EESC info

The European Trade Union Confederation (ETUC), Europe’s major trade union organisation representing 45 million workers at European level, has refused to endorse the Competitiveness Compass, the European Commission’s blueprint for boosting the EU economy. For the ETUC, the Compass in its present form is unacceptable. We spoke to ETUC’s General Secretary, Esther Lynch, about workers’ main objections to the Compass and the fate of the European Pillar of Social Rights amid new calls for drastic deregulation and a stronger focus on competitiveness.

EU trade unions have already expressed their dissatisfaction with the latest European Commission plan to revive the EU economy. In your view, where does the main fault lie with the Commission’s Competitiveness Compass? Which proposals in the plan do you see as particular red flags?

The main problem with the European Commission’s Competitiveness Compass is that it prioritises deregulation over the investments needed to create quality jobs, to develop a strong European industrial policy and to ensure high-quality public services. Likewise, while the Compass acknowledges the importance of quality jobs for a competitive economy, instead of proposing the necessary legislation to reinforce rights, improve working conditions and promote collective bargaining, it undermines this priority by promoting deregulation, which can lead to poorer working conditions and job insecurity.

One of the most concerning proposals is the introduction of the 28th company regime, which would allow companies to operate outside of national labour laws. This could severely undermine employment legislation across Europe, creating a race to the bottom in terms of workers’ rights and protections.

In the same vein, a ban on ‘gold-plating’ – the ability of governments to legislate above and beyond the minimum standards set by EU Directives – is deeply problematic. The idea behind EU Directives, as distinct from EU Regulations, is that they set minimum standards for all countries. Making these the ceiling of what is possible would not only undermine this idea, but would be deeply detrimental to working people and mean the destruction of hard-won progress in healthcare, education, health and safety at work or fair pay to name a few examples.

Additionally, the Compass’ call for pension reforms based on longer working lives is problematic, as it places undue burden on workers without addressing the need for sustainable and fair pension systems.

Moreover, the Compass is heavily skewed towards benefiting businesses, with numerous promises made to business groups but no concrete commitments to legislation that would benefit working people. This includes a lack of measures to ensure that public investments are used to create quality jobs rather than simply increasing corporate profits.

In summary, the Competitiveness Compass fails to balance the needs of businesses with the rights and well-being of workers, making it an unacceptable proposal in its current form.

Would you say that the implementation of the European Pillar of Social Rights (EPSR) could now be under threat?

On paper, the Commission has re-committed to the European Pillar of Social Rights in its recently published work programme for 2025. However, in practice, that same work programme is the first not to include any social legislative initiative since 2019.

By contrast, the Commission has proposed eight pieces of ‘simplification’ legislation over the next year. Nobody likes being overburdened by administration and trade unions are actively proposing solutions to this end, for example rules on public procurement.

However, it is evident that the problems Europe is facing will not be solved by simplification.

The biggest threat to the implementation of the Pillar of Social Rights is the wave of mass layoffs being announced across Europe. This will endanger wages and job security, but also pensions, social protection and many of the other principles of the Pillar.

It is necessary to ensure investments to protect and create quality jobs, including a SURE 2.0 instrument and a strong EU investment mechanism, as well as to introduce the necessary legislative initiatives to guarantee quality jobs.

If not by cutting regulatory burdens, what would be the right course for the EU to improve its relevance in the current global economic context?

The conditions that led to these layoffs were driven by a lack of investment. This is true as much for private as for public investment.

Corporations have been redirecting investments away from workers’ pay and much needed research and development and towards dead-end dividend pay-outs and share buybacks, stymieing the advancement of green and technological developments here in Europe.

Over the past few years, the USA and China have initiated major waves of public investment. Meanwhile, the EU was busy adopting new rules forcing its Member States into austerity cuts.

The EU must urgently change course. Mass public investments – with social requirements to ensure these investments deliver quality jobs – are a pre-condition for implementing the European Pillar of Social Rights.

Esther Lynch is the General Secretary of the European Trade Union Confederation (ETUC). She has extensive trade union experience at Irish, European and international levels and she served as both Deputy General and Confederal Secretary at the ETUC. In her roles, she led efforts to strengthen workers’ and trade union rights, influencing key directives on adequate minimum wages, transparent and predictable working conditions, and whistleblowing. She also spearheaded campaigns for the European Pillar of Social Rights and fair pay. Her work secured 15 legally binding exposure limits for carcinogens and social partner agreements on digitalisation and reprotoxins. A lifelong feminist, Esther advocates for ending the undervaluation of work predominantly done by women.

