The only way to ensure long-term competitiveness is to shift away from fossil fuels and towards a competitive and circular economy. The transformation must be fair and our efforts on competitiveness must go hand in hand with increased prosperity for everyone in Europe. With these two conditions in mind, EU Commission President Ursula von der Leyen commissioned former ECB chief and Italian Prime Minister Mario Draghi to outline a vision for the future of Europe in the midst of multiple crises. In his 400-page report on 9 September, he presented a plan to ensure Europe's long-term competitiveness. In terms of content, there are many parallels with the report by former Italian Prime Minister Enrico Letta. According to the report, the EU, in comparison to the USA, is falling behind economically and current forecasts do not paint an optimistic picture. The number of employees in Europe will drop by two million a year from 2030 and GDP will stagnate, even being further reduced from 2050. According to Draghi, an increase in productivity is needed to counter this development. The problem is not so much labour costs as a lack of innovative strength. If you exclude the high-tech sector, the EU even enjoys higher productivity than the USA. Europe has not only missed out on digitalisation but has lost a great deal of potential for productivity increases. Since 2008, 30% of EU ‘unicorn’ start-ups, i.e. companies with promising innovation technologies, have migrated to the USA.

New industrial strategy
In his report, Draghi presents a new industrial strategy that is divided into three main areas. The first is to close the innovation gap with the USA. Europe must create an environment that specifically attracts and retains innovation. Among other, Important Projects of Common European Interest (IPCEI) should be strengthened and extended to innovative technologies. Secondly, there must be a joint plan for decarbonisation and competitiveness. Decarbonisation should be regarded as a great opportunity for growth. He is in favour of separating the prices of renewable energy from those of natural gas in order to significantly reduce energy costs for both industry and consumers. Thirdly, Europe needs to increase security and reduce dependencies. Europe must become more autonomous and independent, both in terms of defence and raw materials. Draghi calls for more cooperation in the defence industry and demands trade agreements with resource-rich third countries. It is important to react to unfair competition and secure European supply chains. Much of this is already happening at Member State level, but coordinated action as a community is crucial.

Massive investment surge and the question of financing
Above all, Draghi wants to help Europe out of this desperate state of affairs by launching a massive investment boost. New paths will have to be taken in order to cover the estimated annual investment requirement of up to an additional 800 billion euro or 5 per cent of EU GDP. The last time such a surge in investment happened was in the 1960s and 70s. The volume is more than double that of the Marshall Plan. According to Draghi, a large proportion of the funds will be channelled through the European Capital Markets Union (CMU). However, it will not work entirely with private funds. Public funds are indispensable, and joint financing is particularly necessary. According to Draghi, joint debt or a ‘safe asset’ would also be helpful in driving forward the CMU. The previous Recovery and Resilience Facility has shown how such tools can be used effectively.

Interventions in the area of rulemaking
Draghi criticises the lack of coordination of national economic policies within the framework of the European Semester. This should be limited to fiscal policy, whilst at the same time a new Competitiveness Coordination Framework should be created. Overall, the declared aim is to reduce bureaucratic burdens and reporting obligations. There is talk of a general 25 % reduction  for European companies. SMEs are even to be exempt from 50 % of all reporting obligations. Draghi regards so-called gold plating, whereby member states implement higher standards for example with regard to the labour law or social domain than required by the EU, as an obstacle and wants to put a stop to it. From a labour perspective, this is an extremely critical approach, which should be rejected. No obstacles should be placed in the way of countries that are ambitious for example with regard to social or environmental issues and strive for higher standards. The proposed restructuring of the European Semester also requires extreme caution.

In order to better monitor internal competition, Draghi is proposing a ‘New Competition Tool’. This should enable the Commission to examine structural barriers such as tacit agreements more easily and quickly. At the same time, the Commission should selectively relax competition policy and speed up merger control procedures. This is intended to pave the way for high-tech giants in the EU. In order to make the EU more attractive as a business location, start-ups as ‘Innovative European Companies’, are also to be given the option of a standardised EU-wide 28th set of rules instead of 27 national regulations. In addition to corporate and insolvency law, this would also include tax and even labour law.

Focus on competitiveness at the expense of social balance
Draghi also sees education as an important starting point, wanting to focus more on teaching STEM skills. To this end, the European Social Fund ESF+ is to be specifically geared towards developing skills in strategically important areas. However, from the perspective of employees and trade unions, social content and important concerns in the world of work are commonly given far too little attention. These are very vague in the report and lag behind the economic policy demands in terms of concreteness. There is also no explicit link to the European Pillar of Social Rights. In particular, the considerations surrounding the topic of reducing bureaucracy are highly problematic. And even though trade unions explicitly welcome Draghi's call for a massive increase in the volume of investment, there is also a demand for a link to social conditionality. This means that investments and subsidies should only flow to companies that also produce in Europe and create a trade union-friendly environment in which long-term jobs are created and collective bargaining is respected. Only then can the upcoming transformation succeed hand in hand with and through employees and not be decided over their heads.

Further information
Mario Draghi: EU competitiveness - Looking ahead
Euractive: Draghi Report - urgent but insufficiently concrete
Social Europe: Draghi Report - a social agenda is lacking
EUObserver: Draghi - Competing with China and US 'infinitely easier' with joint debt
AKEUROPA Commission proposal to reform the European electricity market does not solve central problem
AKEUROPA Employees' demands on EU industrial policy. Roundtable discussion with AK President Renate Anderl
Linking EU funding to social criteria. What options are there?
Capital Markets Union. Let´s be careful!