In particular, there should be more investment in education, particularly in skills relevant for the high-growth service industries. But it should be recognised that people in services need to be able to juggle lots of skills. They need to deal with risk and legal issues, for instance. As such the new educational investment should be in providing training that connects all these areas up together, rather than teaching them in isolated subsets.
The people in EU states, with the exception of the new Europeans in central and eastern Europe, tend to be much more risk averse and slow to adapt to the new competitive logic. But if the EU is to invest in its people there should be some trade-offs, such as a shift in agricultural subsidies to education.
However some EU states, such as Denmark, Switzerland and Sweden, are amongst the most competitive in the world, and many of them excel in their national health provision. But they tend to invest less in IT, which is one of the reasons for their poor labour productivity levels in comparison to the US. They are also a long way from reaching the goal set at Lisbon to spend 3% of GDP on research and development.
Europe could raise its game very fast in two ways: reduce its labour rigidity, which makes it hard for organisations to adapt and change; and encourage more standardisation. If the financial services sector agreed on a set of shared standards it could save $100 billion a year.
Leaders: Hans Ulrich Maerki, Stuart Rock, EBF, Issue 28, Spring 2007
Review by Morice Mendoza