Warsaw, 4 October 2024 

Memorandum from the Union of Entrepreneurs and Employers on the proposed composition of the European Commission for 2024-2029

 

• The European People’s Party (EPP) has filled more than half of the posts within the ‘new’ EC. This heralds a rather moderate direction for public policies.
• As EC chief Ursula von der Leyen has suggested on several occasions in recent months, the main priority of the coming term will be to strengthen the EU’s competitiveness. The way to achieve this goal is through the twin transformations: digital and green.
• Spanish socialist Teresa Ribera was awarded the prestigious portfolio on market concentration and state aid after the ‘iron lady’ Margrethe Vestager.
• In line with the recommendations of the high-profile Draghi report, the EC intends to increase Europe’s competitiveness by placing greater emphasis on new technologies. This will be supported, among other things, by the appointment of a separate commissioner responsible for startups and innovation.
• The appointment of Austrian Magnus Brunner as Commissioner for Home Affairs suggests a tightening of migration policy and raises questions about the future of free movement within the Schengen area.
• The former Permanent Representative of the Republic of Poland to the EU, Piotr Serafin, as Commissioner for the Budget, will be responsible, among other things, for the distribution of funds to the areas most relevant from our perspective, including cohesion policy and agriculture.

 

European Commission President Ursula von der Leyen was sworn in for a second term of office on 18 July. Two months later, she proposed the long-awaited composition of the College of Commissioners for 2024-2029. However, before her team assumes their positions, likely on 1 November, the EC chief’s designated colleagues must undergo hearings before the European Parliament. More than one candidate in previous years has fallen at this stage.

Regardless of whether each candidate receives approval from Parliament, the priorities and overall direction of the future Commission, whose actions will impact business, are already known. What does the new composition of the European Commission mean for business and what will Brussels put most emphasis on in the next ‘five years’? Below is a subjective overview of the key findings from the reshuffle in the EU’s main executive body.

1. Centre-right still on top

The European People’s Party (EPP), von der Leyen’s parent party, which includes the Civic Platform and the Polish People’s Party, won the European Parliament elections in June, winning 188 of the 720 seats in the chamber. Success was evident both in the allocation of key positions—besides von der Leyen, the Maltese President of the European Parliament, Roberta Metsola, retained her post – and in the distribution of power within the College of Commissioners. More than 50% of the 27 available vacancies have just been filled by the EPP, whose dominance heralds a continuation of the current direction and an evolution rather than a revolution in the creation and development of public policies.

There are many indications that the Christian Democrats will remain in their current alliance with the Socialists and Liberals for the next five years, with both parties having two nominations each for EC deputy heads. At the same time, the designation of Italian Raffaele Fitto as Executive Vice-President for Cohesion and Reforms may suggest a turn to the right. The former minister in Silvio Berlusconi’s government is now a partisan of Prime Minister Giorgia Meloni, whose Italian Brothers together with Law and Justice form the European Conservatives and Reformists (ECR) faction. Its appointment, uncertain in the face of opposition from liberal and left-wing forces, would represent a further step away from the ‘cordon sanitaire’ policy applied to certain groupings of the ‘new European right’. It would, however, make sense in the context of the similar positions of the Christian Democrats and the ECR against parts of the climate regulation, including the Nature Restoration Law, which MEPs from both parties voted against in February. 

2. Time for competitiveness

As von der Leyen indicated in her programme (so-called ‘political guidelines’) for her second term as head of the EC, her main priority is to strengthen the competitiveness of the European economy, the key to which is to support the green and digital transformation taking place side by side. [5] Among the measures needed in this direction, the politician mentioned the completion of the single market in sectors such as services, energy, defence, finance and electronic communications, or an increase in research funding. She also announced the creation of a Clean Industrial Deal within her first 100 days in office, aimed at increasing the level of decarbonisation-accelerating investment in energy-intensive industries, and proposed ring-fencing the European Competitiveness Fund as part of the Multiannual Financial Framework, the EU’s long-term budget, for 2028-2034. Guaranteeing funding for the development of strategic technologies, including those related to artificial intelligence (AI) and space exploration, can support the emergence of innovation on the Old Continent, consistent with the conclusions of the recent high-profile Draghi report. According to the publication, Europeans are significantly behind the Chinese and Americans in terms of productivity, especially when it comes to the high-tech sector. According to the authors, closing this gap will enable investments of €800 billion per year. A similar steady injection of cash, they argue, will translate into the generation and development of strategic technologies within the community, improving its competitive position vis-à-vis the world’s largest economies.

Given the current statistics, appropriate corrective action must be taken immediately. Firstly, the EU’s share of global GDP fell from 21 to 16.5 per cent between 2008 and 2022. At the same time, the US recorded a slight increase, while China, starting from a ceiling of over 8%, matched the European Union. Currently, the economies of Beijing and Washington are growing ten times and five times faster than the EU’s, respectively.

Innovation statistics are equally grim. Today, only 3 of the top 50 technology companies are from the Old Continent, with as many as 30% of Europe’s ‘unicorns’ – startups valued at more than $1 billion – moving their headquarters to the US between 2008 and 2021 due to the greater availability of capital.

The pessimistic outlook is completed by energy prices, in the case of natural gas as much as 4-5 times higher than US prices. This is by no means conducive to the expansion of European business. At the same time, specific doubts can be formulated about the tools to support European competitiveness that are emerging as recommended in the public space – further cash injections or maintaining a course towards a very ambitious green transformation may prove to exacerbate the problem rather than solve it.

3. Elevation of a Spanish socialist

Teresa Ribera, the incoming EC Executive Vice-President for a Clean, Just, and Competitive Transition, will play a pivotal role in driving initiatives to boost the EU’s competitiveness. A Spanish socialist and former third deputy prime minister and minister for ecological transition in Pedro Sánchez’s government, Ribera will ensure the EU stays on course to reduce CO2 emissions by 90% by 2040, compared to 1990 levels. This goal will be achieved by greening industry and creating incentives for sustainable investments, a task in which she will be supported by Dutchman Wopke Hoekstra, the future Commissioner for Climate, Net Zero and Clean Growth. Given Ribera’s experience as a former UN negotiator and key architect of the Paris Agreement, she is expected to bring strong principles and determination to the implementation of the European Green Deal.

