When talking about the long-term future of EU businesses, which is not an easy task when all what seems to matter is the short-term, there is a tendency to highlight regulatory, economic and political issues. Among the recurrent themes are sluggish growth in developed countries and the rise of some emerging economies such as China and Brazil, the cost of energy and the status of the relationships with some of the main EU providers, and the never-addressed constraints to create a real EU single market.
Less attention is given to some of the social issues that could most significantly affect the future of EU business and that are probably more relevant than many of the economic, political and regulatory factors we have got used to hear about.
Longevity is one of the social trends that will most affect EU businesses. Higher life expectancy has huge implications for the EU in different areas. With regards to businesses, unless dramatic changes in birth rates take place, the proportion of older to younger workers will continue increasing. Overall productivity will be negatively affected, as fewer young workers with new skills enter the labour market. In this context, there will be a growing focus of European companies on opening manufacturing centers and R&D facilities outside the EU. The only solution will be a serious immigration reform that attracts younger generations of workers and ensures that sufficient talent is brought into EU businesses. Unfortunately, short-sighted politicians, rather than promoting policies in this direction, seem to be doing the exact opposite. Paradoxically, we run the risk of converting longevity into bad news.
A second social trend is the important changes in younger generations’ job preferences. As a result of the current crisis, they will be less inclined to work for large multinationals or the government. Both job security and salary certainty have come to an end and self-employment will become a preferred choice for a large number of them. This can, among other things, critically affect how talented workers are recruited by large companies: in fact, in recent years, job contracts have been frequently less relevant than the acquisition of start-ups and small companies where the talented people work. People would not want to be employers but rather owners. The relationship between employers and employees will shift to one based on an ecosystem of small companies around large multinationals. The creation of venture divisions in companies such as Eon and Telefónica is a trend that will become much more relevant in the future.
The last social factor is the increased disconnect between companies and university education. University education in the EU is not responding effectively to the speed of technological change and it is certainly lagging behind that of China and the United States, where the number of engineers and students in technical degrees is larger. Although hardly a new fact, the implications of this situation are not always well understood, as it will have a radical impact on education: As both students and employers realize university education is not achieving its purpose, why not getting rid of it altogether and rather focus on self-designed studies? This has huge implications in terms of the education system and social inequality.
All these social trends will have huge implications for businesses across the EU. Companies, alongside politicians, need to understand these changes and start thinking of how to react. We run the risk of being incapable of adapting to the new reality and miss –once again –the opportunity to retain competitive businesses in Europe.
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