We Need An Industrial And Innovation Policy For Europe

The prolonged economic crisis since 2008 has drastically reduced incomes and employment levels and the promised recovery will not reabsorb unemployment, particularly in Europe. Nevertheless, economic policy in Europe is sticking to past recipes based on two mainstays: fiscal austerity and labour flexibility. This strategy does increase the short-run cost competitiveness of European firms overseas but this comes at the cost of decreasing the size of European internal markets reliant on domestic demand. Europe needs clearly structural reforms, but of a kind very different from those asked by the European Commission during this crisis. We here report on two closely connected and integrated lines of policy intervention related to the labour and the industrial system in Europe and its periphery countries. The two layers of intervention relate to industrial/innovation policy and labour policies mainly linked to wage setting.