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Position of the Union of Entrepreneurs and Employers on ‘A new industrial strategy for Europe’



Warsaw, 12th May 2020


POSITION OF THE UNION OF ENTREPRENEURS AND EMPLOYERS ON
‘A NEW INDUSTRIAL STRATEGY FOR EUROPE’

The Union of Entrepreneurs and Employers hereby presents its opinion to the Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions titled ‘A New Industrial Strategy for Europe’.

We would like to point out that industry in Europe has been a global leader in economic transformation for centuries. The issues of the modern world, the changing geopolitical conditions, and recently, above all, the ongoing coronavirus epidemic along with the upcoming economic and social changes associated with it constitute the background for the challenges that industry in the European Union must soon face.

The so-called ‘second sector’ accounts for 20% of the EU economy, employs around 35 million people and generates many additional millions of jobs within the Union and beyond. However, its role in the case of Poland is significantly greater. It constitutes about 40% of our domestic economy, and it is here where almost every third Pole finds employment. Henceforth, the provisions in the proposed industrial strategy for the EU are crucial to the further development of our country, even more so in the upcoming recession.

We concur that “We now need a new industrial way for Europe, fit for the ambitions of today and the realities of tomorrow”. The road to achieve this goal must not, however, translate into industry’s further regulation, such as imposing new legal requirements, restrictions, fees or taxes for the second sector. For centuries, it has been the unhindered opportunity to conduct industrial activity that constituted the basis for innovation and fostering change on a global scale by European industrial plants. Sole legislation itself has never led any country to fortune and wealth.

While in the provisions of ‘A New Industrial Strategy for Europe’, it is written: “We need a European industrial policy based on competition, open markets, world-leading research and technologies and a strong single market which brings down barriers and cuts red tape. And we must resist the simplistic temptations that come with protectionism or market distortions (…)”, many of the further provisions raise concerns about the planned shape of industrial policy through numerous legal regulations determined at a European level.

The issue of social standards also found its place in the document. The European Commission notes that “Thanks to Europe’s social market economy, economic growth goes hand-in-hand with improved social and living standards and good working conditions. The European Pillar of Social Rights will continue to be our compass and ensure the twin transitions are socially fair”. However, these issues must not mean that, with the help of subjective solutions, justified by social arguments, entrepreneurs from selected EU member states are eliminated from the common market. Such practice was introduced during the works on the Mobility Package in recent years.

The Commission also stresses that “Faced with these headwinds, Europe’s response cannot be to erect more barriers, shield uncompetitive industries”. However, the notion of ‘an uncompetitive industry’ must not be attributed to those sectors that have lost their competitiveness due to the introduction of administrative fees, taxes or regulatory requirements that result from international agreements or European law.

‘A New Industrial Strategy for Europe’ focuses largely on two sectors: energy and the digital industry.

The experts of the Union of Entrepreneurs and Employers have begun working with the Polish industry to develop the Polish Energy Strategy, which is currently undergoing an update process. We are aware that there will be a reversal of the roles of individual generation sources and takeover of main work by distributed sources, while conventional energy from coal should in Poland gradually take over the role of a guarantor of electricity supply. Any and all changes in this matter, however, ought to be spread over a substantially long period to allow Polish industry to adapt to new norms and standards. The Just Transition Fund may be an interesting tool to support the Polish energy transformation, but it certainly will not be the primary source of its financing. Poland will still have to use other sources of financial aid from the EU and will also have to mobilise significant resources on its own. This issue had already been the subject of a commentary by the Union on 28th January 2020.

We are already following all attempts to introduce norms in the field of renewable energy, aiming to properly regulate the issues related to the investment process, for instance, in onshore wind farms, with both attention and approval.

Digital technology issues have found an exceptionally important place in the industrial strategy. We agree that this area plays and will play an extraordinary role during the crisis associated with the COVID-19 epidemic, as well as in many years to come. It may also become one of the pillars of economic recovery after the crisis caused by the coronavirus pandemic.

Furthermore, the policies of individual member states and the European Commission should therefore be primarily designed to guarantee entrepreneurs a stable and predictable regulatory environment and a level playing field for all participants of the digital ecosystem. Likewise, the highest possible allocation of funds for digital development within the nearest EU financial perspective seems to be a top priority.

What raises our concerns are the emerging voices regarding the introduction of the so-called digital tax. The Union of Entrepreneurs and Employers has consistently pointed out that digital services boost the competitiveness of the SME sector due to digitisation, and thus, among other things, increased working efficiency and widened access to new markets. The unilateral imposition of a digital tax on European companies, in the absence of such a tax in other parts of the world, will negatively impact the competitiveness of Polish and European companies against entrepreneurs from outside the European Union, for example, from the US, China or India.

European industry has to be innovative to be competitive. To meet this condition, it must have access to the most modern telecommunications infrastructure possible. Therefore, it is vital to implement the 5G standard quickly and efficiently so that our continent does not lag behind. The current situation forced by the COVID-19 epidemic shows the importance of digitising both the economy and solutions for citizens, including health care, education and digital offices. The availability of infrastructure for the purposes of industry must therefore go hand in hand with a set of online public services.

We would also wish to highlight the fact that intellectual property action plans stipulating an assessment of the need to update the legal framework, ensuring intelligent use of intellectual property and a more effective fight against intellectual property theft, must not pose a threat to competitiveness resulting in the exclusion of innovative business models and the reduction of opportunities for European SMEs to compete globally. Further regulations for European entities will not improve their competitiveness.

The magnitude of changes that may take place as a consequence of the forthcoming economic crisis might shift the prospect of implementation and revise their significance in case of numerous provisions postulated in ‘A New Industrial Strategy for Europe’. Hence, they should be analysed carefully and thoroughly by social partners and public institutions.

Union of Entrepreneurs and Employers

 

12.05.2020 Position of the Union of Entrepreneurs and Employers on ‘A New Industrial Strategy for Europe’

 

fot. Giampaolo Squarcina / ma lic. Flickr.com

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