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RESER Conference


and repair of motor vehicles. 7,2. 75,5. 51 - Wholesale trade ... 92 - Recreational, cultural and sporting activities. 4,3. 21,7. 93 - Other service activities ... – PowerPoint PPT presentation

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Title: RESER Conference

European Commission
RESER Conference 14th September 2007 Services in
the context of EU policy for Enterprise and
Industry Ronald Mackay DG Enterprise and
(No Transcript)
Topics of presentation
  • Main themes
  • Challenges to industry
  • Communication on industrial policy 2007
  • Innovation in services
  • Interlinkage industry and services
  • Services as inputs to industry
  • Industry as service provider
  • Productivity and competitiveness
  • Policy sreeening in service sectors
  • Key messages

Challenges to industry
  • Mid-term review of industrial policy
  • COM(2007)374
  • Stocktaking, launch of new initiatives
  • Programme of work to 2009
  • Challenges to industry
  • Globalisation
  • Rate of technological advances
  • Energy and climate change
  • Implications for the service sector
  • Communication on industrial policy (2005)
  • Integrated approach (Horizontal and sectoral
  • Concrete programme of work

Programme 2007 - 2009
  • Industrial Policy Initiatives
  • Horizontal (e.g.)
  • Sustainable industrial policy
  • Intellectual property
  • Structural change (anticipation)
  • Industry and services (policy screening)
  • Sectoral (e.g.)
  • European food industry
  • Electrical engineering
  • Space defence and security
  • Pharmaceuticals

Innovation in services (1)
  • Expert Group Findings
  • Commission paper SEC(2007)1059
  • Services companies, generally, do not innovate
    less than manufacturing companies but great
    differences exist between knowledge intensive and
    other services.
  • Lower percentage of all service sector firms
    (34.0) as opposed to manufacturing firms (39.3)
    are technical innovators.
  • The exception are KIBS firms, which are more
    likely than manufacturing firms to introduce
    either a product or process innovation (51.5 )
  • Fazit Service firms do innovate, but in a
    different way.

Innovation in services (2)
  • Implications
  • Policy instruments need to recognise the
    specificity of innovative companies in services
  • The strong heterogeneity within services sectors
    has implications for policy
  • A distinction based on RD intensity may be more
    adequate than services/manufacturing ?
  • Innovation support schemes need to focus on fast
    growing companies (not only in the service

Innovation in services (3)
  • European Innovation Platform for Knowledge
    Intensive Services
  • pilot action that will test new forms of
    integrated support mechanisms for knowledge
    intensive services with high growth
  • operational learning platform where such new
    policy approaches in support of innovation in
    services can be tested
  • Aims
  • to foster technological as well as
    non-technological innovation (organisational
    innovation) in services
  • to practically implement such good practice
    examples and to further develop them in support
    of knowledge intense services

Structural change (1)
  • Structure of industry in Europe
  • Rate of change too slow or too fast?
  • EU manufacturing remains specialized in
    medium-tech sectors and has not taken advantage
    of the fast growth of certain high tech sectors.
  • European businesses have not fully exploited
    either the opportunities offered by ICT
  • Also, within sectors, the EU is comparatively bad
    at reallocating resources to the most productive
  • Anticipation (getting ready, not forecasting) and
    development of capacity to change
  • Adjustment costs and the European Globalisation
    Adjustment Fund

Structural change (2)
  • Interlinkage industry and services
  • Service provision is mainly local. Industrial
    restructuring has an impact on the location, or
    relocation, of employment in the service sector.
    Will industry continue to procure essential
    business services close to where it is located?
  • Does the service sector have the capacity to
    create alternative employment in areas affected
    by industrial restructuring?
  • Impact of outsourcing/offshoring Many services
    which were previously considered non-tradable are
    being increasingly codified, standardised, and
    suitable for delivery at a distance. (Digital
  • What framework conditions have a positive, and
    which have a negative impact on company strategy?

Industry and services (1)
  • Importance of services as inputs
  • Reliance of industry on wide range of service
  • But
  • Relative absence of quality standards
  • Lack of market transparency
  • High transaction costs
  • Risk of dissatisfaction with service delivered
  • Need for procurement of business related services
    based on based on more objective criteria and
    best value for money

Services as intermediate inputs to industry
Industry and services (2)
  • Manufacturers are also service providers
  • Manufacturers build products but their clients
    want solutions
  • Manufacturing companies increasingly provide
    services in conjunction with their product.
  • Increased demand for complex systems (e.g.
    satellite system, mobile phone base station,
    transportation systems)
  • Business models (e.g. Public Private
    Partnerships, Build-Operate-Transfer)
  • They are confronted with the same administrative
    and regulatory obstacles to trade as service
    firms, both within the EU and internationally.