ETUC represents 45 million members from 94 trade union organisations in 42 European countries, plus 10 European Trade Union Federations.

By Kinga Grafa

Businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. This over-regulation holds back their growth and prevents them from keeping pace with competitors from other parts of the world. Europe can’t keep going round in circles – entrepreneurs need real change, not more analysis of the same barriers we have known about for years. This is a key moment to move from words to deeds, writes Kinga Grafa of the Polish business confederation Lewiatan.

The European Commission recently unveiled the Competitiveness Compass, a roadmap for the next five years that seeks to strengthen the EU’s economic position and support European businesses. The course of action put forward by the Commission is the right one. Business has long called for such changes, making ‘competitiveness’ and the ‘single market’ their top priorities. But if the EU wants to be a global competitor, it must act now. Taking a strong economy as a basis, we urgently need to streamline regulation, lower energy costs and ensure effective support for investment and innovation. Faced with a volatile geopolitical environment, we also need free trade agreements with key partners to be finalised, such as those covering access to critical raw materials.

Today, businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. Competitors from other parts of the world are growing faster, while over-regulation holds back the growth of European businesses. The European Commission must put forward specific reforms that will genuinely improve the EU’s business environment. The Competitiveness Compass addresses the main barriers to growth and productivity in the EU, such as high energy costs, over-regulation and skills and labour shortages. This is the right course of action, but the most important thing is to put it into practice. This means legislative proposals and action plans that promote competitiveness and do not act as a brake on it.

The single market is one of European integration’s greatest success stories, but its potential must be fully realised. It is unacceptable that the barriers in the single market, identified 20 years ago, remain in place. The Polish Presidency of the Council of the EU has the chance to change this, with the freedom to provide services a key priority. This is vital not only for the transport sector, but also for the growing group of companies offering professional services. Unfortunately, the Letta and Draghi reports do not pay sufficient attention to this issue. Letta focused only on construction and retail, while Draghi did not take into account the Commission’s estimates for the additional steps that could unlock the services market’s potential. Positively, Niinistö’s report highlighted the role of services in building resilience and security. No one needs convincing how important this is in the current geopolitical landscape. It is against this backdrop that the Commission is proposing the ‘28th regime’ – a single set of rules covering taxation, labour law and corporate law. This initiative aims to simplify cross-border activities, especially for SMEs, but we do not know enough about the proposal at this stage to be able to assess it.

The announcement of deregulation and streamlined legislation is clearly a step in the right direction. Now, however, is the time to put the proposals into practice, and this must be about more than simply reducing the reporting burden. We hope that the Commission will carry out a thorough ‘audit’ of EU legislation that will translate into specific proposals to rapidly improve the EU’s regulatory environment.

We look forward to the Single Market Forum in Kraków and await the conclusions of the public consultation involving Lewiatan members. The aim will be to prepare the next single market strategy.

This is a key moment, moving from words to deeds and implementing solutions that truly unlock the development of European business. Dialogue between the EU institutions and the social partners will be essential if there are to be solutions that meet businesses’ real needs. Unless we take bold decisions, we will lose valuable time and lag behind the global competition.

Kinga Grafa is Deputy Director-General for European Affairs at Lewiatan Confederation and a Permanent Delegate to BusinessEurope. A political scientist and journalist by education, she attained her experience regarding the functioning of the EU while working for the Office of the Committee for European Integration (2008-2009) and the European Parliament (2009-2014). She is also a co-author of a book about the Polish aristocracy and author of scientific publications on American foreign policy, the American elite and cultural diplomacy.

'It is time to take a concrete step forward from the Draghi Report before it vanishes in the corridors of politics. We need good strategists and policymakers capable of moving beyond this report and developing strategies for EU industrial policy', says Croatian entrepreneur and scientist Stjepan Orešković.  Together with Jörn Fleck, senior director at the transatlantic think tank institute Atlantic Council, he presented the ambitious "Future 500" initiative at the public international conference Conclave II in Brussels. Part of the broader Atlantic Council's platform SEEUS Futures, 'Future 500' aims to identify and support 500 European companies poised for substantial growth and global impact. The goal is to support Europe's new entrepreneurs in competing globally, bolstering Europe's presence on the international economic stage. Stjepan Orešković told us more about the project.

Can you briefly present the core idea of 'Future 500' project?

