Opinion of the Economic and Social Committee on the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the competitiveness of the European Information and Communication Technologies (ICT) Industries'
9. 3. 98 EN Official Journal of the European Communities C 73/1 II (Preparatory Acts) ECONOMIC AND SOCIAL COMMITTEE Opinion of the Economic and Social Committee on the ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the competitiveness of the European Information and Communication Technologies (ICT) Industries’ (98/C 73/01) On 21 April 1997 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communication. The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 5 November 1997. The rapporteur was Mr Burani. At its 350th plenary session (meeting of 11 December 1997), the Economic and Social Committee unanimously adopted the following opinion. 1. Introduction (Chapter 1 of the communication) The communication represents an initial Com- 1. 1. mission contribution to a debate launched by the Netherlands Government and by an informal council of ministers in spring 1997 on the situation of the ICT industries (1) in Europe. The communication is designed to stimulate further contributions on a burning issue that requires swift and effective solutions. The Committee believes that this topic urgently needs to be addressed with a view to finding practical solutions; such is the intention of the comments and proposals which follow. 1. 2. After pointing out that the ICT industries are a ‘critical component’ of the European economy, the Commission notes some ‘worrying signs’ of EU weakness compared with other countries: slow market growth, declining relative shares for European producers, and an inadequate response to market and technological evolution. This phenomenon is well known, and is found in other similar industries. 1. 3. The Commission states that the EU needs a competitive and dynamic ICT industry in order to avoid excessive dependence on key technologies, participate in expanding global markets and help create new jobs, and — the final and most ambitious objective — in order to be at the forefront of future innovation. (1) The Commission document specifies that it only examines the following fields: consumer electronics, computer and office equipment, telecommunications equipment, com- ponents, software (either as component or product, or services associated with the provision of software). Other sectors, such as broadcasting or content industries, which are often included in the definition of ICT industries, are not covered. These objectives are unimpeachable. However, 1. 4. the Committee feels that while the objective of being at the forefront might possibly be achieved via a medium to long term strategy, the situation calls for immediate action that is consistent with those strategies; this is logical and indeed is recognized by the Commission itself. C 73/2 EN Official Journal of the European Communities 9. 3. 98 1. 5. The communication states that the industry, the Member States and the Commission must act immediately and draw up an effective action plan. Success will undoubtedly depend not only on action from the industry but also on appropriate legislative and regulatory infrastructure. The communication makes only brief mention of the role of the legislator (1). The Committee would like to see more stress on the primary responsibility of the public authorities in establishing the basic conditions for boosting competi- tiveness and making it easier for the industry to take advantage of innovations and create new jobs. 2. The ICT industries: global structures, European competitiveness 2. 1. Market structure (chapter 2. 1 of the communi- cation) 2. 1. 1. For the purposes of a systematic examination, the Commission divides the market into three segments: infrastructure, industrial and commercial markets, and consumer markets. The three segments differ in their characteristics and in how they operate, and call for differing legislative and policy action. However, the Committee feels that they have one point in common: in very few of them is Europe ahead of its competitors. Analysing the reasons for this is a first step towards understanding the problems. The infrastructure market covers large-scale 2. 1. 2. systems with relatively long product life-cycles, and is affected by downsizing and deregulation. The Com- mission notes that while the traditional ‘European- affiliated’ suppliers are in a strong competitive position in some fields, such as telecommunications, they are also facing progressive deregulation and liberalization. Industrial and commercial markets attract 2. 1. 3. many producers who have often built on niche markets to secure themselves large markets. Such producers tend to be technology oriented and depend heavily on venture capital. The Commission notes that US industry enjoys strong positions on these markets. 2. 1. 4. Consumer markets demand constant inno- vation and product reliability; they are becoming the ‘technology drivers’ of ICT industries. Their main problem is constant price erosion, which forces firms into mergers. The market is now dominated by a relatively small number of recognized brand-names supported by global production structures. The market leaders are Japan and Korea, although ‘European- affiliated’ producers hold their own relatively well; (1) Commission communication, first paragraph of point 2. 1. however, their position is threatened by the US, which is gaining ground especially in the field of micro- computers. All this has resulted in market globalization 2. 