An alternative agenda for Europe's politicians

Our leaders do not regard the economic integration of Eastern Europe as adding to our comparative advantage in the world. It will; or at least, could do
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The Independent Online
Europe's political masters may be only half way through their two-day summit in Amsterdam but we know, don't we, pretty much what will happen. Short of some blazing open row, a possibility not to be entirely discounted, the patched-up compromise will keep the Maastricht process moving forward for a few months more. The communique with the various possible forms of words has long been written, and the real decision about Europe's future direction will be taken in about 18 months' time.

But it is frustrating for the rest of us, and even for the Foreign Secretary Robin Cook, to judge by recent speeches, to watch politicians talk and know that the words mean very little. There are so many issues which they could be talking about which matter crucially to the ability of the countries in the European time zone both to give a more fulfilling life to their citizens and to compete more effectively against countries in the American and East Asian time zones. So as an antidote to an overdose of Eurowaffle, try this list of half a dozen issues which do matter enormously to Europe's future and are not on the agenda in Amsterdam.

One. How can European countries plan for the region becoming the oldest in the world, bar Japan, by the end of the second decade of the next century? There is now, at last, an awareness of the implications of ageing populations on pay-as-you-go public pension systems, and a lot of good work is being done by the OECD on the impact on the tax burden, and both the last UK government and the present one have been working on the public pension side of it. But the rest of Europe has not; and in any case this is only one aspect of the problem.

We need to think not just of the macro-economic implications but also the micro-economic ones. What will the impact be on the education system? Or on the skill-base of workers? How do we build up a much better support system for the army of elderly? What does this mean for companies, for this is far from being an issue just for the public sector? In Japan the multiple problems of ageing are being analysed with great intensity. In Europe it hardly seems to be discussed.

Two. How does Europe create more new businesses? Of course, unemployment in the large continental countries has at last moved to the centre of the debate, and the UK is attempting to tackle its problem of long-term unemployment. But even more flexible labour markets, econo-speak for getting rid of rigid labour laws which discourage employers taking on more people, will not create many job opportunities if Europe does not increase its rate of company creation. Britain does quite well by European standards on this measure, but it is world standards that matter. Europe as a whole has to do much better, learning from North America and East Asia.

Three leads on from this. Why is Europe not creating many high-technology businesses? Even Britain lags badly behind the US on this score, but for the large continental economies the problem is worse still. Is there something lacking in European education systems? A particular problem for Germany and to some extent France is that they may be keeping their cleverest people in education too long. If people only get their first jobs in the second half of their 20s, rather than the first, they may be too old to want to take the risks of a hi-tech start-up.

Four. We have to look at the implications of a step-change in the level of self-employment. Bill Gates recently suggested that by 2050 half the workforce would be self-employed. Even if that is right, it might seem a long way off and many of us will not be around to worry. Nevertheless, if the trend towards self-employment continues (as it has in the UK), this has profound implications. Welfare policies are based round employment: there is not much point, for example, legislating for a minimum wage if half the work-force is self-employed.

Five. How do we incorporate the economies of the Eastern Europe into the Western European economic zone? This is a different issue from the political enlargement of the EU, which is near the top of the agenda. Before the First World War Europe was an integrated economy, and drew strength from the different skills and resources to the East. Now we tend to see Eastern Europe as either a market, a problem or even a threat. Individual companies can spot the contribution the region can make - for example using its skilful computer programmers to help fix the millennium bug. But our political leaders do not regard its economic integration as adding to Europe's comparative advantage in the world. It will; or at least it could do.

Finally, Europe has failed to see its cultural diversity as an economic opportunity. One of the most disturbing developments of the world economy (from a European point of view) has been the failure of Europe to provide any real competition to US popular culture. There are pockets of success. The UK does well to hold between 15 and 20 per cent of the pop music market, perhaps 30 per cent of the software for video games, and has been gaining a bit of ground in films. Sweden does well in pop music, too. But elsewhere exports of popular culture are pitiful. A generation ago stylish young Brits flocked to French movies. Now 80 per cent of cinema attendances in France are watching American.

This is dreadful. Britain may do quite well over the next 20 years in this field, but that does not help Europe as a whole much. Within the Continent there are enormous, and different, cultural resources. That difference ought to be a source of strength. Yet policy has tended to subsidise films people do not want to watch, or put quotas on US imports that they do. Instead of building on strength, we protect weakness.

Not subjects for Europe's politicians? Surely they should be. That is not a call for state intervention in, say, the French film industry, and certainly not for more Brussels bureaucracy. Rather it is to point out that European governments are not thinking about our Continent's comparative advantages and disadvantages in a systematic, orderly and disciplined way. Our own Prime Minister and Foreign Secretary understand all this, but the others?

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