The news out of Europe these days is good, for a change. After a “lost” decade, the economy is gathering momentum and new political leadership in several countries is bringing with it hopes for a wind of change. Martina Larkin and Eckart Windhagen spell out the risks ahead.
Martina Larkin is head of Europe and Eurasia and a member of the executive committee of the World Economic Forum. Eckart Windhagen is a senior partner at McKinsey and Company, based in Frankfurt
Yet Europe needs to be wary of complacency: the threat of its erosion has not dissipated, and indeed the continent faces dangerous new pressures as the world becomes more multi-polar and the challenges ahead more complex.
The EU’s big challenge in 2018 and beyond will be to harness its joint scale and unique diversity by standing together on issues such as security, migration, inclusive and sustainable growth, and the 4th Industrial Revolution, even as it addresses political fragmentation, divergence, and a loss of trust in its institutions.
To kickstart the bold thinking from European citizens, policymakers, and businesses, needed to address these issues, the World Economic Forum is this week launching its Renew Europe report.
It outlines key areas where Europe needs to take action and develop stronger collaboration to prepare for a better future, including by developing a more human-centric, inclusive economy, rebuilding trust in democratic principles and governance, and transitioning to a more sustainable and energy efficient society.
The report features the perspectives and concrete ideas from a swathe of civil society including youth leaders and 130 senior policymakers.
From the extensive input and analysis that went into this report, three priorities stand out as priorities for European leaders:
Shaping progress and citizen well-being in the Fourth Industrial Revolution
Automation, advanced robotics, and artificial intelligence offer immense opportunity for Europe. At a time when Europe’s ageing population will act as a drag on its economic growth, these technologies of the 4th industrial revolution will give a much-needed boost to productivity that can more than offset the demographic trends.
But there are also legitimate concerns about job security and wages. McKinsey Global Institute research suggests that there is likely to be enough work to offset automation, but the transition period will be tough; as an example, up to 32% of Germany’s workforce may need to shift occupations by 2030 in the event of rapid automation adoption.
To capture the opportunity the digital economy can offer, Europe will need a new approach to technical training and education. It will have to develop a modernised, flexible workforce that can build its digital economy and prevent it from falling further behind the United States and China.
At the same time, strong retraining and lifelong learning programs can help protect workers from being left behind in the transition period.
Ideas such as a “Universal Right to Learn” could help ensure worker succeed in this transition by providing all European adults with annual credits for training, funded by employers and redeemable both in the form of in-house corporate training and external training programmes.
Ensuring Europe’s future leadership through regional collaboration and city diplomacy
Europe faces rising geopolitical risks, as well as terrorist attacks on its own soil. Europe’s combined defence spending, at about half US levels, could make it a leading actor, but defence capabilities of individual member states are fragmented and vary widely. It will be critical for Europe to increase collaboration and coordination at all levels.
The fragmentation is especially striking at the city level. European cities are economic powerhouses and drivers of international flows of people, money, products, resources, ideas, and technologies. Cities and city regions are dealing with similar problems including growing threats of extremism, terrorism, organised crime, and violence.
However, there are no sufficient mechanisms in place for cities to share resources, best practices, or tools.
The “secure cities” initiative would help enable that sharing by building off existing city networks to connect cities dealing with similar challenges. It could facilitate best practice sharing, develop an index to measure progress, and build a tool to help city leaders identify potential partners in urban violence-reduction projects and initiatives.
Developing a holistic and pan-European migration policy
Europe has been thriving as an open, connected, and diverse society. Yet concerns over recent waves of migrants and asylum seekers have led to calls to close Europe’s internal borders and spawned an anti-immigrant backlash that threatens European social cohesion.
Close to three million people applied for asylum in Europe between 2015 and October 2017. They are distributed unequally and past waves have left concerns about Europe’s capacity to integrate them successfully.
Europe needs a holistic, pan-European migration policy to maintain its open society in the future where high levels of migration will continue to be a reality. Europe needs to address citizen concerns about large migrant flows, including their worries about border security and the potential impact on social services.
This means controlling borders effectively and implementing best practices in short- and long-term integration.
No single country in Europe can manage these issues on its own. It is time for Europe to take the lead, if the continent as a whole is to retain its role as a key actor on the global stage and respond to the concerns and needs of its citizens, especially the next generation.