Sweden’s presidency of the European Union has just come to an end. During its presidency, Sweden succeeded in putting the competitiveness of businesses and the EU at the top of the political agenda.
A new long-term competitiveness agenda was launched together with a number of individual proposals aimed at improving the EU’s global position. This has been a positive presidency where we as employers have found a reliable partner.
We must now ensure that this focus is not lost, because the lack of competitiveness is real. Europe’s share of the global economy has been declining for a long time. In 1990, the EU accounted for around 25 per cent of the world’s GDP. The corresponding figure for 2020 was 15 per cent and by 2050 it is expected to be less than 10 per cent.
There is an urgent need to regain ground. The green transition gives us such an opportunity. How successful it is, however, ultimately depends on how well our economy works.
Competitiveness is based on companies’ ability to succeed in a global market in a profitable way. Europe’s future economic growth outlook will increasingly depend on its ability to increase productivity. This requires a well-balanced policy to support innovation, increase skills, reduce rigidity in the labour market and allow for a better allocation of resources.
As employers we believe that this calls for policy action in three particular areas:
First of all: regulation and taxation must become more business friendly. We do not need more burdens and bureaucracy. Too much of this has been added in recent years with thousands of pages of regulation being added over the past few years. We need policies that promote entrepreneurship and encourage companies to innovate, invest and trade.
All EU policies must be guided from a regulatory improvement perspective, reducing the regulatory burden of businesses, and fully implementing the ‘one in one out’ principle. We welcome the fact that the European Commission has started to apply a ‘competitiveness check’, which we employers had proposed to the Commission during the Conference on the Future of Europe.
Regulation and taxation must become more business friendly
Secondly: the single market is the EU’s main success factor and guarantees the free movement of people, goods, services and capital. A well-functioning single market, with free movement and a level playing field between companies, is a prerequisite for Europe’s global competitiveness and thus for the green transition.
The same applies to the ability to attract, hire, and develop qualified employees. Today, skills shortages are a real hindrance to growth and is preventing companies from developing and selling their products and services.
The free movement of labour and services and matching in the labour market can be improved by improving mutual recognition of diplomas and diplomas from schools and higher education. The EU can also help to facilitate the hiring of labour from third countries.
Thirdly, and not less important: businesses need access to basic production resources at competitive prices. This is about energy, raw materials, labour, capital and data. Increased sustainability requires increased electrification.
Currently, the EU is dealing with legislative proposals aimed at ensuring access in Europe to selected strategic raw materials and accelerating environmental permit processes for selected so-called green projects. This is good as permit granting is often characterised by long processing times and unforeseeable processes. The green transition requires faster and more balanced permit processes. This helps to strengthen employment and can thus contribute to welfare.
Sweden has now handed over the presidency to Spain, which has also chosen open strategic autonomy as one of its main priorities. As employers, we will continue to push to ensure that the competitiveness of businesses and the EU remains at the top of the EU’s policy agenda.
Stefano Mallia is president of the Employers’ Group of the European Economic and Social Committee. Per Hidesten is CEO of Swedish Industrial Employers.