26th February 2010
The IPA response to the Future “EU 2020” Strategy
Introduction
We welcome the EU 2020 strategy and its
emphasis on growth, jobs, innovation and improved productivity as a way for the
EU to recover from the financial and economic crisis. The strategy acknowledges
that the crisis has, in many member states, accelerated the economic
restructuring that was already taking place, challenging member states to
consider the shape of their future economy. It also recognises that the crisis
has placed under threat many of the gains of the last 10 years, for example
increased employment, and that greater efforts towards sustainability must be
made.
We are concerned, however, that the
strategy continues to rely on the policy frameworks and interventions of the
last 10 years to achieve the very real challenges facing the EU in the next 10
years. Increased labour market participation, a more knowledge based economy,
better and higher value jobs, higher levels of innovation and greater resource
efficiency are important objectives in maintaining the EU’s competitiveness.
But the absence of the workplace in the strategy, acknowledged as the place in
which many of these objectives are to be realised and as a focus of policy, is
concerning.
This response suggests the ways in which
many of the objectives of the EU strategy might be better realised by
considering the workplace, and possible policy interventions at this level.
Raising participation
Raising labour
market participation has been identified as one of the key levers for improving
EU competitiveness. Unemployment before the recession declined to approximately
7 per cent, a figure that is likely to have risen in the last two years. The EU
has relatively low levels of participation at either end of the working age
spectrum, placing greater pressure on state social security provision,
particularly as demographic change increases the age profile of EU populations.
Creating work
that is sustainable over the life cycle will be crucial to challenging these
trends. The EU 2020 strategy recognises the need for more and better jobs, but
it seems to see these only as high skill, high value jobs, rather than jobs
which are based on healthy, engaging and stimulating work. Long-term
epidemiological research in the UK,
as well as several European workplace surveys shows the health impact of bad
work. They show, for
example, that health suffers when people have little opportunity to use their
skills, and little decision making authority. Extending working lives in the 21st
century will mean addressing power, autonomy and control as a means to
healthier, more sustainable work. Creating more jobs will be of little use if
the ways in which they are organised and managed are not improved to utilise
skills and allow worker autonomy and control.
Resource efficiency
An efficient use of resources will be
important for EU and member states over the next 10 years, particularly in
light of the fiscal deficits many face. At the same time the strategy
acknowledges that ‘major transformation cannot be done without investment in
people and productive capacity.’ Investment in people through skills has
featured prominently on the policy agenda of the last 10 years at national and
EU level, and the strategy suggests it will continue to do so. Yet in many
countries the supply side skills investments have not yielded the expected
productivity returns, making budgets for state investment in skills vulnerable.
The strategy makes reference to the need for better matching of skills demand
with supply, principally through increased labour mobility, but it fails to
recognise the other range of factors that influence skills utilisation.
Recent research carried by the UK Commission
for Employment and Skills suggests that work organisation is a significant
factor influencing skills utilisation. At the moment poor management and job
design often prevent investment in skills translating into productivity
returns. Managers lack the skills and awareness themselves to redesign
processes and jobs to capitalise on the skills and knowledge of their
workforce. We have already discussed the impact of skills under utilisation on
employees in terms of health, but it has also been shown to impact on levels of
engagement. Increasing labour mobility and improving the responsiveness of
skills providers to demand should help, but in a great many workplaces more
investment in management skills and access to transferable knowledge on work
organisation could ensure that the investment in skills already made translates
into much needed productivity and innovation, as well as future skills
investment.
Sustainable innovation
The EU 2020 strategy recognises the
importance of the SME sector, and in particular highly innovative start-ups.
These companies, offering business services, high tech and advanced manufacturing
have driven job creation in recent years, and are likely to continue to do so.
Moreover, these organisations are seen as creating the ‘high value’ jobs
desirable for the future EU economy. The document looks for policy support to
enable them to scale-up and expand across the EU.
As the most innovative companies recognise,
competitive advantage lies in sustained innovation. Maintaining levels of
innovation is challenging particularly as companies increase in size from small
to medium, altering the structures and process and the access of leaders to the
employees’ knowledge and skills. Companies such as Google that have managed to
sustain levels of innovation have radically altered the structure of the
organisation and the relationship between employer and employee. The EU’s
commitment to support these small organisations’ ‘growth potential’ and
‘innovation capacity’ is to be welcomed, but that support could be well
directed helping those organisations to
manage their employees effectively and create the structures, processes and
relationships that facilitate the transfer of knowledge and ideas.
Engaging people in work
Businesses across Europe
understand that improving their performance, productivity and innovation will
mean engaging their workforce far more deeply than they have to date. The Sainsbury
Centre estimates that presenteeism cost the UK 15.5 billion per year in lost
productivity, and accounts for 1.5 times as much working time lost as
absenteeism. Estimates vary, but CIPD research suggested that as many as 2/3 of
UK
workers are not fully engaged in their work. Improving engagement will, in many
member states, require a step change in workplace culture and an alteration in
the relationship between employers and employees. However, as the recent report
to the UK
government ‘Engaging for Success’ said;
‘We believe that if employee engagement and
the principles that lie behind it were more widely understood, if good practice
was more widely shared, if the potential that resides in the country’s
workforce was more fully unleashed, we could see a step change in workplace
performance and in employee well-being, for the considerable benefit of UK
plc.’
Engagement correlates with profitability,
innovation, performance, productivity, retention, skills utilisation and health
and safety. The idea of engagement recognises that the place of work in
peoples’ lives is changing; they seek meaning, fulfilment and identity from
work as well as economic rewards. Engagement is as relevant to the public
sector as it is to the private sector. Sharing knowledge of best practice
between organisations is an effective way of bringing about change and in an
increasingly integrated European market the European Commission could
facilitate the effective transfer of that knowledge.
What the EU 2020 strategy could do
The EU 2020 strategy to date sets out an
ambitious agenda for growth and economic change. However, it misses out on a
potentially important means of achieving a change in the EU's historic rate of
growth by under valuing the impact of the workplace, work organisation and
employment relations. The longer and more productive working lives the 2020
strategy recognises we will require work that improves health and
satisfies Europeans’ social, intellectual and emotional needs. Innovation
across the economy can only be sustained if relationships built on trust mean
that employees are willing to share their knowledge and ideas with colleagues
and employers.
Following
this we have three suggestions for ways in which the EU 2020 strategy and the
initiatives leading from it could better support growth, productivity,
innovation and wellbeing;
- Give greater consideration to
the workplace in the EU 2020 strategy and the possibility of workplace
level policy interventions as a means of achieving the EU 2020 strategy
objectives.
- The European Commission has a
vital role to play in knowledge transfer, facilitating learning between organisations
in member states on the ways in which workplaces can be organised and managed
to better utilise skills, provide more engaging work, and innovate. There
are plenty of examples of good practice, but few resources devoted to
sharing knowledge.
- Workplace level policy has
had significant successes at national level in generating more productive
workplaces. There are long running policy initiatives in member states
that have had success in changing the ways in which organisations work,
fostering high-performance working that yields improved productivity. The
lessons from these schemes could be learned throughout the EU, and
supported by EU funding. The recent UKWON report on workplace innovation details
the success.[i]
- The European Commission could
have an important cultural leadership role in advocating good work both as
an employer and policy maker. Raising the profile of employee engagement
among employers, and of healthy, stimulating and rewarding work among
citizens could help to raise expectation of working lives.
[i] UKWON, Workplace innovation
in European Countries, (UKWON, 2009)
