European Union

2018 is the year to renew Europe

Reform efforts must make concrete, meaningful improvements to the lives of ordinary European citizens in 2018

Reform efforts must make concrete, meaningful improvements to the lives of ordinary European citizens in 2018 Image: REUTERS/Lucas Jackson

Martina Larkin
Senior Advisor to the President, World Economic Forum Geneva
Eckart Windhagen
Senior Partner, McKinsey Global Institute
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“Beyond differences and geographical boundaries there lies a common interest” Jean Monnet, the unifying force behind the birth of the European Union, once said.

Clearly, the issue of Europe’s unity is not a new one, but 2018 will be a decisive year for Europe’s future as the world becomes more multi-polar and the challenges ahead more complex. The European economy is gathering momentum – with more solid and broad-based progress and a substantial increase in the forecast for economic growth in the Eurozone. Yet Europe will need to harness its joint scale and unique diversity by standing together on common challenges such as security, migration, inclusive and sustainable growth, and the Fourth Industrial Revolution, while also addressing political fragmentation, divergence, and a loss of trust in its institutions.

Many reform efforts have been launched across the region. These are showing some positive results. They must make concrete, meaningful improvements to the lives of ordinary citizens in 2018. Indeed, the coming year presents an important window of opportunity, both economically and politically, to deliver tangible progress. This will strengthen citizen trust and provide a compelling vision for Europe’s future, ahead of the 2019 European Parliament elections.

(1) developing a more human-centred, inclusive economy

(2) rebuilding trust in democratic principles and governance

(3) developing a long-term migration strategy

(4) ensuring Europe’s leadership in defence and security

(5) transitioning to a more sustainable and energy-efficient society

Three priorities stand out for European leaders:

Shaping progress and citizen well-being in the Fourth Industrial Revolution

The Fourth Industrial Revolution has already transformed the way citizens, businesses and governments engage with each other. Its impact on the economy and society cannot be overstated. Automation, advanced robotics, and artificial intelligence offer immense opportunities for Europe. At a time when its ageing population will act as a drag on economic growth, Europe will need the productivity-enhancing benefits of automation and digitisation.

But there are also legitimate concerns about job security and wages. While research by the McKinsey Global Institute suggests that there is likely to be enough work to offset automation, the transition period will be tough. Up to 32% of Germany’s workforce may need to shift occupation by 2030, in the event of rapid automation adoption, for example.

To capture the opportunities offered by the digital economy, Europe will need a new approach to technical training and education. It will have to develop a modernised, flexible workforce that can build its digital economy and prevent it from falling further behind the United States and China. At the same time, strong retraining and lifelong learning programs can help protect workers from being left behind in the transition period.

Ideas such as a “Universal Right to Learn” could help ensure workers succeed during the transition, by providing all European adults with annual credits for training. These could be funded by employers and redeemable on both in-house corporate training schemes, and independent programmes.

Ensuring Europe’s future leadership through regional collaboration and city diplomacy

Europe faces rising geopolitical risks, as well as terrorist attacks at home. Its combined defence spending, which is about half of US levels, could make it a leading actor. But individual member states' defence capabilities are fragmented and vary widely. It will be critical for Europe to increase collaboration and coordination at all levels.

European cities are economic powerhouses and drivers of international flows of people, money, products, resources, ideas and technologies. But at the same time, cities and city regions are confronted with growing threats, including extremism, terrorism, organised crime and violence. Many of these increasingly important urban centres are dealing with similar problems. But there are not sufficient mechanisms in place for cities to share resources, best practices, or tools.

The “seCURE Cities” initiative would help enable sharing by using existing networks to connect cities facing similar challenges. It could facilitate best practice sharing, develop an index to measure progress, and build a tool to help city leaders identify potential partners in urban violence reduction projects.

Developing a holistic and pan-European migration policy

Europe has thrived as an open, connected and diverse society. Yet concerns over recent waves of migrants and asylum-seekers have led to calls to close internal borders. An anti-immigrant backlash is threatening social cohesion. Close to three million people applied for asylum in Europe between 2015 and October 2017. These people are distributed unequally, and previous waves have left concerns about Europe’s capacity to integrate them successfully.

Europe needs a holistic, pan-European migration policy to maintain its open society, in a future where high levels of migration will continue. Europe must address citizen concerns about large migrant flows, including worries about border security and the potential impact on social services. This means controlling borders effectively and implementing best practices in short- and long-term integration.

No single country in Europe can manage these issues alone. It is time for Europe to take the lead. The Renew Europe report is a catalyst for further thought, debate, and action around developing a stronger and more modern Europe. One that retains its role as a key actor on the global stage and responds to the concerns and needs of its citizens, especially the next generation.

The 2018 Annual Meeting will be an important setting for this discussion. We hope to inspire citizens, businesses and policymakers to demonstrate bold leadership and address Europe's challenges. You can join the discussion on #renewEurope.

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