Industrial Policy for Quality Jobs and a Just Transition: Plotting a Route through the Fiscal and Geopolitical Trap

Abstract

Key Messages

• Achieving the prospective 2040 climate targets proposed by the European Commission demands that the pace of decarbonisation be stepped up. This will require the European Green Deal to have dedicated industrial policies and a stronger social dimension.

• Setting the European economy on a viable pathway towards net zero not only needs industrial policy targets but also sufficient financial resources to achieve them.

• Industrial policy has a key contribution to make to ensuring that the digital and green transitions are just transitions, with support for, and the creation of, quality jobs being a paramount consideration.

• Industrial policy must create a level playing field in terms of environmental and labour standards and protect industries in the European Union (EU) from unfair competition. It also needs to mobilise massive investment to scale up low-carbon technologies and innovation.

• Tight fiscal rules and the deadlock on an increase in EU resources seems to lead to incremental adjustments, resources being scraped together from existing EU funds and an excessive reliance on the mobilisation of private investment.

• This practice will not result in closing the investment gap but could end up in industrial policy being driven by the competitiveness agenda and dependent on state aid, flexibilisation and deregulation, all of which undermine labour standards and put pressure on wages and working conditions.

This policy brief makes the case that such a worst-case scenario must be avoided and sets out recommendations for the next EU political cycle.

Keywords: industrial policy, just transition, decent work, fiscal policy, EU policy, social dimension, EU countries