Speaking at the No To Austerity, yes to a Europe of Rights, Work and Solidarity conference organised by CGIL, industriAll Europe highlighted the urgent need for a European industrial plan that bets on massive investments with social conditionalities in good industrial jobs
In the panel titled ‘Investments for Growth’, to manage the transitions and for the revitalisation of industry Judith Kirton-Darling, industriall Europe’s General Secretary set out industriAll Europe’s key demands on investment and industrial policy, and reiterated that:
“a return to austerity will drag member states further towards another unnecessary recession whilst impeding the EU from meeting its social and climate targets all whilst impacting the lives and jobs of thousands of workers across Europe.”
The European Union needs a permanent investment mechanism at EU level with the capacity to meet its social and green objectives, and to fund a real European industrial policy.
As called for in the recent Draghi report, Europe needs an unprecedented scale of investment that to reverse the current trend towards deindustrialisation. But as Draghi also recognises, the EU’s competitiveness will not be built through social cost-cutting. On the contrary, we need unprecedented investment in upskilling and retraining, innovation and social cohesion.
How can this be achieved? IndustriAll Europe has long argued for a proactive industrial policy with strong social conditionalities on all public support to industry, leveraging public money and contracts to lock in private investment in Europe.
Evidence shows it works. Companies are currently far more willing to invest in the U.S. than in Europe, despite the inclusion of binding social and fiscal conditionalities. A clear example of this is the United States’ Inflation Reduction Act. A recent report published in June by the Transport & Environment NGO showed that the North American market attracted some 11% more investment in the key EV sector between 2021 and 2023, compared to Europe — despite Europe being the bigger producer. Stellantis, owner of the Peugeot, Citroen, Fiat and Opel brands, diverted a whopping 74% of its EV investment to North America.
However, as a result of the frugal approach to investment and public finance coupled with a lax approach to corporate mismanagement, Europe is now on the brink of losing ground in industries in which it is a global market leader. According to ECB data, the key impediment to industrial activities in Europe is a lack of demand. If purchasing power and real wages continue to stagnant – in many European countries, real wages are still below 2019 levels – the situation will deteriorate further.
It is important to take a closer look at how the record profits of the past years have been distributed, or rather not distributed, since companies in the energy, automotive, steel and pharmaceutical sectors have reported record profits in the post-COVID years matched with record dividend payouts and share buy-backs, while investments in sites and R&D have flatlined and real-wage growth stalled.
In the automotive sector, dividends increased by almost 25% last year, bringing them to a record 46 billion euros. European companies have been the leaders in dividend distribution which accounted for 40% of the overall increase last year, alongside Japan. Today, these same companies are announcing massive cost-cutting strategies that will hasten Europe’s deindustrialisation in part because they cannot reach or exceed these record profits.
It’s time to call out corporate strategies based purely on profit maximisation. Europe’s strategic autonomy should trump pure shareholder value. At this time of massive transformation, we need a European industrial plan that ensures that we are making investments in the right direction to meet our social and climate needs, while protecting workers and industrial capacity in the coming months. We can’t transform an industry that we have already lost.
“We need to avoid forced redundancies at all costs, using all of the available tools and resources to negotiate socially fair alternatives. We need more public investment in industry, but investment must come with social conditionalities”, stated Judith Kirton-Darling industriAll Europe General Secretary at the CGIL event.
“There is an urgent need for the EU to deliver an industrial deal that will protect and create quality jobs. We cannot let industries privatise profits and then socialise their costs! We call on EU leaders to give us a seat at the table to decide on Europe’s industrial deal, our place is at the table and not on the menu! We demand an industrial strategy, a just transition for all workers, and investment not austerity! Europe needs to step up and leave the dangerous austerity path that will intensify today’s perfect storm,” concluded Judith Kirton-Darling.