BusinessEurope: EU strategy ‘should be more focused on the short term’

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As European leaders prepare to meet in Brussels this week to discuss long-term economic plans (25-26 March), Jürgen R. Thumann, president of EU employers' lobby group BusinessEurope, warns that discussions need to have a greater sense of urgency.

Jürgen R. Thumann is president of BusinessEurope, the organisation representing 40 industrial and employers’ federations in 34 European countries. Thumann will be a keynote speaker at this year’s European Business Summit on 30 June–1 July.

He was speaking to EURACTIV Editor Frédéric Simon.

To read a news article drawing upon this interview, please click here

EU leaders are meeting in Brussels this week to discuss the targets for the 'Europe 2020' strategy. What is your message to them?

We did comment and we will comment again on the 'Europe 2020' strategy. Of course it is a very useful basis and we have no differences of opinion. However, the sense of urgency, the sense of focus, should be improved. That is what we believe is needed – a strategy that is much more focused on the short term.

Where do you recommend that action is taken quickest?

Number one is that the EU and the Commission has to foster innovation, develop entrepreneurship, improve education. It has to do everything it can to promote open markets. Last but not least, we believe we have to start at EU level to put in place an integrated industrial policy. I think in recent history, the recession told us we need a strong industrial base in Europe. We cannot just rely too much on services.

Innovation, industrial policy… All these issues have been discussed for quite a while already. What’s changed?

We have nothing brand new to say. The only thing is it has to happen. Everybody in the EU-27 has to focus on these issues.

But how can it be made to happen this time? We know the Lisbon Strategy has been criticised for not…

…and has somewhat failed as we all know. I think first of all it is a lack of focus. And everybody has to commit as far as political leadership is concerned that we really do everything to foster entrepreneurship, innovation, etc. Things have to happen and they have to happen faster.

Mechanisms are needed to make sure this happens in practice. Do you agree with the ones that have been proposed in the draft Europe 2020 strategy, such as stronger country surveillance?

We do believe that the 'Europe 2020' strategy all in all is positive but we are missing the urgency. Our concern is that, if we now talk about a 2020 strategy, too many political leaders will say 'OK, that's in ten years' time'. And we don't have time to wait ten years.

I can take for example the Maastricht criteria to limit public debt to 60% of GDP. According to our calculations, it will take until 2025 to come back to 60% if we have a growth rate of at least 2%, otherwise we won't make it.

So in our 'Go for Growth' proposal we say that until 2014, we have to do everything to come to this growth target of at least 2%. We have to stop talking, we have to start moving and taking action. With a new Commission and Parliament in office, everything is ready. This is why we have published an agenda for 2010-2014.

Again we have nothing against the 'Europe 2020' strategy but for us it is just too far out. We want to emphasise the urgency.

Weak implementation and enforcement at national level has also been one of the weaknesses of the Lisbon Strategy.

That is correct about the enforcement issue. But I think what is needed is commitment of individual governments. And at the EU spring summit, those who are somewhat reluctant, the others should put pressure on them.

And I believe the discussion should be more open and also more in public. Because the real problem we have in Europe is unemployment, not only public finances and reforming the financial markets. So we need to do everything to create jobs. That is the number one challenge and target.

The strategy comprises five headline goals: on employment, education, R&D, climate and energy, and poverty. Do you subscribe to all of those?

We basically do.

Even on the poverty targets?

Yes. To be perfectly honest, on the 'Europe 2020' strategy, we did not have much discussion. I have had discussions over the last few weeks with [European Council President Herman] Van Rompuy, [Commission President José Manuel] Barroso, [European Parliament President Jerzy] Buzek and a number of national prime ministers, with our chancellor here in Germany, and we do emphasise very much our 'Go for Growth' agenda.

And we are not putting very much emphasis on this 2020 strategy because based on experience. We are concerned that this is too far out.

Would you say it is not that relevant for you?

No, I wouldn't say that. Again, we do appreciate the 2020 agenda but I have to say that we have much more of a sense of urgency. It needs to happen faster!

