Italy ‘needs to do more’ to meet EU growth targets

Italy needs to do more to contribute to the EU’s ambitious plans to boost growth and jobs, the enterprise commissioner said on Monday.

Speaking in the Italian parliament in Rome, Günter Verheugen said that Italy still needed to work hard on two of the three areas of concern highlighted by Brussels last year.

Italy’s ongoing struggle to reduce its public debt remains a cause for concern, the German commissioner said.

“The commission has welcomed the commitment shown in… July 2006 to respect the 2007 deadline for the correction of the excessive deficit… It is now important that the necessary measures are put in place and effectively implemented,” he said.

The other area for concern was the labour market, Verheugen said.

“The percentage of people at work remains below EU average and the gap is higher for young, women and elderly people.”

“Reforming the labour market in order to reducing segmentation, combining flexibility and security, and reducing undeclared work is now a key challenge for the future of Italy.”

But the commissioner had some encouraging words for the new Italian government on the third area highlighted by the commission – liberalisation of industry and services.

“The measures recently introduced to remove barriers to competition in professional services, retail distribution and other services are important steps in the direction of providing better services at lower prices for our citizens and enterprises,” he told Italian deputies.

But he warned Italian prime minister Romano Prodi not to give in to the wave of protectionism sweeping through Europe.

“I would like to recall the importance of moving towards a full opening of the energy markets,” he said, referring to suggestions that Italy would protect national industries from takeover if other countries did the same.

The statements were sparked by the failed takeover bid for France’s Suez energy group by Italy’s Enel.

Verheugen also stressed another area of concern for the commission.

“We know that Italy does not score well with respect to many indicators of technology and innovation, including for example, the level of R&D expenditure in businesses, the number of patents, the number of graduates in science and technology. Urgent action is needed,” he said.

But he praised the Rome government for improvements to the business climate over the last few years.

“Between 1998-2002, the number of procedures to start-up a business have reduced from 21 to 12, and the time necessary from 22 to six weeks. Over the same period, the costs for company registration halved.”

Council. These four priority areas cover knowledge and innovation; business environment; employment; and energy.

But Verheugen’s criticism was not restricted to Italy – he stressed that other member states still had plenty to do as well.

“Reforms in the area of healthcare and pensions are an area of difficulty... Competition and the functioning of markets is where progress is slow.”

“Some concerns still remain as far as the challenge of adaptability goes. Flexibility has only increased at the margins and the problem of an increasingly fragmented labour market persists.”
 
But overall, he said, the EU was making progress towards achieving the Lisbon targets – and that the effort was worth it.

“Reaching the Lisbon objective for R&D investment will bring about an increase in GDP of 3.6 per cent in the long run,” he said.

“Reaching all Lisbon objectives combined would increase GDP in the long run by between 12 and 23 per cent.”

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