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NATIONAL ECONOMIC AND SOCIAL COUNCIL

REPORT

Towards an economic and employment strategy based on a
knowledge society in the Euromed region

Working group

National Economic and Social Council of Algeria (CNES) – rapporteur

Economic and Social Council of Luxembourg

Economic and Social Council of Spain

Economic and Social Council of Tunisia

Economic and Social Council of Greece

National Council for Economics and Labour of Italy

REPORT

Towards an economic and employment strategy based on a
knowledge society in the Euromed region

Rapporteur: Mr YoucefBeghoul

Summary

The development of human resources in all areas has been a constant feature of the activities undertaken since the Barcelona Declaration of 1995 and the Lisbon strategic goal of March 2000. The world economic crisis makes this all the more necessary: the current model needs to be replaced by a model of sustainable and fair growth, and the knowledge-based economy (KBE) can contribute to this radical, comprehensive change.

The World Bank has identified five priorities in this connection: continuing improvements in governance, gearing education and training systems more closely to the needs of a sustainable economy, developing research and innovation, developing information and communication technologies (ICT), promoting mediation as a method of conflict resolution, and all social players adopting the values of sharing and cooperation.

The Euro-Mediterranean area can become more competitive if it adapts to these new requirements. Education and training systems tailored to the situation in each country, and greater cooperation between countries in terms of technology and the labour market, will make it possible to make the most of this opportunity.

Command of a common foundation of basic knowledge – reading, writing, arithmetic, ICT and a foreign language – is related to the objectives on employment, employability and decent work adopted at the 10th meeting of Euromed employment ministers, and is vital to the creation of a knowledge-based economy.

The Mediterranean partner countries need to make more and better use of the tools available to them for scientific research and development: public spending, participation in the EU's framework programme, Tempus, Erasmus Mundus and the European Training Foundation are all forces to boost R&D and innovation, and thus to enable a KBE to develop.

The Mediterranean partner countries also need to bridge the digital divide they are experiencing, and measures to facilitate this are a priority for Euro-Mediterranean cooperation; it is also a pre-condition for a successful knowledge-based economy.

The creation of a KBE is dependent on the rule of law, and involves changes to the legal frameworks in the states in the region; it is a mission that falls to those states, and progress towards it should be assessed on a regular basis.

The plan set out above will, as a whole, also help a great deal in improving the role of women as economic and social stakeholders. Training that matches the needs of the labour market will back up the programmes of positive action assisting women and promoting equality of opportunity.

The elimination of "barriers to knowledge" is an essential condition for the development of a KBE.

ESCs embody the values of sharing, dialogue and cooperation on which the knowledge-based economy is founded, and provide an irreplaceable institutional framework for seeking consensus in the mediation needed to put it into practice.

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In its final declaration, the Euromed Summit of Economic and Social Councils and Similar Institutions held in Athens on 15 and 16 October 2007 resolved that the topic of "Towards an economic and employment strategy based on a knowledge society in the Euromed region" would be discussed at the 2009 summit.

The Athens summit also decided that this information report would be drafted by the Algerian National Economic and Social Council (CNES), in cooperation with the economic and social councils of Portugal, Luxembourg, Spain and Tunisia, the Turkish delegation of the EU-Turkey Joint Consultative Committee and the delegation of Egyptian representatives.

The Euromed Summit of Economic and Social Councils and Similar Institutions held in Rabat on 14-16 October 2008 confirmed the decision taken in Athens, and added the Greek Economic and Social Council and the Italian National Council for Economics and Labour to the study group.

1.The foundations:

1.1The Barcelona Declaration of 1995, which laid the foundations for a Euro-Mediterranean partnership, acknowledged that it was essential to develop human resources in all areas. References to an economic and employment strategy based on a knowledge society can be found in the work of numerous ad hoc groups and in resolutions arising from meetings between representatives of the Member States and partner countries in the Euromed region.

1.2In Lisbon in March 2000, the European Union set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.

1.3The problem being examined has a privileged position in relations between the countries of the European Union and the countries of the southern Mediterranean, and is worth seeing in the light of new data.

1.4The intention of creating a stable, sustainable Euro-Mediterranean area based on solidarity, completely focused on the development and wellbeing of the population of the region by means of trade and the free movement of goods and people, is up for discussion now more than ever. This needs to be put in place as a matter of urgency, as confirmed both by recent developments in the world economy and by the nature of the solutions to the problems arising from the crisis in the structure of the economy and in its regulatory institutions.

1.5This urgency also lines up with the ambition shown in the quality of its objectives as set out by the Barcelona Process, which, ever since it was first launched, has recommended developing:

political and security dialogue aimed at creating an area of peace and stability underpinned by respect for human rights and democracy;

economic and financial partnership, and the gradual establishment of a free-trade area by 2010 aimed at creating an area of shared prosperity and supporting the economic transition of the partner countries;

social, cultural and human partnership, aimed at developing human resources, promoting understanding between populations and cultures and facilitating exchanges between civil societies.

