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In presence of ECB President Mario Draghi, European Commission Vice-President Valdis Dombrovskis and Maltese Minister of Finance Edward Scicluna, Valeria Ronzitti, CEEP General Secretary, addressed the main issues faced by the EU economies at the macro-economic dialogue at political level.

Following the publication of European Commission’s Communication on Fiscal Stance, CEEP believes it is a clear call to responsibility sent to Member States, as wel as a call to start considering the Eurozone as a whole and not just as the sum of its individual components. CEEP also addressed:

The role of Member States fiscal policies

We have always considered public investment in key physical and social infrastructures as the main lever to foster growth for the benefit of citizens and enterprises in Europe. We also believe that some expenses favorable to long-term growth should remain separate from current expenditure: investment with positive effects on future generations, such as education and healthcare, could be financed with debt and deficits, unlike consumption expenditures.

The need for a balance between sustainability and stabilisation

For us, there is no point in opposing sustainability of public finance and the needs of stabilisation.
More efficient investment leads to larger effects on domestic GDP and larger international spillovers. Moreover, surplus countries can now borrow at record low interest rates. Therefore, the accumulation of government debt following fiscal expansion can actually be quite modest and does not endanger long-run debt sustainability.

The governance issues for the Economic and Monetary Union

We need to be realistic over what we can achieve. In the EMU, fiscal policies are a national responsibility. The SGP does not oblige countries with fiscal room for manoeuvre to make use of it. There is no guarantee that the coordination of national fiscal policies through the SGP will result in an appropriate aggregate euro area fiscal stance. With our present instruments, the concept of the Fiscal stance is methodologically and politically ambitious. It is now for Member States to commit and see this communication as an important step toward a more coordinated andexpansionary Euro area fiscal policy. The longer we wait, the more we decrease our long-term growth prospect.

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CEEP organised this morning (25 January) a breakfast event on “Local Public Services Enterprises and the EU SME Definition” at the European Parliament, hosted by MEPs Herbert Reul (EPP, Germany) and Jean-Paul Denanot (S&D, France).

Speakers representing local public services enterprises from all around Europe illustrated the need to engage in a reflection on the EU SME Definition to make it a real tool of support for all SMEs in the EU. Concrete examples were presented by Thierry Durnerin (FedEpl – Fédération des Entreprises Publiques Locales, France), Dr. Milena Angelova (BICA – Bulgarian Industrial Capital Association, Bulgaria) and Dr. Özgür Öner (GdW – Federal German Housing and Real Estate Organisation, Germany). They invited MEPs and representatives from EU institutions to a reflection on how to make the EU SME Definition more inclusive so that it can better support growth and jobs creation.

Many of CEEP members are small and medium-sized enterprises, meeting the thresholds of an SME in terms of size. They however are not considered as SMEs per the EU definition, as they operate under some control of a public authority as providers of SGEIs. Such enterprises can therefore not take part in some funding and financial schemes and face a regulatory burden from which other SMEs (who might be competing for similar markets) are exempted.

Katherina Reiche, CEEP President:

“CEEP does fully support all measures aiming at facilitating SME business operations. The European Union urgently needs this huge potential of SMEs to enhance growth, competitiveness and employment. However, since the SME definition is becoming more widely used (at EU and national level, as well as in aspects of financing), we want to point at some of the shortcomings of the current EU SME policy.”

Services of General Interest can be described as “enabling services”. This means that without reliable energy and water supply or dependable waste water or waste management, the production of many other goods and services would not be possible. It is therefore unfortunate that many local public enterprises cannot benefit from easier access to finance or a reduction in the administrative burden. Instead, the opposite is true.

“With regard to the decision about whether a company is an SME or not, it should make no difference whether a state agency or a private individual is a partner in the company. The same demarcation criteria should apply without exception in both cases.”

You can find more on CEEP’s position on the issue in our Opinion “For an Inclusive EU SME Policy”.

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The members of the Public Services Employers’ Forum (PSEF), representing Public Services and Services of General Interest (SGIs) employers and providers, welcome the intention of the European Commission to bring more balance between the economic and social dimensions of the European Union through its initiative on a “European Pillar of Social Rights”.

SGIs are a cornerstone of the EU Social Model and have a central role to play in the Pillar’s process to ensure the citizen’s quality of life and support the development of European businesses.

PSEF members believe that, in order to better support the EU social dimension, the Pillar should aim at fostering a better understanding of the differences between the national social systems and to define possible common reference principles to foster upward convergence.