1. 5. which has reached a point where the term ‘European industries’ in the strict sense is virtually meaningless. Interpenetration of markets and capital is occurring all over the world. This trend is set to increase, and its implications deserve serious consideration. It must not be forgotten that the ICT industries are found to a large extent in sensitive sectors; the defence applications of R&D are a case in point. In such sectors, moves towards globalization must be tempered by the need to maintain political balance worldwide. 2. 1. 6. The communication paints a detailed and accurate picture of the situation. The Committee would add that the EU is unlikely to become competitive if it is unable to adopt policies and structures geared to market globalization. Hence purely ‘European’ solutions and approaches could condemn the EU to weakness. 2. 1. 7. The sector’s employment position is mixed. Jobs are being lost in the wake of high productivity gains or, in some cases, relocation to third countries, but new jobs are being created in software and services. The Commission sums up the net result as ‘overall moderate growth in the long term’. 2. 1. 8. The Committee would sound a note of caution here. In the absence of precise figures on relocation, it is difficult to say whether the employment balance is positive or negative. A more detailed analysis is needed in order to ascertain whether any new or expanding industries (e. g. telecommunications) show a positive balance that offsets the negative balances of other industries. At all events, it is difficult to estimate the number of jobs lost in related fields (transport, hospitality, commerce, services) when businesses re- locate. It is thus clear that the main problem — and not only as regards employment — is how to correct the tendency to set up production units outside Europe. The answer might lie in application of the ‘social clause’. 2. 1. 9. This tendency is also encouraged by the EU’s external policy, particularly as regards central and eastern European countries. It has to be recognized that the need to support the development of these countries — inter alia with a view to the accession of some of them to the EU — is politically, economically and 9. 3. 98 EN Official Journal of the European Communities C 73/3 socially justified. However, in present circumstances it is difficult to reconcile the need to create jobs within the EU with that of keeping up a substantial flow of investment to third countries. In the Commission’s view, these problems should be remedied by: — a greater marketing and communications drive on the part of suppliers; — a greater commitment to promoting ICT take-up by 3. Competitiveness of the European ICT industries public administrations; (chapter 2. 2 of the communication) The communication cites a number of figures 3. 1. which give a clear idea of the meteoric growth of ICT industries. These industries have now outstripped the chemical and motor industries in terms of turnover, production and added value. The growth rate (7 % per year, and likely to remain stable) is outstanding. However, the optimistic picture is tempered by the fact that the growth rate is lower than those of the United States and the emerging Asian economies, and the EU’s trade balance for these industries as a whole is worsening. 3. 2. A sectoral examination reveals that the EU is behind in the software field and very poorly placed in electronic assembly, but relatively competitive in the semi-conductors field thanks to international strategic alliances. Telecommunications equipment is the only sector where the EU has a leading position, exemplified by the success of GSM telephony. In short, the outlook is not entirely bleak, and the Commission’s attempt to analyse the reasons for the problems and find ways of remedying them deserves fullhearted support. 4. Main challenges for the European ICT industries (chapter 3 of the communication) (1) 4. 1. Improve market take-up 4. 1. 1. market problems: The communication identifies a number of — businesses are not forward-looking; many still per- ceive investment in ICT solely in terms of cost, and underestimate how it can improve competitiveness; — individual consumers and public administrations are slow to take up ICT technologies (the communi- cation mentions the low number of Internet users); — the chief problem, however, is felt to be the uneven pace of telecommunications liberalization in the Member States. — speedier harmonization of standards and regu- lations. 4. 1. 2. The Committee endorses the analysis and, broadly speaking, the proposed remedies. However, it would caution against solutions which, however obvious they might seem, could turn out to be double-edged swords; if companies are not already competitive, investment in marketing and communications cam- paigns could further the cause of third country suppliers. Similarly, harmonization of standards and regulations would offer a wider market to those who are best placed to exploit it. Such considerations have nothing to do with protectionism; they merely seek to assess which initiatives are helpful to EU industry and which ones boost competition from the strongest third countries. In short, the first task is to lay the foundations for making the ICT industries more competitive in the weaker sectors and to keep their position in the stronger ones. 4. 2. Transform industrial structures 4. 2. 