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.
Medical University of Warsaw, 2a Księcia Trojdena Street
Warsaw
Poland
The European Economic and Social Committee (EESC), the Polish Ministry of Health, and the Medical University of Warsaw is holding a major conference entitled Towards an EU Action Plan on Rare Diseases on 10 April 2025 at 9 a.m. at the Medical University in Warsaw, Poland.
It is fashionable these days to call Europe uncompetitive and to demand a massive deregulation campaign at EU level. But the extent to which the economic situation is problematic depends on the definition of competitiveness, the denominator used and the benchmark, as well as the circumstances.
It is fashionable these days to call Europe uncompetitive and to demand a massive deregulation campaign at EU level. But the extent to which the economic situation is problematic depends on the definition of competitiveness, the denominator used and the benchmark, as well as the circumstances.
Moreover, competitiveness is equated with deregulation, which is incorrect, as if a massive simplification campaign will be the solution. Hence, it is important to get the parameters right to control the discourse, which could otherwise spiral out of control and land in the Eurosceptic camp.
Competitiveness as a policy objective is back, despite having never gone away – it is important to be reminded of these precedents. With the Lisbon strategy, formally adopted by the Lisbon European Council in March 2000, the EU wanted to become ‘the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion’. Already during the Delors years, competitiveness was a concern for the European Commission – just read the famous 1994 article by Paul Krugman, who called it a ‘dangerous obsession’. Mr Delors at the time was concerned about rising European unemployment, against the backdrop of competition from the US and Japan, and proposed, as a solution, a programme of investment in infrastructure and high technology. We have heard this before.
Legislative simplification has been on the agenda for a long time as well. The Simpler Legislation for the Internal Market (SLIM) exercises started as early as 1996, when the EU had 15 Member States. Commissioner Charles McCreevy (2004-2009) favoured regulatory ‘pauses’ in 2005-06, until the financial crisis hit. Vice-President Frans Timmermans was tasked with a better regulation programme under the Juncker Commission. While all these plans were commendable, it would be better to address the root causes of regulatory complexity – the decision-making process and poor enforcement – rather than merely treating the symptoms. But with 27 Member States, this is easier said than done.
Competitiveness, at least as defined by the Draghi report, is more about productivity and GDP growth, which can give vastly different results depending on the denominator. But there are also other ways to measure competitiveness. One could look at internal versus external competitiveness. Internally, the EU appears weak, with declining productivity compared to the US. Externally, however, the EU has a trade and current account surplus, whereas the US faces a huge trade and current account deficit – yet this does not seem to be a problem (except for President Trump).
The EU also has a much better fiscal position than the US or even Japan, though we lack precise data for an exact comparison with China. The EU’s budget deficit was about 3.5% of GDP in 2024, whereas it was almost double that in the US (6.4%). The US can finance this in international markets due to the dollar’s global standing, although medium-term interest rates in the EU and the US are diverging, signalling market concerns about the US economy. Today, the six-month market lending rate for the USD stands at 4.8%, whereas in the euro area, it is 2.5% (Euribor).
In addition, energy prices in the EU have been much higher than in the US since mid-2021, when Putin started to manipulate prices, which is a competitiveness problem for the manufacturing industry, and for Germany in particular. Today, the cost of energy in the EU is at least 50% higher than in the US.
Energy policy is another good example for the regulatory debate: is too much regulation the problem? On the contrary, the EU has a single energy market for distribution but not for production, which remains under the control of Member States. This creates problems in countries with excess production, as it drives up prices due to energy shortages in other countries, as is the case between Sweden and Germany.
Furthermore, in the digital sector, one could ask whether having no regulation is better. Do we want US-style free speech and no content moderation? Do we want an oligopolistic market as we have today?
This brief reflection emphasises that any debate on competitiveness and deregulation must be approached with the utmost care to prevent it from degenerating into a black-and-white discussion, which could negatively impact sound economic policymaking.