Notably, the politician will gain oversight of the prestigious Directorate-General for Competition (DG COMP) in addition to her environmental and climate change responsibilities, meaning that, subject to the European Parliament’s approval of her candidacy, she will shape EU competition policy for the next five years. The prestigious portfolio, managed for the past decade by liberal Dane Margrethe Vestager, known for her skirmishes with Big Tech, must today redefine its role, taking into account the impact of the EU’s intensifying rivalry with China and the US and the advancing AI revolution. Therefore, one of her main tasks in her new position will be to review the rules on market concentration and state aid. She is likely to face challenges in finding the right balance between implementing solutions that remove barriers to innovation and support the creation of European champions, while also protecting competition in the internal market from the excessive dominance of the largest national economies, particularly Germany and France. It is these two countries that have the greatest potential to subsidise their companies and thus support their overseas expansion, which could arouse opposition and resentment from the smaller Member States. A significant challenge for Ribera will be to skilfully navigate vested interests while enhancing the competitiveness of European industry and driving its green transformation.

4. New technologies as a driver of competitiveness

The appointment of Finnish Christian Democrat Henna Virkkunen as Executive Vice-President for Tech Sovereignty, Security and Democracy should also be seen as a reflection of the new EC’s course on competitiveness. As announced by Ursula von der Leyen in July, one of the pillars of this function will be to foster the proliferation of digital technologies, which is expected to entail a greater ability for Europeans to use them in the development of new services and business models. Achieving this goal is also to be supported by the Apply AI strategy it was commissioned to prepare. In addition, the politician will be tasked with launching the AI Factory initiative providing AI start-ups with access to the computing power of EU supercomputers within her first 100 days in office. The programme is intended to facilitate the training of AI models and has already been criticised for coming onto the EU executive’s radar too late. The most promising AI companies in Europe have long established significant partnerships with US tech giants. For instance, the recent agreement signed in February between the French unicorn Mistral and Microsoft highlights this trend, as noted by the influential POLITICO portal. Importantly for business, on the legislative front, Virkkunen’s responsibilities will be complemented by the presentation of the EU Cloud Act and AI Development proposals, as well as the responsibility for implementing the high-profile Digital Services Act (DSA) and Digital Markets Act (DMA) into national legal orders.

Additionally, it is important to highlight the establishment of the position of Commissioner for Startups, Research, and Innovation within the 2024-2029 Commission. The need for a separate area was first recognised with the appointment of former Bulgarian Deputy Prime Minister and Foreign Minister Ekaterina Zakharova, who in her new role will, among other things, manage the billion-euro research and innovation programme Horizon Europe. Her mission, clearly articulated in a public document published by von der Leyen, will also include creating a strategy for European startups and scaleups, expanding the activities of the European Innovation Council (EIC) or drafting the European Innovation Act in a way that increases innovative companies’ access to venture capital and enables them to test their solutions in a supervised environment by generalising the institution of regulatory sandboxes. This wide range of Bulgarian responsibilities sends a clear message about the European Commission’s commitment to positioning Europe in the technological race against the United States and China. However, the announcement of new regulations, the multiplicity of which many believe has prevented the Old Continent from building a global digital business in previous years, may be questionable.

5. Fortress Europe is coming

The election of Austrian Finance Minister Magnus Brunner as Commissioner for Migration and Home Affairs seems significant. His country has been successively stiffening its stance towards migration and the free movement of people within the EU for years. While Vienna has indeed been notorious in recent times for actions such as illegally extending temporary border controls, starting to build border walls or blocking the extension of the Schengen area to Romania and Bulgaria, similar initiatives are increasingly becoming part of the mainstream EU debate. Suffice it to say that Germany, too, decided last month to reintroduce controls at all its land borders. Shortly before, Berlin’s representative on the European Commission, Ursula von der Leyen, had called for the search for “innovative ways” to combat irregular migration. One of these is to be the establishment of extensive partnerships with neighbouring countries, for which the Commissioner for the Mediterranean, Croatian Dubravka Šuica, and the Czech Commissioner for International Partnerships, Jozef Síkela, will be responsible. Their future activities are likely to be inspired, among other things, by the recent agreement between Italy and Albania to return migrants intercepted in Italian territorial waters to special centres in the Balkan country for processing asylum applications. It can be assumed with a high degree of probability that agreements of this kind will become the European Commission-sanctioned norm in the years to come.

6. Not just NATO. The Union assumes responsibility for defence.

According to earlier media reports, the EU will live to see its first Defence Commissioner. This is likely to become former Lithuanian Prime Minister Andrius Kubilius, whose portfolio is also expected to include the space sector. As President von der Leyen declared, one of his tasks will be to present a so-called White Paper on the Future of the European Defence Industry within 100 days in office.  The document will lay out a strategy for the creation of a European air shield and cyberspace security system and define investment needs to enhance the community’s military capabilities. It also outlines a vision of net contributors’ sceptical perception of joint arms purchases. Although the Commissioner-designate does not underestimate the role of NATO, at the same time he stresses that without the above-mentioned measures, the EU will not be ready for a Russian attack on one of its Member States. [14] In this context, Kubilius calls on European countries to build up minimum stocks of ammunition.  This appeal aligns with the nomination of former Estonian Prime Minister Kai Kallas, who is recognized for her aggressive stance toward Moscow, as the EU High Representative for Foreign and Security Policy..

It can be assumed that the future head of EU diplomacy will form a united front with the Lithuanian for the next five years to raise awareness of the threat from the east and actively oppose Russian imperialism. Their alliance on this issue will be all the more important as a change of White House occupant is imminent. A potential victory for Donald Trump could force Europe to be more autonomous on security issues. Then the firm stance of the two representatives of the Baltic republics will become a beacon for the rest of Europe.

In addition, it should be noted that entrusting Kubilius with the mission of drafting a proposal for a space law and formulating a Space Data Management Strategy are in line with the recommendations of Mario Draghi’s report on strengthening the competitiveness of the EU economy by exploiting the potential of innovative sectors, including that of space exploration.

