09 November 2009

SPEAKING NOTES of Carl Cederschiöld, President of CEEP

Mr. Chairman,

I greatly appreciate this opportunity for Social Partners to discuss macroeconomic issues with key European policy makers. According to the Treaty, our main economic objective is to bring about a harmonious, balanced and sustainable development in the whole area. In looking back, we can safely say that the Union has been a fantastic economic and political success. Inside and outside its territory, the Union has becom synonymous with peace and prosperity. For the transition countries, joining it has been the overarching policy goal.

To continue this success story, it is essential that the Union demonstrate its ability to steer its members also through economic storms, and take under its umbrella those who are particularly hard hit.

The EU has already proven its capacity to react swiftly and pragmatically with the instruments available at EU level and even new ones, once the destructive potential of the financial crisis was fully recognised.

1 See Article 2: “The Community shall have as its task, by establishing a common market and an economic and
monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote
throughout the Community a harmonious, balanced and sustainable development of economic activities, a
high level of employment and of social protection, equality between men and women, sustainable and noninflationary
growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.”
However in terms of the central Treaty objective, we are about to fall back:

EU and euro zone income will drop by about 4 % this year, and in some noneuro zone Members by up to nearly 20 %.

In this perspective, current policies, for all their merit, are not enough: This is not what the Treaty nor the European Economic Recovery Plan envisages.

1. We cannot accept that current income losses across the Union will become permanent, and that there will be a modest 1 % average growth thereafter. For one reason this would be a drastic implicit reversal of the Lisbon Strategy which considered the pre-crisis rate of 2 % as insufficient
and aimed at a rate of 3 %.

2. We should not accept that current unemployment losses will become permanent, and that a “lost generation” is in the making. In fact nemployment is about to shoot up to levels not seen before in EU history, and nearly one fifth of Europe’s young and immigrants will be out of work. No labour market policy, however “employability” or
“flexicurity” oriented it may be, can handle alone shocks of this magnitude.

3. Public budgets now bear the combined burden of financial repair, economic support programmes and cyclical effects. But with some time lag, this will seriously impair the state’s capacity to act as a service provider, growth inducer and social safety net of last resort. Investment
in infrastructure is already lagging now in Europe.

Particular efforts are necessary in the area of Services of General Economic Interest, mostly in the areas of public transport and sustainable energy supply.

4. We must acknowledge that some Members are in outright economic depression.

In order to ensure that the Union remains a synonym for peace and prosperity, it is essential to find a European answer that is up to the scale of the challenge
we are facing.

Finally, I would like to draw your attention to an issue of specific concern to the CEEP:

2 The three Baltic States.

During the crisis, public services providers have had a stabilizing effect on the economy and on labour markets, and have built their crisis response around the concept of employability, focusing on upgrading skills and anticipating new needs. We, the public employers, call on politicians to start phasing out emergency rescue measures for specific sectors to make room for financing the
infrastructure on which our general prosperity is built.
Thank you very much.