Research
The Employers’ Perspective in the Baltic Sea Region
15.07.2010
Introduction
Employers’ organisations’ (EOs) of the region regard competitiveness and sustainable development as the key objectives of business cooperation in the region. This region is diverse, with differing social characteristics and cultural heritage (languages, history etc.), but also with remarkable disparities of macroeconomic indicators, such as several different currencies, and differences in industrial development, productivity rates and income structures. Still, the region is united by one sea, which focuses the efforts of the organised business community in looking for new advantages, inspired by the regional strategy of the enlarged Europe.
The author develops the assumption that the EOs of the Baltic Sea states are an essential part of the organised business community, demonstrating their ability to make a pragmatic contribution: bringing appropriate ideas from business reality in order to address the global economic challenges of the countries suffering from economic crisis. The aim of the article is to show that business organisations, recognising the strength and full potential of the region, can mobilize interest groups, national states and international organizations for this purpose. As will be shown in this article, despite the diversity of the regional economies, the EOs have managed to agree that, in order to consolidate and coordinate the viewpoints of organized business, it is necessary to settle upon a common stand and action with respect to other relevant actors.
One of the greatest challenges for the region is to facilitate the development of the EU Baltic Sea Region Strategy (BSR) and carry out a reform of the CBSS, reaching common targets agreed in the region. The article is based on the analysis of the course of development of the recommendations from EOs that were prepared for the Baltic Sea States summit in Riga on 3–4 June 2008. This case shows up the issues identified in the process of reaching an agreement among EOs and developing proposals during the 1st Meeting of Baltic Sea Employers’ Organisations. These proposals were submitted to the CBSS Presidency and the European Commission (EC), as well as to the governments of the relevant states for further integration into EU policy and national flagship projects.
Competitiveness and sustainability objectives of the region were the basis for the involvement of EOs in the development of regional strategy during the Latvian Presidency of the Council of Baltic Sea States (CBSS) in 2008. The priorities for reaching these objectives are education, entrepreneurial activity, energy and development of infrastructure (including transportation). These priorities can be reached by utilizing diversity and increasing the participation of the public sector and NGOs in the implementation of the strategy.
The employers’ perspective for competitive advantage
Even though the Baltic Sea Region was hit hard by the global crisis (resulting in significantly negative economic growth in terms of GDP for the Baltic countries, with growth continuing in 2009 only in Poland), the competitiveness fundamentals remain strong, with a great potential of collaboration and development of regional institutions.
Figure 1. Economic growth: the Baltic Sea Region countries
Because they have used to their full value the resources available in the region, the majority of BSR countries are ranked as being at the highest stage of development (while Latvia, Lithuania and Poland are ranked as being in a transitional period to the stage of the most developed countries). The EOs representing the majority of entrepreneurs in the region have created a network of Nordic and Baltic General Directors, recognising this potential and becoming the driving force of business opinion consolidation in the region. This is also serving to encourage the consolidation and definition of the economic priorities of the EU Strategy for the BSR by the representatives of the organised business community. Certainly, the development of the region should be viewed in the wider context of the economic development of the EU, involving the European Economical Area (EEA) and EU Neighbourhood Policy, using the full potential of its geopolitical location.
The EOs as a strong business network of the BSR have reached general agreement that the issue of financial stabilization currently dominates in public discourse and on the political agenda, while the issues of trade, investment and the revival of the real economy receive only limited attention. Following the political agenda, these issues have not been integrated into the update of the strategy, raising the threat that it could become inadequate to the current situation and the socio-economic agenda of society in the mid-term. Therefore the EOs address the following in their Joint Resolution: institutions and policies; economic development; relations between EU members and other BSR countries; the BSR strategy itself and the role of EOs.
The business community still cannot be sure that EU decision-makers can provide the answers, and that the EU has an economic strategy for the future of the region, which would serve to stabilize financial markets and improve the availability of financial resources to the economy and investments in growth, as well as to institutionalize governance of the BSR. The business community of the region needs a vision of the capacity of decision-makers and policy executives in the public sector to deliver responsible business choices, more profound integration in the ongoing processes concerning stabilization of financial markets, and choices for a sustainable environment. If the separate and generally differing national policies of the BSR could be replaced with united BSR policies, then the list of losses for the region in this crisis situation would be much shorter. The global economic setbacks bring a need to define a new content and scale of regional policies, based on social, cultural and economic advantages, as well as on principles of coordination and concentration of resources during the process of implementing and supervising the strategy.
