ETUC response to Mario Draghi’s Report on the future of European competitiveness

Mario Draghi's Report on the future of European competitiveness was published on 9 September 2024.

Given the importance of the report, the ETUC and our affiliates have been active to influence the outcome, including by meeting with Mario Draghi during the Executive Committee meeting in March and by providing him with trade union analyses and recommendations (including the ETUC input to Draghi's Report on the future of European competitiveness).

While the ETUC agrees with the overall message about the need for significant investments to be delivered at European level and for an ambitious industrial policy, we do not agree with all of the policy recommendations, and some may create a threat to workers' rights.

The ETUC response to Draghi report should be read in conjunction with the ETUC response to the Report by Enrico Letta "Much More than a Market".

• Key messages

Social dialogue is a key component for our European competitiveness, as recognised also by the Val Duchesse Declaration for a Thriving European Social Dialogue. The ETUC has therefore called on Commission President von der Leyen to establish a high-level social partners working group on how to deliver an EU industrial policy for quality jobs along with the other recommendations included in the report.

High-quality jobs, good working conditions and social dialogue and collective bargaining are at the heart of competitiveness. Being serious about competitiveness means being serious about delivering quality jobs in every sector and in every region, about improving working conditions, about reinforcing social dialogue and collective bargaining, and democracy at work. Social cohesion is a key element for competitiveness.

The recommendations of the report with regard to the need for investments and for an ambitious European industrial policy should mark a turning point in the EU's approach. The ETUC calls for an ambitious European industrial policy with significant investments that supports common goods and innovation and delivers quality jobs and social progress, based on strong public services, social protection, housing, transport and childcare.

Failed austerity policies must be rejected and instead the EU must establish ambitious common investment tools, develop progressive taxation policies and provide Member States with the necessary room for manoeuvre to finance the investments for industrial policy, public services, and just transitions.

At the same time, the report does not identify the legislative actions necessary to ensure quality jobs and social progress. The ETUC calls on the EU institutions to put forward the legislative initiatives outlined in the ETUC Manifesto for a Fair Deal for Workers. A more social Europe is a precondition for a more competitive Europe.

Also, the ETUC is very concerned about the resurfacing of the deregulation agenda, in particular the call for the EU to "self-restrain" and the misguided arguments against 'gold-plating'. These have the potential to undermine essential rights. The ETUC will firmly oppose any initiative that undermines workers' rights and standards. Protective rules ensure a level-playing field and a resilient, high-quality and future-proofed economy based on innovation and social cohesion, and should not be considered as a drag on competitiveness.

Commission President von der Leyen has included references to the implementation of several recommendations of the Draghi Report in the mission letters to the Commissioners-designate. It is therefore of high importance for the ETUC to put forward key proposals to inform the upcoming discussion with the Commissioners-designate on the delivery of the various recommendations in the Draghi Report.

ETUC key proposals with regard to Mario Draghi's Report on the future of European competitiveness:

• Investments. The ETUC has long identified the consequences for working people of chronic under-investment. The report recognises the current crisis of lack of investment and recommends additional investments of more than 800 billion Euros a year. The report also positively stresses the need to reinforce public investment and the EU spending capacity, including with proposals for joint public financing models at EU level for implementation and calls for a EU-financed facility using EU-named securities. The report is clear on financing needs but ambiguous on financing objectives and strategies, mostly relying on financial markets and overlooking the necessary social investments and the role of public investment banks. Also, the report fails to identify the significant limitations to the necessary additional investments that the economic governance framework imposes on Member States. The ETUC calls for the EU to establish ambitious common investment tools, develop progressive taxation policies and provide Member States with the necessary room for manoeuvre to finance the investments for industrial policy, public services, and just transitions. There must not be a return to failed austerity policies. It is key to implement a new fiscal capacity for investment leaving no one and no region behind, such as a European Sovereign Fund, financed through the issuance of common EU-denominated bonds to support a strong European industrial policy and investments in socially just green and digital transitions and common goods. The ECB mandate should be enlarged to include full and quality employment, and support to the ecological transition while fighting climate change in addition to its price stability one. Its secondary mandate for economic development should also be more prominent.

