In a month full of important announcements about the future of the European Union (EU), including the launch of the long-awaited Mario Draghi report and the unveiling of the composition of the new College, questions remain around the concept of competitiveness and how it will shape the next institutional cycle. Addressing competitiveness through the lens of sustainable and inclusive wellbeing could, and should, play a central role in shaping the EU’s approach moving forward.
Projects like MERGE call for a bold redefinition of competitiveness: Increasing productivity and economic growth should not be seen as ends in themselves, but as a means to promote wellbeing and employment opportunities, all while respecting planetary boundaries. To meet the challenges ahead, we must also adopt a broader understanding of productivity—one that places sustainable and inclusive wellbeing at its core. Shifting from GDP to more meaningful measures of progress is an essential first step for building sustainable prosperity and a future where economic success aligns with human and environmental wellbeing.
What is competitiveness anyway?
As “competitiveness” becomes a central focus in shaping political priorities for the next five years, it is crucial to carefully consider how the term is defined. For many, competitiveness is fundamentally about productivity, and the policies, institutions, and other factors that influence it. For others, it is ultimately about promoting wellbeing. 1
For the European Commission (EC), the concept has often been linked to sustainability, as seen in the term “sustainable competitiveness,” which refers to businesses being both productive and environmentally friendly.2 Given this, it is not surprising that competitiveness plays a key role in the European Green Deal, which is not only a climate strategy, but a building block in Europe’s political economy, with economic growth at its core.3
The rising importance of competitiveness in European policy is also reflected in the language of recent key documents. For instance, this term together with “competitive” appear thirty times in EC President Ursula von der Leyen’s political guidelines for the 2024 period, doubling its mentions compared to the 2019 document and replacing terms like “green” and “climate,” which were more prominent in previous guidelines. Notably, the concept of competitiveness is tied to prosperity (“A new plan for Europe’s sustainable prosperity and competitiveness”), connecting at least in principle the issue of productivity and wellbeing. However, how these are connected in practice is one of the key challenges for the next EC.
Is the future of European competitiveness sustainable? – Reflecting on Draghi’s report
After months of anticipation, Mario Draghi’s report on the future of European competitiveness was finally released on September 9th. The extensive document includes important contributions to improving coordination mechanisms and boosting investment levels. However, when looking at it through a “sustainable and inclusive wellbeing” lens, the report falls short on many crucial aspects.
The document begins with the premise that GDP growth is slowing due to weakened productivity, which in turn threatens Europe’s ability to achieve its ambitions—such as high levels of social inclusion, carbon neutrality, and increased geopolitical relevance. However, it falls short of fully developing this interconnection, failing to explain the relation between slower economic growth and a potential deterioration of outcomes in governance, health, education, or environmental protection. This omission is significant, as it leaves room for a future scenario where GDP grows without corresponding improvements in the wellbeing of the population or where environmental protection and healthcare improve while productivity (GDP) does not.
While the Draghi report acknowledges the need to preserve social inclusion, it does not go deep enough in this matter. The proposed approach focuses on jobs and incomes but does not fully articulate how to provide those, let alone how to adequately protect labour and environmental standards across Europe. Likewise, it fails to recognise the potential of social economy, social protection and public services to combat inequalities. Social investment is an important lever for sustainable competitiveness.
Furthermore, the report fails to sufficiently explore the linkages between industrial and cohesion policies, neglecting the issue of a two-speed Europe. The lack of attention to a just transition for workers and communities—a concept completely missing from the report— and the traditional focus on growth metrics like GDP highlight the report’s limitations. It does not adequately address broader challenges or align with the EU’s efforts to pursue sustainable development and a future-oriented concept of competitiveness.
A broader, more nuanced understanding of productivity is needed—one that aligns with social and environmental goals rather than contradicting them. This means conceiving productivity as the efficient and effective use of economic, human and natural resources for the provision of goods and services necessary for sustainable and inclusive wellbeing and expanding human capabilities. This redefined productivity must acknowledge that “greening” industries may reduce productivity in conventional terms but is vital for long-term sustainability. By incorporating ecological and social dimensions into our understanding of productivity, we can create a framework that supports President von der Leyen’s vision for a “new plan for sustainable prosperity and competitiveness,” where economic, social, and environmental progress are deeply interconnected.
A new mandate, a new opportunity
On September 17th, President von der Leyen presented the list of Commissioners-designate and their portfolios, tasked, amongst other things, to drive the Draghi agenda and boost Europe’s competitiveness. The new Commission structure includes a brand-new Executive Vice-Presidency on Clean, Just, and Competitive Transition, which also oversees the competition portfolio. This is a positive development, as the position and its related mission letter suggest a more nuanced and comprehensive understanding of competitiveness.
However, it’s important to note that most of the “economic” portfolios fall under the jurisdiction of another Vice-Presidency (Prosperity and Industrial Strategy). The degree to which these portfolios actively coordinate between each other with social topics—primarily managed by the Executive Vice-President for People, Skills, and Preparedness—will only become clear once implementation begins.
Interconnected problems require equally complex and interconnected solutions. If the new Commission is to rise to the challenges ahead, it must acknowledge that GDP growth alone is unlikely to resolve the EU’s key issues. And therefore, alternative metrics of progress should be considered: metrics that can provide a more accurate diagnosis of the current situation, guide resource allocation, and allow for the assessment of policy effectiveness.
In this context, it is important to re-emphasise that competitiveness should not be framed solely as a tool to bolster Europe’s economic standing nor understood simply as an increase in productivity at the expense of social and environmental standards, or, even worse, at the expense of human security across the world. It must be redefined to consider wellbeing, ecological sustainability, and the long-term resilience of the entire bloc, recognising potential synergies but also trade-offs. Connecting the evolution of non-market aspects of wellbeing, such as health and environmental quality, to traditional economic production, reveals both the resources required to sustain them and the damage caused by inaction. This underscores a critical point: ignoring the impact of a “business as usual” trajectory risks undermining wellbeing. As the new political cycle begins, we have a new opportunity to reflect on our societal goals and make sure that the metrics that guide our decisions are aligned with them.
By focusing too narrowly on GDP growth, a metric whose numerous shortcomings have been recognised at the highest level, by the United Nations and its recently adopted Pact for the Future, we risk missing the chance to propose a more forward-thinking definition of competitiveness, more attuned with contemporary realities and targets. Increasing productivity should not be seen as an end in itself, but as a means to improve people’s living and working conditions, all while respecting planetary boundaries.
Future competitiveness policies must prioritise sustainability and social outcomes over mere GDP growth. Currently, many ongoing projects like MERGE, funded by the European Commission’s Horizons programme, are contributing to this much needed shift by producing new cutting-edge research. By applying a “beyond GDP” lens, MERGE shifts the focus from economic metrics to what truly matters—to sustainable and inclusive wellbeing.
This publication was authored by Tuuli Hirvilammi, Tampere University; Alisa Rannikko, Tampere University; Magali Brosio, ZOE Institute; Christoph Gran, ZOE Institute; Tommaso Grossi, European Policy Centre; Danielle Brady, European Policy Centre; Andrea Ferrannini, ARCO c/o PIN and University of Florence; Mario Biggeri, University of Florence; Brent Bleys, Ghent University; Federico Demaria, Universitat de Barcelona; Annegeke Jansen, Leiden University; Katja Reuter, Social Platform; Maria Zinutti, Wellbeing Economy Alliance; Margreet Frieling, Wellbeing Economy Alliance; Olli Bremer, Demos Helsinki; and Jenni Kilpi, Demos Helsinki.