At the meeting of EOs of the BSR, officials and experts focussed attention on the following issues:
• Competitiveness of enterprises;
• Availability of human capital and promotion of employment;
• Social dialogue and the role of good governance and partnership;
• The role of the EU in the development of the BSR;
• Cooperation between the EU and Russia, and the role of the BSR.
This was an exchange of views among seven organizations from seven countries (Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Denmark and Iceland) of the Baltic Sea Region.
Taking into account important consultations among the EOs, using a common form of questionnaire and preparing a number of position papers (October 2007 – May 2008), as well as discussions and consolidation of interests after the meeting of EOs, recommendations were expressed in a resolution of the EOs of the Baltic Sea States. The joint resolution addresses the necessity for:
• Development of communications, transport networks and other infrastructure;
• Harmonization of laws, regulations and procedures towards the EU acquis and their proper implementation;
• A greater input in development of knowledge and innovation in the region;
• Deeper cooperation in the energy market;
• Promotion of all kinds of contacts between people, business communities, etc.
Other priorities for reaching regional objectives, regarded as conditional and complementary, such as improvement of employment, investment in research and development, and quality of education, could be reached through a rise of competitive economic activity in the region.
Competitiveness of companies, availability of human resources, proficiency, accessibility of energy and infrastructure, as well as consolidation of these resources represent the greatest challenges for the development of each state. In awareness of the wide opportunities for business development and the global economic challenges, it is necessary to expand cooperation networks and strengthen the role of the BSR in the EU by mobilizing for this purpose national governments and international organizations. Awareness of the potential of the BSR, as well as deep analysis of existing institutions and further regular involvement of the EOs will be valued as a pragmatic contribution, appropriate for business reality.
Figure 2 shows the framework of interest representation and consultations of the EOs and other important actors. The recommendations were discussed with the national ministries, and based on the recommendations the position paper on European Business Confederation (BusinessEurope) was developed and passed to the EC Directorate General Regional Policy. The CBSS and the EOs of Russia and Germany were informed about the results of the EO consultations. It is extremely important to achieve mutual agreement on the priorities and on closer cooperation between the countries of the region, including Russia, in order to continue further efforts to create a common economic space between the EU and Russia. As emphasised by Peter Egardt, Chairman of the Business Advisory Council of the CBSS, there are perceptible changes in the global business environment which act to defuse the influence of regions; however the driving force behind these changes is precisely the dimension of regional development.
Figure 2. The framework of interest representation and consultation
On 14 December 2007 the EU Member States invited the EC to present an EU strategy for the BSR by June 2009. The EOs recommended that this strategy should be developed by applying a new, innovative approach, facilitating consolidation and coordination processes within the region, as well as making sure that it does not duplicate other already existing initiatives and policies, and that it concentrates the processes of strategy implementation.
The BSR requires immediate establishment of an integrated business geography, so the BSR strategy should comply with business needs in the EU, facilitating competitiveness and partnership, pointed out Valdis Krastiņš, Chair of the Committee of Senior Officials of the CBSS.
Still, feedback about recommendations taken into account is missing, both from the EC and CBSS. Therefore, discussions with the ministries of foreign affairs and the industry ministries responsible for certain priority areas are to be strengthened.
Employers’ concerns about implementation of the Strategy
Two main considerations were examined during the consolidation process of the EO resolution. The first is based on the macro-economic indicators, which prove an increase of disparities and ‘two speeds’ in the region. Currently, the two speeds are best characterised and proven by Figure 3, showing the prosperity level and growth in GDP per capita in selected countries, and expected per capita growth in 2009 to 2008. Latvia, Lithuania, Estonia, Russia and Poland are lacking behind the GDP per capita of the Scandinavian countries. The significant differences consistently serve to raise the question of availability of financial resources and human capital to invest in priority areas defined by the strategy and the development of partnership projects to manage areas of responsibility. Assessment of the influence of these differences is needed in order to foster the region’s recovery from the impact of the financial and economic crises, and evaluation of the competitive advantages of the region as such would establish common grounds for further cooperation. The EOs expressed the opinion that the development of this region should be further and more broadly examined. Global slowdown and economic crises is the right moment and opportunity to define a much more integrated collaboration model for the economy.
Figure 3. The prosperity level and growth in selected countries
Entrepreneurship and cooperation can be restored, bringing along with it market demand and regional division of labour. Financial expansion policies should be proportionally followed by integration policies for industry and by investments in the educational system. This would be a more complex, but also a more responsible approach. The current economic structure in the BSR would be much more integrated:
• with a higher export and logistics potential;
• with a lower risk of crisis and fall in domestic demand;
• with higher integration and regional division of labour.
