Pierre Gattaz: "The recovery plan has reinforced the legitimacy of the European Union"

Leaders League. What do you think of the European recovery plan? How well is it calibrated in your opinion?
Pierre Gattaz. We see it as an unprecedented opportunity for Europe. It is the first time that so much money has been put on the table in such a short period of time. All this with European debt - which is both a big first and a significant risk. This plan has put us in a position to overcome the covid 19 crisis on the one hand, and on the other has reinforced the legitimacy of the EU. We hope that it will be an opportunity to transform our economies, which must each make the digital and environmental transition. That is the positive side. There are also downsides sides, which are more than a bit worrying.

Such as?
We need to ensure that these stimulus funds are used effectively, that they finance the sectors of the future, employment and worthwhile projects. Above all, we must not get into a situation where we throw good money after bad, because of having made investments that lead to deficits and debt. An entrepreneurial approach must be taken. In a company, one must be careful not to waste money. The same is true at the EU level.

In June 2021, you published an analysis of the member-states’ national plans, based on a survey of the 34 employer federations you represent. What were its findings?
There were four main takes. A majority of employers believed the plan will, at the very minimum, have a positive impact on long-term growth and job creation. But only 11% believed the interview will be significant or very significant. That's telling, as it shows that, in their view, the steps taken are unlikely to be enough.

Second, they are very concerned that there is not enough emphasis on business competitiveness, including research, development and innovation. Our members are keen to stress this point. The third message is that 47% feel that the plans don’t have enough strings attached compelling countries receiving funding to implement structural reforms. Finally, a large majority (71%) states they were not sufficiently consulted vis-à-vis the plan.

What more can be done to boost competitiveness?
Improving competitiveness means reducing red-tape and streamlining regulations. In France, there are 80 codes and 400,000 individual rules for businesses to follow. Add the layer of European regulation and things start to get scary.

Regarding the Fit for 55 climate-package, for example, we all agree that it is necessary. But there are two ways of implementing it: one works and one does not. The first is to cut less red-tape and have fewer taxes in order to be competitive with the Chinese and the Americans. If, on the other hand, you increase complexity and create a less business-friendly environment, you kill companies.

Improving competitiveness means reducing red-tape and streamlining regulations

Take the example of workers rights in France. In principle, it is highly virtuous to make sure that employees have a working environment that is as pleasant as possible. But you can’t have your cake and eat it too: Either we go back to the talking shops we saw under the Hollande government, that went into the minutiae of every possible hardship, which would be madness, or you can put your faith in companies to put in place common-sense policies.

In your opinion, what issues should France prioritize during its presidency of the European Union?
I insist on the need for competitiveness. There is a lot to like in the program of the French presidency. On digital issues, we fully agree with the Digital Service Act (user security, online transparency, etc.). In its current negotiations with the European Parliament, the French presidency must defend, in our opinion, the guidelines decided by the European Council, which are good guidelines. I am thinking of the country-of-origin principle, which will subject tech and e-commerce companies to the supervision of a regulator. This will avoid having 27 national authorities each giving their opinion.

Another of Emmanuel Macron's priorities is the introduction of a European minimum wage, and on this point we are less enthusiastic. We agree with the objective, which is to ensure quality, qualified and better-paid jobs. We are not against a minimum wage in Europe, far from it, but it should not come at the expense of long-term competitiveness. To ensure competitivity, the European directive must respect national practices in terms of wage policy and labor relations, which work extremely well in many countries.

Tell us about the plan to introduce a carbon tax at the borders.
We share its objective of encouraging less pollution. European companies are more committed than the rest of the world to the environment, and we are ready to do more. But let’s be careful how this is funded. We need to ensure that taxes are calibrated in such a way that the EU remains competitive with China, for example, which does not have the same level of ambition in this regard. Another issue: the budgetary framework. The French presidency is right to review the Maastricht rules in order to take into account new financing needs. We must ensure that the rules are simplified and understandable, but remain effective rules nonetheless, because we cannot leave the system open.

Do you think that Europe is doing enough in terms of industrial policy?
I am the president of Radiall, a family-owned medium-sized enterprise with 3,500 employees that operates five manufacturing plants, so I know a thing or two about how fundamental traditional industry is to a country's economy.

In France, we have favored intellectual concepts and the knowledge economy, while the Austrians, the Swiss and the Dutch kept their factories. We are going to need digital technology, but we also need to reindustrialize. It shouldn’t be either or. Quantity counts, but also quality. We need to up our game. Commissioner Thierry Breton has capably managed the covid-19 crisis and we are in favor of what he proposes on other subjects, such as semiconductors. The bottom line is that Europe must be autonomous.