7. On the trail of unfair competition from China

In creating her team for the next few years, Ursula von der Leyen decided to pay particular attention to unfair competition from Chinese players, especially e-commerce platforms. Among the responsibilities of veteran European Commissioner Maroš Šefčovič from Slovakia – who will be serving in this capacity for the fourth time – are overseeing trade, economic security, and interinstitutional relations and transparency. Key tasks include ensuring a “balanced economic relationship based on reciprocity” with China, particularly in light of the recent dispute between Brussels and Beijing over Chinese electric cars. Additionally, he will work on finalizing negotiations among member states regarding a customs reform package, as Chinese online retailers currently benefit from a de minimis threshold that exempts goods worth less than €150 from customs duties. He will also be tasked with protecting the single market from an influx of products that do not meet European norms and standards.

The same phenomena will be addressed from a consumer protection perspective by Irishman Michael McGrath, candidate for Commissioner for Democracy, Justice and the Rule of Law. If approved by the European Parliament, he will address, at the request of Ursula von der Leyen, the restoration of a level playing field through the implementation of product safety legislation and the preparation of the Digital Fairness Act. 

8. Housing needed immediately

Without doubt, one of the most interesting staffing decisions von der Leyen has made is that of appointing Dane Dan Jørgensen as Commissioner for Energy and Housing. This is a historic decision, as it is the first time that the EU executive has formally acknowledged the affordable housing shortage crisis. This is a problem that is well known and described in Poland. According to Eurostat, as many as 52.9% of our compatriots aged 25 to 34 live with their parents.  At the same time, for 41% of surveyed Poles between the ages of 18 and 30, buying a flat appears to be a completely or almost impossible scenario. 

When it comes to pessimism on this issue, we are not alone in Europe, and soaring purchase and rental prices are all to blame. As reported in the UK newspaper The Guardian, between 2010 and 2022, real estate in the EU became 47% more expensive on average, in the extreme case of Estonia reaching a staggering 192% during this period. The rental market has not fared much better, where costs have increased by an average of 18% and by an alarming 144% in Lithuania. As a result, for many households, accommodation-related expenditure has exceeded 40% of the household budget. At the same time, it has become an insurmountable challenge for many young Europeans to secure accommodation.

According to the EC chief’s vision, the remedy for the difficulties outlined is to create a European Plan for Affordable Housing.  The politician also anticipates that Jørgensen will establish a pan-European investment platform to fund the construction of affordable housing. Additionally, he is expected to collaborate with Vice-President Ribera to revise state aid rules in a manner that enhances the energy efficiency of buildings and promotes the development of social and community housing.

9. A Pole will lead the budget

Poland’s representative in the ‘new’ European Commission will be the former Permanent Representative of the Republic of Poland to the European Union in Brussels and a long-time close associate of Prime Minister Tusk, Piotr Serafin. As Commissioner for the EU Budget, Anti-Fraud and Public Administration, the official will focus on negotiating the upcoming EU budget, the Multiannual Financial Framework 2028-2034. His responsibilities will also include oversight of the European Anti-Fraud Office (OLAF). This is the second time this portfolio has fallen to Warsaw, previously the same post was held by current MEP Janusz Lewandowski between 2009 and 2014. It can be assumed that, through his role, Serafin will have the leverage to influence the allocation of budget funds earmarked for Poland, including funds for the areas most relevant from our perspective, such as cohesion policy or agriculture.

In conclusion, although the proposed composition of the College of Commissioners cannot yet be considered final – the candidates still face hearings before MEPs, potentially difficult especially for the politicians put forward by Viktor Orbán and Giorgia Meloni – its current shape suggests that the European Commission is trying to adapt its structure and composition to the challenges most frequently raised in the public debate. This is demonstrated by the establishment of a dedicated position focused on housing and the attention given to the issue of unfair commercial practices by Chinese platforms.

It is certainly positive to take a course on competitiveness and to acknowledge the growing distance between the European Union and China and the United States, as pointed out by Mario Draghi. However, some of the recommended ways to reduce it may be questionable. Of particular concern may be the reaffirmation of commitments under the European Green Deal, which in some fields formulates overly ambitious climate targets, completely ignoring the specifics of countries such as Poland and thus posing a serious threat to their economies. On the other hand, hope for reducing the intrusiveness of the green transition comes from the announcement of the implementation of initiatives such as the Clean Industrial Deal. It is also worth looking at any programmes and funding for the development of the most innovative technologies, including those related to artificial intelligence and space exploration.

See more: Memorandum from the Union of Entrepreneurs and Employers on the proposed composition of the European Commission for 2024-2029

Warsaw, 16 September 2024

Memorandum of the Union of Entrepreneurs and Employers on Poland’s proposed activities during its presidency of the Council of the European Union in the field of healthcare.

 

 

• The Polish presidency should actively promote the implementation of strategic directions in the area of healthcare, ensuring the stability and predictability of regulations and supporting innovation and development in the pharmaceutical sector.
• Improving the promotion of healthy lifestyles and preventing key risk factors could reduce the incidence of non-communicable diseases by up to 70%, which should be a priority for health policy in Europe.
• Digitalisation is a key element in rebuilding health systems after a pandemic and strengthening Europe’s resilience. Despite overall progress, the digitalisation of healthcare in the EU has been slower due to stringent regulations and health data risks.
• The EU should support cooperation between Member States in the digitalisation of health, harmonising technology standards, promoting e-prescriptions and countering misinformation, which will improve healthcare accessibility and quality.
• The number of people aged 65 or over in the EU is expected to increase by 41% by 2050 and the number of people aged 80 or over by 88%, increasing the old-age dependency ratio.
• It is necessary to develop adaptation strategies for health systems, including long-term care for the elderly, which can be supported by the EU.
• The whole of Europe, including Poland, is struggling with shortages of raw materials, rising production costs, logistical problems and competition with Asian markets. There is a need to update pharmaceutical regulations to bring them in line with modern reality and make the European market more attractive to producers.
• The return of API and finished medicines production to Europe comes at a high cost, so financial support from Member States and the EU is essential. This can be achieved through a friendly legal and tax system, subsidies, grants and preferences. Particular emphasis should be placed on regulations that support the operation of pharmaceutical companies, especially those producing generic medicines, thus increasing the availability and reducing the cost of pharmacotherapy.