1. The Commission’s analysis shows that the European ICT industry has been slow to restructure and has tended not to follow the trend towards outsourcing, unlike US and Japanese producers who have set up networks of component suppliers in Asia. The Com- mission suggests that the EU could turn to central and eastern European countries for this, thereby establishing Europe-wide industrial cooperation. 4. 2. 2. This would seem an attractive solution, and there are already a few signs of it being adopted. The Committee supports actions for closer integration between EU and CEEC industries in the ICT sector. For this purpose the Commission can provide initiatives in the fields of training of suppliers, networking, quality management and the like. 4. 2. 3. The communication does not address one issue related to industrial restructuring: concentrations, mergers and agreements among EU firms, or between EU and third country firms. It has been recognized (2) that Europe needs industrial groups large enough to compete with the giants of the United States, Japan and the emerging Asian countries. At the same time, there is justified concern to safeguard competition rules in the single market in accordance with Articles 85 and 86 of (1) Paragraphs 4. 1 to 4. 6 follow the order of the subheadings (not numbered) in the communication. (2) See the Ciampi report of June 1996. C 73/4 EN Official Journal of the European Communities 9. 3. 98 the Treaty. The Committee calls on the Commission to consider this, particularly when it applies the concept of ‘relevant market’ to the ICT industries. Decisions should seek to strike a balance between two opposing requirements which might sometimes clash. A case-by- case approach that eschews preconceptions is absolutely vital in this sector. 4. 3. Develop fast-growing companies 4. 3. 1. The Commission notes that the EU has failed to foster dynamic growth of new companies, especially SMEs, and that further training and labour mobility need to be improved. 4. 3. 2. The Committee wonders what has caused these problems, and the Commission returns to them at a later point (see 4. 7). SME growth is a wider issue, but it is worth making some comments which, while holding good for all companies, are particularly applicable to ICT industries: — the EU suffers from a lack of venture capital and from rather inefficient secondary markets in securities; — the average level of taxation and social charges in the EU is higher than elsewhere because of the European social model. Should tax or social charge concessions be considered, they should go hand in hand with measures to train the workforce or training partnerships between firms and educational establishments. As regards the distribution of ICT investment among the Member States, the future code of conduct in taxation matters will play a major role in ensuring that investment is determined by real — as opposed to tax — differences. 4. 4. Enable European excellence in software The communication affirms a principle which, 4. 4. 1. if accepted unconditionally, would undermine many of the solutions being proposed: ‘no amount of restructur- ing can change the fact that Europe is a high-cost region for manufacturing’. The Committee points out that accepting this affirmation would be tantamount to accepting permanent European inferiority in ICT manu- facturing. The affirmation should therefore be given the gloss that is probably intended in a context which notes the importance of software, a field in which Europe could play a leading role in quality terms. 4. 4. 2. The Commission rightly thinks that Europe should devote special attention to software, given its importance for competitiveness, added value and job creation. The Commission mentions the potential mar- kets offered by financial services and services in general, aviation applications and numerous industrial products. The Committee would add to these the market created by the switch to the single currency, which will require the adaptation of countless financial, accounting and administrative programmes, and will provide an oppor- tunity to revise business procedures and those of the public administrations. The Commission also considers that linguistic diversity poses an additional challenge, as it could put European industry at an advantage in supplying versions in the different national languages. The Committee has reservations about this latter point (see 4. 6. 3 below). 4. 4. 3. The Commission’s analysis may be endorsed in the context of a market which is divided into different national languages, although the Committee points out that there are other quite significant disadvantages (see 4. 6. 3 below). However, it must be borne in mind that excessive diversification could increase costs for users in the smaller countries, thereby weakening their com- petitive position. In any case, the market has already taken this aspect on board: the less common language versions are rare and expensive. 4. 5. Optimize technology development and diffusion 4. 5. 1. The Commission notes that R&D costs are rising as a result of shorter product life-cycles, and calls on producers to accelerate market take-up (a point mentioned in 4. 1 above). The Committee notes that whilst a prompt response to market needs is important, innovation is much more so. Experience shows that success depends not so much on following market trends as on creating new products which anticipate needs and create new markets. The Committee sees insufficient investment in 4. 5. 