The Lisbon Process in the European Union: Lessons for Croatia also the EU member states' old market economies need to adjust themselves to the competitive forces of the global economy. CAUSES OF REFORM A crucial reason that made the EU implement the Lisbon Strategy was the fact that in 2000 the GDP per capita gap between the EU and the US economies was larger than it had been since the beginning of the 1970s. The real GDP gap was even larger than that suggested by per capita indicators, because of the higher population growth in the US. Particularly interesting observations can be drawn from the analysis of this gap. The GDP per capita of the EU15 in 2000 represented about 70% of the US GDP per capita. But labour productivity per hours worked in the EU15 was very close to the US level, about 93%. Furthermore, labour productivity per person employed in the EU15 was also much closer than GDP per capita, representing about 85%(Eurostat, 2004). These differences were due to a shorter average working time in the EU in comparison to the US, lower employment rates and differences in demographic structures. There were also substantial differences in employment rates between the EU and the US(the employment rate in the EU was only about 64% while in the US it was over 73%, OECD, 2002a). Therefore lower labour utilisation in the EU in comparison to the US can be seen as a crucial source of the GDP gap between these two economies. According to some economists(for example, Turner, 2003), the systematic shortening of working time and falling employment rates in Europe reflects a preference for leisure. Another explanation is proposed by Freeman and Schettkat(2005), who hypothesise that the greater time worked and the higher employment rates in the US are due to the greater marketisation of traditional household production in the US. These explanations are interesting, but there are important reasons why the bulk of the blame should fall on labour and product market regulations as well as on welfare state benefits for the relatively short working time and low employment rates in many European countries. The lower employment rate in the EU, to some extent, may, however, result from a relatively low level of human capital. Only 21% of the people of working age in the EU15 have a tertiary education, while in the US the figure is almost 37%. These figures are very important when you take into account the fact that the employment rates of people with tertiary education in the EU are similar to the US rates, and only the rates of employment of less educated people are lower. 77