Two reports are currently dominating the debate at EU level. One is the report of Enrico Letta, former prime minister of Italy, on the European single market entitled "Much more than a market", which was published in April 2024. The conclusions of the European Council in April call for work to be taken forward on the recommendations contained therein. The single market also plays a central role in the Strategic Agenda, as does EU competitiveness. The latter topic will again be addressed in the report of Mario Draghi, former President of the ECB and also prime minister of Italy. The "Draghi report" is due to be published in September 2024. The recommendations from the two reports will will have a considerable influence on EU policy in the next five-year legislative period. Against this backdrop, the Chamber of Labour has prepared a comprehensive Position Paper.

Focus on the interests of companies
Regulations that have a high social value and relate to social and environmental standards are often portrayed one-sidedly as red tape and administrative burden. The buzzword "gold plating" is being used to stir up public opinion against national laws that go beyond the minimum standards set out in EU directives, for example in employee protection, consumer law or climate policy. The Letta report proposes that almost all EU laws should only be adopted in the form of regulations. This would mean that member states would lose the room for manoeuvre they have in implementing directives, as regulations are to be applied directly. This threatens to be to the detriment of employees in particular and is clearly rejected by AK.

Small and medium-sized enterprises (SMEs) and therefore companies almost as a whole, as according to the EU definition, 99.8 per cent of companies are SMEs, are in the centre of the EU´s policy and in particular of the Letta report. The EU-Commission published a communication entitled “SME Relief Package” already back in December 2023. Among other things, this includes a dedicated SME envoy, who is assigned to the President of the EU-Commission and is to attend the meetings of the Regulatory Scrutiny Board. This board has a considerable influence on EU legislation. In other areas, too, what has been started some time ago will be continued. The creation of a savings and investment union also plays an important role in the Letta report, which is aimed at deepening the capital markets union and making access to capital easier for SMEs. According to AK, financial market stability and the interests of employees and consumers should be given top priority. Another recommendation in the report relates to the reduction of reporting obligations for companies.

Research, innovation and training. Concrete measures needed
The call for a fifth single market freedom for research, innovation and education sounds spectacular. However, there have already been no regional restrictions on research projects, knowledge or researchers themselves. The report also comes up with proposals that are feasible even without a "fifth freedom". These include recommendations to increase investment in digital infrastructure or to introduce a platform with free access to research results and data ("European Knowledge Commons"). The section on digital skills is particularly interesting for employees. Unfortunately, there is little concrete information on how training and further education should be organised and financed. The demands for a distinct European degree, an expansion of European exchange programmes and the right to an "Erasmus for all" are interesting.

Proposals on EU trade policy highly questionable
The chapter on trade policy is full of overtones insinuating that labour, social and environmental standards should de facto play no role in future trade policy. It also recommends relying on interim agreements, which do not need to be referred to national parliaments anymore. The proposal to create a transatlantic single market with the USA also draws attention. This could put considerable pressure on EU standards in the social, labour and environmental area. From AK´s point of view, this would be counterproductive, particularly in terms of competition policy, and would put EU companies under further pressure.

AK takes a critical view of the Letta report. The social dimension is not a side issue!
AK welcomes the Letta Report as a basis for an in-depth discussion on the future of the internal market. There are some good proposals in the areas of research and education, for example. Overall, however, the report primarily focuses on business interests and contains several highly problematic demands. Although social aspects are addressed, the social dimension remains a side issue. In contrast, the interests of employees should be placed at the centre of EU economic policy. After all, they are the ones implementing the environmental and digital transformation and they lay the foundation for a stable and sustainable economy in the long term.

AK therefore calls for the creation of a fifth fundamental freedom that relates to the Social Progress Protocol and the fight against wage and social dumping. Workers' rights must take precedence over market freedoms. Instead of claiming to "cut red tape" while actually undermining important standards, it would make more sense to regularly review EU regulations to ensure they are up to date and revise them if necessary. The European Pillar of Social Rights should be implemented, services of general interest should be recognised as an essential component of a functioning single market and mandatory social standards should be included in public procurement.

Further information
Enrico Letta: Much more than a market
AK EUROPA: Capital Markets Union. Let‘s be careful!
AK EUROPA: Letta Report on the Future of the Single Market
AW Blog: EU-Binnenmarkt in der nächsten EU-Legislaturperiode. Analyse zum Letta-Bericht (German only)