1.6Despite the delays, discrepancies and failures encountered in setting up the infrastructure and institutional framework for this nascent project since the 1980s, it is still supported by market players and civil society. They are meeting more frequently and forging closer relationships in order to give the project direction and to open up more opportunities for strategic and operational convergences in its implementation.

1.7The extent of the global economic crisis, the severity of its impact on the economic and social life of people on both sides of the Mediterranean and, above all, the nature of the challenges it throws up and of the solutions it demands have all hardened this determination to make the Mediterranean an area of active cooperation and creative interaction between its human resources to face the crisis and develop an innovative approach to deal with it peacefully and to everyone's benefit.

2.The impact of the global crisis

2.1The economic and financial crisis has prompted major policy rethinking at international level, which involves taking a hard look at the failings of the recent past in order to build a better future, not only to restore growth but to lay the foundation for a fair and sustainable world economy. The recovery cannot just be a return to "business as usual". The financial business model failed, with the outcomes of globalisation being unfair for too many. The new globalisation will require an integrated and coherent policy regime for a growth that is socially, economically, environmentally and politically sustainable. This entails assisting countries and the global community to confront the crisis, accelerate recovery and build a fair and inclusive globalisation.[1]

2.2There are two important lessons to be drawn from this systematic and multi-faceted crisis in historical globalised capitalism:

2.2.1The diversity of the problems, and their interconnectedness – bankruptcies in the financial and industrial sectors, unemployment and poverty, inflation, global warming and the energy crisis, migration, etc. – requires us to have an overarching understanding of the solutions. We will not be able to get out of the crisis "solo", by pandering to national egos, but by optimising regional interactions and making better use of the opportunities already inherent in the manifold interrelations between nations and economies;

2.2.2The dominant model for wealth creation and distribution, and the consumption patterns associated with it, has completely run out of steam and is developing problems and distortions that represent a serious threat to the general social, environmental and geopolitical balance of the world. It leads to chaos and wastage of resources, to exclusion and marginalisation, to inequality and to illicit profiteering.

2.3The global crisis heralds the end of the era of growth and the start of a new era identified and characterised by energy saving and the development of alternative energy sources, the development of institutions enforcing ethical behaviour in financial and commercial transactions and in income distribution and consumption patterns, and by new sources of growth that promote a reduction in the consumption of mobilisable physical resources. The new model will draw on a new pool of values and beliefs for its vitality, consistency and effectiveness.

3.The Knowledge-Based Economy (KBE)

3.1Human capital and development of knowledge will have a key role to play in this new model, both in structuring its foundations and in developing synergies and opportunities to achieve its objectives. It is in this context that the knowledge-based economy (KBE), as a new paradigm for the growth and competitiveness of countries and businesses, really becomes significant and shows the need for systematic reflection and consultation to make it the new driving force speeding up the implementation of the project to make the Mediterranean a co-development area.

3.2In its philosophy and in its purpose, and in the forms of organisation it promotes, the KBE is an economy that gives priority to cooperation and governance. This new economy is defined as one in which the overall productivity of factors increases, not due to an increase in physical capital but thanks to a dynamic of knowledge creation, processing and dissemination and of transforming the organisation of agents around knowledge.

3.3It is the perfect example of an economy in which the benefits to countries and businesses consist in sharing. The primary method of deploying it systemically is via the interaction of agents, through cooperation, partnership, alliances, networking and the promotion of local production systems that are firmly rooted in territories and regions. States have a vital role in implementing this method and the mechanism it entails. It is an economy of networks and synergies between the regulators, business people and experts who make up its primary social figures.

3.4Studies by the World Bank, among others, have revealed that the KBE is founded on five pillars:

3.4.1creating quality institutions and incentive regimes that encourage the development of the business climate, for example by guaranteeing security in transactions and the free movement of property rights;

3.4.2developing education and training systems that focus on the learning and production of skills based on the needs of the market;

3.4.3developing scientific research and innovation, focusing heavily on public incentives and support for businesses based in research laboratories or networked with technical resource and innovation centres;

3.4.4developing ICT (both hard and soft), guaranteeing freedom of production and circulation of information;

3.4.5promoting systems of governance that encourage negotiation and mediation between stakeholders in the KBE process as a method of conflict resolution, with the establishment of trusted companies being the ultimate goal of KBE projects.

3.5The KBE's values are sharing and cooperation: focusing entirely on anticipation and building the future, its approach is to build trust. From this viewpoint, the Mediterranean area has some significant needs, as well as a great deal of potential.

