Dutch minister calls for move towards US social model

[Henk Elegeert]

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Article >> http://euobserver.com/?aid=17474&rk=1

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Dutch minister calls for move towards US social model

07.10.2004 - 17:33 CET | By Richard Carter

EUOBSERVER / BRUSSELS - The EU needs to move more towards
the US social model if it is to close the productivity gap
with America and reach its economic goals, the Dutch
economics minister and Chairman of the EU's competitive
council said today (7 October).

Speaking at an event organised by the Lisbon Council - a
Brussels-based pro-reform think tank - Laurens Jan
Brinkhorst said, "I will argue that the updated European
Social Model should differ distinctly from the current one.
It will inevitably resemble the US model more than is the
case today".

However, Mr Brinkhorst continued, "But it will still be a
European model, reflecting European preferences for social
inclusion and environment".

Mind the gap
A shift in the European social model is vital if the EU
stands any chance of fulfilling its self-set economic goal
to be the most competitive economy in the world by 2010 -
the Lisbon strategy - said the minister as he sketched out
how far the EU has slipped behind the US.

"Since the early 1990s", said Mr Brinkhorst, "the US has
largely outpaced the EU in terms of economic growth. From
1991 to 2003, the US economy grew by no less than 47 percent
in total, whereas the EU economy achieved only 28 percent
growth".

He added, "With respect to the GDP [gross domestic product]
per capita, Europe ranks significantly below the world's
best performers. In 2003, America's GDP per capita was 55
percent higher".

"Only one member state - Luxembourg - could compete with
most US states in terms of GDP per capita. The average
person in France, Germany and Italy earns less than the
average American in all but four of the US states (Arkansas,
Montana, West Virginia and Mississippi)".

And this issue is all the more pressing given Europe's
ageing population, often described as the "demographic
time-bomb".

Work longer, Europe!
One of the ways in which Europe can boost its productivity
and growth, according to the Minister, is by working until a
later age.

Although people are living longer, many Europeans choose to
retire before the official retirement age - which Mr
Brinkhorst noted was introduced in the late 19th century.
This reduces the productivity of older workers and increases
pressure on pension systems.

"We will simply have to work longer", said Mr Brinkhorst,
calling for "incentives to seek work and work longer".

He also called for more flexible labour markets, stimulating
innovation, improving regulation and lowering taxes as a way
to boost growth and productivity.

No guts, no glory
Despite the seemingly enormous gap to bridge with the US in
terms of productivity growth, Mr Brinkhorst remains upbeat.
There is "ample room for improvement", he said and "no need
to think that our future will inevitably be gloomy".

If all EU member states performed as well as the best EU
member state in terms of the three main drivers of growth,
the EU's GDP per capita would be 30 percent higher than the US.

"But we do need to get into a higher gear and redirect the
agenda to target enhancing economic growth, employment and
competition", he concluded.

And he stressed that the model he envisages will still be "a
European model, reflecting our European choices".

"Europe will still have a high level of social security, but
not as high as it is now".

© EUobserver.com 2004
Printed from EUobserver.com 08.10.2004

The information may be used for personal and non-commercial
use only.

This article and related links can be found at:
http://euobserver.com/?aid=17474&sid=9
"

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