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Basque Country: In the eye of the financial storm

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Although many Europeans associate it with political turmoil, the Basque Country is the only Spanish region where the economic outlooks is mild.

Tuesday 13 March 2012

In the summer months, the beachside cafés in the Sagües quarter of San Sebastián (Basque Country, Spain) are bustling. The surfers take their morning session, while tourists, local youth and middle-aged clientele take their mid-afternoon cañas, or small beers. Walking through the parte vieja – old quarter of the city – a sign reads: “Tourists beware you are not in Spain, nor France, you are in the Basque Country”. Something seems very different here.

You get the impression that the financial crisis has not taken hold here. Nevertheless, the winter months are hard for the service sector. Juan Ramon, a local taxi driver, confirms the difficulties of keeping one’s head above water in the ‘off-season’. Elena, one of the owners of La Consentida, a pintxos bar along the normally thriving coastal avenue, La Zurriola, notes the effects of the now four-year crisis. “Every day we are worried about business, but winter is always especially difficult,” she says.

Although things may be bad in the Basque Country, the situation is worse in the rest of Spain, especially in the south where mass tourism plays a huge role. But the Basque Country has a different background. Its research centres and traditional industries are still fairing well in the financial storm.

Amid soaring unemployment and fears of a double-dip recession in Spain, the Basque Country offers a contrasting picture. The Spanish situation is grim, with 5.3 million unemployed at the end of 2011, the Bank of Spain predicts that the country’s economy will fall into another recession, contracting by 1.5% in 2012, which would exacerbate the 22.9% unemployment rate reported at the end of 2011, according to the Spanish National Institute of Statistics (INE).

Meanwhile, the Basque Country has the lowest unemployment rate of all the Spanish regions, known as Autonomous Communities, and has maintained comparatively lower levels for decades. With a population of 2.16 million, the Basque Country’s unemployed is 159,667. That’s just 7.4% unemployment, way below the Spanish average.

But why is the Basque country weathering the financial storm better than the rest of Spain? It goes back to basic economic drivers… industry and production. Iron mining and steel manufacturing helped build this region and, unlike the UK and other struggling European economies, the Basque Country is not letting go of them without a fight.

Heavy mining at the turn of the 19th and well into the 20th century gave the Basque region a solid economic base and provided steady employment for skilled and unskilled workers, including economic migrants. Today, the Basque Country’s level of industrialisation is greater than the EU average.

The Basques have also been able to reinvent themselves, with EU backing and opportunities. Through the European Regional Development Fund (ERDF), the EU has €241 million in co-funding destined for the Basque Country under the Regional Competitiveness and Employment programme (2007-2013). The funds are devoted to areas that are already highly developed in the Basque Country, including science and technology, research and development, environment, energy resources, and transport.

The tiny Basque Country punches above its weight politically as well, offering its expertise to the EU in such fields as taxation policy, health, the environment, transportation, e-democracy, agriculture, language and culture, and even fishing policy. According to one MEP from the Basque Nationalist Party (PNV), “The Basque Government is in continual contact with the European Commission in formal and informal settings.”

But does all this direct contact between the EU and the Basque region create greater tension with Madrid? Yes and no.

In considering the absence of a Spanish central state-sponsored representation mechanism, an official from the Spanish Permanent representation to the EU notes, “It is a weakness of the system that the Autonomous Communities do not have the capacity to be able to negotiate and be represented here in Brussels,” at least through the central state.

As an autonomous region you would expect some, well, ‘autonomy’ in its dealings with the EU, but Spain can’t help but be envious of the Basque Country’s clout and strong ties to the EU. For the Basques, though, it is pure logic: why wait for Madrid – or negotiate a shared position with the other Autonomous Communities – when you can act directly at the EU level?

This thinking applies on many levels, including how the Basques fund their research. Tortuero Martin, a government expert, explains that funding is arranged through an agreement between the management agency or authority and those in charge of employment policy in the Autonomous Communities. “There is regional source of funding, and it doesn’t come from the budget of the state in Spain,” he stresses.

