CCMI/239
Reindustrialisation of Europe in the context of the cost-of-living crisis
OPINION
Consultative Commission on Industrial Change
Reindustrialisation of Europe – opportunity for businesses, employees and citizens in the context of the cost-of-living crisis
(own-initiative opinion)
Rapporteur: Andrés BARCELÓ DELGADO (ES, I)
Co-rapporteur: Monika SITÁROVÁ (SK, Cat. 2)
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Advisors
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Vega GIL OYAREGUI (to the Group I rapporteur)
Juan José LUIS DELGADO (to the Category 2 co-rapporteur)
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Plenary Assembly decision
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3/12/2024
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Legal basis
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Rule 52(2) of the Rules of Procedure
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Section responsible
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Consultative Commission on Industrial Change (CCMI)
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Adopted in section
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4/6/2025
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Outcome of vote
(for/against/abstentions)
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36/1/3
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Adopted at plenary
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D/M/YYYY
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Plenary session No
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…
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Outcome of vote
(for/against/abstentions)
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…/…/…
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PREAMBLE
This opinion is part of a wider package of EESC opinions on the cost-of-living crisis. With this package, the EESC is examining the different facets of this policy challenge and presenting a comprehensive and wide-ranging set of recommendations to European and national policymakers, civil society organisations and other stakeholders. The package includes seven ‘sectoral opinions’, each dedicated to issues in a specific relevant policy area. In addition, an ‘umbrella opinion’ presents the overarching policy recommendations to address the cost-of-living crisis as a whole and build resilience against future crises.
1.Conclusions and recommendations
1.1The EESC welcomes the Commission Competitiveness Compass initiative, focused on improving the competitiveness of the EU economy to close the gap with the USA and Asia. Its development must include clear performance metrics to allow EU institutions and stakeholders to monitor the achievement of every task included in the Compass. Increased private and public investment are also needed to improve the EU’s competitiveness.
1.2The 2025 Commission Work Programme includes an Action Plan on Affordable Energy. The EESC wants the Commission to guarantee that the plan will secure the electricity supply and ensure a stable, competitive and predictable price. It should also include low-carbon energy, via renewable sources and renewable fuels of non-biological origin (RFNBOs).
1.3Open strategic autonomy must be at the heart of the reindustrialisation process, securing access to raw materials, diversifying sources and making the EU economy more resilient. To encourage companies to nearshore their production in the EU, the EESC recommends adopting an industrial policy based on a value chain approach. This approach emphasises the equal importance of both upstream and downstream activities in the transition. This can be achieved by increasing the number of partnerships with non-EU countries and streamlining permitting procedures, while ensuring respect of labour, social and environmental standards, to support the growth of the EU’s own extractive industries.
1.4The EU legislators must use the upcoming Industrial Decarbonisation Accelerator Act to ensure the sustainability of alternative and circular economy business models by offering accelerated permitting, financial support and policy backing to those businesses dedicated to the transition. The Circular Economy Act proposal should send a clear message of support to circular businesses, reassuring investors that the EU is the ideal environment for developing clean solutions.
1.5Social dialogue, including collective bargaining, must be embedded in the reindustrialisation process to reinforce the social aspect of the single market.
1.6Reindustrialisation requires a dedicated innovation programme with specific targets that include both existing industries and new developments and are based on social dialogue. This programme requires public investment, which must be accompanied by social conditionalities as outlined in the Clean Industrial Deal.
1.7The EESC suggests that the EU promote public-private partnership programmes to boost industrial investment, with a dedicated section to promote youth entrepreneurship in the manufacturing sector. The programme should foster cooperation between public institutions and private companies to accelerate innovation and the marketing of new technologies.
1.8The EESC asks that the upcoming Commission proposal on the Union of Skills provides for the direct recognition and validation of workers’ skills across the EU once they have been recognised by the public authorities of one Member State, reducing bureaucratic burdens. The Commission must launch an EU-wide programme to promote industrial and fairly paid apprenticeships among younger generations, supporting a more resilient workforce. It should also deliver tools for anticipating and managing change, offering a just transition pathway that includes upskilling and reskilling the workforce, as part of social dialogue.
1.9The clean public procurement scheme is an opportunity to boost and recognise sustainability efforts by EU companies in a non-discriminatory way.
1.10To enhance competitiveness and retain and develop industrial production in the EU, the EESC wants the Omnibus packages to ensure regulatory coherence and legal certainty for companies and workers, streamline permitting procedures by making them clearer, faster and more predictable, reduce reporting workflows and prevent redundant reporting. Harmonising clean technology standards across the EU can also facilitate market access and compliance for businesses.
