Businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. This over-regulation holds back their growth and prevents them from keeping pace with competitors from other parts of the world. Europe can’t keep going round in circles – entrepreneurs need real change, not more analysis of the same barriers we have known about for years. This is a key moment to move from words to deeds, writes Kinga Grafa of the Polish business confederation Lewiatan.
Businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. This over-regulation holds back their growth and prevents them from keeping pace with competitors from other parts of the world. Europe can’t keep going round in circles – entrepreneurs need real change, not more analysis of the same barriers we have known about for years. This is a key moment to move from words to deeds, writes Kinga Grafa of the Polish business confederation Lewiatan.
The European Commission recently unveiled the Competitiveness Compass, a roadmap for the next five years that seeks to strengthen the EU’s economic position and support European businesses. The course of action put forward by the Commission is the right one. Business has long called for such changes, making ‘competitiveness’ and the ‘single market’ their top priorities. But if the EU wants to be a global competitor, it must act now. Taking a strong economy as a basis, we urgently need to streamline regulation, lower energy costs and ensure effective support for investment and innovation. Faced with a volatile geopolitical environment, we also need free trade agreements with key partners to be finalised, such as those covering access to critical raw materials.
Today, businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. Competitors from other parts of the world are growing faster, while over-regulation holds back the growth of European businesses. The European Commission must put forward specific reforms that will genuinely improve the EU’s business environment. The Competitiveness Compass addresses the main barriers to growth and productivity in the EU, such as high energy costs, over-regulation and skills and labour shortages. This is the right course of action, but the most important thing is to put it into practice. This means legislative proposals and action plans that promote competitiveness and do not act as a brake on it.
The single market is one of European integration’s greatest success stories, but its potential must be fully realised. It is unacceptable that the barriers in the single market, identified 20 years ago, remain in place. The Polish Presidency of the Council of the EU has the chance to change this, with the freedom to provide services a key priority. This is vital not only for the transport sector, but also for the growing group of companies offering professional services. Unfortunately, the Letta and Draghi reports do not pay sufficient attention to this issue. Letta focused only on construction and retail, while Draghi did not take into account the Commission’s estimates for the additional steps that could unlock the services market’s potential. Positively, Niinistö’s report highlighted the role of services in building resilience and security. No one needs convincing how important this is in the current geopolitical landscape. It is against this backdrop that the Commission is proposing the ‘28th regime’ – a single set of rules covering taxation, labour law and corporate law. This initiative aims to simplify cross-border activities, especially for SMEs, but we do not know enough about the proposal at this stage to be able to assess it.
The announcement of deregulation and streamlined legislation is clearly a step in the right direction. Now, however, is the time to put the proposals into practice, and this must be about more than simply reducing the reporting burden. We hope that the Commission will carry out a thorough ‘audit’ of EU legislation that will translate into specific proposals to rapidly improve the EU’s regulatory environment.
We look forward to the Single Market Forum in Kraków and await the conclusions of the public consultation involving Lewiatan members. The aim will be to prepare the next single market strategy.
This is a key moment, moving from words to deeds and implementing solutions that truly unlock the development of European business. Dialogue between the EU institutions and the social partners will be essential if there are to be solutions that meet businesses’ real needs. Unless we take bold decisions, we will lose valuable time and lag behind the global competition.
Kinga Grafa is Deputy Director-General for European Affairs at Lewiatan Confederationand a Permanent Delegate to BusinessEurope. A political scientist and journalist by education, she attained her experience regarding the functioning of the EU while working for the Office of the Committee for European Integration (2008-2009) and the European Parliament (2009-2014). She is also a co-author of a book about the Polish aristocracy and author of scientific publications on American foreign policy, the American elite and cultural diplomacy.
