The trade union delegation to the Macroeconomic Dialogue on 12 November 2025 made three interventions. Esther Lynch (ETUC General Secretary - speech below) Ludovic Voet (ETUC Confederal Secretary - speech here) and Isabelle Barthès (IndustriAll Europe Deputy General Secretary - speech here) spoke from the trade union side.
Esther Lynch's speech:
President Lagarde,
President Donohoe,
Commissioner Dombrovskis,
Minister Lose,
Colleagues,
Thank you for this opportunity to speak on behalf of Europe’s working people.
1. The Diagnosis – A Deep Imbalance
For too long, Europe’s economic debate has treated wages as a problem to be contained rather than as the foundation of shared prosperity. And the results are visible in the everyday reality of working families’ budgets.
The share of national income going to labour has fallen from around 66 percent of GDP in the 1990s to barely 63 percent today. In other words, almost 37 percent of the value created in our economies is now captured by capital.
Yet only a small share of that capital income is reinvested. Corporate investment accounts for barely 12 percent of GDP — roughly one-third of the income captured by capital. That means two-thirds of capital income is not being reinvested in Europe’s productive capacity.
Too much of it is being diverted into financial markets, share buy-backs, and speculative bubbles — including the current AI boom — rather than into the real economy. Dividends now amount to about 10 percent of EU GDP, and have risen by 155 percent since the early 2000s, far faster than wages, which have increased by only 112 percent.
Too much is being taken out of the economy, and too little is being put back in.
2. The Consequences – Weak Growth, Job Losses, and Inequality
The consequences are now being felt across Europe. The lack of productive investment has weakened our industrial fabric. Faced with trade disruption from across the Atlantic and intensifying competition from China, Europe is seeing a wave of job losses in manufacturing — the very sectors we claim as strategic.
Restructuring and redundancies are spreading to other sectors as well. When investment stagnates, employment and innovation decline, and the risk is that job losses in critical sectors spread throughout the economy.
But this is not just a social problem — it is a macroeconomic one. When the wage share falls, so does domestic demand. When profits are hoarded instead of reinvested, Europe loses its ability to grow on its own terms, to innovate, and to be resilient in the face of shocks.
At the same time, rising corporate profit margins have fuelled inflation. Price increases have not only reflected energy shocks but also expanding mark-ups in certain sectors. Inflation must not become another mechanism to transfer income from labour to capital.
That is why the European Central Bank must track profits as closely as it tracks wages when analysing inflation dynamics — because ignoring profit-driven price rises risks misdiagnosing the problem and applying the wrong remedy.
Workers did not cause inflation — yet they are paying for it twice: first through higher prices, and then through policies that restrain wages in the name of stability. In many countries, real wages remain below pre-crisis levels.
The ECB’s September forecast expects compensation per employee to rise by 2.7 percent over 2026–2027, but its wage tracker shows that nominal wage growth in the first three quarters of 2026 will slow to around 2 percent — effectively halting real wage recovery and blocking one of the main engines of growth.
3. The Wrong Response – Austerity and Deregulation
Instead of addressing the imbalance between capital and labour, Europe risks repeating old mistakes. Austerity driven by the EU’s fiscal rules threatens to choke recovery just as it begins.
Even if the European Commission projects a slightly contractionary policy mix for 2025–2026, much stronger austerity lies ahead. According to national medium-term structural fiscal plans, one-third of Member States — representing around half of euro-area GDP — face fiscal cuts of between 3 and 7 percent of GDP.
Consumers and investors are already reacting to this expectation, pulling back on spending and investment. If public investment is cut just when Europe needs it most — for clean energy, digital infrastructure, training, and quality jobs — we will deepen stagnation and social division. The fiscal framework must support, not punish, investment in people and productive capacity.
Alongside austerity, a new threat is emerging: the deregulation agenda. Proposals to weaken labour laws, reduce protections, or bypass social dialogue are being sold as solutions to competitiveness.
The ETUC supports sensible simplification where rules are unnecessarily complex — but eroding rights has never made Europe stronger. It drives inequality, insecurity, and resentment, and it undermines the very stability that investors rely on. Europe’s competitiveness must rest on quality jobs, strong protections, and fair pay — not on a race to the bottom.
4. The Right Response – A European Investment Pact
Europe faces a difficult external environment and major restructuring challenges — from decarbonisation to technological change.
What we need now is a European Investment Pact that restores balance between capital and labour, underpins the real economy, and channels profits back into productive activity.
The European Central Bank and the Eurogroup have a critical role to play:
- Recognising that fair wage growth is part of the solution, essential to boosting domestic demand;
- Supporting public and private investment that drives productivity and the green and digital transitions;
- Monitoring corporate profits as closely as wages when assessing inflation dynamics;
- Ensuring that fiscal rules encourage long-term investment — in energy infrastructure, affordable housing, and projects that strengthen Europe’s competitiveness and social cohesion; and
- Promoting fairer taxation and resisting business tax cuts that erode the revenue base needed for investment and services, and risk triggering a race to the bottom across Europe.
5. Conclusion – Renewal Through Fairness
Europe’s economy today is like a field that has been harvested again and again without the soil being renewed.
Profits are taken out, but too little is put back in.
If we want Europe to flourish, we must reinvest in its soil — through fairness, productive investment, and shared responsibility grounded in social dialogue.
What we need now is a European Investment Pact, one that restores balance between capita and labour, underpins the real economy, ensuring that profits are channelled back into productive activity. The European institutions including the Central Bank have a critical role to play:
- by recognising that fair wage growth is part of the solution, in particular at boosting domestic demand;
- by supporting public and private investment that drives productivity and the green and digital transitions;
- by monitoring corporate profits as closely as wages in assessing inflation dynamics;
- by ensuring that fiscal rules encourage long-term investment rather than cuts, for example, public investment in energy infrastructure, affordable housing, and other projects that strengthen Europe’s competitiveness and social cohesion; and
- by ensuring fairer taxation and avoiding cuts in business taxation that undermine the revenue base for needed public investment and services and risk a race to the bottom across Europe.
President, we are ready to play our part.
But workers — along with pensioners and those who depend on social protection — cannot and should not be asked to carry the burden of transforming Europe alone.
To renew Europe’s soil, we must also renew its rewards — with increased wages that allow people to share fully in the prosperity they create.