Europe is not short of challenges. Policy makers are finally waking up to the need for action on climate change. Digital technologies are already having a dramatic impact on how we work and live in a world where it is increasingly hard to keep pace and compete. Traditional social policies are strained by global competition so that it is harder to maintain inclusive societies. Demographic change will make this tougher still.
We can’t afford to confront only one of these challenges. It’s daunting, but we have to battle all of them at the same time.
Don’t worry, because there is a framework for this big battle. Competitiveness, sustainability and inclusion are not alternative priorities, rather they’re three foundations on which future European prosperity and well-being will stand. In a new report by the European Investment Bank, our economists argue that these three issues are densely intertwined.
Inclusive investment in skills as the key to sustainable, inclusive future competitiveness
Data from the European Investment Bank Investment Survey shows that the firms that are most successful at digitalisation are already feeling less competitive pressure. They may even be gaining market power, which could lead to an even more skewed economic outcome in the future.
We also find evidence of a hollowing out of the labour market, with less wage growth among middle-earners. This potentially exacerbates inequality.
Our survey results show that finding skilled staff is a constraint, particular for the most innovative companies. Companies that bring new innovative products and services to the market feel that constraint most.
If we fail to invest enough in skills, we will steer businesses towards labour-saving automation that may create unemployment, rather than towards innovation that draws demand for new European products in the global market.