 

1. Preventive Healthcare.

Non-communicable diseases account for almost 90 per cent of all deaths in the World Health Organisation (WHO) European Region. Much of this disease burden is preventable and largely depends on risk factors such as tobacco use, harmful alcohol consumption, unhealthy diet, physical inactivity, air pollution and exposure to carcinogens and radiation. Improving the promotion of healthy lifestyles in combination with preventive measures against key risk factors for non-communicable diseases has the potential to reduce their incidence by up to 70%. Therefore, action to eliminate these risk factors through prevention and health promotion, as well as addressing the underlying socio-economic determinants of these diseases, should continue to be a priority for health policy in Europe.

Not only do non-communicable diseases place a heavy burden on the overall health and well-being of the population, but they also negatively impact our economies, put a strain on our medical workforce and place an unequal burden on health systems that are significantly understaffed and lack sufficient investment in many European countries. In addition, as we saw during the SARS-Cov-2 coronavirus pandemic, COVID-19, people with concomitant conditions are also more affected during public health crises. They are more susceptible to contracting infectious diseases and experience an impaired immune response, including a greater risk of severe disease associated with infectious diseases such as COVID-19. Therefore, the rationale for investing in the elimination of non-communicable diseases risk factors is clear: they generate high healthcare and pharmaceutical costs in all countries, and lead to significant social expenditures such as lost productivity.

In addition, with ageing populations in Europe, healthcare costs tend to rise. The return on investment in prevention is well known; however, the share of investment in prevention as a proportion of overall health expenditure remains significantly low, accounting for only 3% of overall health expenditure in the EU.

In contrast, the perceived focus of the health system in the Member States on remedial action, i.e. action taken in the event of illness, results in healthcare being seen mainly as a cost, whereas well-functioning healthcare – and not just health recovery – is essential for a country’s socio-economic development, including GDP growth. One way to do this is through health education and prevention. These are actions that reduce future costs, increase productivity, prosperity and quality of life for society.

The aim of healthcare measures should be to ensure the mental and physical well-being of citizens, which is directly reflected in their professional activity level and healthy life expectancy. Above all, therefore, multidimensional promotion of health-seeking attitudes is needed.

An area that has been neglected over the years has been psychological and psychiatric care, with an estimated one in six people having a mental health problem in 2019, both in the EU and in the wider WHO European region. This number has increased by around 25% as a result of the COVID-19 pandemic. In contrast, access to psychiatric care is a key problem in many Member States. Although most countries have policies to improve the mental health of the population, there are challenges in implementing them. These challenges include a growing shortage of health and care professionals and the need for stronger and more numerous programmes to prevent mental health problems and promote well-being. In addition, people with experience of mental health problems need to be more involved in the creation of these programmes, to ensure that countries develop them in line with their needs.

The lack of adequate education and access to support not only generates high costs for the health system, but also has a significant impact on the costs for businesses, the financial condition of social security systems and the economy as a whole. Figures for 2022 clearly show that the number of sick leave issued due to mental and behavioural disorders amounted to 1.29 million in Poland alone, which translates into as many as 23.8 million days of sickness absence for employees. The increasing trend in this area is worrying, and the lack of access to mental health advice and long waits for help only add to the problem.

2. Digital Transformation.

EU citizens today take digital technologies for granted, allowing them to communicate with their peers anytime, anywhere, as well as manage their transport bookings, accommodation and other activities via their smartphone. Digital development has been strongly supported by the European Union over the past decade: EU policy makers have made digital transformation a political priority and created a whole package of legislation to support this transition. However, digitalisation in healthcare has been slower than in other sectors, which can be attributed to the rigorous regulatory environment underlying healthcare delivery, the nature of the risks associated with technology failure and the sensitivity associated with handling personal health dataⁱ. For all these reasons, it was not fully anticipated how dynamic the changes in healthcare digitalisation were during the COVID-19 pandemic.

COVID-19 has forced patients, medical professionals and institutions to reorganise almost all existing care pathways to manage the pandemic. As medical practices and hospitals were limiting face-to-face visits to essential consultations, teleconsultation and telemedicine became the new standard of care in many European countries, even though for up to 84% of patients this represented their first experience of virtual care. The pandemic also revealed weaknesses in both the health and digital sectors in Europe: reliance on products and technology from outside Europe led to supply bottlenecks and shortages of medicines and equipment.

Today, this new impetus for digitalisation can play a key role in accelerating the recovery of health systems after the COVID-19 pandemic and strengthening Europe’s resilience to avoid future crises. EIT Health, in its report ‘Unlocking Innovation to Build More Resilient and Sustainable Healthcare Systems in Europe’ identified digitalisation as a pillar of this recovery and highlighted ways in which EU funds, policies and regulations can be used to remove barriers to innovation in health. Looking beyond the pandemic and its consequences, the current moment could be a historic opportunity to finally make digital technologies an integral part of public health services, which could thus simultaneously become more equitable and accessible to all European citizens and offer greater personalisation and value to the individual patient.

However, there are still significant differences in access to services within the European Union, and funding for healthcare by Member States, measured as a percentage of GDP, also varies. This indicates the need for a local approach when implementing digital solutions in the health sector, as levels of digital readiness are uneven across EU countries. The expanded use of mobile healthcare (mHealth) beyond pilot programmes and its integration into clinical and public health initiatives will be challenging, especially in countries with limited economic resources.

From a technological point of view, it is crucial to create a reliable public infrastructure in the Member States that will enable the seamless integration of mobile healthcare with routine health activities. These innovative digital solutions should be part of ‘integrated health services’, which are defined as ‘health services managed and delivered in such a way that people receive a continuum of health promotion, disease prevention, diagnosis, treatment, disease management, rehabilitation and palliative care, coordinated across levels and settings of care, both within and outside the health sector, according to their needs throughout their lives’.

The European Union should support Member States in the digital transformation of health in particular by promoting cooperation with other EU countries on the digitalisation of health. This should include the exchange of best practice, joint research projects and, in particular, the harmonisation of technological standards, allowing, for example, the cross-state implementation of e-prescriptions in all Member States. It is also necessary to put in place appropriate information programmes to counteract health misinformation and increase transparency in public health communication, thus engaging a larger proportion of the population to enjoy the benefits of digitising parts of health processes.