Drawing on insights from important reports on the future of Europe—prepared by Draghi, Letta, and Heitor—and analysed through the dual lens of scientists and entrepreneurs, the initiative raises several critical questions: Who will execute these competitiveness plans, and the newly published Competitiveness Compass? What mechanisms will be used? What costs will be incurred? And what returns can be expected compared to those of recent high-growth U.S. companies? The "Future 500" project is a cornerstone of the SEEUS platform, representing the U.S., EU, and Southeast Europe, and aims to boost visibility and cooperation among these regions. It is strategically designed to address Europe's pressing need to nurture a dynamic environment that elevates local companies to leaders on the global stage. The initiative focuses on providing venture capital, strategic guidance, and international networking, learning from experts like Harvard University's Dani Rodrik and EBRD's Beata Jaworcik to develop 21st century industrial policies that significantly enhance our competitive position.

Do you already have potential candidates for the 500 companies you plan to select? What are the basic requirements a company must meet to be chosen?

While no specific companies have been chosen yet, 'Future 500' will target entities with scalability and rapid growth potential. The process will be open and continuous, and prioritise economic promise, innovation, and strategic importance within their sectors. We will also seek to establish partnerships with multilateral development banks and investors that are already supporting companies in becoming a competitive force. The focus is on companies that already demonstrate robust growth path, innovative capabilities, and the ambition to scale globally. This ensures that the companies are not only market leaders but also trailblazers in technology and business models. We will build on the experiences of great projects like Scale-Up Europe, which bring together founders, investors, executives and scientists with the mission of making Europe a home for tech champions. For EU candidate countries, these potentially selected companies are especially crucial—they will embody the principles of the new economy and serve as role models for ambitious, internationally competitive firms that do not mostly rely on national taxpayer funding.

How optimistic are you about Europe's global competitiveness potential?

There is significant optimism about Europe's ability to strengthen its global competitive position moving away from prevailing attitudes of self-pity. Eurozone’s stock benchmark total returns, since this bull market began in late 2022, overperformed S&P 500, if we take Nvidia out. European social and health systems are keeping people healthy and active for longer periods at a much lower cost, and have a positive impact on the productivity and competitiveness of our economy on a global scale.

We are trying to echo Immanuel Kant's notion of "genuine enthusiasm" which he mentioned in the context of the French Revolution. Such a mindset can transform challenges into a motivational force, leading to seemingly invincible determination. We need fewer fat cats and puppy dogs—wealthy, complacent elites and overly obedient, unambitious followers—who have been favored in the last two decades. Instead, we need more 'hungry young men'—driven, ambitious individuals ready to take on challenges.

The 'Future 500' initiative aims to proactively address chronic issues flagged in competitiveness reports, such as the need for bold innovation and the scaling of enterprises. Europe's global standing will heavily rely on its ability to integrate advanced technologies, nurture entrepreneurial talent, and refine industrial policies to support inclusive growth. By leveraging its well-educated workforce, rich innovative heritage, and traditional and new industrial sectors—and addressing issues like regulatory fragmentation and market imbalances—the initiative strives to create a fertile environment for business leaders and innovators.

In a nutshell, the "Future 500" initiative marks an important step in testing Europe's economic landscape, positioning the continent as a global competitor by fostering high-potential companies and strengthening the entrepreneurial ecosystem. There is no chance of winning in competition without knowing who our competitors are.

Dr Stjepan Orešković is a scientist and entrepreneur. He is a member of the European Academy of Science and Arts and a founder of Bosqar Invest. Under his family leadership, Bosqar Invest grew its workforce from 300 to over 16,000 employees within five years, showcasing a formidable scale-up strategy that integrates science, technology, investments from pension and other funds, and entrepreneurial courage—a vital approach advocated by Draghi's report. This strategic emphasis likely influenced the Atlantic Council's initiation of the Future 500 project he is talking about.

A package of legislative reforms on corporate reporting duties, known as the ‘Omnibus Package’, will soon be unveiled by the European Commission.  The package aims to simplify and streamline sustainability regulations, making reporting obligations more straightforward for businesses. Since its announcement in November, it has sent shockwaves across the EU, sparking much debate and pushback from various groups. Civil society organisations (CSOs), trade unions, businesses, investors, lawyers and scholars have all raised concerns about the Omnibus Package’s potential to lead to deregulation, urging the Commission to protect, rather than weaken, those instruments.  Andriana Loredan of the European Coalition for Corporate Justice (ECCJ) explains what is at stake and why CSOs like ECCJ oppose the Omnibus Package.