Moreover, the Basques have the means and institutions in place to lobby the EU directly, which is arguably a more robust form of negotiating than the sclerotic traditional power structures. This nimble, somewhat informal, approach could well be the Basques regions secret weapon, helping it weather the financial storm and defy the dire predictions for the Spanish economy.

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Tags: basque country, brussels, business, economy, employment, eu, europe, financial crisis, france, industry, research, spain, technology, tourism

Social responsibility goes digital

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By Ray O’Reilly

Information technology is being hailed as the new face of socially responsible business.

Friday 10 February 2012

Corporate social responsibility, or CSR, is getting a makeover thanks to the emergence of ultra-fast, ultra-smart, ubiquitous information and communications technologies (ICT). This match-up is the beginning of an unexpected but somehow quintessential relationship explored in a refreshing exhibition hosted this week in Brussels.

Companies are embracing cutting-edge technology to save on costs and deliver competitive advantage in these tough economic times. But what many may not appreciate is that this economically rational decision can have profound social benefits, too. ICTs can boost an organisation’s CSR activities, which has a cascading effect along whole value chains, from stakeholders and staff to suppliers and service providers.

The five dimensions of ICT4CSR

Political … giving people a voice

Geographical … bringing people together virtually

Economic … bringing markets closer to home

Societal … providing access to education, knowledge and opportunities

Environmental … green technology helping to tackle climate change

The term ‘corporate social responsibility’ dates back to the late 1960s and 1970s but has entered more mainstream use since the publication of R Edward Freeman’s book, Strategic management: a stakeholder approach, in 1984. Through CSR activities – donations, community work, ‘green’ operations, etc. – organisations look beyond shareholder value alone in search of positive outcomes for all stakeholders (consumers, employees, communities, the environment).

Providing technology is only part of the contribution that ICT companies can make, experts suggest. The industry is uniquely placed to help local communities around the world, to nurture talented people, and to help developing countries find innovative solutions to the pressing challenges they face.

In 2010 alone, the ICT industry contributed betwen 30% and 40% to the economic growth of developed countries.

Hosted at the European Parliament from 6 to 9 February, the exhbition, entitled ‘ICT4CSR: Enriching life through communications’ tells a story of how ICT provides fertile ground for companies to nurture ideas, talents and people which eventually come to fruition in the form of better (digital) working conditions, safeguards for the environment, and myriad ways for enriching society.

Thus, in the right hands, CSR is much more than a company’s way of easing its conscience, the fair suggests. To organisations that embrace it fully, it becomes a way of life, a way of operating with integrity and a way to promote the harmonious and sustainable development of the economy, society, and environment.

Unusual digital dividend

Governments worldwide are investing in the huge potential of digital communications technology to connect people, transcending boundaries and bringing communities together to benefit one another. Europe is no exception.

“It’s my dream to get every European digital,” wrote Neelie Kroes, European Commissioner for the Digital Agenda, on her blog. “And that means everyone needs to be covered by fast broadband connections.”

The Digital Agenda for Europe focuses on ICTs’ capability to reduce energy consumption, support ageing citizens’ lives, revolutionise health services and deliver better public services. Its targets include broadband of at least 30Mbps for everyone by 2020 with half of European households subscribing to connections of 100Mbps or higher.

The widespread rollout of very fast, ‘always on’ internet provides solutions to a number of local, regional and global challenges. For instance, access to education in remote villages. With satellite broadband solutions and advances in e-learning, village children can benefit from home schooling using interactive, multimedia lesson plans.

“Having access to the internet and other ICTs will not just be the privilege of the few,” commented MEP Robert Sturdy during the opening of the exhibition. “I truly believe that smarter, greener, targeted ICT can change the way we work and live, for the better, no matter which corner of the world you are from.”

A 10% increase in broadband penetration will improve GDP by 1.3%. And high-speed internet also enables businesses, especially small ones, to remain competitive and allows consumers to take advantage of advanced online services that improve their quality of life, from e-commerce to e-government services.

