Speech by His Excellency Yves Leterme at the Tata Consultancy Services Summit:
21/10/2011
Mr. Chairman,Distinguished guests,Ladies and Gentlemen,I am very happy to welcome you in our Belgian – and European – capital. I am all the more happy as I value the presence of Tata Consultancy in Belgium, and the fact that, as I was told, Belgium is your third largest operation in Europe. I also congratulate you on the choice of theme for this summit. ‘The growth imperative’ is a very topical subject. We do indeed need economic growth, and for Europe especially it is imperative to reconnect with a sustainable growth.I tell you no secret when I say that growth requires, first, financial stability. Over the past three years the European countries have put a considerable amount of money and energy in stabilising the financial markets and fighting the global crisis. Much of this stabilising effort came from a common and coordinated response of the member states of the European Union. As you all know this effort is now in a critical phase. Sunday, the European Council will have to take decisions on - at the least - the following matters:- a solution to put Greece’s public finances on a sustainable footing- a recapitalisation of our banks.- an improved European Financial Stability Facility - and, last but not least, new institutions to improve the functioning of the Eurozone. The crisis of the Eurozone demonstrates that we need ‘more Europe’, that a common currency requires coordination and integration of the fiscal and economic policies of the member countries, in short, that a common currency requires economic governance.Ladies and Gentlemen,Financial stability is a prerequisite for growth but it is of course not enough. We have to address the challenges Europe faces to reconnect with growth in a socially and ecologically responsible manner.When I say in a socially responsible manner, I mean that growth has to benefit the many, not the few. In Belgium, as in a number of other EU countries, we have created what we call the Rhineland model, a humane system of government which combines personal, political and economic freedom with social solidarity and ecological responsibility. It is a model which is the envy of a large part of the world, as witnessed for instance by the number of migrants who are attracted by it.We are and remain attached to this model. But we also know that the world does not owe us a living, that the rest of the world is rapidly catching up with us. To paraphrase the famous phrase of prince Salina in ‘Il Gattopardo’: if we want things to remain the same, we will have to completely change them. In other words, if we want to be able to go on financing our Rhineland model, we will have to work differently, as well on the side of capital as that of labour.Let’s start with the capital. We have seen the disaster that occurs when capitalism is not driven by the creation of value. We are still paying for the devastations caused by a capitalism that was led by greed; that saw people not as an asset but as a cost to be minimized; that was driven by the short termism of quarterly reports and shareholder value; and that imploded at a great cost to all of us.It is not easy for political leaders to explain to our citizens, who suffer from the crisis, that, on top of that, their tax payer’s money has to be used to pay for the irresponsibility of some bankers.Do not misunderstand me. We in Europe are totally in favour of systems of free enterprise. But freedom, as we have seen all too clearly and painfully, is the opposite of laissez faire.Freedom has to be canalized and protected by law, so as to benefit the many and not the few. That goes as well for personal as for economic freedom. As the catholic preacher Jean Baptiste Lacordaire already said in the 1830’s: ‘Between the strong and the weak, it is liberty that oppresses and the law that sets free.’ Indeed, a free market soon ceases to be a free market without the laws and regulations that prevent the formation of cartels and monopolies, without the laws and regulations that create a level playing field for smaller players and for newcomers.All this means that free enterprise has to be a stakeholder capitalism, which benefits the many, and not a shareholder capitalism, which increasingly benefits only the few. It has to be a capitalism which creates things, not just deals and swaps; which creates lasting value, not just benefits for shareholders.Secondly – and this is no cheap pun - labour also will have to work differently. We are faced by several challenges. One is the fierce competition in an increasingly globalised and integrated world. We remain committed to our systems of social solidarity but we have to be careful that we do not price labour out of the globalised market.Another major challenge is the greying of our population. At the Belgo-British conference in London earlier this week, a representative of the British government gave a very telling figure. One in three of the girls and one in four of the boys born today in Britain can expect to become a hundred years old. I suspect that the figures for many other European countries are similar.This raises different issues. One is the question