Innovation and Human Resources as a Key Factor in Strengthening Productivity in the European Union

Palmieri S.

Innovation and Human Resources as a Key Factor in Strengthening Productivity in the European Union
Working paper prepared for the “FLEXIBILITY AND SECURITY – TOOLS FOR COMPETITIVITY AND SOCIAL COHESION” workshop. Budapest, Honved utca 8th December 2005

During the last ten years the EU experienced a rough slowdown of its own productivity. Such a decline has been mainly driven by the combined effect of three elements: a) an excessive focus on low and medium-low technologies industries; b) an inability to seriously challenge the US’ dominance in the domain of the high tech manufacturing sectors; c) and finally its apparent slowness to exploit the productivity enhancing benefits of high tech sectors in a range of other sectors. The target of being the most competitive economy of the world (Lisbon strategy) and to close the economic gap with the US can be probably achieved with the help of two key factors, a stronger investment a) in the hi-tech innovation and, b) in the human capital. At the moment, the average level of development of hi-technology and in the field of the life long learning, within the European Union, cannot be considered sufficient. According to the last Community Innovation Survey (CIS3), referred to the period 1998-2000, just 44% of the European enterprises had invested in some form of innovation activity. The range of the innovator enterprises swing between 28% of Greece and 61% of Germany. In 1999 the proportion of employees in enterprises providing CVT activities was around 87% of the total employment. Nevertheless, if we consider the percentage of employees who concretely took part in CVT courses, as a percentage of employees in training enterprises, the percentage falls down at 47%; 39% if compared with the overall employment. In fact, only 4 person over 10 are in the possibility to adapt their knowledge to the economic, technological and organization change. We’ve to wonder whether in a continent that wants to be the first economy based on knowledge (like the Lisbon Agreement said) rates like these are acceptable. One first question is: who must bear the costs of changing this situation and give a wider system of knowledge, capable of insuring that the flexicurity can operate in its own full effectiveness? Secondly, can the Lisbon strategy process be considered sufficient in order to fill up the European shortage in productivity, innovation, human capital, etc? For both questions, I’m afraid, the answer is: no. Also the ongoing review process, for instance, emphasizes the supply side only, without any adequate concern about the issues of the social cohesion and the ecological sustainability. In this framework it is rather difficult to found as strategic key factors of the Lisbon strategy the innovation and the human capital.

Budapest, 2005