Competitiveness used as a pretext for deregulation of much-needed sustainability regulations

The Omnibus Package focuses on three key sustainability instruments at the heart of the European Green Deal, namely the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation. This package is a direct result of the new Commission’s shift in direction, which began with Mario Draghi’s report on the Future of European Competitiveness in September 2024. Draghi’s report partly attributes the stagnation of EU markets to excessive regulatory burdens for businesses, while conveniently overlooking other key factors, like oil, gas and food inflation driven by speculation by multinational companies. According to Draghi’s report, the EU’s sustainability reporting and due diligence framework is a major source of regulatory burden. Without evidence linking sustainability legislation to the perceived lack of EU competitiveness, this narrow perspective has become a pretext for potentially dismantling sustainability legislation altogether.

With this particular Omnibus Package, the Commission intends to simplify some of the most critical instruments recently adopted to address big businesses’ impacts on people and the environment. This includes the CSDDD, which was adopted only last year and has yet to be implemented.

Any discussion of Omnibus’ content remains speculative for now. However, one of the most significant risks associated with Omnibus is the legislative reopening of sustainability instruments, which could result in the renegotiation of key provisions (like civil liability or climate transition plans under the CSDDD). ECCJ strongly opposes reopening previously agreed-upon sustainability legislation. This would increase regulatory uncertainty, jeopardise businesses’ respect for human rights and the environment and penalise first movers.

Disproportionate business influence in the midst of a flawed consultation process

The announcement of the Omnibus Package and the Commission’s development of its proposal have been conducted with a total lack of transparency and with no regard for EU treaty law or the Commission’s own procedural rules.

The Commission intends to present its Omnibus initiative within a very short timeframe, which does not allow for an adequate impact assessment and public consultation. This approach is incompatible with the right to participate in EU decision-making processes, a democratic principle protected by EU treaty law. It also contradicts the Commission’s own Better Regulation Guidelines, which require broad and transparent stakeholder consultation during the Commission’s policymaking process.

Instead, in February 2025, the Commission held a semblance of consultation, a so-called ‘reality check’, with a small, selective group of stakeholders, primarily large companies and business associations. Many of these companies are currently facing legal action for human rights or environmental abuse in their own operations or value chain. Thus, they have a vested interest in weakening sustainability legislation, at the expense of workers, local communities and the climate. Furthermore, the disproportionate representation of large businesses contrasted sharply with the underrepresentation of civil society. CSOs, trade unions and small businesses were only symbolically represented, while victims of corporate abuse and businesses advocating sustainability regulations were completely excluded from the conversation.

Omnibus Package: a potential threat to ambitious climate policies

President Ursula von der Leyen and Commissioner Valdis Dombrovskis, who oversees the entire ‘simplification’ drive, appear to be aligning with the agenda of the largest, most powerful corporations. In particular, the Commission’s key partners during the so-called reality check included companies whose business activities significantly contribute to climate change and who have an interest in reducing climate obligations, such as companies in the oil, gas, petrochemical, automotive and financial sectors. Given the current climate crisis and its adverse impacts on people and the environment, this raises concerns about whether the Omnibus Package will be a step backwards for climate policies.

The Commission’s priority should be implementation rather than deregulation

If the Commission is truly concerned with competitiveness and a reduced regulatory burden, as well as human rights and climate justice, it should consider how to effectively implement sustainability instruments. This can easily be done by developing guidelines to assist companies and Member State authorities, as specified in the CSDDD, as well as developing funding and capacity building. This approach would address the Draghi report’s criticism of a lack of guidance to facilitate the application of EU sustainability legislation.

Ultimately, secretly rewriting crucial sustainability regulations behind closed doors, with some of the world’s largest corporations, is hardly the path towards achieving genuine competitiveness. 

Andriana Loredan is a policy officer at the European Coalition for Corporate Justice (ECCJ) and has been involved in advocacy on the Corporate Sustainability Due Diligence Directive since the proposal was first published in 2022. She previously worked on the topic of business and human rights from a forced labour perspective, at Anti-Slavery International. 

The EU needs to resist the siren song of deregulation, as it would only create uncertainty for businesses, weaken sustainability-driven competitiveness, and diminish citizens’ well-being and trust, says Danny Jacobs, general director of the Flanders environmental network Bond Beter Leefmilieu - BBL. He shared with us the concerns of environmental NGOs regarding the EU’s latest proposal to simplify regulations, which they fear may sideline the key ambitions of the European Green Deal.

Could you comment on the latest Commission initiatives on deregulation, such as the Competitiveness Compass or the Omnibus package?

