Business leaders call for investment in ‘humanware’

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Leading business executives meeting in Brussels yesterday (31 May) complained about the constant nagging over austerity and structural reforms and urged policymakers to focus on those areas that will boost Europe’s competitive advantage against the rest of the world – investment in people.

“A tree cannot grow without good soil and Europe cannot push for growth without a sound structure,” said Hendrik Bourgeois, Vice-President of European Affairs at General Electric, speaking at the State of the European Union conference.

"Fiscal consolidation is not enough," he said, criticising Europe's single-minded austerity drive.

“A tree cannot grow without good soil and Europe cannot push for growth without a sound structure,” said Hendrik Bourgeois, Vice-President of European Affairs at General Electric, speaking at the State of the European Union conference.

"Fiscal consolidation is not enough," he said, criticising Europe's single-minded austerity drive.

The current eurozone crisis presents a rare window of opportunity for carrying out long-overdue structural reforms and even questioning the EU’s existing political and economic structures, corporate executives noted.

Innovation and technology are certainly the key ingredients for a sound recovery, which will boost growth and make it last over time, they argued.

Workforce is Europe's competitive advantage

“On average the eurozone is a better innovator than North America,” said Bruno Lanvin of INSEAD business school, presenting a worldwide survey of business people. But the United States are better at implementing, he added.

The World Wide Web, for instance, was developed at the CERN in Switzerland, but monetised in Silicon Valley.

Business people insist that Europe has a great competitive advantage – its workforce. Corporate executives applauded the old continent for its investment in “hardware”. The EU, they felt, has played a critical and successful role in building infrastructures – transportation, information, energy – but EU leaders lack ambition when it comes to investing in “humanware” and “software,” they said.

Without sufficient number of business hubs and technology cluster, policies that support SMEs and a truly vibrant venture capital culture, Europe risks losing the competitiveness race, business leaders warned.

“Silicon Valley is a concept and the culture has to be developed over time—we should focus on developing the ecosystem,” argued David Parekh, from the United Technologies Research Centre.

Much of that ecosystem will need to rely on new talents and these can be harvested both in Europe and in emerging markets.

Allowing skilled workers to work and live in Europe is a must, insisted Amur Lakshminarayanan, Vice-President for Europe of Indian TATA Consultancy Services, and he lamented delays in putting in place a European blue card – the equivalent of the US green card for migrants.

Reaping young people’s talents

Europe’s youth must also be convinced that the EU is still a vibrant arena for their creative talent and their ambitions for a better world, business executives said.

“There is little emotional commitment and without emotion there is no motion,” said INSEAD’s Ludo Van der Heyden, who lamented Europe's lack of spirit for progress and innovation.

The convincing game is not happening, Van der Heyden continued as EU students look for jobs elsewhere and most multinationals coming to INSEAD recruit for jobs outside of Europe—China, India, Abu Dhabi.

“We should stop this blaming business and focus on the positives to restore confidence,” Van der Heyden said, noting that being tough on students does not necessarily undermine confidence building.

Business leaders criticised both EU and national politicians for being ineffective and indecisive in resolving the ongoing crisis in the euro zone. Even more worrying, cracks have started to appear in the EU’s decision-making process, showing that national interests still dominate Europe's efforts to resolve the crisis.

Europe could get out of the turbulence if it focused on the completion of the single market, and the transfer of “best practices” among member states, but business people felt that no single EU social model would fit member countries. Hence, while economic integration was perceived as necessary, social flexibility was seen as an important factor in the successful future of the EU.

A smaller eurozone?

One out of three business executives believes that the eurozone should be smaller than it is today, showing greater support for a two-speed Europe, but are convinced that further integration is needed among those who stay.

Business executives took a pragmatic approach, saying it makes perfect sense to limit an alliance of the strongest players, as weaker members would just destabilise it.

“This does not mean that they cannot catch up later, but at least they would endanger the overall project,” they said.

Europe faces an acute lack of highly educated and qualified workers in the fields of science, technology and engineering, which threatens to undermine the future economic competitiveness of the EU.

The 'Europe 2020' strategy, signed off by EU leaders in 2010, includes a target to increase the employment rate across all member states from its current level of around 69% to 75% by 2020.

Achieving this target, which applies for both women and men between 20 and 64 years of age, will mean reducing the number of unemployed people in the EU from around 23 million (9.5% of the workforce) at the start of 2011 to less than 12 million (5% of the workforce) in 2020.

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