The European Trade Union Confederation (ETUC), Europe’s major trade union organisation representing 45 million workers at European level, has refused to endorse the Competitiveness Compass, the European Commission’s blueprint for boosting the EU economy. For the ETUC, the Compass in its present form is unacceptable. We spoke to ETUC’s General Secretary, Esther Lynch, about workers’ main objections to the Compass and the fate of the European Pillar of Social Rights amid new calls for drastic deregulation and a stronger focus on competitiveness.
The European Trade Union Confederation (ETUC), Europe’s major trade union organisation representing 45 million workers at European level, has refused to endorse the Competitiveness Compass, the European Commission’s blueprint for boosting the EU economy. For the ETUC, the Compass in its present form is unacceptable. We spoke to ETUC’s General Secretary, Esther Lynch, about workers’ main objections to the Compass and the fate of the European Pillar of Social Rights amid new calls for drastic deregulation and a stronger focus on competitiveness.
EU trade unions have already expressed their dissatisfaction with the latest European Commission plan to revive the EU economy. In your view, where does the main fault lie with the Commission’s Competitiveness Compass? Which proposals in the plan do you see as particular red flags?
The main problem with the European Commission’s Competitiveness Compass is that it prioritises deregulation over the investments needed to create quality jobs, to develop a strong European industrial policy and to ensure high-quality public services. Likewise, while the Compass acknowledges the importance of quality jobs for a competitive economy, instead of proposing the necessary legislation to reinforce rights, improve working conditions and promote collective bargaining, it undermines this priority by promoting deregulation, which can lead to poorer working conditions and job insecurity.
One of the most concerning proposals is the introduction of the 28th company regime, which would allow companies to operate outside of national labour laws. This could severely undermine employment legislation across Europe, creating a race to the bottom in terms of workers’ rights and protections.
In the same vein, a ban on ‘gold-plating’ – the ability of governments to legislate above and beyond the minimum standards set by EU Directives – is deeply problematic. The idea behind EU Directives, as distinct from EU Regulations, is that they set minimum standards for all countries. Making these the ceiling of what is possible would not only undermine this idea, but would be deeply detrimental to working people and mean the destruction of hard-won progress in healthcare, education, health and safety at work or fair pay to name a few examples.
Additionally, the Compass’ call for pension reforms based on longer working lives is problematic, as it places undue burden on workers without addressing the need for sustainable and fair pension systems.
Moreover, the Compass is heavily skewed towards benefiting businesses, with numerous promises made to business groups but no concrete commitments to legislation that would benefit working people. This includes a lack of measures to ensure that public investments are used to create quality jobs rather than simply increasing corporate profits.
In summary, the Competitiveness Compass fails to balance the needs of businesses with the rights and well-being of workers, making it an unacceptable proposal in its current form.
Would you say that the implementation of the European Pillar of Social Rights (EPSR) could now be under threat?
On paper, the Commission has re-committed to the European Pillar of Social Rights in its recently published work programme for 2025. However, in practice, that same work programme is the first not to include any social legislative initiative since 2019.
By contrast, the Commission has proposed eight pieces of ‘simplification’ legislation over the next year. Nobody likes being overburdened by administration and trade unions are actively proposing solutions to this end, for example rules on public procurement.
However, it is evident that the problems Europe is facing will not be solved by simplification.
The biggest threat to the implementation of the Pillar of Social Rights is the wave of mass layoffs being announced across Europe. This will endanger wages and job security, but also pensions, social protection and many of the other principles of the Pillar.
It is necessary to ensure investments to protect and create quality jobs, including a SURE 2.0 instrument and a strong EU investment mechanism, as well as to introduce the necessary legislative initiatives to guarantee quality jobs.
If not by cutting regulatory burdens, what would be the right course for the EU to improve its relevance in the current global economic context?
The conditions that led to these layoffs were driven by a lack of investment. This is true as much for private as for public investment.
Corporations have been redirecting investments away from workers’ pay and much needed research and development and towards dead-end dividend pay-outs and share buybacks, stymieing the advancement of green and technological developments here in Europe.
