FinancialGuy Writes!

I am pleased to say that this post is a double celebration for FinancialGuy. Firstly, it is the 100th post on this blog. Phew! That took some effort…

Secondly, and more importantly, it is the other half of an interview exchange for our blogs between myself and Vice President of the European Economic and Social Committee, Anna Maria Darmanin. I was pleased to be the first EU affairs blogger to be interviewed by a high-level EU official. Now I am pleased to be the first EU blogger to interview such an EU official…

The first parts of this interview exchange can be found here and here.

FinancialGuy: As a member of the EESC, you represented trade unions at European level. These days seem to be pretty busy for trade unions with cuts, job losses and pay freezes caused by the global recession. Do you think that trade unions have been able to represent workers rights effectively under all this pressure?

Anna Maria Darmanin: Yes we are going through difficult times. I do not want workers to pay for the greedy bankers unethical behaviour by losing their jobs. With China as the world factory we have lived through a prosperous decade. We consume and grow. In that period, when the wheels are turning, people may tend to ignore the value added of being part of a trade union. EU countries have different traditions for membership of trade union.

In the Nordic Countries the rate of workers being part of trade union is high (Sweden for example = 68% ) – In other countries, like France it is as low as 8% – (Germany on 19 %). With strong Trade Unions you get a trustworthy partner for the business to negotiate with, and an important component in social dialogue on a regional, national and European level. It is a common interest. This view is not shared in some economies. Take the US for example where there are constant attacks on the Public Servants Trade Unions and a general low proportion of Trade Union Membership (+/- 12%).

We need the trade unions, especially in difficult times. We need to give what the members want, that is a job and a fair deal. Having said that the trade unions are never stronger than its members.

FinancialGuy: One of the main tools of trade unions in many countries has been to call for strikes. Bearing in mind how fragile many EU economies are, is it responsible to call strikes?

Anna Maria Darmanin: Strike should be a last weapon to be used – but without that tool, what is then left for the workers? – We must be responsible – not least in public areas like transport and healthcare – but we also should not be afraid to show muscles when needed. Nothing comes from nothing you know and we as workers would not have had the inclusive society we have now in Europe, allowing children of all families and backgrounds to reach the highest posts, allowing workers to have roof over their head, food on the table, weekend free and a holiday now and then, without being able to fight when needed.

A new report from the European Industrial Relations Observatory ( EIRO ) reveals that between 2005 and 2009 the highest average levels of industrial action were found in Denmark (159.4 days lost per 1,000 workers) and France (132 days lost per 1,000 workers). The lowest levels were in Austria (no days lost) and Estonia (0.1 days lost). The average for all 25 countries researched was 30.6 days lost. The average in the new Member States (11 days lost) was only about a quarter of that in the old EU 15 plus Norway (43.6 days).

FinancialGuy: The large scale job losses across the EU must be having a very real human cost. Since EESC represents civil society in Europe, what are you doing to help and to protect citizens?

Anna Maria Darmanin: The main role of the EESC in the present crisis environment, with high unemployment, not least among youth, and heavy cuts in social protection all over Europe, is to snap at the heals of the three big EU Institutions – The Commission, The Parliament and the Council – and keep them aware of the hardship many European citizens find themselves in.

In November last year, we organised a conference in Vilnius in Lithuania where the local official view on the gravity of the crisis was forcefully contradicted and attention was drawn to the extremely difficult employment situation in the Baltic countries. In this particular case we managed to cause a stir that had a truly positive effect on the public debate in Lithuania.

In June we will be organising a similar event in Spain that has one of the highest youth unemployment rates in the EU, around 40%.

The EESC annually draws up an opinion in the European employment guidelines. These guidelines are part of the European Employment Strategy that provides a framework for Member States to share information, discuss and coordinate their employment policies. Through its contribution to this process, that is based on members hands-on knowledge of what actually happens in the Member States, the EESC helps framing the overall approach of the EU employment policies. On the whole, the EESC deals with a variety of aspects of employment policies, restructuring and social policies while carrying out its main task, which is to draw up opinions.

At the moment we are preparing several opinions linked to the Europe 2020 strategy that aims to make the European Union a smart, sustainable and inclusive economy. In other words: Growth, increased productivity, innovation, a greening of the economy and a consistent effort to integrate the citizens that for one reason or another are left aside, are all at the heart of the European project. The Europe 2020 strategy is implemented through seven so-called flagship initiatives that include topics such as youth, better matching of skills and poverty reduction.

FinancialGuy: Is that enough? What more could be done?

