Baltic Sea Region Territorial Monitoring System

Territorial Cohesion - Competitiveness through smarth growth

The educational level of the BSR population is generally well above that of the average EU citizen. When measured e.g. through the EU 2020 target of at least 40% of 30-34–year-olds having completed third level education, all EU/EFTA countries in the BSR are well above the EU average save for Germany. Most BSR countries have also reached their separate national targets in this respect, with Germany, Poland and (barely) Estonia constituting the only exceptions. Regarding the entire age group 25-64 years, most regions in the BSR do not reach up to a 40% limit, which is natural, since that target has been set only for the primarily young ones. Educational levels throughout Europe tend to fall the older the age group is concerned. Nonetheless, there is a clear convergence process in the BSR regarding tertiary education, as those regions where levels are lowest tend to have the highest increase rates. This convergence process concerns eastern and western BSR alike.

A well-educated population may be regarded as an input factor to the knowledge economy. Another such input is investment in research and development, where the EU 2020 strategy has set a target rate, that 3% of the Union’s GDP should be allocated for R&D by the year 2020. Unlike in the previous Lisbon/Gothenburg strategy, the target makes no distinction between public, business or third sector R&D. In terms of total R&D investment shares, the BSR is thoroughly divided by an east-west gap. All regions having reached the magic 3% target rate, or in fact all regions in general where this share is high, are western BSR regions (x-axis). Among those in the eastern BSR where this share is high are primarily former East German regions as well as e.g. Estonia. A similar pattern is visible regarding the business sector investment share (y-axis), which by and large tends to walk hand in hand with the total share. There are differences in this respect though. University cities or BSR capitals (such as Berlin) tend in general to have comparatively higher rates of public sector R&D investments whereas the opposite holds true for typical industrial regions. A completely other issue is of course that R&D as the only saviour is barely fitting each and every region, and also in the BSR there are evidence of prosperous regions despite low levels of education and/or low R&D input (Åland would be the prime example).

A third strategic target in the EU 2020 strategy concerns lifting up employment rates to higher levels. The general target set for the entire EU concerns the age group 20-64 years, of which at least 75% should be employed by the year 2020. The figure shows the development of the overall employment rate of the entire BSR (red line), western BSR (green) as well as eastern BSR (blue) for the years 2005-2011. Two observations can be made. Firstly, and rather obviously, employment rates for the eastern BSR taken as a group will not reach the 75% limit by 2020, unless something truly dramatic would occur. The western BSR has already passed that rate, much thanks to substantially high employment rates in Sweden and Norway. Secondly, the gap between eastern and western BSR appears rather consistent, implying that no macro level convergence is taking place between the two shores of the Baltic Sea.

Such macro level adjustment are however less interesting from a territorial point of view. The above figure depicts the regional variations in terms of employment rates for the same age group 20-64 years. In most BSR countries regional differences in this respect are large, typically ranging between 10 and 15% between top and bottom performer. Finland, Poland, Belarus as well as BSR Russia are most polarised in this respect (and at this territorial level) whereas particularly Denmark, but also Sweden and Norway, display a rather balanced pattern. Only in Poland and the Baltic States are there no regions that have already (by 2012) reached the generic EU target rate (blue line in the graph). All regions in Sweden as well as in Norway in contrast have done so. For comparison, all of BSR Russia save for Leningrad oblast also lay above the 75% rate, albeit both Russian as well as Belarusian data is slightly biased (being based on data where both in the numerator and the denominator differ, which shifts their rates upwards) and not fully comparable. Apart from the generic 75% EU target, there are additional national target rates that have been adjusted to fit the on-the-ground reality of each Member State. In some cases this is above the 75% line (Denmark, Sweden, Finland, Germany, and Estonia), in other cases below (Poland, Lithuania, and Latvia). The orange lines denote these nationally individual target rates for the EU MS of the BSR. Only three regions in Sweden, two in Finland, two in BSR Germany, and one in Poland have reached this national target rate, the rest of the regions in the EU parts of the BSR have not.

Whether or not the remaining regions will be able to reach the generic EU targets and/or the corresponding national ones remains an open question. This figure makes an attempt to predict this. We have utilised the average year by year development between 2005 and 2012, and applied this rate of change on the years to come up till 2020. Arguably, within this time frame there have also been considerable decrease in employment rates throughout the BSR as a consequence of the credit crunch of 2008 (in particular the years 2009 and 2010). We have addressed this issue by calculating the annual growth rate for each year separately throughout the period, whereupon the average rate for a vast majority of the regions remains positive. Nonetheless, by including the years 2009 and 2010 we may say that this forecast is a cautious one, but realistic at that. Another thing – which we have not been able to address – are the considerable (or expected) changes in the age group 20-64 years, as the baby boomers of the post war period are gradually passing the 65 year limit, which implies that the denominator of the employment rate will in many regions start to decline, resulting in comparatively higher rates despite no real change on the ground. Nonetheless, the starting point is that among the EU MS, seven regions of which two in BSR Germany (Lüneburg, Schleswig-Holstein), two in Finland (Etelä-Suomi, Åland) and three in Sweden (Stockholm, Småland med öarna, Västsverige) have already reached both generic EU as well as their respective national target rates. A further six regions are expected to reach both these by 2020. Of these, three are Swedish, two German and one Polish (Mazowieckie). 14 NUTS 2 regions in the EU parts of the BSR are projected to reach neither their national target rates, nor the corresponding EU one. Apart from all three Baltic States, two Finnish and two Danish regions as well as seven Polish ones belong to this group. In the non-EU parts of the BSR, we may compare the performance of regions in terms of the general EU target only. All Norwegian regions already today lay above the 75 % line and all but one in BSR Russia (Leningrad oblast). Brest oblast in Belarus would, if the present trend continues, also reach this level by the year 2020, whereas Gomel, Vitebsk and Mogilev oblasts in Belarus as well as Leningrad ditto in BSR Russia will not reach up to that. Such under-optimisation of productive resources is potentially as costly affair. As said previously, reaching EU targets would bring about between 1.6 and 2.0 million additional jobs to the BSR.

(C) ESPON BSR-TeMo, RRG, 2013