The way forward is not for the Pillar to produce new EU social legislation, but to contribute to making sure that the existing regulations are still fit for purpose. The EU Social Acquis already encompasses 70 directives providing workers with protection and rights, therefore the problems existing with the EU social Acquis are not about quantity but quality and enforcement. Moreover, any initiative undertaken in the framework of the Pillar in the social policy area should be subject to the standard consultation procedure enshrined in the EU Treaties, and consequently foresee the involvement of social partners. The Pillar should serve as a reference document pointing out gaps in existing social legislation to assess and address. Amongst the existing social regulation, a modernisation of the Working Time Directive should be pursued to provide legal certainty to enterprises, organisations, employers and workers across Europe and ensure that this legal tool is still fit for purpose.

The European Pillar of Social Rights could inspire the development of new benchmarks to compare and measure social policy developments within the framework of the European Semester. Therefore, the Pillar should not be limited to the euro area Members, but cover all Member States of the EU. PSEF members believe that such benchmarking could make the reform agenda simpler and more specific in nature by recognising the differences between Member States, thereby increasing transparency and ownership regarding the implementation and enforcement of reforms. The EU should promote reforms which allow Member States to thrive autonomously within the European Union. This would require reforms that increase sustainable growth, competitiveness and productivity, facilitate the efficiency of SGIs, and ultimately reduce vulnerabilities and inequalities as experienced in the existing social infrastructure at national level.

The significant divergences across Europe are strongly related to the EU Member States’ structural weaknesses and in existing hindrances to the provision of sufficient, sustainable and predictable investments in physical and social infrastructures in key services such as transport, energy, communication, water, waste management, healthcare and education.

In order to change this situation by promoting and supporting the necessary forms of investment, the Pillar may serve as a basis for adapting the European fiscal rules to secure growth-friendly fiscal consolidation and to foster key forms of public investment such as in education, health and social services, contributing most to productivity gains in the economy. In this context, a comprehensive and non-dogmatic review of the Stability and Growth Pact (SGP) needs to be considered.

The ways and means of pursuing the principles of the Pillar should be developed, decided upon and implemented by the Member States. Respecting the principles of subsidiarity and proportionality will be key for the success and widespread acceptance of the European Pillar of Social Rights. In this regard PSEF members consciously point out that the existing legal competencies of the EU should not be extended by the Pillar and the proven balance between regulations at national level and EU level should remain unchanged. The Pillar should instead provide a set of principles and objectives to be shared by the Member States making the best use of the European Semester.

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The signatories of this joint statement are CEEP (European Centre of Employers and Enterprises providing Public services and SGIs), CEMR (Council of European Municipalities and Regions), CER (Community of European Railway and Infrastructure Companies), EBU (European Broadcasting Union), EFEE (European Federation of Education Employers) and HOSPEEM (European Hospital and Healthcare Employers’ Association).

At the Rome Investment Forum 2016, Valeria Ronzitti, CEEP General Secretary, addressed the panel discussion on “Investment in Innovation and Infrastructures”, and exchanged views with MEP Simona Bonafè, Maria Bianca Farina (President, Italian National Association of Insurers Companies – ANIA), Antonella Baldino (Head Development and Finance, Cassa Depositi e Prestiti – CDP), Lutz-Christian Funke (Senior Vice President, Head Management Affairs and Communications, Kreditanstalt für Wiederaufbau – KfW), Fabio Pammolli (Member of the Investment Committee, European Fund for Strategic Investment – EFSI), Laurent Zylberberg (Director of the International, Institutional and European departments, Caisse des Dépôts et Consignations – CDC) and Rainer Masera (Dean of the Business School, Guglielmo Marconi University).

You can find below her speech (PDF here).

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Dear Ms Bonafé,

Dear Vice-President Farina,

Dear colleagues,

Ladies and Gentlemen,

First of all, let me thank you for letting me the opportunity to address the Rome Investment Forum and make the case for investment policies. While we can salute the political will of the European Commission to boost investments, CEEP keeps believing that more should be done.

A NEW PARADIGM ON INVESTMENTS

We can say that for the past few years, the narrative and the policy choices made around ”investment” has changed. Since Jean-Claude Juncker and his team entered the European Commission, a clear impetus has been launched to trigger investments in the EU. The ”Juncker Plan” shows best the new political will, with its vision and the wish to act quickly.

So far, we assess the balance sheet of the European Fund for Strategic Investments as positive, despite some little hiccups such as:

  • We believe that not enough is being done regarding social infrastructures;
  • The focus has relied too strongly on ”classic” physical infrastructures, and not enough on innovation.