• Industrial policy. The report stresses the need for the EU to develop and put in place an ambitious and effective European industrial policy. The report recommends a mix of broad actions to establish the right conditions for investment, alongside targeted measures to address specific sectoral challenges. The ETUC calls for an ambitious European industrial policy with significant investment that underpins quality jobs and social progress to support common goods and innovation and deliver quality jobs and social progress, based on strong public services, social protection, housing, transport and childcare. Such an industrial policy should ensure the creation of quality jobs in all sectors and regions and contribute to address social and territorial inequalities.

• Competitiveness cannot be based on wage repression. The report positively recognises the importance of the European social model and highlights that promoting competitiveness should not be based upon "wage repression to lower relative costs". Despite these important statements, the report focuses almost uniquely on skills with regard to the recommendations to ensure quality jobs and a strong social contract. Social cohesion is a key element for competitiveness. It is key for the EU to deliver the legislative proposals needed to ensure quality jobs and the full implementation of the European Pillar of Social Rights, included in the ETUC Manifesto for a Fair Deal for Workers.

• Better regulation and risks of deregulation. The report includes better regulation pushes and proposals and risks of deregulation (e.g. "It will also be crucial to reduce the regulatory burden on companies"). In addition to an SME test, the report recommends a competitiveness test to be introduced and highlights the need of "systematically assessing and stress-testing all existing regulation by sector of economic activity" at the start of each Commission mandate and before adopting new EU legislation. The ETUC rejects 'burden reduction' approaches that do not safeguard/ensure workers' rights and standards or that create downward pressure on wages or collective bargaining. The ETUC also rejects the attacks against "gold-plating". Having higher standards at national level than the minimum standards agreed at EU level is not only perfectly in line with EU law as directive always define minimum standards but also a legitimate goal for any Member State.

• 28th regime. The report calls for the establishment of a '28th regime' for interconnectors deemed to be Important Projects of Common European Interest, "i.e. a special legal framework outside of the 27 different national legal frameworks". This proposal is highly problematic and must be rejected, as it would constitute an avenue for social dumping and undermining protective labour standards.

• Social conditionalities. It is positive that the report mentions social conditionalities with regard to state aid and financing for businesses, even if limited to skilling, reskilling and childcare. The ETUC reiterates its call for social conditionalities to be included in all public funding, state aid and support to businesses, as well as environmental and tax conditionalities.

• Right to training. With regard to skills, the report calls for a fundamentally new and positive approach: "the EU must ensure that all workers have a right to education and retraining, allowing them to move into new roles as their companies adopt technology, or into good jobs in new sectors". However, the report falls short of calling for the necessary actions at EU level to establish the right to training for all workers without costs and during working time.
  It is also essential to ensure stable and long-term investments in education and research to foster innovation, critical knowledge and competitiveness based on quality.

• Competitiveness Coordination Framework. The proposal to establish a new "Competitiveness Coordination Framework" to foster EU-wide coordination in priority areas and the proposal to consolidate accordingly also the EU budgetary resources raise significant concerns, unless the EU multiplies its budget and its own resources. It remains unclear what role this competition coordination framework should actually have. It is of paramount importance to reinforce, and not to undermine, social progress, upward social convergence and social objectives in the Semester process and in EU spending. No new structures should be introduced with the effect of undermining wages and collective bargaining, social rights, social convergence, social progress to austerity.

• Public procurement. The report focuses on the role that public procurement procedures can play to support EU products and services, and contribute to innovation and an effective industrial policy. However, the report does not stress the need for the revision of the public procurement Directives to ensure the promotion of collective bargaining and quality jobs. The ETUC reiterates its call on the EU institutions to revise the EU Public Procurement Directives to ensure that public money goes to organisations that respect workers' and trade union rights, that negotiate with trade unions and whose workers are covered by collective agreements.

• Pensions. The report seems to over rely on the mobilisation of private investments and their ability to contribute to close the investment gap. It should be stressed that pension funds are workers' money: adequate and safe pension income has to be fully safeguarded in any case, respecting national competences.

A more detailed analysis can be found in Annex.