The second consideration of the EOs addresses the situation where the objectives of the strategy were reshaped during a framework of constant consultations and discussions. Shortcomings arise when these objectives are not successfully redefined and no compromise is reached. In the case of the involvement of EOs the quality of strategy development and cooperation was not reviewed based on recommendations prepared by employers’ representatives and the realities of the economic situation.
The EOs were concerned about the implementation of the strategy, and offered several approaches to integrate the strategy into the framework of other EU strategies by:
• Deep analysis of the work of current institutions in the region;
• Coordination of different policies and actions of different institutions in the region;
• Consolidation of resources by redefining regional institutions, their missions, tasks and priorities, or by merging organisations and their functions, taking full account of the need to adapt to a new environment following the three EU enlargements since 1995.
Conclusions: encouragement for participation
To create a result-oriented strategy, economic governance of the region should be based on the same principles: there should be preconditions to encourage economic actors to cooperate more efficiently, and to support and implement common regional policy. For instance, it is possible that politicians and civil servants could end up supporting the positions of the International Maritime Organisation and environmentalists on shipping regulation in the Baltic Sea, ignoring the competitive opportunities of the regional shipping sector compared to competitors from other regions, resulting in disregard for regional interests. Lack of proper consultations and expertise forms the background for ignorance of the current situation. National governments are still set upon implementing international standards in the shipping industry before proper social, economic and environmental evaluation of the new EU regulations.
The initiative from the EOs activates the issue of relations among hierarchies, seeking to establish responsible commitments on the part of the public, private and non-governmental sector at all levels of the decision-making process.
Consultations with social partners and NGOs had an important place in the development of the strategy. The involvement of society was perceived as a prerequisite to manage the policy process successfully. High-quality consultations in developing the BSR Strategy are essential in order to ensure cooperation among political and socio-economic partners. Governance of the BSR strategy should concentrate on the development of partnerships with social partners and NGOs or the creation of partnerships to develop growth. Such partnerships may be initiated both by the public sector and by interest groups representing certain professions, industries or economic sectors.
To increase the commitment of the public and private sector there is a need for public authorities to negotiate possible misinterpretation of the strategy and legitimate the decisions, in order to avoid possible resistance and conflicts among interest groups. This means that rules governing the coordination and consolidation process are needed, envisaging plural forms of organizations involving social partners and other NGOs. By reaching a common agreement, a commitment on institutionalization and management of resources could be reached in order to implement the strategy.
Introduction
Employers’ organisations’ (EOs) of the region regard competitiveness and sustainable development as the key objectives of business cooperation in the region. This region is diverse, with differing social characteristics and cultural heritage (languages, history etc.), but also with remarkable disparities of macroeconomic indicators, such as several different currencies, and differences in industrial development, productivity rates and income structures. Still, the region is united by one sea, which focuses the efforts of the organised business community in looking for new advantages, inspired by the regional strategy of the enlarged Europe.
The author develops the assumption that the EOs of the Baltic Sea states are an essential part of the organised business community, demonstrating their ability to make a pragmatic contribution: bringing appropriate ideas from business reality in order to address the global economic challenges of the countries suffering from economic crisis. The aim of the article is to show that business organisations, recognising the strength and full potential of the region, can mobilize interest groups, national states and international organizations for this purpose. As will be shown in this article, despite the diversity of the regional economies, the EOs have managed to agree that, in order to consolidate and coordinate the viewpoints of organized business, it is necessary to settle upon a common stand and action with respect to other relevant actors.
One of the greatest challenges for the region is to facilitate the development of the EU Baltic Sea Region Strategy (BSR) and carry out a reform of the CBSS, reaching common targets agreed in the region. The article is based on the analysis of the course of development of the recommendations from EOs that were prepared for the Baltic Sea States summit in Riga on 3–4 June 2008. This case shows up the issues identified in the process of reaching an agreement among EOs and developing proposals during the 1st Meeting of Baltic Sea Employers’ Organisations. These proposals were submitted to the CBSS Presidency and the European Commission (EC), as well as to the governments of the relevant states for further integration into EU policy and national flagship projects.
Competitiveness and sustainability objectives of the region were the basis for the involvement of EOs in the development of regional strategy during the Latvian Presidency of the Council of Baltic Sea States (CBSS) in 2008. The priorities for reaching these objectives are education, entrepreneurial activity, energy and development of infrastructure (including transportation). These priorities can be reached by utilizing diversity and increasing the participation of the public sector and NGOs in the implementation of the strategy.
The employers’ perspective for competitive advantage
Even though the Baltic Sea Region was hit hard by the global crisis (resulting in significantly negative economic growth in terms of GDP for the Baltic countries, with growth continuing in 2009 only in Poland), the competitiveness fundamentals remain strong, with a great potential of collaboration and development of regional institutions.