There are obviously exceptions, and some projects included in the Investment Plan promote a different vision. I can mention the project on Smart Public Building in Greece, and the development and the better use of Internet of Things technologies in public buildings. But such examples remain rare.

In this context, CEEP welcomes the proposal to prolong the lifespan of the EFSI, and believes that a step forward should be completed by fixing the loopholes noticed in the first version of the plan:

  • There must be an increased on the additionality principle;
  • The coordination between EFSI and the other financial instrustruments (ESIF, Horizon 2020, Connecting Europe Facility, structural funds,…) must be improved;
  • The geographic coverage could be reinforced.

A CALL FOR A HONEST AND NON-DOGMATIC REVIEW OF THE STABILITY AND GROWTH PACT

The Investment Plan alone will not be enough, though. Investments in social infrastructures, but more in general all kinds of investments in public infrastructure, will not reach the desired level if policy makers do not adopt a comprehensive approach to what we consider as obstacles to investment. There is a persistent paradox at European level between the demand for increasing budgetary discipline, and pointing out the lack of investments as one of the main reasons for the persistent slow pace of recovery.

We must now reverse the stagnation in the public capital stock we have seen since the crisis with investments aimed at increasing productivity. I feel like we suffer from a clear lack of understanding of the added value of some public investment.

An example, with expenditure in education and health care. Such investments contributes to reinforcing the human capital stock, enhancing the supply side of the economy and contributing to growth. Howver, it is still mostly considered to be current expenditure rather than investment.

The main problem is that the fiscal rules do not make a distinction between operational expenditures and investments. The situation has become even worse since the application of the European System of National and Regional Accounts (ESA 2010, in force since September 2014).

This means in practice that public investments are calculated in the SGP’s deficit and debt criteria over the short period of the construction duration, whereas they should be considered as long-term investments and written off over a far longer period of 15 to 20 years.

This issue may only be the tip of the iceberg when we consider the full consequences of the SGP on public investment in Europe. That is why we believe that we must now take a step back and decide collectively which form of expenses are indispensable to our relaunch and should accordingly be supported by the EU and its Member States, not only politically but also technically. This implies an honest and non-dogmatic review of SGPs, including its interpretative communication of 2015.

CONCLUSION

In conclusion, we can try to figure out what is the missing link. The evidence supporting the call for investments is clear. The academic case calling for increased investment to support economic growth has been made. Only the political will to go further must be tackled.

My advice would be to use events such as the Rome Investment Forum as a mean of pressure. We need to stop ”speaking to ourselves”, but now need to reach out to those who still need to be convinced.

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On 14 December 2016, CEEP and EUROCHAMBRES organised a roundtable event entitled “Creating Inclusive Digital Eco-systems”. This gathered representatives of providers of SGIs and public services, chambers of commerce & industry, IT-specialists from a broad range of sectors and various other stakeholders. In the presence of European Commission Vice-President Andrus Ansip, the participants highlighted the need for digital ecosystems that are inclusive of citizens, public services, big businesses, SMEs and civil society.

European Commission Vice-President Andrus Ansip emphasised the many aspects of the creation of the Digital Single Market: “Creating a Digital Single Market means many things. It means creating a digital economy and society. Digitising industry, services and government. Promoting a digital lifestyle that goes with our increasingly digital behaviour. This is of direct interest to the private and public sectors, to business and industry, to companies large and small.”  (full VP Ansip speech available here).

In her introductory remarks, Ms Katherina Reiche, CEEP President, pleaded for a digital transformation including providers of services of general interests. “In the digital age, public service providers undertake essential initiatives with regard to infrastructure indispensable to society and essential for the entire economy: without rapid broadband coverage, there can be no digitalisation of business and society. Without reliable and intelligent energy supply, there can be no progress in industrial production and no security of supply. Without protection of water, there is no guarantee of essential services provision and no supply and disposal in the area. The protection of critical infrastructures and cybersecurity are also taken very seriously by public service providers”, she said.

Arnaldo Abruzzini, CEO of EUROCHAMBRES underlined the role that chambers of commerce & industry play in the digitalisation of SMEs. He said: “In this digital era, ’digital’ is integral to companies’ business model. Technological improvements should not only be used to reduce costs, but also to create new products, services and market opportunities. Digitalisation opens the door to new ways of doing business in Europe. That’s why Chambers are informing the SME community about the benefits created by digital solutions and helping them to capitalize on them.”

Prominent speakers presented examples and best practices of digitally inclusive initiatives. Gunilla Lundberg presented the IT-Guide, Dirk Muehlenweg (IBM) showcased the Watson IoT platform for supporting start-ups and SMEs and Matthias Barbian (VDI/VDE North Bavaria) highlighted the importance of having interregional exchanges on digitalisation.

