OPINION | Public services and social dialogue: Europe's competitive advantage

As the European Union reorients itself toward competitiveness and industrial renewal, there is a growing risk that the social model that made Europe successful is treated as a burden rather than an asset. It would be a grave mistake.

Public services and social dialogue are not obstacles to growth—they are strategic tools for resilience and competitiveness.

Across Europe, industries are undergoing rapid transformation. Whether it’s decarbonisation in the steel sector, digitalisation in manufacturing, or automation in public administration, one truth remains: transitions only succeed when workers are supported, included, and empowered.

And yet, social investment and public services often remain the first victims of fiscal consolidation or misguided efficiency drives. The latest EU Competitiveness Communication speaks of productivity and innovation—but rarely mentions people.

We need a reset of this thinking.

OECD research confirms that countries with strong systems of social dialogue and robust public institutions tend to recover faster from crises, experience lower inequality, and display greater economic resilience in the face of external shocks.

A 2023 OECD report showed that countries with high union density and institutionalised dialogue mechanisms had more effective short-time work systems and stronger labour market rebounds post-COVID.

Another study linked efficient public administration to higher firm-level productivity, especially among SMEs. When citizens trust institutions, when rules are predictable, and when services function, businesses perform better.

It’s not just a matter of fairness—it’s a matter of performance.

The current US pathway of cost-cutting under the so-called “Department of Government Efficiency” (DOGE) has led to closures of vital public services, mass layoffs, and increased social instability.

Cuts and deregulation have hollowed out institutional capacity, with long-term effects on the efficiency of public services, and very likely detrimental consequences for business environments that rely on them.

Europe must not go down the same path.

The EU should instead double down on its own strengths:

• A well-trained, protected, and respected workforce,
• Strong social partners involved in transition planning,
• And public services that enable—not hinder—industrial transformation.

What we need now:

1. Social dialogue must be institutionalised at all levels of EU governance—not just consulted as an afterthought, but embedded as a principle of good policymaking.
2. EU economic governance must allow room for social investment. The fiscal rules must support—not restrict—the funding of education, healthcare, vocational training, and worker upskilling. Expenditures in these areas are not mere social costs, they are very necessary investments that will pay off economically too.
3. Public services must be seen as drivers of competitiveness, not budgetary liabilities. They are enablers of workforce productivity, innovation, and societal stability.
4. Active Labour Market Policies must be scaled up. Projects like CESI’s Activer show that well-designed upskilling, career support, and just transition pathways are vital to turn disruption into opportunity.

We must end a misguided debate between worker participation, performing public services and economic strength. The three go hand in hand.

Europe’s competitiveness in the next decade will not come from race-to-the-bottom deregulation. It will come from investing in what works: people, partnerships, and public systems that empower.

Social dialogue and public services are not nostalgic holdovers from another era. They are Europe’s advantage in an uncertain world.

It’s time we recognise that—and act accordingly.