Over the past few years, the USA and China have initiated major waves of public investment. Meanwhile, the EU was busy adopting new rules forcing its Member States into austerity cuts.
The EU must urgently change course. Mass public investments – with social requirements to ensure these investments deliver quality jobs – are a pre-condition for implementing the European Pillar of Social Rights.
Esther Lynch is the General Secretary of the European Trade Union Confederation (ETUC). She has extensive trade union experience at Irish, European and international levels and she served as both Deputy General and Confederal Secretary at the ETUC. In her roles, she led efforts to strengthen workers’ and trade union rights, influencing key directives on adequate minimum wages, transparent and predictable working conditions, and whistleblowing. She also spearheaded campaigns for the European Pillar of Social Rights and fair pay. Her work secured 15 legally binding exposure limits for carcinogens and social partner agreements on digitalisation and reprotoxins. A lifelong feminist, Esther advocates for ending the undervaluation of work predominantly done by women.
ETUC represents 45 million members from 94 trade union organisations in 42 European countries, plus 10 European Trade Union Federations.
Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on cooperation among enforcement authorities responsible for the enforcement of Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the…
Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1308/2013, (EU) 2021/2115 and (EU) 2021/2116 as regards the strengthening of the position of farmers in the food supply chain
The 2024 reports by Mario Draghi and Enrico Letta have made quite a splash in the EU and its Member States, becoming roadmaps pointing to the course Europe should take to secure a viable future. In its opinion, Assessment of the Letta and Draghi reports on the functioning and the competitiveness of the EU's single market, the EESC provides a civil society perspective on the reports and puts forward recommendations for urgent action. We asked the opinion's three rapporteurs—Matteo Carlo Borsani, Giuseppe Guerini, and Stefano Palmieri—to highlight the proposals from the reports that they consider particularly important for the EU's future prosperity.
The 2024 reports by Mario Draghi and Enrico Letta have made quite a splash in the EU and its Member States, becoming roadmaps pointing to the course Europe should take to secure a viable future. In its opinion, Assessment of the Letta and Draghi reports on the functioning and the competitiveness of the EU's single market, the EESC provides a civil society perspective on the reports and puts forward recommendations for urgent action. We asked the opinion's three rapporteurs—Matteo Carlo Borsani, Giuseppe Guerini, and Stefano Palmieri—to highlight the proposals from the reports that they consider particularly important for the EU's future prosperity.
Competitiveness seems to be the talk of the town these days, with deregulation hailed as a magic recipe for putting Europe on the map of global economy players. But there are many ways to measure competitiveness and there is no universal answer to the question of how much regulation is too much. If not handled with care, debates on competitiveness and deregulation risk spiraling into oversimplified, black-and-white arguments that may threaten sound economic policymaking, writes our surprise guest Karel Lannoo, Chief Executive of the Centre for European Policy Studies (CEPS).
Competitiveness seems to be the talk of the town these days, with deregulation hailed as a magic recipe for putting Europe on the map of global economy players. But there are many ways to measure competitiveness and there is no universal answer to the question of how much regulation is too much. If not handled with care, debates on competitiveness and deregulation risk spiraling into oversimplified, black-and-white arguments that may threaten sound economic policymaking, writes our surprise guest Karel Lannoo, Chief Executive of the Centre for European Policy Studies (CEPS).
Karel Lannoo is the Chief Executive Officer of CEPS, one of Europe’s leading independent think tanks. Specialising in financial regulation, European economic governance and single market issues, his recent publications include ‘Understanding Europe’ (in Dutch), a task force report on financial sector policy for the von der Leyen II Commission, and various contributions to academic volumes and reviews. Karel is a frequent speaker at hearings of EU, national and international institutions, as well as at international conferences and executive programmes. He directs studies for national governments, multilateral organisations and private sector entities. His writings regularly appear in the media. Additionally, Karel serves on the boards of companies and foundations and as a member of advisory councils, including the Capital Markets Commission of the Dutch AFM, the capital markets supervisor.