2. R&D as one of the main reasons for the European ICT industry’s lack of competitiveness. Investment in this sector as a percentage of GDP is much lower than in the United States or Japan. To win lasting success on the world markets, it is not enough to offer competitively priced products; innovation and the tendency for prices to fall mean that it is more important to offer original and innovative products which cannot be found elsewhere. the speed of 4. 5. 3. The Committee thinks that a European R&D plan, conducted jointly by industry and the public authorities, should be a top priority. The success of the 9. 3. 98 EN Official Journal of the European Communities C 73/5 plan will depend not only on investment, but also on the availability of human resources; this is not so much a question of boosting employment as of seeking the highest possible professional skills. As a result of the shortage of properly qualified workers, the ICT industry’s scope for development is more restricted and its costs are higher compared with the rest of the world since firms have to overbid in their efforts to attract the limited number of competent people. The ICT industry’s heavy dependence on a technically highly trained work- force, which constantly needs to update its skills and develop its expertise, makes the shortage even more painful. This factor is probably the most severe threat to this industry — a threat which cannot be averted by passive measures such as reducing general costs but militates for direct action to boost the number of qualified persons. 4. 5. 4. Investment in R&D in the defence industry merits special attention, since — as with the electronics industry — such research can have a spin-off effect on research into civil applications. This aspect is outside the remit of the present opinion, but was considered in the ESC opinion on the European defence-related industry (CES 326/97 — rapporteur: Mr Sepi) (1). 4. 6. Exploit the potential for employment growth 4. 6. 1. which ICTs have on employment: The Commission identifies three types of effect — direct effects on the ICT and related industries; — indirect effects on other branches of the economy; — other effects related to the growing value of services and the resulting changes in the international division of labour. The findings of studies into these effects have hitherto not been conclusive — although it must be recognized that this is an extremely difficult exercise. The scenarios vary from a ‘pessimistic’ one with three million net job losses to an ‘optimistic’ one with the net creation of six million jobs. More detailed analyses are needed, building on a preliminary discussion of the basic criteria for establishing the various scenarios. 4. 6. 2. The Commission goes on to cite the example of the United States, where ICT industries have been restructuring for some time and have created many new jobs. The Commission repeats its call to create the conditions for rapid company growth (see 4. 3. 1 and the Committee’s comments in 4. 3. 2). 4. 6. 3. While considering employment in ICT indus- tries, the Committee would like to raise a matter that is specific to Europe, namely linguistic diversity. Labour mobility in the United States is high for various reasons, one of which is the absence of linguistic borders; in Europe, the existence of 11 different languages is an obstacle in itself. It is true that Europe’s linguistic diversity is a source of cultural enrichment, and that in the ICT industries the provision of different language versions for different countries can offer new job opportunities. However, there is no denying that this diversity is generally an obstacle to worker mobility in the EU. In high-tech industries in particular unfamilarity with the main language used in the sector is a further disadvantage. 4. 6. 4. Hence job vacancies within the EU can only be filled by local workers or by others who know the local language plus, in many cases, the basic language of the technologies concerned; this limits opportunities for both workers and employers. The Committee would cite here the case of Luxembourg, whose multilingual nature makes it easier to use human resources from neighbouring countries. However, there are few other countries to which this example can be extended; language forms a barrier for most Member States, especially the smaller ones. 4. 6. 5. The Committee realizes that this is a difficult obstacle to overcome, and will not repeat the old nostrum about including language teaching in school curricula. However, the language factor must be taken into account in any benchmarking exercise (see 6. 8 below). 5. Priority areas for policy initiatives (Chapter 4 of the communication) 5. 1. Policy initiatives under way which require urgent implementation (Chapter 4. 1 of the communi- cation) 5. 1. 1. Under this heading the Commission lists the priority actions already taken or scheduled to start soon under the action plan for the information society published in November 1996 (2). The Committee has already given its views on some of the actions, and is currently drawing up its comments on others. Here it will therefore simply reiterate the points mentioned and (1) OJ C 158, 26. 5. 1997, p. 32. C 296, 29. 9. 1997. (2) COM(96) 607 final, 27. 11. 1996 — ESC opinion in OJ C 73/6 EN Official Journal of the European Communities 9. 3. 98 make a few brief comments. The Commission lists nine priorities which together form a complex action programme that will only succeed if it is framed and conducted in a realistic and flexible manner. 5. 1. 