2.General comments
2.1While some macroeconomic indicators would suggest that the EU economy is performing in an acceptable way, with lower inflation, a very low unemployment rate and better energy costs than during the 2022 energy crisis, the European Commission’s Autumn 2022 Eurobarometer survey found that the rising cost of living was the most pressing concern for 93% of EU citizens
. This feeling has persisted: the cost of living (42%) and the economic situation (41%) were the main topics that motivated European citizens to vote in the last European elections in June last year
. Moreover, in the latest Eurofound 2024 large-scale survey, ‘more respondents reported difficulties making ends meet compared to the previous year, with 30% of respondents saying it was difficult or very difficult to make ends meet, up from 22% in 2023’.
2.2Europe is currently grappling with the dual challenge of addressing the cost-of-living crisis and reversing the long-term effects of deindustrialisation. Both issues are deeply interconnected and present significant implications for businesses, workers, and citizens across the Union.
2.3The main drivers of the cost-of-living crisis are:
2.3.1Inflation went up in 2021, fuelled by the fast economic recovery after COVID-19, reaching 2.9%. The war in Ukraine and the energy crisis brought the 2022 inflation rate up to 9.2% in 2022. After it fell slightly to 6.4%, the inflation rate moderated to 2.6% in 2024. Inflation sentiment is, however, very strong as household shopping basket commodities have been on a permanent upward trend
. It has significantly eroded purchasing power, placing immense financial pressure on middle- and low-income households.
2.3.2Although wholesale electricity and gas prices have fallen significantly since the end of 2022, they remain around twice their historical levels, with fluctuations influenced by regulatory actions, market conditions and ongoing geopolitical tensions. The recent reform of the electricity market has not had the desired result, as the order of merit (the marginal pricing system) prevents consumers from fully benefiting from renewable energy deployment. The Draghi Report shows the big gap in electricity and gas prices between the EU and the USA
. Energy costs remain a critical concern not only for industry, which along with transportation is one of the largest energy consumers, but also for the most vulnerable households.
2.3.3The impact on economic inequality has been varied and multi-dimensional: on income, health access and education. Real wages in 2024 are still forecast to be 1.1% below their 2019 level in the EU. Many low- and lower middle-income households still feel the adverse effects of the high inflation period on their purchasing power. In particular, material and social deprivation and financial distress of workers remain elevated compared to levels before 2022. At the same time, some societal groups have been more affected than others. Low-skilled workers, women and young people have suffered the most. The long-lasting effects are still to be studied
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2.3.4The cost-of-living crisis, soaring energy prices, and the impact of the COVID-19 pandemic have exacerbated housing affordability issues. Additionally, structural factors such as urbanisation, demographic changes, and speculative investment in real estate have driven up housing costs. Excessive housing costs affect not only low-income but also middle-income households and young people. Affordable housing is probably the main challenge for young people, preventing them from starting an independent life. While at the end of 2023 the labour market situation for young people was more favourable than it had been in recent years, many obstacles remained on their route to independence, such as the rising cost of living and their inability to move out of the parental home
.
2.4Deindustrialisation in Europe
Over the past few decades, Europe has undergone a still ongoing process of deindustrialisation, marked by a steady decline in the contribution of manufacturing to the overall economy. In recent years, the industry’s share of GDP has declined from 21.0% in 2005 to 18.5% in 2022. Manufacturing jobs have continued to decline across the continent since 2008 at an unstoppable pace, and the impact is not only affecting low-skilled positions but also highly qualified professionals. This shift has been driven by several factors:
2.4.1Globalisation: Traditionally, companies have outsourced supply chains and their manufacturing capacity to reduce costs. The relocation of manufacturing to regions with lower labour costs has resulted in the offshoring of production, leading to the closure of factories and job losses in Europe.
2.4.2Delays in technological adaptation and underinvestment in innovation: Advances in automation and digitalisation have reduced the demand for traditional industrial jobs, creating a mismatch between the skills of the workforce and the needs of modern industries.
2.4.3Policy focus on services: Many European economies have increasingly prioritised service-oriented sectors, which, in some cases, has led to less focus on traditional manufacturing. This shift has contributed to the decline of industrial activities, highlighting the need for a more balanced policy approach.
2.4.4EU trade and industrial policies, environmental and regulatory policies, demographic changes and labour shortages, lack of adequate investment and declining competitiveness have also played an important role in deindustrialisation processes.