Figure 1. Economic growth: the Baltic Sea Region countries
Because they have used to their full value the resources available in the region, the majority of BSR countries are ranked as being at the highest stage of development (while Latvia, Lithuania and Poland are ranked as being in a transitional period to the stage of the most developed countries). The EOs representing the majority of entrepreneurs in the region have created a network of Nordic and Baltic General Directors, recognising this potential and becoming the driving force of business opinion consolidation in the region. This is also serving to encourage the consolidation and definition of the economic priorities of the EU Strategy for the BSR by the representatives of the organised business community. Certainly, the development of the region should be viewed in the wider context of the economic development of the EU, involving the European Economical Area (EEA) and EU Neighbourhood Policy, using the full potential of its geopolitical location.
The EOs as a strong business network of the BSR have reached general agreement that the issue of financial stabilization currently dominates in public discourse and on the political agenda, while the issues of trade, investment and the revival of the real economy receive only limited attention. Following the political agenda, these issues have not been integrated into the update of the strategy, raising the threat that it could become inadequate to the current situation and the socio-economic agenda of society in the mid-term. Therefore the EOs address the following in their Joint Resolution: institutions and policies; economic development; relations between EU members and other BSR countries; the BSR strategy itself and the role of EOs.
The business community still cannot be sure that EU decision-makers can provide the answers, and that the EU has an economic strategy for the future of the region, which would serve to stabilize financial markets and improve the availability of financial resources to the economy and investments in growth, as well as to institutionalize governance of the BSR. The business community of the region needs a vision of the capacity of decision-makers and policy executives in the public sector to deliver responsible business choices, more profound integration in the ongoing processes concerning stabilization of financial markets, and choices for a sustainable environment. If the separate and generally differing national policies of the BSR could be replaced with united BSR policies, then the list of losses for the region in this crisis situation would be much shorter. The global economic setbacks bring a need to define a new content and scale of regional policies, based on social, cultural and economic advantages, as well as on principles of coordination and concentration of resources during the process of implementing and supervising the strategy.
At the meeting of EOs of the BSR, officials and experts focussed attention on the following issues:
• Competitiveness of enterprises;
• Availability of human capital and promotion of employment;
• Social dialogue and the role of good governance and partnership;
• The role of the EU in the development of the BSR;
• Cooperation between the EU and Russia, and the role of the BSR.
This was an exchange of views among seven organizations from seven countries (Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Denmark and Iceland) of the Baltic Sea Region.
Taking into account important consultations among the EOs, using a common form of questionnaire and preparing a number of position papers (October 2007 – May 2008), as well as discussions and consolidation of interests after the meeting of EOs, recommendations were expressed in a resolution of the EOs of the Baltic Sea States. The joint resolution addresses the necessity for:
• Development of communications, transport networks and other infrastructure;
• Harmonization of laws, regulations and procedures towards the EU acquis and their proper implementation;
• A greater input in development of knowledge and innovation in the region;
• Deeper cooperation in the energy market;
• Promotion of all kinds of contacts between people, business communities, etc.
Other priorities for reaching regional objectives, regarded as conditional and complementary, such as improvement of employment, investment in research and development, and quality of education, could be reached through a rise of competitive economic activity in the region.
Competitiveness of companies, availability of human resources, proficiency, accessibility of energy and infrastructure, as well as consolidation of these resources represent the greatest challenges for the development of each state. In awareness of the wide opportunities for business development and the global economic challenges, it is necessary to expand cooperation networks and strengthen the role of the BSR in the EU by mobilizing for this purpose national governments and international organizations. Awareness of the potential of the BSR, as well as deep analysis of existing institutions and further regular involvement of the EOs will be valued as a pragmatic contribution, appropriate for business reality.
Figure 2 shows the framework of interest representation and consultations of the EOs and other important actors. The recommendations were discussed with the national ministries, and based on the recommendations the position paper on European Business Confederation (BusinessEurope) was developed and passed to the EC Directorate General Regional Policy. The CBSS and the EOs of Russia and Germany were informed about the results of the EO consultations. It is extremely important to achieve mutual agreement on the priorities and on closer cooperation between the countries of the region, including Russia, in order to continue further efforts to create a common economic space between the EU and Russia. As emphasised by Peter Egardt, Chairman of the Business Advisory Council of the CBSS, there are perceptible changes in the global business environment which act to defuse the influence of regions; however the driving force behind these changes is precisely the dimension of regional development.