Digital technologies can improve people’s access to healthcare and bring advances in health issues, especially as healthcare becomes more personalised. While modern technology cannot fully solve all healthcare challenges, it can add significant value when effective and accessible solutions are scarce. However, there are many obstacles to the digitalisation of the healthcare system, including resistance from healthcare professionals and patients. The most important thing is to understand what is required to accelerate the digitalisation of healthcare, beyond the basic need to develop an information society.

3. Healthcare in the context of demographic change.

The European population is ageing. The increase in life expectancy, combined with low birth rates, will increase the size of the older population groups in the EU. The number of people aged 65 or over is expected to increase by 41% over the next 30 years (from 92.1 million in 2020 to 130.2 million in 2050), while the number of people aged 80 or over is expected to increase even more, by 88% (from 26.6 million in 2020 to 49.9 million in 2050). As a result, the old-age dependency ratio is expected to increase significantly, from 32 in 2020 to 52 in 2050 – which represents an increase of more than 62%.

These demographic changes are significantly increasing the European population’s demand for health services, while at the same time the phenomenon of ever-decreasing resources for healthcare is continuing. Between 2000 and 2017, employment in health and social services in OECD countries increased by 48%¹⁸ . As the population ages and changes, the demand for health services will also grow and change: it is estimated that the global demand for health employees will almost double by 2030.

The key to ensuring continued economic growth opportunities will in future reside in better use of healthcare funds. Ageing populations, living longer, generate increasing health and social care costs, which could be less if people age in good health. Economic productivity and prosperity depend on a healthy population, and healthy life expectancy is an important factor in economic growth. OECD studies show that each additional year of population life expectancy translates into a 4% increase in EU GDP. Work absenteeism of between 3 and 6% of working time represents an annual social cost of around 2.5% of GDP. The health of citizens is fundamental to economic prosperity, and investment in the healthcare system is a key investment in the economy.

A consequence of the changing demographic and epidemiological profile of the populations of European Union Member States will be the need to reorganise healthcare. This will mainly be due to the population’s increased susceptibility to certain age-related diseases, such as cancer, cardiovascular disease or musculoskeletal conditions. The volume of consumption and costs of healthcare, especially long-term care, are influenced not only by demographic factors, but also by socio-cultural factors such as the institutionalisation of chronic care and the medicalisation of social life. Projections to 2050, ordered by the European Commission as part of a study in four Western European countries, show a further increase in the number of people needing this type of care, its services and the associated expenditures.

Above all, the priority of the Polish presidency should be to develop appropriate strategies to adapt healthcare systems to new reality. Particularly relevant here is the issue of long-term care for the elderly, and while this remains the responsibility of the Member States, the EU is in a position to support its development through various measures such as dedicated funding, data collection and the design of appropriate long-term goals in this area. Long-term care policies must be considered in the context of other policies that have a direct impact on long-term care, in particular policies on pensions, healthcare and healthy and active ageing. Adequate pensions, which are the main source of income for older people, are a key element in ensuring that long-term care is financially accessible. The European Commission’s 2021 Pension Adequacy Report, jointly prepared by the European Commission and the Social Protection Committee (SPC), outlines the state of pension adequacy in the EU, including in relation to the availability and cost of long-term care services. One of the key messages of the report is that accessible and high quality long-term care services are important for maintaining an adequate standard of living and activity in retirement.

4. EU pharmaceutical law reform.

The limited availability of medicines affects not only Poland, but the whole of Europe. EU countries are facing shortages of raw materials, rising production costs, logistical problems and competition with Asian markets. There is a need to adapt pharmaceutical regulations, which have not been substantially changed for 20 years, to modern reality. It is crucial to increase the attractiveness of the European market to encourage producers to relocate to the EU.

The Commission’s proposals set out in April 2023, while well-founded, appear insufficient, focusing on changes to registration and market exclusivity periods, shifting responsibilities to producers. Incentives are virtual, offering no real investment support. At the same time, the planned legislation ignores issues that the industry has been facing for years, which would need to be communitarised at European level (e.g. the problem of early access to therapy, implementation of a modern distribution chain, delivery of medicines to the patient’s home, price pressure from the public payer).

In the context of these regulations, there have also been claims that their introduction will reduce Europe’s innovativeness in relation to other regions of the world. We believe that the decline in the global competitiveness of the European pharmaceutical sector is not due to the erosion of intellectual property, as the EU has systematically increased regulatory incentives and monopolies in this area since the 1990s. New forms of intellectual property protection introduced since then have aimed to make Europe a leader in R&D innovation.

However, the rise of monopoly protections has contributed to a relative decline in R&D in Europe compared to China and the US, undermining the thesis that larger monopolies lead to greater innovation. Moreover, these measures have contributed to the relocation of medicines production outside Europe, even though the EU is now trying to correct the situation.

In turn, measures to promote generic medicines competition have had positive effects, increasing access to medicines in Europe and reducing pressure on healthcare budgets. The biosimilars legislation has made Europe a leader in this technology, which has encouraged investment in the production of biologic medicines in the EU. Therefore, the Polish presidency should strive to ensure that the final shape of the pharmaceutical strategy for Europe continues to provide support for the generic medicines and biosimilars sector, which is crucial for Europe’s medicine security.

A necessity for the Polish presidency will be a detailed analysis of the proposed regulations in the further course of the legislative work of the Council, with significant consideration for the needs of patients and industry, and ensuring dialogue with regulators at the local and European levels.

5. Rebuilding medicines safety in Europe and Member States, including restoring production of APIs and finished medicines in Europe.

The events of recent years related to the COVID-19 pandemic and Russia’s military aggression against Ukraine have shown how critical security of medicines is, especially in the face of crisis, and highlighted the need for Europe to be independent from API production in countries in the Far East. Continued production dependence could pose a threat to the health and safety of European and Polish patients. The need to bring back the production of APIs and finished medicines to Europe is a strategic objective of all European institutions expressed in guidance documents such as:

• the opinion of the European Economic and Social Committee of December 2023
• the Versailles Declaration of the Council dated 11 March 2022.
• the European Parliament Resolution of 17 September 2020 on the shortage of medicines
• the European Commission Pharmaceutical Strategy of 25 November 2020.