Let's talk about numbers. At best we can expect 1.2 or 1.3% growth in the EU-27 member states this year. But returning to the unemployment issue, we know that does not create jobs, for instance. So we need also to implement more flexicurity, meaning flexibility. We do know and we have learned that flexibility helps to create jobs. Because if labour markets are too regulated and not flexible enough, then we know that employers are hesitant and reluctant to employ people. Therefore we want to bring forward flexicurity – on the one side flexibility and on the other side also giving our existing employees some kind of security.

On labour issues, Germany has been criticised by French Finance Minister Christine Lagarde for keeping down its labour costs in order to favour its exports.

She should better read the numbers before she makes such statements. Because Germany has one of the highest if not the highest wages in the EU. We have by far the highest labour costs: wages are highest and also taking into account fringe benefits and social benefits, when you put everything together, we have the highest labour costs. So I don't know what this lady was talking about.

Do you agree then that differences in labour costs across Europe can be a problem that needs to be tackled?

No, I think what we need is flexicurity. And let me say this, Germany is of course ahead of most other European countries so we do have pretty good flexibility and security systems in place.

For instance, what has worked very well in the last two years here in Germany is the 'short work week' as we call it. That has enabled many employers and companies to hold on to their employees and keep unemployment number relatively low.

This is what the lady from France should better think about and implement there.

Well, there is still a big debate in France about the 35-hour week…

We have that behind us now in Germany, you can forget about the 35 hour work week. You need to be flexible. If you don't have enough orders, maybe we can work only 30 hours or even 28. But if you have more orders and work to do, in some companies you may go back to 40 hours or 42. So that's what I call flexibility.

And I can add Spain to France. Spain has the same issue, it is very much regulated, the labour market in Spain – I have a company in Spain so I know what I am talking about – and it is very, very costly for the employers to change the working hours per day or per week or even change your workforce by adding or reducing and being flexible. It is extremely difficult in Spain.

Returning to the 'Europe 2020' strategy, Germany said EU targets on education would go against the competences of the German federal system. What is your view?

I think what is behind their arguments is simply a money issue. The state governments would like to get a higher share of federal taxes. The municipal tax system depends on the profitability of the individual companies. So if they are doing good, the municipal tax is high and it is wonderful for the communities. But with the recession like in the last two years, municipal taxes have come down dramatically. So this is a specific German issue.

But do you agree that Europe should be involved in education issues?

Absolutely, I agree that Europe should be involved. I agree that the federal government in Germany should be involved and get more authority because we need to coordinate much better our educational programmes.

Another point which is creating problems is that finance ministers last week said they were against the target to invest 3% of GDP on R&D and preferred another measure of success that is more 'outcome oriented'. What is your view?

I am absolutely in favour of the 3%, my position is very clear. I am open if somebody comes up with great ideas to have something different. But what I have heard when finance ministers questioned the 3% target is that maybe they want an excuse for not meeting the target.

Maybe what we can do is look more at regions, not at the individual country. You could take a number of countries and regions together and see whether they reach 3% of their combined GDP or not. But we need to have some target and measurement.

Overall, are you confident that the new strategy will be more effective than the previous one?

It looks as though I am having difficulties taking you away from the 2020 strategy…

The most important part is the 'Go for Growth' agenda of BusinessEurope for 2010-2014. If we can double the growth rate until 2014 from one to two per cent, we would create at least 6.5 million additional jobs according to our calculations. And we would for this also have a need for future investments to be able to create these jobs. So it all goes hand in hand.

And if I may come back to Germany, what we have done here for the past four-and-a-half years of Chancellor Merkel's governments, we have created here over two million jobs. So it can happen. If everybody is focusing: if you have the flexicurity, if everybody is focusing on growth, if we have our financial markets back in place more transparent and better regulated, I believe we have very good possibilities of achieving a growth rate of 2% until 2014.

And then, on top, maybe the 2020 strategy can become more successful than the Lisbon Strategy.

On financial regulation, talks recently collapsed on the regulation of hedge funds and private equity. What is BusinessEurope's position on this issue?

As far as financial regulation is concerned, we need to have more open discussion also with our American friends. That cannot be only a European issue, we have to include the United States and after President Obama's victory [on the health care bill] I hope he will have more time to spend on financial market regulation and start to really have some in-depth discussion also with the Europeans. We need more transparency, we need better regulation without over-regulation.

I wasn't so aggressive on this hoping that discussion and meetings would be more successful. But what I hear and what I see, I am not too happy because you need also to take some action.

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