2. The deadline for effective liberalization of the telecommunications markets is the end of this year. The Committee urges the Commission to act firmly to correct any discrepancies or resistance and see that all Member States respect this deadline. The Commission describes electronic com- 5. 1. 3. merce as ‘the first practical implementation of the information society, the first “massive application” of the future’. The Committee has drafted an opinion on the Commission’s recent communication (1) on the subject. A further action area is the strengthening and 5. 1. 4. acceptance of internationally agreed principles and rules on competition, intellectual property rights, privacy and individual rights, information security, interoperability and standards. The Committee endorses this, but has the impression that the accent is on compliance by European operators. Action should also focus on com- pliance by third country players, who are not always noted for respecting European and international stan- dards. 5. 1. 5. The Commission also mentions take-up actions and awareness initiatives. More detailed information is needed on these. 5. 1. 6. An action at Union level in the field of satellite personal communication services has already been sub- mitted, and the Committee has issued an opinion on it (2). Action plans are being prepared for ICT 5. 1. 7. applications in the transport sector. They concern trans-European networks, air traffic control systems, and numerous consumer applications. The Committee awaits further details of these. 5. 1. 8. The R&TD framework programme scheduled to begin in 1998 will integrate support for the develop- ment of technologies into a single programme covering four areas: services for citizens, electronic commerce, multimedia content and key technologies. Here too, in the absence of further details, the Committee is unable to comment, and would simply refer back to the general remarks made in 4. 5. 2 above. (1) COM(97) 157 final, 16. 4. 1997 — ESC opinion in OJ C 19, 21. 1. 1998. (2) COM(95) 529 final — ESC opinion in OJ C 204, 15. 7. 1996. 5. 1. 9. Education, training and refresher/retraining courses are critical for equipping workers with the skills and flexibility needed to use technology. The Committee fully supports the various initiatives which the Com- mission has launched in this field. It would however point out that training programmes must not neglect the need for a basic grounding in the main languages used in information technology, for the reasons set out in 5. 1. 10 below. 5. 1. 10. The language problem is particularly acute for European software, and has been covered in a separate programme (3) on which the Committee has already issued an opinion. Here it would add that, while respecting linguistic diversity, initiatives should also be assessed in cost/benefit terms, in order to ensure that the countries with less common languages are not disadvantaged because the cost of adapting programmes is spread among a small number of users. 6. New areas requiring attention (Chapter 4. 2 of the communication) (4) 6. 1. Improve global competition 6. 1. 1. The communication mentions the two main steps towards worldwide liberalization. These were the WTO conference held in Singapore in December 1996, at which the ITA (5) was concluded, and the WTO telecommunications agreement of February 1997. It also mentions the abolition of tariffs on all IT products by the year 2000, and proposes action to extend the country coverage of the ITA. Lastly, it thinks that all these developments will help to reduce European ICT pro- duction costs and improve export prospects for European producers. 6. 1. 2. The Committee strongly endorses the action plan and the principles underpinning it. However, it wishes to add some cautionary comments, and would recommend that the impact of each initiative be assessed in advance. Free trade is undoubtedly the right path to follow as it will open up competition and bring down prices, but it must be remembered that markets are won by the most competitive players. While liberalization undoubtedly helps European producers to penetrate third country markets, the same applies to third country (3) COM(96) 456, 2. 10. 1996, adopted by the Council on 8. 10. 1996 — Multiannual programme to promote the linguistic diversity of the Community in the information society — ESC opinion in OJ C 212, 22. 7. 1996. (4) Paragraphs 6. 1 to 6. 8. 2 follow the order of the subheadings (not numbered) in the communication. (5) ITA — information technology agreement. 9. 3. 98 EN Official Journal of the European Communities C 73/7 producers and the European market — a market which is already largely open. A medium to long-term forecast is needed of the results of market liberalization from a European standpoint, giving figures on the likely costs and benefits, the increase in production and in imports/exports, and the impact on employment. 6. 1. 3. In short, market liberalization must be consis- tent with the aim of not denting the competitiveness of EU industry. To this end, the Commission should review some aspects of decisions and actions either taken or due to be taken. Firstly, it should review the rules on public procurement by government authorities, excluding from these rules privatized telecommuni- cations operators in countries where there is now free competition between operators. Also, the United States should be pressurized into revoking the Effective Com- petitive Opportunity Test (ECO-Test) as it is incompat- ible with the undertakings made in the WTO agreement on basic telecommunications services. 6. 