3.6The global crisis we are currently experiencing represents an unprecedented opportunity for the Euromed region, particularly the countries bordering the Mediterranean, to reallocate their capital towards forward-looking sectors that promote a new model of growth. The macro-economic impact is such that it will be human capital, rather than financial capital, that is at the heart of a new economic world order and a global New Deal.

4.For a competitive Mediterranean KBE

4.1It is worth questioning whether it is economically and socially viable to continue thinking and acting in accordance with the same concepts. The feasibility of a shared Mediterranean KBE depends on taking a fresh look at the reality of relations between the Member States and partner countries of the Euromed region in order to see the existing gaps and the strengths and weaknesses of each one, and to produce tools that will contribute to a common potential for development.

4.2Within this knowledge-based economic and employment strategy, the Euromed region has a great deal of potential: it must take greater account than it has in the past of people's needs, for example with regard to employment, growth and development, by incorporating them in a mutually beneficial, win-win process that will strengthen both Member States and partner countries.

4.3The most reliable way of achieving that is to pool their assets and competitive advantages; to this end, programmes and activities aiming to promote quality, which have already been negotiated in various economic and social sectors, need to be set up and put into operation as quickly as possible.

4.4The European Union has made a certain amount of progress with the Lisbon Strategy, via three cycles referred to as Lisbon 1, Lisbon 2 and Lisbon 3, which will finish in 2010; in view of the mixed results in some sectors, Lisbon Plus (post-2010) is currently being planned.

4.5Given the different levels of development in the various countries in the Euromed region, the Mediterranean partner countries need, in order to level out those differences, to make sustained efforts and to release more funds allocated to education, vocational training and all sectors that could improve skills of various kinds.

4.6In this connection, new areas of activity will need to meet two requirements:

to establish quality infrastructure and staff training that meets the needs expressed by businesses, not least by SMEs and SMIs;

pay closer attention to cognitive factors in all areas of activity, ensuring that the mechanisms for acquiring theoretical and practical knowledge improve the productivity of factors and increased added value.

4.7The development of knowledge is a crucial common concern which has an impact on both competitiveness and social cohesion in the economy of each country, as appropriate, high-quality education and vocational training increase economic growth and help to reduce inequalities of all kinds.

4.8The knowledge economy is the driving force for growth, and the key to innovation and competitiveness, i.e. to safeguarding existing jobs and creating new ones. The more knowledge and know-how are made available to all parts of the economy, the more modern and competitive they will be, and the more jobs they will create.

4.8.1In this context, the importance of an integrated approach is that it is able to combine employment policy with economic, fiscal, social and environmental policies, and with education and training policy.

4.9The share of non-material capital defined by the proportion of knowledge workers and high-intensity activities – i.e. teaching, training, health, IT, R&D, multimedia and software – is increasingly emerging as the key variable in countries' growth and competitiveness.

4.10It is of prime importance to encourage and develop the entrepreneurial spirit and to foster a business culture and business creation: these are decisive areas where action needs to be taken in order to give the Euromed region the competitive profile that best meets the context of globalisation and its challenges.

4.11Ongoing action to reduce the black economy and informal working, in parallel with improvements to the institutional, legal and administrative context and an increase in the value placed on skills, will create a favourable climate leading countries down the path of growth and wealth creation.

5.Developing an effective education and training system based on market requirements

5.1The scale of the challenge faced by most developing countries can be measured in terms of knowledge indicators, given that modern training programmes require a combination of three aspects: motivating the pupils, which is the guarantee of any successful training activity, predicting the requirements of the economy which can evolve very quickly and prioritising training methods based on new technologies and innovative approaches to learning.

5.2Countries in the Euromed region must continue to build on their achievements in terms of human capital, stepping up their fight against illiteracy and adapting their life-long education-training systems to meet a triple objective:

equal opportunities for acquiring knowledge and know-how,

employment concerns that the system is eager to address,

partnership with the national and regional authorities which requires overhauling the organisational structures

5.3The verdict returned after the fourth Mediterranean Forum, held in Marseilles on 22November 2008, was that academic and professional training systems from primary right up to secondary level fell short of requirements. This assessment was true for countries to the North and South of the Mediterranean. This situation makes it difficult for young people trying to enter the job market and is all the more serious given the drastic deterioration in the global economic situation.

5.4Coordinated action is urgently required to ensure that everyone has the command of a basic skills portfolio: reading, writing, arithmetic, ICT and a foreign language.

5.5The issues of employment, employability and decent work were on the agenda at the meeting of Employment Ministers of the 27 European Union countries and the 16 Mediterranean partner states which took place on 9 and 10 November 2008 in Morocco. It is essential to take all the necessary steps to ensure implementation of the measures advocated for promoting job creation, modernising labour markets to react more readily to change and developing human resources in line with labour market requirements.