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Statement from Industry Leaders of EU Home Appliance Brands

Leaders from 25 top European home appliance brands demand urgent policy action to address the issues that threaten the competitiveness of a strategic sector to the success of Europe’s decarbonisation and housing plans.

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“Work,” said Leo Tolstoy, “is the inevitable condition of human life, the true source of human welfare.” Judging by recent developments in the EU economy, the great Russian author was, at best, only half right: for many Europeans, work is increasingly low-paid, precarious, and – especially in strategic industries – non-existent.

The EU has shed 2.3 million manufacturing jobs over the past fifteen years, with a million of these job losses occurring since 2019, according to the European Trade Union Confederation (ETUC).

The pace of redundancies has accelerated to truly alarming levels over the past few weeks. Michelin, a French tire manufacturer, has said it will lay off more than a thousand workers. Swedish battery maker Northvolt has filed for bankruptcy. German carmaker Volkswagen has announced plant closures in its home country for the first time in its history.

There is a broad consensus about the root causes of these problems. These include, but are not limited to, high energy prices, increasing competition from China and the US on critical technologies and strategic sectors, and weak domestic and external demand.

While the European Commission has attempted to forge consensus on the solutions as well – most notably through Mario Draghi’s report – recipes to end Europe’s manufacturing crisis remain remarkably divergent.

Should, for instance, Europe’s competition policy be modified to promote industrial champions? (Draghi says yes; senior Commission officials say no.) Should Europe issue more common debt to fund critical investments? (Draghi says yes; many Northern member states say no.) Should financial regulations be loosened to incentivise greater investment? (Draghi says yes; civil society and consumers NGOs say no.)

Arguably, however, nowhere was such a lack of policy consensus more evident than over this past week, when the ETUC called for a Covid-19-style temporary ban – or “moratorium” – on all firings.

“Europe is currently haemorrhaging quality jobs because we do not have in place the measures needed to support our companies and their workforce to remain competitive,” said ETUC General Secretary Esther Lynch.

Lynch, whose organisation represents 45 million European workers, also called on the EU executive to introduce a “just transition directive” to guarantee that “no worker is left behind” during the shift to a green economy.

“The European Commission has committed to delivering those measures, and companies should wait until they are in place before taking decisions about their futures,” she said.

Asked about the proposal, BusinessEurope, an influential Brussels-based business lobby group, said that they “share the ETUC’s concerns” about Europe’s industrial plight but stressed that they “do not believe that a moratorium on redundancies is the right answer”.

“On the contrary, this will be counterproductive as it will further undermine the competitiveness of the companies concerned and discourage investment in Europe,” a spokesperson said.

A never-ending industrial recession?

Unfortunately, the clash between businesses and workers over how to address Europe’s rapid deindustrialisation is likely to become even more fraught over the coming months, as the long-stalled EU legislative machine gets up and running for the new mandate and job losses continue to mount.

Corroborating this dire assessment, the Hamburg Commercial Bank (HCOB) reported last week that euro area manufacturing employment fell in November at its fastest pace since August 2020. Job cuts in Germany – Europe’s largest economy and historically an industrial powerhouse – were especially pronounced.

HCOB’s Manufacturing Purchasing Managers’ Index (PMI), which measures factory conditions across the eurozone, also deteriorated, dropping from 46 in October down to 45.2 in November – well below the ‘no-change’ level of 50.

“These numbers look terrible,” said HCOB chief economist Cyrus de la Rubia. “It’s like the eurozone’s manufacturing recession is never going to end.”

De la Rubia added that the PMI data, coupled with companies’ announced plant closures, indicate that job losses will only increase over the coming months.

“Companies continue to trim their staff,” he said.

“While the official unemployment rate has trended down for a few years and stabilised at 6.3%, the PMI and the cost-cutting plans of many companies suggest we are headed for higher unemployment rates.”

What will be of the European social model?

Draghi, and indeed Ursula von der Leyen and her new team of commissioners, have done their utmost over the past few months to reassure the wider public that boosting the EU’s “competitiveness” will not come at workers’ expense. Indeed, Draghi himself is on record as saying that protecting Europe’s social model is “non-negotiable”.

It would, of course, be naive to assume that businesses and workers are trapped in a ceaseless, Sisyphean struggle: what is good for business can be good for workers too. Yet it would be equally naive to assume – as the Commission, and even Draghi, sometimes appear to do – that their interests are permanently aligned.

As Europe’s industrial base collapses, its job losses mount, and unemployment rises, it seems reasonable to assume that EU policymakers’ ostensible commitment to the non-negotiability of Europe’s social model could turn out to be very much negotiable.

Moreover, with political extremism on the march throughout much of Europe, policymakers who may be contemplating sacrificing European workers at the altar of European competitiveness would do well to heed the warning of another great 19th century Russian novelist.

“Deprived of meaningful work, men and women lose their reason for existence,” wrote Fyodor Dostoyevsky. “They go stark, raving mad.”

Economic News Roundup

EPP calls to ‘avoid penalties’ for carmakers but stick to 2025 CO2 targets. The EPP group adopted the position paper on securing the bloc’s struggling car industry with a large majority on Wednesday (11 December). Unlike a previous version of the paper seen by Euractiv, the EPP group did not call for a two-year delay of the 2025 CO2 reduction target of 15%. Instead, it calls for an assessment of compliance with the targets over three years so that carmakers could escape fines in 2025 if they over-achieve targets in subsequent years. “All these measures should consider the efforts and investments that companies have already taken,” the final paper reads, adding that any changes to the CO2 targets should avoid “legal challenges.” Read more. 

UK finance minister Rachel Reeves told her Eurozone counterparts on Monday (9 December) that the country wants a “business-like relationship” with Europe, as Britain seeks to revitalise its faltering economy by fostering deeper trade and investment ties with its largest trading partner. Reeves’ attendance at Monday’s Eurogroup meeting – the first by a UK Chancellor of the Exchequer since Britain formally left the EU in 2020 – comes as part of a broader effort by London to “reset” its political links with Brussels that have yet to recover from the shock Brexit referendum in 2016. Read more.

France’s budgetary crisis will be resolved, but challenges remain over Paris’ high debt levels and climbing deficit, Eurogroup President Paschal Donohoe said on Monday (9 December). Donohoe added that French finance chief Antoine Armand had given his counterparts a full update on the country’s fiscal position during Monday’s Eurogroup meeting. “From all the engagement […] with Minister Armand and with the French authorities during this period… [I am] confident that the steps will be taken to stabilise the French situation,” he said. Read more.

Chinese companies condemned the European Union’s “over-emphasis” on economic security on Monday (9 December), arguing that Brussels’ push to reduce its strategic dependence on Beijing will ultimately harm European consumers and hamper the EU’s dual transition. Nine out of 10 Chinese firms operating in Europe believe that the EU’s “Economic Security Strategy” and its “de-risking” policy are having a negative impact on their business, the China Chamber of Commerce to the EU (CCCEU) reported in its annual survey. Read more.

Poland will focus on a regulatory review of the securitisation market to reinvigorate Europe’s long-stalled single market for capital during Warsaw’s upcoming Council presidency, Finance Minister Andrzej Domański said. Speaking to journalists in Brussels on Wednesday (11 December), Domański said Poland would also aim to promote a broader “equity culture” across the EU by removing regulatory obstacles which prevent EU citizens from investing their savings in stocks or other assets. “What we can focus on are rather relatively low-hanging fruits like securitisation, like making trade settlements more smooth,” Domański said. Read more.

[Edited by Anna Brunetti/Owen Morgan]