It is worth emphasising that locating the entire medicine production process in the country, including the production of the API, involves significant costs (construction of new infrastructure, training of personnel, environmental protection, etc.), so financial support from the Member State and the EU is essential. This can be done indirectly, by building a business development-friendly legal and tax system, or directly, through subsidies, grants or preferences. It is worth noting that in the case of Polish entrepreneurs, they are mainly focused on the production of generic medicines, which translates into increased availability and reduced costs of pharmacotherapy. Particular emphasis should therefore be placed on creating regulations that enable companies to operate smoothly, guaranteeing stability, predictability and return on investment. Some of the solutions currently being introduced will need to be further deepened in the future. The following are examples of proposals in the area of registration refunds:

• Complete exemption from statutory payback for a medicine produced in Poland and/or from a substance produced in Poland.
• Priority in the establishment of lists, in particular of free medicines for a medicine produced in Poland and/or from a substance produced in Poland.
• Ensuring that comparable reimbursement conditions can be obtained for medicines produced in Poland and/or from a substance produced in Poland.
• Shortening the period of data exclusivity/market exclusivity of original medicines.
• Elimination of regulatory gaps favouring abuse of the right to exclusivity and negative patent links delaying the marketing of equivalents.

It is necessary to take the lead on the above subject in order to guarantee the strategic autonomy of the European Union based on the production capacities of the individual Member States. There is a need for a dedicated European legislative act with financial and regulatory incentives to maintain and move production of APIs and finished medicines to Europe. The Polish presidency could turn the declared strategic directions of all European institutions into reality.

 

See more: Memorandum of the Union of Entrepreneurs and Employers on Poland’s proposed activities during its presidency of the Council of the European Union in the field of healthcare.

Warsaw, 1 August 2024

Poland at the forefront of digital transformation in the EU. Priorities for the Polish presidency of the Council of the European Union

 

• In view of the great geopolitical uncertainty and the upcoming presidency of the Council of the European Union in 2025, the Polish government faces the important task of building new pillars to strengthen the competitiveness of the European economy.
• The European economic model is made up of many factors, but it is the new technology sector that is becoming one of the most important drivers of economic growth. In 2021 alone, the ICT sector accounted for 5.5 per cent of EU GDP.
• Unfortunately, our potential remains unrealised in this area. In the list of the world’s 20 largest technology companies, there is not a single one headquartered in Europe, and only 11 per cent of global unicorns come from the Old Continent. By not creating our own innovations, we are also becoming increasingly dependent on external suppliers of new technologies.
• Additionally, Europe has become a champion of digital regulation in recent years. The EU’s regulatory requirements for the technology sector are among the most extensive in the world. Although they affect different areas or categories of players, they occur extremely frequently, leading to an increasing level of complexity in the regulation of the digital market and raising the entry threshold for new players.
• Europe still has a chance to achieve a leadership position, but this will only be possible through an appropriate regulatory environment, investment in local technology implementation, support for digital education, closer links between industry and academia in research and development, and an increased role for transatlantic cooperation.
• Artificial intelligence, the Internet of Things, the cloud or blockchain often referred to as future technologies have the potential to provide a breakthrough in productivity in Europe. Therefore, the Polish presidency should focus on supporting the competitiveness of the new technology sector and creating an appropriate regulatory environment to unlock the potential of digital innovation.
• The Union of Entrepreneurs and Employers has prepared a list of digital priority areas that should set the tone for the upcoming presidency.

 

Regulation monitoring

The European Union’s regulatory requirements for the technology sector are among the most extensive in the world. Digital Services Act, Data Act, Digital Markets Act, GDPR, AI Act, ePrivacy, Terrorist Content Online regulation, Data Governance Act, NIS2 – the EU adopts thousands of regulations, directives and decisions every year, many of which hinder economic development. In 2023, for example, a total of 2228 legal instruments were adopted or amended. In 2022, the figure was 2445, and in 2021 it was 2380. While some of these have had a positive impact on digital sector regulation trends, global leaders in new technologies do not always follow Europe’s lead. China and the United States, with their flexible regulatory frameworks, better access to databases and therefore easier access to capital, are developing the artificial intelligence ecosystem, which is the most important technology of the future, faster and more efficiently. There are now three times as many AI creative hubs in the US as there are in Europe, and China leads the world in terms of the number of publications in AI journals, conferences and repositories, publishing around 135,000 AI articles in 2021.

Europe, on the other hand, introduced the AI Act and, before that, GDPR, which significantly limits the possibilities of developing artificial intelligence in Europe. AI is heavily dependent on the quality of Big Data analytics, and such analytics requires access to relevant data. This data is in short supply in Europe – according to a report by Polityka Insight, in 2017 only 4 per cent of data available globally was stored within the EU. This number is growing slowly, and the Data Protection Regulation 2016/679 (GDPR) is a factor that limits it significantly. While the GDPR certainly provides extensive protection for the privacy rights of individuals, it undoubtedly reduces Europe’s competitiveness when it comes to researching and implementing solutions based on big data processing, such as artificial intelligence. The main criticism of the GDPR stems from the restrictions on access to data, which is crucial for artificial intelligence developers in the EU to train machine learning models. The Regulation introduces stringent requirements for the collection, storage and use of personal data, which complicates the use of such data in the development of advanced technologies without breaching the regulations.

Another regulation, already mentioned above, is the AI Act Regulation, which in the Polish translation version has 458 pages. The new multi-page regulation effectively gives officials the unprecedented privilege of determining the direction of this technology before the market and inventors have even demonstrated their capabilities. Although Thierry Breton, EU Commissioner for the Internal Market and Services, insists that not only will the AI Act not delay the development of new technologies in the EU, but it will actually be a starting point for ‘European start-ups and researchers to become leaders in the global AI race’ the mood among entrepreneurs contradicts this. Companies taking steps to introduce artificial intelligence surveyed by EY Poland indicated that legal barriers ranked as the fifth reason delaying the implementation of AI in their organisation. For entrepreneurs, the AI Act means entirely new requirements and further barriers to overcome before bringing a product or system to market.

