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ERT contribution to Atlasorbis Magazineù

Intervew of Nicola Zichella

By Wim Philippa

Secretary General

European Round Table of Industrialists (ERT)

ERT is an informal forum bringing together around 45 chief executives and chairmen of major multinational companies of European parentage, covering a wide range of industry and technology sectors. ERT Members believe that a dynamic and competitive industrial base can deliver sustainable economic growth and job opportunities in Europe. Achieving this is our objective.

ERT seeks to wake up policy makers to looming problems that put achievement of this objective at risk, and to provide ideas for solutions. All ERT companies operate globally and see the rapid changes taking place in the world's various markets. They show that healthy and well-run European companies can compete internationally. They can only do this by adapting swiftly to changes in global market dynamics, and are therefore obliged to anticipate these changes long before they become known to European policy makers. ERT's role, therefore, is to act as an industrial sounding board for EU policy makers to informally test early ideas for policy approaches in view of making Europe more competitive in the face of global market developments.

ERT would like to see a Europe characterised by higher sustained growth and more and better jobs. This is why ERT contributed to the preparation of the EU's Lisbon Agenda which seeks to make Europe the `most competitive and dynamic knowledge based economy in the world'. Unfortunately, the absence of decisive policy action at the level of many EU Member States has meant that progress on delivering the Lisbon Agenda has been much too slow. Even the re-focus of the EU's policy action to growth and jobs has not brought about decisive policy action in all countries. Implementation of the measures listed in the Lisbon Agenda remains crucial, even if they are by now no longer sufficient to ensure Europe's continued ability to compete in the global market.

Europe does not have the ability to compete with some emerging economies on labour costs for established products. We can however, compete by introducing new and innovative products. There are many European successes that demonstrate this, including the telecommunications sector. Europe has led the world in these fields, and will probably continue to lead, despite fierce competition. But if Europe is to continue to be a leader overall, we need to create the atmosphere that encourages similar innovation in other fields. This can be addressed in two ways: more venture capital money, and greater national government involvement. Venture capital brings companies to a point where they can prove their products work. Government support then becomes critical to provide the right environment for these innovative products and services to flourish. There is a vast pool of potential innovation in Europe. Europe needs to engage in those areas where it is strong and focus and invest there.

One of the challenges in this field is Europe's approach to risk, which is fundamentally different from other parts of the world: there tends to be more caution in the European approach to innovation and change. Fundamental differences in attitudes to concepts like the Precautionary Principle make for poor innovation across Europe. The regulatory environment to stimulate innovative products and services is still largely absent. ERT sees fragmentation, low focus on industrially relevant R&D and a missing public/private partnership culture as the main weaknesses of the European R&D landscape. If we use a classical definition of innovation, it is the introduction of new ideas, goods, services, and practices which are intended to be useful. This is the key to competing in today's global economy.

ERT is also adamant that Europe can only remain an important economic player on the global scene if it embraces openness to trade and investment. Economic nationalism - recently on the rise in some EU Member States - contributes to the erosion of the European Single Market, which is so essential for ensuring the global competitiveness of European companies, and must be fiercely resisted. On the contrary, it is through cooperation with the other major and emerging economic players that we will succeed in bringing about mutually beneficial outcomes.

It must be underlined that nobody seeks to challenge the continued existence of different national social systems in Europe. In fact, well-functioning social models can contribute to labour markets that support EU competitiveness. Unfortunately, today many of our national social systems can no longer seriously be described as “well-functioning”: they are neither sustainable in the long run, especially in countries where demographic structures are changing quickly; nor do they give the right incentives. In too many EU countries, it is still more beneficial to stay at home rather than take up paid employment. With resources for social systems growing ever more limited, this cannot work in the long run. Europe needs modern social security systems that allow those who cannot work to have decent livelihoods, but that also make it possible for those who can work to earn more by working than by staying at home. This includes good retraining programmes to ensure that we continue to have a good skills base in Europe, improvements to the educational systems, and tax systems that do not penalise work.

Improving the EU's competitiveness is an urgent task to ensure our continent's continued economic standing in the world. Decisive and consistent policy action, based on the principles of international openness and free and fair competition, can bring about improvements in the quality of life of Europe's citizens. We Europeans hold the key to ensuring our own future. If we don't act, nobody will do it for us. The sooner we act, the brighter our future will be.

More information on ERT is available at www.ert.eu.

Dennis Kredler

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Dennis Kredler

Strategy Analyst

European Round Table of Industrialists (ERT)

Karabiniersplein 18a

B-1030 Brussels

Tel +32 2 534 3100

http://www.ert.eu