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Tags: brussels, business, corporate social responsibility, digital agenda, economy, eu, europe, european parliament, industry, internet, Neelie Kroes, r edward freeman, responsible business, value chains

When the chips are down

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By Khaled Diab

Arab revolutionary fever has spread to Europe as Belgians raise their freedom fries, not to bring down a regime but to ask for one to be formed.

Wednesday 23 February 2011

Missing the most defining moments in Egypt’s recent history by a few short weeks and watching the revolution unfold in my native land from afar has been frustrating.

But some of that revolutionary spirit has infected my adoptive land, Belgium, where young people have started what has been called the friet revolutie or “fries revolution” (after that most popular of national symbols, Belgian chips) to express their anger and frustration at their country’s ongoing failure to form a government.

Creative events have been held across the country to mark the world-record-breaking 250 days without government, including a strip protest, beer demos, and the continuation of longstanding actions such as shaving and sex strikes. The largest event was held just down the road from where I live in Ghent, where protesters occupied one of the city’s main squares and partied until midnight, when a delegate from Iraq – the former record holder – handed over a trophy.

“We want to show our politicians that we are proud of their performance,” one of the organisers told Belgian TV with a heavy hint of irony. “At first we thought: what in God’s name are they up to? Are there no important problems that need solving? When we realised they were obviously going for this world record we decided they deserved a celebration.”

Of course, no one is proud that Belgium has won this dubious record, but irony and the surreal are two qualities that cross the language barrier and unify Belgians. In my personal view, Belgium broke the ‘no government’ record a long time ago, with its failure to build a lasting coalition and the political crisis that has ensued since the previous elections in 2007.

In a piece on Comment is Free, Laurens de Vos wrote, “the feeling is growing that if the country is bound to be split up, so be it”. This strikes me as wishful thinking on the part of De Vos, who is a member of the Flemish nationalist N-VA, which seeks the gradual creation of an independent Flemish state and which – along with intransigent elements in the Francophone community – is largely responsible for the current impasse.

My impression, supported by the gathering protest movement, is that most ordinary Belgians feel the country faces more important issues than the so-called “federal reform” currently paralysing Belgium’s political class. The reform debate is allowing politicians to be distracted from crucial issues, such as agreeing a budget, tackling growing unemployment, and allaying the fears of foreign investors and financial markets.

De Vos also recycles a typical Flemish nationalist chestnut, citing the apparently irreconcilable differences between the country’s two communities. “There have been disagreements on virtually every single topic between the socialist south, oriented to ‘Latin’ Europe, and the north with its more Anglo-Saxon approach,” he says, though the more generic “Germanic” is the more typical term used to describe Flemings.

This is a transparent attempt to butter up to British readers by suggesting that Flemings and Brits are in the same club and those Walloons are ‘Latin’, with all the negative stereotypes that label carries. But this bears little resemblance to reality, except on the linguistic front. In my experience, Belgians are very similar culturally, despite the language difference – far more so than the regional differences within larger countries, such as my own Egypt.

It is true that the political landscapes in Flanders and Wallonia are different, but this is largely due to the fact that the south (which used to be the most prosperous) has a concentration of declining heavy industry and mining, and hence tends to vote socialist, while the north is traditionally more rural and, in recent decades, has become a hub for hi-tech industry and services, and so tends to vote more liberal and conservative. It’s like the divide in the UK between the home counties and the north – yet at the moment few people are calling for the breakup of England.

Moreover, the political diversity within the regions is large. Flanders has areas with a strong progressive and socialist tradition, such as Ghent and the former mining communities of Limburg. In fact, to register its opposition to Flemish separatism, Ghent declared its independence from Flanders and became a city state for a day.

In keeping with his party’s separatist agenda, De Vos proposes a number of decentralising policies that will rob the federal state of most of what remains of its powers, leaving Belgium an empty shell, effectively dead. But, as I’ve argued before, independence is not in the best long-term interests of either Flanders or Wallonnia.