Figure 2. The framework of interest representation and consultation
On 14 December 2007 the EU Member States invited the EC to present an EU strategy for the BSR by June 2009. The EOs recommended that this strategy should be developed by applying a new, innovative approach, facilitating consolidation and coordination processes within the region, as well as making sure that it does not duplicate other already existing initiatives and policies, and that it concentrates the processes of strategy implementation.
The BSR requires immediate establishment of an integrated business geography, so the BSR strategy should comply with business needs in the EU, facilitating competitiveness and partnership, pointed out Valdis Krastiņš, Chair of the Committee of Senior Officials of the CBSS.
Still, feedback about recommendations taken into account is missing, both from the EC and CBSS. Therefore, discussions with the ministries of foreign affairs and the industry ministries responsible for certain priority areas are to be strengthened.
Employers’ concerns about implementation of the Strategy
Two main considerations were examined during the consolidation process of the EO resolution. The first is based on the macro-economic indicators, which prove an increase of disparities and ‘two speeds’ in the region. Currently, the two speeds are best characterised and proven by Figure 3, showing the prosperity level and growth in GDP per capita in selected countries, and expected per capita growth in 2009 to 2008. Latvia, Lithuania, Estonia, Russia and Poland are lacking behind the GDP per capita of the Scandinavian countries. The significant differences consistently serve to raise the question of availability of financial resources and human capital to invest in priority areas defined by the strategy and the development of partnership projects to manage areas of responsibility. Assessment of the influence of these differences is needed in order to foster the region’s recovery from the impact of the financial and economic crises, and evaluation of the competitive advantages of the region as such would establish common grounds for further cooperation. The EOs expressed the opinion that the development of this region should be further and more broadly examined. Global slowdown and economic crises is the right moment and opportunity to define a much more integrated collaboration model for the economy.
Figure 3. The prosperity level and growth in selected countries
Entrepreneurship and cooperation can be restored, bringing along with it market demand and regional division of labour. Financial expansion policies should be proportionally followed by integration policies for industry and by investments in the educational system. This would be a more complex, but also a more responsible approach. The current economic structure in the BSR would be much more integrated:
• with a higher export and logistics potential;
• with a lower risk of crisis and fall in domestic demand;
• with higher integration and regional division of labour.
The second consideration of the EOs addresses the situation where the objectives of the strategy were reshaped during a framework of constant consultations and discussions. Shortcomings arise when these objectives are not successfully redefined and no compromise is reached. In the case of the involvement of EOs the quality of strategy development and cooperation was not reviewed based on recommendations prepared by employers’ representatives and the realities of the economic situation.
The EOs were concerned about the implementation of the strategy, and offered several approaches to integrate the strategy into the framework of other EU strategies by:
• Deep analysis of the work of current institutions in the region;
• Coordination of different policies and actions of different institutions in the region;
• Consolidation of resources by redefining regional institutions, their missions, tasks and priorities, or by merging organisations and their functions, taking full account of the need to adapt to a new environment following the three EU enlargements since 1995.
Conclusions: encouragement for participation
To create a result-oriented strategy, economic governance of the region should be based on the same principles: there should be preconditions to encourage economic actors to cooperate more efficiently, and to support and implement common regional policy. For instance, it is possible that politicians and civil servants could end up supporting the positions of the International Maritime Organisation and environmentalists on shipping regulation in the Baltic Sea, ignoring the competitive opportunities of the regional shipping sector compared to competitors from other regions, resulting in disregard for regional interests. Lack of proper consultations and expertise forms the background for ignorance of the current situation. National governments are still set upon implementing international standards in the shipping industry before proper social, economic and environmental evaluation of the new EU regulations.
The initiative from the EOs activates the issue of relations among hierarchies, seeking to establish responsible commitments on the part of the public, private and non-governmental sector at all levels of the decision-making process.
Consultations with social partners and NGOs had an important place in the development of the strategy. The involvement of society was perceived as a prerequisite to manage the policy process successfully. High-quality consultations in developing the BSR Strategy are essential in order to ensure cooperation among political and socio-economic partners. Governance of the BSR strategy should concentrate on the development of partnerships with social partners and NGOs or the creation of partnerships to develop growth. Such partnerships may be initiated both by the public sector and by interest groups representing certain professions, industries or economic sectors.
To increase the commitment of the public and private sector there is a need for public authorities to negotiate possible misinterpretation of the strategy and legitimate the decisions, in order to avoid possible resistance and conflicts among interest groups. This means that rules governing the coordination and consolidation process are needed, envisaging plural forms of organizations involving social partners and other NGOs. By reaching a common agreement, a commitment on institutionalization and management of resources could be reached in order to implement the strategy.