2. Accelerate ICT take-up and promote awareness 6. 2. 1. The communication includes this among the ‘new areas’, but it is also listed among those under way (see 5. 1. 5). The Commission mentions first and foremost the role of the public authorities in stimulating take-up of ICT by their own services, by schools, by the public and by companies. The Commission mentions the lagging situation of some of the southern and peripheral Member States, and states that information technology is ‘a powerful tool to promote cohesion by reducing barriers’. This is undoubtedly true, but there are other major barriers such as the linguistic diversity which it is proposed to maintain. The Committee would also point out that, 6. 2. 2. outside the market offered by the public authorities, steps are needed to give a decisive boost to per capita spending on ICT products by corporate and individual users, with appropriate policies being adopted in the fields of education, training and health applications. A careful assessment is needed of the impact of punitive tax policies such as the proposed ‘bit-tax’. The mere prospect of such a tax would have an adverse impact not only on the market, but also on investment strategies in the sector. 6. 3. Create new markets by timely standards 6. 3. 1. The Commission stresses the importance of adopting universal standards as a strategy for opening up new markets. To this end it calls on producers to cooperate at world level, whilst not forgetting the existence of ‘regional specificities’ which are justified by the need to win new markets or keep traditional ones. The Commission’s line on this is flexible. On the one hand, it ‘supports the creation of (. ) structures enabling European companies to participate in the international ICT standardization process’. On the other, it notes that these structures should ‘trigger internationally recognized standards using European specificities’. 6. 3. 2. On the subject of technical standards, the Committee points out that a distinction must be drawn between different types. The Commission’s use of the term is too generic and does not properly reflect the need for the industry to respond swiftly to standards dictated by the market, which might be different from official ones. On this point the Committee draws the Commission’s attention to the comments which it made in an earlier opinion (1). 6. 3. 3. The Committee considers that the delicate balance between universal and European standards should be established on a case-by-case basis. General principles are not enough to resolve possible conflicts with the competition rules under Article 86 of the Treaty. Such conflicts should be settled by the competent authorities with the requisite flexibility and with a clear view of the interests at stake, taking account of the points made in 4. 2. 3 above. 6. 3. 4. With a view to ensuring ‘consistency and an optimal use of the European standardization resources’, the Commission suggests the early establishment of a one-stop office under the umbrella of the European standardization bodies. The mooted objectives are too generic for the Committee to give any views on them, and it is unable to comment until it has information about the nature, duties and role of the office. 6. 4. Exploit the potential of enlargement EU enlargement is felt to offer the European 6. 4. 1. ICT industries a larger high-growth market and improved economies of scale for production. This would allow European companies to reorganize their manufacturing structures as the United States and Japan (1) COM(96) 359 final on standardization and the global the European approach — ESC information society: opinion in OJ C 89, 19. 3. 1997. C 73/8 EN Official Journal of the European Communities 9. 3. 98 have done vis-à-vis Asian countries. The Commission notes that this process is already under way, to the extent that some producers are relocating activities from the Far East to central and eastern Europe. for European SMEs compared with their American counterparts, especially in Silicon Valley. The Com- mittee endorses this but would point out that to ensure an effective, clear comparison, it is important also to consider the type of model and taxation. Furthermore, the analogies between the CEEC 6. 4. 2. and certain Asian countries are less real than they seem. The advantages offered by the CEEC in terms of lower production costs will steadily become less pronounced once they have joined the EU. If one rejects the principle of country specialization in production structures (see 4. 2. 2), it is clear that the role of these countries cannot be limited to accessory products. The Com- mission’s policy is to encourage ‘active industry represen- tation in the CEEC’, but the terms in which this is couched make it sound more like a colonial relationship. This cannot be the Commission’s intention, and the Committee asks it to redraft this part of the communi- cation so as not to create the wrong impression. 6. 5. Promote industrial cooperation 6. 5. 1. The Commission mentions industrial cooper- ation initiatives that are under way or proposed in the Newly Independent States, the Mediterranean region, South America and Asia. The Commission calls for more efforts to inform firms, especially SMEs, of the opportunities offered. 6. 5. 2. The Committee notes these statements, but points out that calls for ‘cooperation’ in fact encourage relocation of businesses or of part of them, with obvious consequences for employment (see 2. 1. 