Speech of President Stefano Mallia at conference "Leading the Way: A Competitiveness Agenda for a Stronger Europe"

Stefano Mallia at event "Leading the Way"

Ladies and gentlemen, esteemed colleagues, distinguished guests,

It is my pleasure and honour to welcome you today to our flagship event titled "Leading the Way: A Competitiveness Agenda for a Stronger Europe."

This is an event which is supported by our six partner organisations - BusinessEurope, SMEunited, Eurochambres, Eurocommerce, SGI-Europe, and COPA-COGECA. They are our partners with whom we ar working very closely on the topic of competitiveness and who are also with us to participate in today’s debate.

The theme of today's event strikes at the very heart of our mission as Employers.

In a world shaped by constant transformation, the European Union stands at a critical crossroads, where challenges and opportunities are converging to redefine our future. The ecological, demographic, societal, technological, democratic, geopolitical, and financial challenges demand a coherent and clear vision to move forward. There is no space for complacency.

We’re in the middle of not one, but two overarching transitions – which are already today changing in a very fundamentally way our economy. We are at a stage where old certainties are no longer valid (for example look at challenges being forced by climate change upon the car industry in Europe) and new emerging realities are moving too fast for our policy making structures (and here I specifically have in mind the emergence of AI).

As business leaders, it falls upon us to play an active role in shaping this path. Our role is pivotal in providing businesses with the necessary conditions to function as engines for growth and prosperity.

Today's event marks an important milestone in our journey. We are bringing together European businesses and EU policy makers from the Parliament and the Commission to discuss the need for a competitiveness agenda for the EU that not only propels our businesses forward but also drives prosperity for all.

Ladies and Gentlemen,

This event has been driven by the conviction that Europe’s competitiveness must be front and centre in the spotlight, now and in the next institutional cycle.

I believe it's a fair assertion to state that competitiveness has been disregarded and excluded from the EU agenda for years, if not decades—at least since the last Lisbon Agenda. And this has had serious consequences that speak clearly in figures.

Europe's share of the global economy has been declining for quite some time - from 25% in 1990 to 15% in 2020 and in 2050 it is predicted to be less than 10%.

Europe is falling behind on eight of ten transversal technologies, putting Europe at a clear disadvantage.

For instance, the top ten major companies investing in quantum computing are in the United States or China, not in Europe. In artificial intelligence (AI), investment by US corporations is six times that of their European counterparts.

From the top 10 countries which have published the most impactful AI research, we only find 2 EU member states, Germany on the 4th and France on the 8th place.

Of the top 100 cited papers on AI, we find that in 2022, Germany was the source of 4 papers whilst France was the source of 2 such research papers. Compare this with 68 in the US and 27 in China.

Take the automotive industry as an example. Of the estimated 10 million all-electric cars sold worldwide last year, 6 million were manufactured by Chinese producers. This in an industry where traditionally it was China that was looking towards us a leader in the field.

Europe has some of the most productive retailers but has no online retail platform to match the size of leading US and Chinese online retailers. Europe has strength in software, too, but is not leveraging its position to establish a world-leading business-to-business software company such as Salesforce.

In addition to our own structural problems, we are also looking at a likely slowdown of the global economy.

Dear friends and colleagues, make no mistake - we are heading for seriously troubled waters.

To us employers it is clear that a lot of work needs to be done on various fronts. From tackling the existential threat of climate change, to upgrading critical infrastructure to addressing the very challenging demographics, there is no doubt that there is a lot that needs to be done and done with urgency.

However we are also clear that we need to tackle some maladies which are of our own making…………..and here I am specifically referring to over-regulation.

Compared to our competitors, EU businesses are burdened by significant administrative obstacles that hinder their ability to invest and effectively undergo the green and digital transition.

These obstacles include onerous, unrealistic and overlapping reporting requirements, cumbersome permitting and licensing procedures as well as administrative complexity, lack of clarity in policies and guidelines, and other administrative barriers.

Unfortunately, Europe has become a champion of regulation which is hindering our indigenous enterprises whilst at the same time discouraging inward investment.

I will cite one example concerning a sector which is critical for our industries - the steel sector. Just taking into account recently enacted legislation and legislation which is in the pipeline, the EU steel industry must deal with 148 new legislative initiatives, 89 of which come from the Green Deal.

This trend is unmistakably mirrored in the reality that European companies underperform in comparison to their counterparts in other major regions: they are growing more slowly, creating lower returns, and investing less in R&D.

We need to critically examine why we continue to lag behind on innovation, when it is innovation that will establish whether we will survive the global storm ahead.

We are fully supportive of the latest initiatives by the Commission to reduce administrative burdens, however we need to start seeing concrete and meaningful results as soon as yesterday. In this regard we positively note the document launched just a few days ago by Germany putting forward a number of practical suggestions on how this can be achieved.

The goal of this drive should be to make it easier for companies to create jobs and growth whilst once again making Europe an attractive place to invest in.  

As employers we strongly believe that we can still turn the tide – if we are all ready to take up the challenge.

After all, there are many reasons to be optimistic. Europe has many strengths, including high-quality education systems and one of the most open and connected economies in the world.

Over the past few years, the Employers' Group with its partner organisations has consistently advocated for a more strategic approach to competitiveness, proposing the idea of a "competitiveness check" on all new legislation before it is actually launched.

And over the past months, we have seen a shift in focus as the EU begins to prioritize the competitiveness of our economy and businesses, marking a departure from decades of neglect.

Ladies and gentlemen,

I would like to leave you with 3 crucial take aways which we as the Employers’ Group will carry forward into the next legislative cycle:

  • First, we need to have competitive access to resources: Energy, raw materials, labour, capital, and data must be available under competitive conditions for businesses to thrive.
  • Second, we need to have open markets with equal rules: Businesses of all sizes, sectors, and locations need access to markets with a level playing field in the EU and globally.
  • Third, we need to have business-friendly regulation and taxation: This means that we need a policy framework that supports entrepreneurship and innovation, investment, and trade to once again make Europe the number one location for investment.

Thank you and I look forward to a strong and constructive debate.

The speech was delivered on 06 September 2023 at the event "Leading the Way: A Competitiveness Agenda for a Stronger Europe"