Anna Maria Darmanin: The EESC is doing everything it can within its mandate and within the policy mandate that citizens have given to the European Union. A lot more could be done at a practical level but as I already pointed out most competences in the social area remain with the Member States.

FinancialGuy: One of the main ideas to pull Europe out of the recession and hopefully create an economically competitive EU is the Innovation Union, which you just mentioned. Do you think the Innovation Union can work?

Anna Maria Darmanin: The Innovation Union MUST work! The Committee points out that innovation is to be supported on the basis of the long-term aspects and sustainability.

The Committee understands innovations in terms of their broader ramifications – in other words, that they span not only research, technology and products, but also all human interactions and kinds of organisations, including social services, business practices and models, design, branding and services, as well as the diverse interplay between them. With respect to social innovations, the Committee is also in favour of consulting the social partners.

The Europe 2020 Strategy has placed Innovation as a political top priority. With an ageing population and strong competitive pressures from globalisation, Europe’s future economic growth and jobs will increasingly have to come from innovation in products, services and business models. Innovation in its broadest sense must be part of our response to today’s challenges.

I am strongly convinced that boosting our research and innovation performance is the only way for us to support sustainable growth and create good and well-paid jobs that will improve the quality of life in Europe.

With Innovation Union, we have now a vision, an agenda, a clear distribution of tasks and robust monitoring procedures. One of the biggest challenges for the EU and its Member States is to implement those objectives whereby innovation is the overarching policy. Innovation must stay high on the political agenda in the coming years. All actors have to work together to achieve results and EESC will do what is necessary to make the Innovation Union a reality.

FinancialGuy: Who or how do you think the investment in small and medium sized enterprises should be paid for?

Anna Maria Darmanin: The EESC never forgets to support the SME in its opinions. The Committee emphasises the important role of SMEs and micro-enterprises in the innovation process and recommends tailoring support and measures to their specific demands in particular. It furthermore recommends considering whether and how start-ups could be exempted for an appropriate period from most of the otherwise normal procedures and regulations and whether further special incentives might be introduced. The same applies to social economy enterprises.

The Committee agrees with the Commission that small and medium-sized enterprises are key players in the economy and as such should particularly benefit from the innovation initiative and its support measures. However, the definition and rating of small and medium-sized enterprises should be reconsidered, since new networking opportunities enabled through ICT mean that micro-enterprises, and even one-man operations, are taking on increased significance.

Many of the bureaucratic hurdles to innovation put SMEs and start-ups at a particular disadvantage vis-a-vis big businesses, with their well-resourced legal departments, offices abroad, and so on, even if these are necessarily – because of these very attributes – less agile. It is even possible that this is one of the reasons why, for example, the EU has now forfeited market leadership in innovative ICT products to the USA.

Another very important point for the SME is the Community Patent. The lack of a Community Patent is an unacceptable, costly and damaging fragmentation that needs to be overcome in order to increase the EU’s competitiveness and to send a positive signal to all other areas of the Innovation Union. The Committee appeals to Parliament and Council to adopt the proposed procedure as a decisive and significant step forward on the path to a final EU patent. The Committee agrees that this is “economically indispensable and politically acceptable”.

FinancialGuy: How long do you think it will take before we see real results?

Anna Maria Darmanin: There are already visible results!

The EU’s role in access to finance has grown:

To improve SMEs’ access to finance, financial instruments within the Competitiveness and Innovation Framework Programme ( CIP ) continue to facilitate venture capital investments and provide guarantees for lending to SMEs.

Microenterprises represent 90% of the over 100 000 SMEs that have benefited so far from the CIP financial instruments. A further 200 000 SMEs are expected to benefit by 2013. On average, each SME that is granted a guaranteed loan in the EU creates 1.2 jobs.

The Commission has also set up a permanent SME Finance Forum bringing together SME representatives, banks, market operators, and other financial institutions, including the EIB, in order to address the various practical obstacles faced by SMEs when attempting to get credit. Furthermore, the Temporary State Aid framework that allows for additional aid for SMEs has been partially prolonged until the end of 2011.

Also in 2010, the EIF together with the EIB and the Commission launched PROGRESS, a new EUR 200 million microfinance initiative. It is intended to provide finance to groups who have difficulties to access the traditional banking system – these groups include (young) unemployed, minorities, people at risk of social exclusion.

FinancialGuy: Anna Maria, thank you very much for your time. I’m sure that my readers will have found your answers as interesting as I have.

To visit the blog of Anna Maria Darmanin, please click here.

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