Therefore, instead of initiating further regulations, the Polish presidency should focus on creating innovative regulatory methods. It is certainly necessary to limit the introduction of successive regulations which, instead of stimulating innovation, block entrepreneurs from the start with the need for constant updates and adjustment to requirements that are repeated in many acts. The more frequent introduction of regulatory sandboxes, which allow experiments to take place in an environment subject to regulatory control and oversight, should be considered.

An equally important task will be to assess the impact of the acts adopted during the last term of the European Commission, whose ambition was to regulate virtually every dimension of the new technology sector. In 2025, we will be able to formulate the first proposals for the implementation of the new Internet Constitution, i.e. the DSA (Digital Service Act) and the DMA (Digital Market Act), and this should be our priority.

Development of cybersecurity

Confidence in new technologies is closely linked to the level of cybersecurity. Since the outbreak of the war in Ukraine, EU countries have become a target for cybercriminals from Russia, and as Deputy Prime Minister and Minister of Digitalisation Krzysztof Gawkowski says ‘I don’t know if we are in a state of cyber war, but we can say we have a cyber cold war’. Following the failure of the cyber war against Ukraine, Russia is intensifying attacks on its allies, according to a report by French technology company Thales. At the outset of the conflict itself, the majority of incidents were primarily related to Ukraine (50.4 per cent compared to 28.6 per cent in Q3 2022), but over the past six months there has been a sharp increase in conflict-related incidents in European Union countries (9.8 per cent compared to 46.5 per cent of global attacks). This summer, there were almost as many conflict-related incidents in EU countries as in Ukraine, and by the first quarter of 2023, the overwhelming majority of incidents, 80.9 per cent, had already occurred within the European Union. Public administration, the financial sector, the transport sector, telecommunications and the energy sector are most frequently attacked. Although the conflict has previously been relatively low-impact, the European healthcare sector, governments, industry, IT services and the aviation sector are increasingly being targeted by attacks designed to put pressure on Western societies. According to Microsoft research, in the first six weeks of 2023, Russia initiated cyberattacks in at least 17 European countries and these were mainly targeting government institutions for espionage purposes.

As can be seen, a damaging cyber campaign is currently targeting democratic institutions, government entities and critical infrastructure providers across the European Union and beyond. This is a continuing pattern of irresponsible Russian behaviour in cyberspace. As part of Russia’s information warfare strategy, pro-Russian hackers not only spread disinformation, but also launch attacks on servers and other elements of the IT infrastructure. Their actions aim to disrupt both public and private institutions.

It is encouraging to see that the European Union is making cybersecurity a priority, especially in the context of a globalised digital world. In response to these challenges, the EU has introduced a number of legal requirements to protect personal data and digital infrastructure and prevent cyberattacks. The CER Directive (2022) replaced previous legislation, increasing digital protection obligations for operators and digital service providers and strengthening cooperation between Member States. The NIS2 Directive continues this work by expanding the scope of regulations and introducing stricter safety requirements. It aims to better protect the EU’s digital infrastructure and make it more resilient to cyberthreats. The NIS2 Directive applies to medium and large companies and institutions in a wide range of sectors, including energy, transport, banking, financial market infrastructure, health, drinking water, waste water, digital infrastructure, public administration, space and food, as well as the companies in their supply chains.

Subsequent directives, such as the Directive on Attacks against Information Systems and the Civil Protection Directive, focus on combating cybercrime and crisis management in the context of attacks against critical infrastructure. This legislation aims to increase the security of citizens, companies and institutions in the EU.

In the area of cybersecurity, it will be essential to take measures to ensure that any vulnerabilities in the system are eliminated. To this end, the activities of the Polish presidency of the EU Council should be focused on cooperation with industry, which plays a key role in promoting cybersecurity and ensuring secure infrastructure. Representatives of companies developing security systems should be actively involved in the development and implementation of regulations and strategies to combat cyberthreats. Leaders from the EU, governments and industry can work together to strengthen cybersecurity by sharing information, best practices and developing common strategies for secure infrastructure.

Another priority action is to develop international partnerships with democratic countries and in the spirit of transatlantic and NATO cooperation. Particularly on the side of the NATO alliance and the European Union Member States, there is a growing need to further develop capabilities for joint offensive operations in cyberspace. Cybersecurity is a new area of activity for the North Atlantic Alliance to which NATO is attaching increasing importance. The example of the intensification of disinformation campaigns against the West in connection with Russia’s attack on Ukraine proves that NATO and the EU should devote even more attention to the issue of hybrid threats, and that the Polish presidency, by introducing new initiatives aimed at expanding cooperation, can effectively strengthen the alliance.

Strengthening the role of the Digital Single Market

According to experts, by 2025, 24.3 per cent of global economic activity will take place in the digital sector and the value of the digital economy will grow to USD 23 trillion. The dynamic development of new technologies and, consequently, of e-commerce and new business models, has put the unification of the digital dimension of the European economy at the top of the European Union’s agenda. As a result, 22 years after the official launch of the single market, the Digital Single Market Strategy for Europe was announced in May 2015.

The Digital Single Market Strategy enables better access to online goods and services for consumers and businesses across Europe, by removing barriers to cross-border online activity, creating the right conditions for the development of digital networks and services and maximising the economic growth generated by Europe’s digital economy, or at least that was its intention. Looking through a purely economic lens, the potential of the Digital Single Market is certainly not yet fully realised.

Although we have succeeded in simplification with VAT or the abolition of roaming charges within the EU, the idea of a Digital Single Market is being hit by barriers to cross-border trade, digital over-regulation and a lack of a strong vision for the EU economy. According to the latest data, while nearly 20 per cent of companies in the EU sell services and goods online within their own country, only 8.1 per cent offer them in other EU Member States. The fact that the strategy adopted has not translated to any significant extent into the way businesses operate, and in particular their digitalisation, is also evidenced by an analysis of the data provided by Eurostat. In 2015, 16.2 per cent of companies in the European Union were accepting online orders, rising to 19.7 per cent in 2022. In the seven-year period separating the figures quoted, we have experienced rapid growth in the e-commerce sector and the COVID-19 pandemic, which has resulted in an even more intense increase in the share of online shopping in consumers’ shopping baskets. In light of these developments, an increase of just 3.5 percentage points is disappointing.

