manufacturing industries in the EU.

  • Industrial efficiency: the EU is leading the way in many instances, generally ahead of the US and closing the gap on Japan. However, there are significant differences in performance across Member States and industrial sectors in the EU.

  • Business-friendliness of government regulation: The group of countries where it is less burdensome for companies includes Luxembourg, Finland, Estonia, Cyprus, Denmark and Sweden, whilst companies complain most in Belgium Portugal, Greece, Hungary and Italy. For more details, see MEMO/11/702.


As part of the Europe 2020 strategy, the Commission launched in 2010 a new industrial policy1 that highlighted the actions needed to strengthen the attractiveness of Europe as a place for investment and production, including the commitment to monitor regularly Member States’ competitiveness policies.

The annual "European Competitiveness Report" and the report on "Member States’ Competitiveness Performance and Policies" will contribute to the evaluation of the Member States under the broader framework of the European semester and Europe 2020.

More information

Communication "Industrial Policy: Reinforcing competitiveness"

"European Competitiveness Report 2011"

Report on "Member States’ Competitiveness Performance and Policies 2011"

MEMO/11/701 "Industrial Policy: Reinforcing competitiveness"

MEMO/11/702 "Overview of competitiveness in 27 Member States"

Industrial Competitiveness: "An Industrial Policy for the Globalisation Era"


Europe 2020 and European semester


Contacts :

Carlo Corazza +32 2 295 17 52

Andrea Maresi +32 2 299 04 03