BUSINESSEUROPE: THE EU’S SOCIAL POLICY CAN AND SHOULD SUPPORT ITS COMPETITIVENESS

Today, BusinessEurope has published its priorities for the EU’s social dimension over the next five years. This paper was presented to the European Commission President Ursula Von der Leyen, Executive Vice-President Valdis Dombrovskis, and European Commissioner for Jobs and Social Rights Nicolas Schmit at a high-level meeting with the European Social Partners.

Commenting on the publication, BusinessEurope President Fredrik Persson said:

“A strong economy is essential for safeguarding our European way of life. Well-designed employment and social policies can enhance Europe’s competitiveness and productivity. The European business community has outlined five key priorities for EU social policy that will help to reverse the decline in its global competitiveness. EU actions are required to facilitate labour mobility and complete the Single Market.

Expanding labour market participation, equipping workers with future-proofed skills and attracting skilled workers from third countries is equally important. European companies are facing acute labour and skills shortages that are undermining their competitiveness and therefore Europe’s future growth and employment.”

Key Data Points

1. Only 3.8% of the EU’s working-age population moved within the EU in 2023.
2. The EU vacancy rate has been growing since 2013 and is now stagnating at a high rate: 2.6% of jobs in the EU were vacant in the first quarter of 2024.
3. Only three EU Member States feature in the top 10 of the OECD’s most attractive destinations for highly educated workers.

Executive summary 

Europe continues to be one of the best places to live, work and do business. But the EU’s competitiveness and attractiveness as a place to work and to invest is declining compared to other world regions. The European economy is falling behind: In 2023, EU GDP grew by 0.5% only vs 3.1% in the US and 5.2% in China. Having a strong economy is a prerequisite for defending our European way of life and, therefore, the EU needs to put competitiveness at the forefront. A strong economy is the basis for growth, employment, investment in the green and digital transitions, as well as other key priorities such as infrastructure, security, social protection.

For Europe’s ageing societies, getting more from our work and our investment is particularly important if we want to maintain our living standards. Unfortunately, overall EU productivity in 2022 is only 75% of that enjoyed in the US. The EU has also failed to close its long-term productivity gap with the US. This is threatening Europe’s social market economy.

European employment and social policy can and must contribute to improving Europe’s competitiveness and productivity. Europe’s policy choices have an impact on companies and workers. They determine enterprises’ capacity to remain productive, competitive and resilient in the face of potential crises. They have an impact on how companies do business and create job opportunities. They influence labour market participation. They affect how, when and where people work. They guide how people access education and training.

European companies are committed to playing their role, including a positive role in society. However, they are held back by skills and labour shortages and unnecessary costs generated by public policy choices that are putting them at a competitive disadvantage in global markets and discouraging jobcreating investment in Europe. In 2022, proposals under the Green Deal alone represented a total of almost €2 billion of additional administrative burden.

For BusinessEurope, social policy over the next five years should focus on:

• completing the single market: a functioning labour mobility through the use of digital tools;
• expanding labour market participation, with increased activity resulting from inclusive active labour market policies;
• future proof skills, with a new skills agenda of the EU bringing digital education to the forefront;
• legal migration of skilled workers, with measures to attract talents in the EU more easily;
• competitive sustainability based on a global level playing field on the social dimension of ESG in trade, and accounting.

Furthermore, two horizontal policy changes are urgently needed:

• EU policy makers need to move away from their predominantly regulatory approach to social policy and avoid coming forward with unnecessary new social policy legislative initiatives, which increase compliance costs and burden for European companies and are particularly damaging for SMEs.
• The EU should give the necessary space so that the social dialogue can play its role in helping to find solutions to Europe’s labour market challenges. On issues which are within their competence, the European social partners are best placed to find solutions reconciling employers’ and workers’ needs.

Read BusinessEurope’s policy recommendations in full here.