2.4.5The consequences of deindustrialisation have been far-reaching. Regions once thriving on manufacturing have experienced economic stagnation, higher unemployment rates, and widening regional disparities. The loss of industrial capacity has also increased Europe’s dependency on imports, exposing the continent to vulnerabilities in global supply chains and energy markets, as the experience during the COVID-19 pandemic showed.
2.5Industry is back on the political agenda
Reindustrialisation would be the best choice and offers a strategic pathway to:
2.5.1Boosting economic resilience: An increase in the total cost of ownership, escalating wages, including in non-EU countries, rising transportation costs, higher import duties and costs, as well as potential supply disruptions, are all eroding the usual cost advantage of outsourced supply chains. By increasing local production and reducing reliance on volatile global supply chains, Europe can enhance its economic stability and strategic autonomy.
2.5.2Fostering innovation: Industry is the main driver of innovation in products, processes and services. The new challenges in relation to digitalisation and artificial intelligence, robotics and the circular economy provide an essential opportunity for the EU. Industry 5.0 is now shaping and defining reindustrialisation. The goal is to create a modern, competitive and sustainable industrial base.
2.5.3Promoting sustainability: The integration of sustainable practices and the circular economy into industrial activities can help the EU achieve its ambitious climate goals while being less reliant on raw materials and creating new market opportunities.
2.5.4Providing quality and secure jobs, together with a permanent social dialogue: Industry drives employment and ensures social integration and stability.
2.5.5In some countries adopting the methodology of a cooperative workers’ buyout (WBO) has proven to be a successful experience that could also be spread to other EU countries. When properly structured, it can save jobs and preserve production sites.
2.6Strategic policy context:
Through policy initiatives in line with the Draghi Report on EU competitiveness, and EU Commission initiatives, EU industry must close the gap with its main trading partners, such as the USA and China.
2.6.1The Clean Industrial Deal proposes a clear path to focus on decarbonisation, clean technologies and incentivising investment. The Commission will help build a growth-conducive regulatory framework, supporting industry in its efforts to innovate, scale up, manufacture products and provide services, working in partnership with all stakeholders to ensure targeted solutions for each value chain.
2.6.2The ‘Competitiveness Compass’, built on the recommendations set out in Mario Draghi’s report on the future of European competitiveness, identifies three core areas for action: innovation, decarbonisation and competitiveness, security and resilience, and five cross-cutting activities: simplifying, lowering barriers to the single market, financing competitiveness, promoting skills and quality jobs, and harmonising and coordinating policies at EU and national level. It will deliver an ‘unprecedented’ reduction in red tape with a particular focus on European SMEs and will include a Competitiveness Coordination Tool to help the Member States cooperate on projects of common strategic interest.
3.Specific comments
3.1By addressing the root causes of deindustrialisation and the cost-of-living crisis, Europe can seize this moment to revitalise its economy, empower its workforce, and improve the quality of life for its citizens. Here are some key aspects and opportunities:
For businesses:
3.1.1Reindustrialisation offers an opportunity to harness advanced technologies, fostering innovation and enhancing global competitiveness. European industries can become leaders in the green and digital transformation.
3.1.2By triggering a resurgence of manufacturing and onshoring production, businesses can mitigate the risks from global supply chain disruptions and stabilise costs.
3.1.3Adopting sustainable practices aligned with EU climate goals can unlock new markets for environmentally friendly products and services.
For workers:
3.1.4A renewed focus on industry can secure well-paying, stable jobs across various sectors, addressing unemployment issues exacerbated by deindustrialisation.
3.1.5Investment in education and vocational training ensures a workforce capable of meeting the demands of modern industries.
3.1.6Localised and resilient industries provide more stable employment opportunities, reducing dependency on volatile global markets.
3.1.7With a focus on sustainable and ethical practices, workers can benefit from better working conditions and job security.
For citizens:
3.1.8A thriving industrial sector promotes overall economic stability, improving living standards and reducing poverty.
3.1.9Industry provides quality jobs that together with taxes paid by the industries will secure public investments in infrastructure and services.
3.1.10Revitalised industrial zones can lead to better infrastructure, enhanced public services, and vibrant local economies.
