‘Very worrying’: Trade unions alarmed by EU’s industrial collapse

Europe’s major trade union organisations have expressed deep concern about the scale of the EU’s industrial decline, as structurally high energy prices continue to lay waste to a crucial pillar of the bloc’s economy.

Fears were compounded after a Eurostat study published on Monday (15 January) found that month-on-month industrial production in the EU fell by 0.2% in November last year, the third consecutive monthly decrease. Year-on-year industrial output was also down 5.8% in November after declining by 5.4% in October.

“We are facing a very worrying situation,” European Trade Union Confederation Confederal Secretary Ludovic Voet told Euractiv. “These figures are a canary in a coal mine: the biggest hit are the long-term investments in buildings and equipment.”

Voet’s concerns about a lack of investment in key infrastructure are also borne out by the Eurostat data.

Month-on-month production of capital goods such as buildings, machinery, and equipment fell by 0.8% across the bloc in November after dropping by 0.7% in October. Capital goods production was also 8.7% lower in November compared to the same month in 2022.

“The lack of investment we are seeing today is already having dramatic implications for working communities,” Voet warned.

“Factories are closing and jobs are being cut in the very sectors that lifted Europe to where it is today.” These especially include energy-intensive sectors such as the aluminium, fertiliser, and chemicals industries.

‘Raising the alarm’

Judith Kirton-Darling, the acting joint general secretary of industriALL Europe, similarly told Euractiv that her organisation, which represents some seven million European workers, “has been raising the alarm about industrial decline and the threat of deindustrialisation in Europe for some time”.

She stressed that current EU policies, including the controversially stringent fiscal rules recently agreed by EU finance ministers, will only exacerbate the bloc’s industrial malaise.

“Alarmingly, fiscal austerity and a return to austerity policies are further hampering industrial development, potentially undermining Europe’s competitive position in the global market,” Kirton-Darling said.

Both Kirton-Darling and Voet urged European policymakers to introduce more “flexible” fiscal regulations to encourage investment. They also suggested that future state industrial subsidies should be contingent upon the strengthening of collective bargaining rights and the creation of high-quality jobs.

“Rather than imposing rigid fiscal constraints, European leaders should actively promote resilient industries, good industrial jobs, and social cohesion,” Kirton-Darling said.

Voet further warned that the EU’s failure to arrest its industrial decline is causing “bitterness and disillusionment” among European workers, which in turn is being “preyed on by the populist far-right, who only drive further division and chaos”.

“To win working people back to the European project, we need the EU to show it is on their side,” he said.

‘A clear and present danger’

Experts contacted by Euractiv were similarly alarmed by the current state of Europe’s industrial sector.

“Deindustrialisation is a clear and present danger, especially for energy-intensive sectors vital to downstream ecosystems,” said Tobias Gerhke, a Senior Policy Fellow at the European Council on Foreign Relations.

Gerhke attributed the EU’s industrial decline largely to the energy crisis triggered by Russia’s full-scale invasion of Ukraine in February 2022. He also suggested that the bloc’s industrial woes “are exacerbated by ongoing challenges like the lack of skilled labour and insufficient infrastructure”, as well as “lavish industrial policies” in China and the US.

Ben McWilliams, an energy policy analyst at Bruegel think tank, agreed that high energy prices bear most responsibility for Europe’s industrial decline.

However, he suggested that it is unlikely that the impact of the US Inflation Reduction Act – which provides up to $369 billion in government subsidies to stimulate green investment and consumption – is “yet showing in the data”.

“[Energy] prices are less volatile but remain two-to-three times above pre-crisis levels,” McWilliams said. “These continue to be passed along value chains, and ultimately reduce the economic incentives for heavy industrial production in the EU.”

Like Kirton-Darling and Voet, McWilliams noted that Europe’s long-term industrial prospects will depend upon current and future national government policies.

“Longer perspectives on the EU’s industrial position cannot be interpreted from a short-term natural gas price-driven phenomenon,” McWilliams said.

“The future of Europe’s industrial competitiveness will instead be determined by its ability to develop new sources of renewable energy and create a good investment environment for innovation and the technologies of tomorrow.”

Gerhke agreed: “Without intervention, Europe’s deindustrialisation will only accelerate.”

Cover photo: Year-on-year EU industrial output fell by 5.8% in November after declining by 5.4% in October. [EPA-EFE/CAROLINE BREHMAN]