Speakers of the second panel exchanged on the components for an effective policy mix for digitalisation. Lucilla Sioli from the European Commission’s DG CONNECT emphasised that investment in broadband infrastructure is also profitable for companies, consumers and institutions. She also discussed digital skills, as30% of EU citizens still do not have access to a fast fixed internet connection, preventing them from using digital services available for the rest of Europeans.

On 14 November 2016, 25 enterprises providing public services and services of general interests have been awarded the CEEP CSR Label. The awarding ceremony was held at the Caisse des Dépôts et Consignations (member of CEEP France) in Paris, and organised with CEEP France. A compendium of practices and enterprises awarded was also circulated at this occasion.

“This label is a demonstration that public services’ providers in Europe do more than fulfilling their services. They are also particularly conscious and active when it comes to positively impacting the society and the environment,” said Valeria Ronzitti, CEEP General Secretary.
Pascal Bolo, President of CEEP France, also emphasised the importance of CSR for public services’ enterprises and organisations. “CSR is part of their DNA, as public services’ enterprises and organisations combine the private interests and management practices and the values of the public. They answer the call for modernity and efficiency with a positive vision, favoring long-term views and perspectives and not only looking for short-term benefits. Those enterprises also use primarily local resources and contribute to jobs creation.”

Corporate social responsibility is a key element for the management of public services. For this reason, in 2008, CEEP created the CEEP-CSR Label in 2008. It was created to answer the need of enterprises providing public services to be recognised for their activities in the field of CSR, without label dedicated to public services’ providers.

The enterprises and organisations awarded in 2016 are:

Practices awarded with merit:

  • Ciliopée Groupe “Fight social isolation of older people”
  • EDG – Entsorgung Dortmund GmbH “Projects to support integration”
  • GEBALIS, EM “Together, we’ll take care of our neighbourhood”
  • SEMAEST “CoSto – Connected Stores”

Enterprises awarded:

  • ACEA Ato2 S.p.A., Italy
  • Ambiente Servizi S.p.A., Italy
  • APS – Administração dos Portos de Sines e do Algarve, S.A., Portugal
  • BVG – Berliner Verkehrsbetriebe, Germany
  • Ciliopée Groupe, France
  • EDG – Entsorgung Dortmund GmbH, Germany
  • EMATSA – Empresa Municipal Mixta d’Aigües de Tarragona, Spain
  • Fyrishov AB, Sweden
  • GEBALIS, EM, Portugal
  • Gruppo Hera, Italy
  • Junta de Freguesia de Olivais, Portugal
  • Kraftringen Energi AB, Sweden
  • NGE Nantes, France
  • Perfect Union, France
  • SAEMES, France
  • Scape Group, United Kingdom
  • SEMAEST
  • SEM Plaine Commune Développement, France
  • Séquano Aménagement, France
  • Groupe SERL, France
  • SIC – Société Immobilière de Nouvelle-Calédonie, France
  • SIDR – Société Immobilière du Département de la Réunion, France
  • SMA Torino S.p.A., Italy
  • SODEGIS, France
  • Stockholm Vatten AB, Sweden

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At the Macroeconomic Dialogue, CEEP called today for boosting private and public investment in Europe.

CEEP and the EU social partners welcomed the renewal and empowerment of the European Fund for Strategic Investments (EFSI). “However, it will not be enough to attract investments into what has proved to be the “Cinderella” of the Plan in its first phase: the investment in social infrastructures”, explained CEEP General Secretary Valeria Ronzitti.
“There is no natural appetite for private investors to go there. It calls for a stronger political and public intervention. We encourage Members States to think outside of the box”, continued Ms Ronzitti. Social impact bonds, where private investors provide capital to support the provision of social services with public value, are very good examples of such innovative approach.

Boosting public investment has many positive long-term effects. “An increase in public investment has positive effects, as it can contribute to the economy’s potential output by increasing the stock of public capital. But for that, the fiscal rules need to be adapted”, said Ms Ronzitti. As such, expenditure in education and health care directrly contributes to reinforcing human capital stock, enhancing the supply side of the economy and contributing to growth. Despite this, it is currently considered to be an expenditure rather than an investment.

“We therefore must take a step back and decide collectively which form of expenses are indispensable to our relaunch and should accordingly be supported by the EU and its Member States. This implies an honest and non-dogmatic review of Stability and Growth Pact”, concluded Ms Ronzitti.