of providing for the care for more and more elderly people. Another very important one is the fact that the labour force as a whole will have to work harder and will have to work longer if we are to be able to afford this care.This is not a harsh or inhuman position. The same medical and social progress which makes people live longer also means that our citizens stay healthy and active for a longer time. In a paraphrase on the fashion guru in ‘The devil wears Prada’ who says that ‘size two is the new four’, a Belgian professor, at the same Belgo-British conference, said about age: ‘45 is the new 35’. If I extrapolate, I can say that ‘sixty is the new fifty’, which means that we have to consider more flexibility in the mandatory retirement age. This is something which really has to be done.These are matters to be discussed between the social partners. But governments also have their role to play for if those partners fail to reach agreements, governments may have to step in. And this is my third point, European governments also have to work differently.The role of public authority is not to create jobs, and this is true even in crisis situations. The role of governments is to create a climate which stimulates the creation of jobs and thus of wealth. Much has to be done to adapt this climate to the competitive globalised world.In its Europe 2020 strategy, the European Union has set out five ambitious targets for smart, sustainable and inclusive growth. On top of that, the European Commission put forward seven so called flagship initiatives to catalyse this progress. I would like to see the European Union play a more decisive role in these matters. The implementation of these targets and flagship initiatives is still too much the responsibility of national governments. But in the situation as it is, the Belgian government takes these targets very seriously.I’d like to focus here on one of them, named "an industrial policy for the globalisation era". This is a very important flagship, for growth must be driven by growth in the real economy, and an important part of that economy is the industrial sector. As I said, we need a capitalism which creates things, on top of services and deals.It is an illusion to think that we can completely separate R&D from manufacturing, that we can keep the R&D in our highly developed countries and farm manufacturing out to countries with lower labour costs. We will lose out on both fields, for, inevitably, the software follows the hardware, not the other way around. Moreover, the loss of manufacturing also means the loss of many solid, well-paid jobs.All this means that the European public authorities should have a smarter policy in encouraging the manufacturing industry. This industry will, of necessity, have to be one with a high level of added value, or tailored to specific niches. But it has its role to play, a vital role to play in Europe. To support this, governments have an essential responsibility to help create a more favourable R&D and innovation environment by, for instance, the quality of their education system, by innovative and sustainable public sector procurement, by stimulating entrepreneurship and SMEs, by reducing the administrative burden and improving business legislation. And this is not the end of the story. The European Union should complement the measures of the member states with efforts of its own. The European Commission should activate the industrial flagship and roll out an industrial agenda which invests in the competitiveness of European industry. It should invest in cross border infrastructure, and also in Research and Development, for instance for the clean technology which is necessary to reach our own environmental goals and which will be in increasing demand in the rest of the world. These are niches for a strong industrial basis. Ladies and Gentlemen,I have proposed some ideas on how capital, labour and governments will have to work differently if we want to generate enough wealth to keep our model of society. I want to stress that this goal is in no way to be achieved by protectionism. Belgium is by tradition an open economy, one of the most open economies of the world. It has never been protectionist. On the contrary, national and European industrial policy should be combined with a trade policy that opens doors to non-EU markets, and to knowledge and investments from outside Europe. Our industry can only be durable if it can hold its own in a competitive international environment and if it can export successfully to emerging markets. We must never forget that we live in a globalised world. EU companies should endeavour to learn from and cooperate with non EU companies. That so many important European and Belgian companies work with Tata Consultancy Services - our hosts today - proves my point.As one of the most open economies in the world, Belgium is very well aware of the importance of investment from, and trade with all parts of the world. With Tata Consultancy Services and all other companies who invest in Belgium, we will remain reliable and hospitable partners for the mutually beneficial growth that Europe and the rest of the world need.I thank you for your attention.