9 above). Such a policy will give positive results in the long term, by improving market penetration, extending European interests in the rest of the world, and boosting employ- ment. In the short term, however, there is no doubt that relocation reduces job opportunities for Europeans. This must be addressed by a policy for cushioning the social effects, but must be accepted as the price to pay for the prosperity of future generations. 6. 6. Facilitate the emergence of SMEs 6. 7. Focus on employment: skills, education and training 6. 7. 1. The Commission proposes the adoption of a ‘skills standards’ scheme to underpin the regular adaptation of skills to technological and scientific development. The establishment of skills profiles related to the main activities on an industry-wide basis would help when defining training programmes. The standards would thus also provide yardsticks for improving school curricula. 6. 7. 2. This proposal deserves careful consideration. However, it is clear that no ‘profile’ derived from official ‘skills standards’ could be upgraded frequently enough and fast enough to keep pace with the constant advances in research and technology. Direct cooperation between businesses and education institutions is thus necessary. It should be the job of the Member States to lay the necessary foundations for this cooperation, in line with local requirements but taking account of the fact that training should increase the number of researchers and technicians with an IT background, and improve workers’ potential mobility within the EU. 6. 7. 3. The Committee also thinks that undoubted benefits are to be had from Community initiatives to support industrial reconversion and reskilling of ICT workers, so that they can move from the hardware sector to the software and services sectors. The latter two sectors are expanding rapidly and are set to continue to do so; it is here that new jobs can be created to offset those lost in the hardware sector, if not to actually generate a net increase in employment. Lastly, the Committee notes that the scope for 6. 7. 4. creating new jobs in the ICT sector is closely tied to the development of global networks and of the information society (i. e. the Internet, online information exchange services, multimedia services, electronic commerce appli- cations, teleworking, distance learning, etc. ). 6. 6. 1. The communication recognizes the role of SMEs as prime movers in the creation of new jobs and in innovation. It identifies lack of venture capital and poor cooperation with financial institutions as the main reasons why Europe lags behind the United States in fostering the emergence of new SMEs. The excess of red tape in Europe is also felt to be a serious obstacle. The communication proposes benchmarking of conditions 6. 8. Promote benchmarking 6. 8. 1. The Commission considers that benchmarking is an effective and powerful tool for improving competi- tiveness, and it intends to promote its use by companies, 9. 3. 98 EN Official Journal of the European Communities C 73/9 especially SMEs. This topic is considered in a separate Commission document, on which the Committee has issued an opinion (1). Benchmarking of the ICT industry, along the lines already followed by the Netherlands Government, will be extremely useful. The communi- cation states that the Commission will work closely with the Member States and companies to identify critical framework conditions. The Committee rec- ommends that when speaking of ‘companies’, due account is also taken of the experience and suggestions offered by SMEs. The Committee is pleased that the Commission 6. 8. 2. has not lost any time. The first communication (2) was followed by a further communication (3) which announces the launch of a pilot project for the ICT industries. 7. Conclusions 7. 1. The Commission concludes by highlighting the common thread which links the various proposed measures — that of urgency. It intends to follow up the communication by working together with the Member States and industry to draw up specific actions and establish a work schedule. 7. 2. The Committee has already commented on the various strands individually. It endorses the implemen- tation of a coherent action plan which must be flexible so that it can keep pace with a highly volatile situation; it must be free of red tape; and it must be closely tailored to its ultimate aim, that of regaining global competitiveness. 7. 3. The Committee feels it extremely positive that the Commission has pinpointed concrete areas for action. Efforts should focus in particular on measures that will create new jobs; this means incentives for SMEs, and especially for the creation of new SMEs in the most promising sectors (software, multimedia content, etc. ), support for training for young people and workers, and incentives for schools to use new technologies and join networks. 7. 4. In addition to the communications on bench- marking, the Commission has launched a number of communications and projects on the information society (4). Each separate project may be worthwhile, but they need to be carefully coordinated so as to avoid any overlapping or incompatibility and to pursue potential synergies. (1) COM(97) 153 final — ESC opinion in OJ C 296, 29. 9. 1997. (2) COM(96) 463 final, 9. 10. 1996. (3) COM(97) 153 final, 16. 4. 1997. (4) Among these, mention may be made of the communication on Europe at the forefront of the Global Information Society: Rolling Action Plan (COM(96) 607 final, OJ C 296, 29. 9. 1997. Brussels, 11 December 1997. The President of the Economic and Social Committee Tom JENKINS