On behalf of European employers and providers of public services, Valeria Ronzitti, CEEP General Secretary, and Joseph Farrugia, CEO of the Malta Employers’ Associations (MEA), addressed the Tripartite Social Summit, co-chaired by the President of the European Council, the President of the European Commission and the Slovak Prime Minister, Robert Fico. Emphasising the central role of public services in the European society, Ms Ronzitti suggested 3 avenues to put the EU back on track, support economic growth, facilitate social improvements and reduce inequalities.

1. “Remove the sense of alienation, re-define the concept of protection and security EU citizens are asking for, stop with do-goodism and politically correct speeches, as the first steps to counteract those who see Europe as a “necessary evil” and “not a common good”.” In this respect, Mr Farrugia presented the Maltese example, where his organisation broadcast a TV programme communicating on Europe and the contribution of social dialogue to the EU project.

2. “Continue necessary structural reforms and negotiate them as much as possible to ensure that they are a unifying factor. This implies for Governments to sit together with employers and trade unions to design and implement them. This point was one of the key elements of the recent statement “A New Start for Social Dialogue” (signed by the European Commission, the European Council, employers’ organisations and trade unions).”

3. “Invest, invest, invest. CEEP will support all initiatives aiming at ensuring additional investments for long-term growth prospects. This is crucial for our members who reported in our Autumn Pulse of Pulse Services that budget cuts as well as administrative and regulatory burden remain their biggest obstacle invest.
We welcome the empowerment of the EFSI and its new arm to support the EU external policy, as expressed in the Social Partners’ statement on the table today.
But EFSI alone will not be enough. The first phase proved unsuccessful to address the lack of investments in social infrastructures. EFSI is still meant to attract mainly – if not exclusively – private investors whose appetite to invest in social infrastructures – not only schools and hospitals, but rather skills and health – is limited.
To significantly increase those investments Member States need to finally use to full extent the flexibility built-in the Stability and Growth Pact. Moreover an honest and non-dogmatic reflection need to be launched by at EU level on whether the Stability and Growth Pact is still fit for purpose.”

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Europe is faced with unprecedented economic, social and political challenges. These challenges – insufficient competitiveness, lack of growth and employment, migration, security issues, and the need to redefine EU-UK relations – require European solutions.
European social partners strongly believe in the European Union. Populism, nationalism, xenophobia, anti-European sentiments, isolationism or protectionism can only create a downward spiral that will damage everyone. European and national commitment can and must go hand-in hand.

European employers and European Trade Unions regret but respect the decision of the United-Kingdom to leave the European Union. They are determined to contribute to finding solutions to mitigate the negative effects of this decision for companies and workers across Europe. Companies and workers must not pay the price for Brexit.

Our aim is to preserve as close economic relations between the European Union and the United-Kingdom as possible, while preserving the integrity of the Single Market, and fully respecting the four freedoms linked to it, i.e. free movement of goods, services, capital and persons.

European social partners also insist on the need to improve Europe’s attractiveness as a place to invest and create jobs.

After a decade of under-investment, increasing efficient and productive private and public investment is essential for Europe’s present and future growth and employment, particularly on fields like physical and social infrastructures, circular economy, digitalisation, innovation and research, education and training for better skills, etc. We therefore support the extension of the so-called Juncker Plan for Investment (European Fund for Strategic Investment – EFSI), drawing the necessary lessons from the first year of application on the need to improve additionality, facilitate cross-border projects and support countries experiencing difficulties in mobilising this instrument.

In parallel, EU and national efforts to remove obstacles to investment and job creation in Europe must be stepped up.

To reverse the relative decline of European industry including SMEs and given the importance of manufacturing and related services for growth and job creation in all sectors of the economy, we call on the European Commission to include an ambitious industrial policy strategy in the 2017 work programme.

Having efficient European institutions is essential to devise balanced and efficient European policies benefiting all Member States enterprises and workers. Europe needs transparent, democratically accountable and well-performing institutions: the European Commission, the Council and the European Parliament have to be united and determined in working together to improve the capacity of the European Union to address enterprises’ and workers’ needs and expectations.

At the same time, a well-functioning social dialogue at EU, national, sectoral and company level is important to devise efficient policies that will increase European prosperity and ensure social fairness.

The statement on “a new start for social dialogue’ co-signed in June by the Commission, the Council and the social partners is our common roadmap to design and implement policies for growth and job creation. We count on the European Commission and on the Council to live up to their commitment to implement it and support us through capacity building projects to further strengthen national social partnership for efficient social dialogue and industrial relations, where necessary.

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