Moreover, due to the specificity and dynamics of the EU legislative process, as well as the Commission’s growing ambitions, the regulatory landscape for the digital economy in the EU is becoming increasingly unclear, as we wrote above. As a result, companies are finding it increasingly difficult to navigate the legal reality. The problem is particularly relevant for smaller entities without professional assistance.

There is a lot of work ahead, but the overall contribution of the Digital Single Market to the EU economy is undeniable and measurable. It is estimated to generate almost EUR 177 billion in additional growth each year. Therefore, when setting the direction of digital policy, the Polish presidency should focus on conducting initiatives that integrate the digital economies of EU Member States. In a dynamic world where technology is an integral part of our lives, the Digital Single Market is the basis for the future of the European economy. One of the main barriers to its development remains the inconsistent implementation of common rules. As we take over the presidency of the Council of the EU, we should aim to improve the functioning of the European Semester – which is part of the EU’s economic governance framework – and introduce an assessment of how Member States are achieving their single market objectives, which will certainly serve to harmonise the implementation of EU legislation.

Small and medium-sized entrepreneurs, who, despite having such a significant impact on the economic development of Europe and Poland, bear the relatively highest costs of export activity, must also be at the centre of discussions on the vision of the Digital Single Market. An active policy to support their international expansion should therefore not only be an ambition of our government, but also a Polish contribution to the debate on the challenges that the European institutions should face in the near future.

Research and development cooperation

The digital economy is the knowledge economy. According to the concept of a knowledge-based economy (GOW), one of the most important factors determining the pace and level of economic development of a region is the innovation, transfer and use of knowledge. The ability to create it and transform it into new technologies and innovative products and services provides a competitive advantage for entrepreneurs. To make this possible, the activities of research and development institutions, which are the centre of innovation, are extremely important.

From the outset, the European Union’s research and technological development (RTD) policy has played an important role in European legislation. In the 1980s, with the introduction of the European Framework Programme for Research, the scope was further expanded. In 2014, the majority of EU research funding was grouped under Horizon 2020, which ran from 2014 to 2020 and aimed at ensuring the EU’s global competitiveness. Its successor, ‘Horizon Europe’, which is the European Union’s current research and innovation programme, was launched in 2021 and will run until 2027.

The Polish presidency should focus on shaping a more ambitious EU research and development policy and aim to significantly increase overall research spending in Member States in order to maintain and strengthen the Union’s international competitiveness. To this end, cooperation should be intensified with non-EU partners, and in particular with the United States, which has for years defended its status as the leading development-spending country. Analysts from the Polish Economic Institute presented the results of a report prepared by the European Union in Tygodnik Gospodarczy No. 6/2023, which examined the 2,500 companies with the largest research and development expenditure in the world in 2021. Of the 2,500 companies, as many as 822 are from the USA, 678 from China, 361 from the European Union and 233 from Japan. The remaining 406 companies come from 22 countries around the world. The number of EU companies in the list decreased by as many as 41 compared to 2020. At the same time, the number of US companies increased by 43 and Chinese companies by as many as 81. Not a single company from Poland was included in the list.

There is no doubt that those countries that invest the most in research and development activities are winning the technological power race. In this context, the approach of the European Union and individual Member States to funding, supporting and promoting R&D activities plays a decisive role in shaping the future of the Old Continent. It is not only about enterprise restructuring, research, development and innovation, but above all about supporting small and medium-sized enterprises, which are the foundation of the European economy. If we want to join this technological race, we have to bet on a close integration of the activities carried out under the European funds and strengthen cooperation with business. Therefore, during the presidency of the EU Council, we should intensively support all initiatives concerning R&D cooperation in EU countries.

Supporting the development of digital competences

Digital transformation processes are leading to profound changes in the operating model of businesses, the economy and society. In the new model, one of the determinants of the competitiveness of economies becomes the level of digital competence of the population, the workforce and the number of skilled ICT professionals.

Strengthening the digital skills of the EU’s current and future workforce is key to the long-term competitiveness of the European technology sector. Investment in education and training programmes in STEM (Science, Technology, Engineering, Mathematics) and computer science, with an emphasis on supporting underrepresented minorities and women, is essential. It is equally important that the EU’s immigration policy enables businesses to access the global talent pool to meet the growing demand for highly skilled digital professionals in the single market. EU immigration policy should support companies to recruit professionals from outside Europe so that our market can compete effectively with other global innovation centres. Small and medium-sized enterprises (SMEs) play a special role in the context of global competition. Digitalisation offers them the opportunity to increase efficiency and expand their markets, but it also comes with risks, such as cyberattacks and the need to constantly adapt to new technologies. Strengthening the digital skills of SME employees is a key factor in being able to compete successfully in the global marketplace.

Strengthening digital skills is an investment in the future of the European technology sector. The Polish presidency should promote investment in education programmes, openness to global talents and support for SMEs, which will allow Europe to maintain and increase its competitiveness in the age of digital transformation. Particular emphasis should be placed on achieving the objectives of the policy programme ‘Path to the Digital Decade’ by 2030. The document sets out the directions for the development of the digital transformation of the European Union. It focuses on four main areas: digital skills, digital infrastructure, digitalisation of businesses and digitalisation of public services. Within the skills area, the ambitious targets have been set of increasing the number of ICT professionals to more than 20 million, a better gender balance in the profession and a minimum of 80 per cent of the EU population achieving basic digital skills.

To strengthen digital capabilities, Member States can engage in large-scale international projects, pooling resources and increasing cooperation. The Commission, for its part, has pledged to help define and develop such projects. The prepared programme also establishes an annual cycle of cooperation in pursuit of common goals. The mechanism for cooperation with the Commission and Member States includes, among other things, a joint monitoring system based on the Digital Economy and  Society Index (DESI), an annual report assessing the progress of individual countries as well as recommendations and strategic action plans of EU Member States for the digital decade. Poland will take over the presidency of the EU Council five years before the set deadline for achieving the above goals, so it is worth verifying whether the adopted mechanisms effectively support the development of digital competences of EU citizens and introduce additional measures to support the Digital Decade programme.

See more: Poland at the forefront of digital transformation in the EU. Priorities for the Polish presidency of the Council of the European Union