Servo-industrial sector (Austria)
Servoindustrieller Sektor
Anm. Die Industrienahen Dienstleistungen
beinhalten die Vermietung beweglicher Sachen ohne
Bedienungspersonal (NACE 71), die
Datenverarbeitung u. Datenbanken (NACE 72) sowie
die Erbringung v. unternehmensbezogenen
Dienstleistungen (NACE 74). Die
Produktionsorientierten Dienstleistungen
umfassen 1/3 Handel, Reparatur v. Kfz u.
Gebrauchsgütern 1/3 Beherbergungs- u.
Gaststättenwesen 1/3 Verkehr u.
Nachrichtenübermittlung 1/2 Kredit- u.
Versicherungswesen 1/2 Industrienahe
Dienstleistungen erweitert (Realitätenwesen NACE
70, Forschung u. Entwicklung NACE 73). Quelle
IWI (2007)
Servo-industrial complex
Services in the economy
  • DG ECFIN study 2007
  • Sources
  • Industry classification
  • NACE _at_ 2 or 3 digits
  • Usual caveats about methodology how reliable are
    the figures?

Manufacturing and tradeable services
total value added total employment World export growth
Food and beverages 15 1,86 2,25 7,3
Chemicals 24 1,94 1,67 12,2
Rubber and plastics 25 0,99 0,61 8,2
Basic metals 27 0,73 0,83 12
Fabricated metal 28 1,82 1,58 8
Machinery 29 2,08 0,97 8
Electrical machinery and apparatus, nec 31 0,9 0,6 7,5
Radio, television and comm. equip. 32 0,52 0,31 8,5
Medical, precision and optical instruments 33 0,57 0,18 10,6
Motor vehicles 34 1,42 1,13 7,5
Electricity, gas and water supply E 2,17 0,59 20,8
Other business activities 74 6,97 13,09 7,2
Other service activities 93 0,72 1,28 70,7
Labour productivity performance
(growth during period 1995-2004 in ) (growth during period 1995-2004 in ) (growth during period 1995-2004 in )
  EU25 US
50 - Sale, maint. and repair of motor vehicles 7,2 75,5
51 - Wholesale trade 27,2 52,8
52 - Retail trade 14,6 58,1
H Hotels and restaurants -1,3 11,8
62 - Other air transport 6,6 57,9
63 - Other supporting and auxiliary transport activities -2 42,2
65 - Financial intermediation 46,7 69,4
66 - Insurance and pension funding -13,4 10,3
73 - Research and development -1,6 46,4
74 - Other business activities -7,7 17,1
90 - Sewage and refuse disposal -5,1 37,6
92 - Recreational, cultural and sporting activities 4,3 21,7
93 - Other service activities -11,1 11,8
The EU productivity problem
  • EU market services have contributed relatively
    little to growth
  • (Sectoral contribution to business sector
    productivity growth)
  • (Source OECD, Scarpetta, 2007)

Services productivity
  • A shared problem
  • Productivity growth in services lags behind that
    of manufacturing, but the service sector is
    already large, and still growing.
  • Productivity increases in industrial sectors may
    have a ceiling, which is determined by the
    relatively low productivity of service inputs
  • Industrial companies employ increasing numbers of
    people in internal service functions. Their
    overall productivity growth will reach a limit if
    they do not tackle the issue of services
  • Services productivity is too important to leave
    it entirely in the hands of the service providers.

Initiative on Industry/Services (1)
  • Rationale
  • The cost, quality and productivity of certain
    service sectors, have an impact on the
    competitiveness of industry.
  • Regulations which affect the performance of
    professional and other business services,
    financial services or the retail and distribution
    sector also have an impact on industry.
  • In addition, competitive network industries
    enhance the competitiveness of industry as a
  • Industry is both a user and provider of a growing
    range of services related to innovative
    technologies and products.

Industry related services
  • Service sectors with close linkage to industrial
  • Quality, price and competitiveness of the
    service sector has impact on competitiveness of
    many industrial sectors
  • Examples
  • Engineering services
  • Creative industries (Design, Architecture,
  • Other Business Services
  • Network services (Distribution, Communications)
  • Facility Management
  • Recycling, Waste disposal
  • Methodology Same form of competitiveness
    analysis as applied to the industrial sectors
    could be applied to these (or other) service

Initiative on Industry/Services (2)
  • Methodolgy
  • Identification of key areas of interdependency
  • Policy screening of relevant service sectors
  • Identification of obstacles to increased
    competitiveness and market failures
  • Assessment of impact on industry
  • Assessment of need for intervention

Initiative on Industry/Servicesvice (3)
Competitiveness Assessment Structural data and indicators
External Competitiveness
Employment and Geographic dimension
Challenges for the service sector
  • Provide more inputs to policy development
  • Industry, innovation, SME, Research
  • Internal Market, Public procurement, Intellectual
  • Trade, Competition
  • Emphasise contribution to economic growth and job
  • Lisbon strategy, National reform programmes,
    Community Lisbon Programme
  • Invest in more RD
  • Invest in more innovation
  • Increase productivity
  • Increase use of standards

References and links
  • References and links
  • Mid-Term Review of Industrial Policy COM(2007)374
  • http//
  • Innovation in Services SEC(2007)1059
  • http//
  • EU Industrial Structure 2007
  • http//
  • Industriebuch 2007
  • Industriewissenschafliches Institut (IWI) Vienna

The End
  • Thank you for your attention
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