3.2Overall, reindustrialisation can bring significant long-term benefits. However, it also presents challenges that require coordinated efforts at both EU and Member State level and need to be managed through thoughtful policy and strategic planning:
3.2.1One of the biggest challenges is attracting and retaining skilled workers. Industry competes with other economic activities to attract and retain top talent, which requires stable jobs, competitive salaries and career development to be offered. The Quality Jobs Roadmap is a positive European Commission initiative as good-quality jobs and decent working conditions are crucial for attracting workers. Additionally, policies to activate and equip specific segments of the population who are outside the labour market and provide them with the necessary skills should be implemented, especially regarding to women, youth and migrants and other vulnerable groups. Furthermore, Member States must be open to welcoming skilled workers from non-EU countries in a streamlined, non-bureaucratic way. This includes expediting work permit processes, recognising foreign qualifications and ensuring equal treatment. The EU should strive to be the preferred destination for skilled workers worldwide.
3.2.2Providing workers with training and both technical and soft skills development as well as a clear career path and professional prospects: As industries evolve, there is a continuous need to train and reskill the workforce to ensure a good match between skills and labour market demands. Having a skilled and resilient workforce is especially crucial in sectors that are facing the twin transitions. Moreover, we welcome the Commission’s call to modify State aid rules and to establish social conditionalities linked to public investments, to provide better incentives for industry to invest in upskilling, reskilling, quality jobs and recruitment of workers for a just transition. The Union of Skills and the STEM Strategic Education Plan should work towards delivering this goal. This training should provide for direct recognition and validation of workers’ skills across the EU once they have been recognised by the public authorities of one Member State, reducing bureaucratic burdens.
3.2.3The rapid pace of technological advancement requires industries to continuously adapt and innovate. Industry must embrace digital transformation, which includes adopting new technologies, with a special focus on a robust cybersecurity approach to guarantee data integrity and full respect of personal rights.
3.2.4Re-industrialising and decarbonising at the same time is a challenge. Industries must balance growth with environmental and social sustainability. Integrating sustainable practices into industrial processes is essential to meet environmental regulations and consumer expectations. This involves adopting green technologies, reducing carbon footprints, and promoting circular economy principles. It is necessary to promote circular products and innovative business models based on circularity with incentives, allowing them to continue competing against traditional and profitable business models and making ‘green’ and ‘clean’ products and services affordable.
3.2.5Regulatory and administrative burdens and cross-border issues: The EU’s regulatory environment and administrative approval procedures are often seen as complex and burdensome, with 32% of EU firms identifying regulations as a ‘major obstacle’ to their investment activities
. Businesses face significant compliance costs and administrative delays in obtaining permits and approvals, which can deter investment and innovation. Despite the single market, differences in national regulations, standards and procedures create obstacles to entry and increase costs for businesses operating in multiple EU countries Simplification does not mean deregulation. It is not about dismantling the Green Deal or essential social safeguards, nor making Europe more like the USA. It is about cutting through bureaucracy that benefits no one.
3.2.6
While reindustrialisation could create new jobs, it could also lead to technological displacement, where automation and advanced technologies replace certain types of labour
. Addressing this will require specific programmes on reskilling and social policies.
3.2.7As industries become more competitive, there may be increased pressure from global competitors.
Maintaining a competitive edge will require continuous innovation and investment
efforts.
3.2.8Social dialogue, including collective bargaining, must be embedded in the reindustrialisation process, in order to ensure a participatory approach. Employers and workers should commit to creating and implementing competitive training programmes that foster industrial, social and territorial cohesion through collective bargaining and worker participation at company level. A new social contract should also take into account organised civil society, the voice of young people, and especially those regions most impacted by transitions.
3.3Role of industry as a driver of innovation and value-added services:
3.3.1Industry is key to the reindustrialisation of Europe, fostering economic growth, innovation and sustainability. It supports high-value service development, mitigates the cost-of-living crisis and counters deindustrialisation by driving further innovation, revitalising local economies, creating jobs and encouraging the population to remain in industrial areas:
3.3.2Industry is a key driver of innovation, often leading the way in the research and development of new technologies and processes. This innovation can spill over into other sectors, fostering a culture of continuous improvement and technological advancement.
3.3.3Industry often promotes value-added services that enhance the overall value chain. This includes everything from advanced manufacturing techniques to after-sales services, helping to lower the production costs, and leading to higher quality products and greater customer satisfaction.
3.3.4Industrial jobs, particularly those in high-tech and advanced manufacturing sectors, tend to offer higher wages compared to many service-sector jobs. This can help improve living standards and reduce income inequality.
3.3.5The industrial sector offers significant opportunities for professional growth and career advancement. Workers can benefit from continuous learning, skills development, and the potential to move into higher-level positions.
Brussels, 5 June 2025.
The president of the Consultative Commission on Industrial Change
Pietro Francesco DE LOTTO
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