The European Commission has presented an economically driven agenda of deregulation and simplification, threatening to jeopardise hard-won environmental, social and economic achievements. This tension between adaptation and preservation of the European acquis makes it difficult for the EU to steer a clear course.

The Commisssion’s Competitiveness Compass, presented in late January, echoes corporate concerns over energy costs and economic challenges, but sidelines key priorities such as zero pollution and citizens’ wellbeing, failing to guide Europe’s economy towards a clean, prosperous and circular future. The Compass risks leading Europe astray. Promoting competitive decarbonisation without integrating social and environmental objectives undermines the very purpose of EU institutions: to serve and defend the common good.

What worries civil society organisations is the risky 25% simplification target within the Compass. While streamlining regulations is welcome, simplification without thorough assessments could undermine critical health, social, and environmental protections. It is not regulation that hinders business innovation, but rather a lack of clear rules. Further deregulation would only create a climate of uncertainty, penalising first movers – businesses that take the lead – while compromising progress and sustainability.

We also fear that this push for simplification will come at the expense of environmental and social objectives. The Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), and the EU taxonomy have many flaws and haven’t gone as far as they could have. Weakening them further from an already low starting point would render these directives meaningless.

Another concrete example sets the scene for what is happening at the moment.  Flanders has faced an immense PFAS problem in recent years: a large part of our territory is polluted by these chemicals, and hundreds of thousands of citizens are affected. A restriction or ban under chemicals legislation (REACH) is seen as the most effective tool for controlling the risks posed by substances, like PFAS, which are used in industrial processes as well as in products (mixtures and articles). If the European Commission were to abandon the importance of strict REACH regulation, it would increase the risk of exposure to dangerous chemicals, which is harmful to public health. Companies would have fewer obligations to seek safe alternatives, which inhibits innovation in sustainable chemistry. Environmental pollution may increase as less stringent rules lead to more hazardous discharges and waste. Consumers are more at risk because products are not as thoroughly checked for toxic substances. This could result in European companies lagging behind in the global transition to safer and more environmentally friendly products, losing market share to competitors who do embrace future-proof innovations.

How hopeful are you about the fate of the Green Deal in light of the newly announced course set by the Commission to boost the European economy?

The European Commission’s 2025 Work Programme presents both promise and peril. While its commitments to decarbonisation and affordable energy signal a potential path towards a cleaner, more resilient Europe, key ambitions of the European Green Deal are at risk of being sidelined. Concerns are mounting over the proposed Omnibus Regulation, which could serve as a backdoor for the deregulation of corporate responsibility under the guise of ‘simplification’. Recent trends show that simplification is too often used to weaken essential safeguards, from chemicals legislation to agriculture. The rushed Common Agricultural Policy (CAP) reform in March 2024, which stripped out green safeguards, is a stark example. Now, the long-overdue REACH revision, once framed as a tool to protect public health and the environment, risks being repackaged as a ‘simplification’ measure to ease industry rules.

Just a few months ago, President von der Leyen promised to stay the course on all European Green Deal goals. And yet the current Work Programme tells a different story, deprioritising the very goals where action is most urgent – particularly the Zero Pollution ambition.

Do you see that deregulation, as proposed, could have negative impact on sustainability and the progress achieved so far?

The EU needs to resist the siren song of deregulation, which would only undermine regulatory certainty and predictability for businesses, weaken long-term sustainability-led competitiveness, and erode citizens’ wellbeing and trust.

The EU needs to ensure that cutting red tape does not mean cutting environmental and public health protections. Smart implementation should strengthen, not undermine, the European Green Deal. Weakening key environmental and social protections under the guise of cutting red tape is not a strategy for economic strength. It is a reckless step backward that will sabotage the very rules designed to future-proof our economy. All this reinforces the alarming risk of undoing a decade of progress on sustainability.

At the same time, civil society is under growing pressure across the EU, with restrictive foreign agent laws, protest crackdowns, and funding cuts threatening fundamental rights. The European Democracy Shield and the upcoming EU Civil Society Strategy must deliver more than just symbolic commitments – they must provide legal protections, sustainable funding, and structured civil dialogue with EU institutions. The Commission’s Work Programme must prioritise safeguarding democracy by strengthening civil society. Without an independent and well-resourced civil society, European democracy itself is at risk.

Danny Jacobs is the general director of Bond Beter Leefmilieu - BBL (a federation of 135 environmental NGOs in Flanders, Belgium) and a Belgian representative in the European Environmental Bureau (Europe’s largest network of environmental citizens’ organisations, representing some 30 million individual members and supporters).