So, what’s the solution to the deadlock? In my view, and that of many of the protesters, Belgium needs to reinvent its political landscape and recreate national political parties, because local parties cannot hold national appeal in federal elections, and social security must remain federal. On the social front, Belgium needs a national media and a universally bilingual education system.

If Belgian politicians fail to resolve their differences soon, then may be it will be time for a real revolution in which the political class are given their marching orders and Belgians seize direct control of their democracy, making their country the first post-party state.

This column appeared in the Guardian newspaper’s Comment is Free section on 18 February 2011. Read the full discussion here.

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Tags: arab, belgian crisis, Belgium, bhv, democracy, elections, england, europe, flanders, friet revolutie, friet revolution, ghent, independence, industry, n-va, opposition, revolution

Is Europe not working?

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By Khaled Diab

The chair of a leading multinational claims that Europeans do not work hard enough and do not value work enough. I beg to differ.

7 May 2010

At a recent conference in Brussels, bigwigs from the political, business, trade union and academic worlds got together to discuss ways of boosting the performance and competitiveness of European industry. Amid talk of innovation, R&D, job creation and helping SMEs, one speaker caused a wave of uncomfortable murmurs to spread through the audience.

It was partly due to his aloof tone and partly his message which, though he did not say it explicitly, implied that Europeans were lazy and all too often spongers. Peter Brabeck-Letmathe, the chair of Nestlé’s board, claimed that Europeans were not working hard enough and had lost their work ethic.

“We have the problem of the hours people are working. If you look at the hours per capita worked in Europe, they are substantially below the rest of the world,” he explained.

Citing surveys which he said revealed that only a minority of Europeans believed hard work was a value to aspire to in contrast to a majority of Chinese, he claimed that Europe was facing a crisis of its work ethic and needed to pull itself up by its bootstraps. “Working smarter is not the solution for Europe. The only solution for Europe is working smarter and harder,” he told his bewildered audience.

Of course, assuming that Brabeck-Letmathe practises what he preaches, this would be quite understandable considering that, as a top manager, he makes millions and so may feel he owes it to his shareholders to work long hours – and he can probably afford an army of helpers to take care of all the practical aspects of his life.

However, I’m not entirely convinced of the economic and social value of Brabeck-Letmathe’s assertions. Do people in countries that clock up a lot of hours actually want to work so long, does it make them more productive, how does it affect their lives and impact their societies? For example, do workers in unregulated China want to spend most of their waking hours assembling cheap goods for export?

In the OECD, South Koreans work by far the longest hours, racking up a massive 2,300-plus hours a year per employee. So, what does this mean ? To demonstrate, allow me to introduce Lee, a civil servant at the South Korean ministry of agriculture and fisheries. He gets up at 5.30am, starts work at 8.30am and doesn’t return home before 9.00pm, just in time to snore. In addition, he doesn’t get to see his kids except at the weekend or on the three days of holidays he gets a year.

So, is Lee working these hours because he finds his job thrilling or he’s a workaholic? No, it’s because he feels insecure. “It’s the culture. We always watch what the senior boss thinks of our behaviour. So it’s very difficult to finish at a fixed time,” he admits.

Moreover, is this the kind of existence we Europeans want for ourselves? After all, if we, as a society, wish to use the economic gains of recent decades to have more leisure time, then we are entitled to do so. In any case, economies cannot continue to grow ad infinitum.

But to go to the bottom line, based on Brabeck-Letmathe theory, you would expect that the Europeans putting in the longest hours would be doing pretty well for themselves. So, who are Europe’s hardest workers? The Germans, I hear at the back? Perhaps the Swedes? No, it’s the Greeks who put in more than 2,000 hours a year – and yet their country is in financial meltdown.

And Greece is a perfect illustration that it is not the quantity of the hours you put in that matter, but the quality. For example, Luxembourg and Norway generate about twice as much GDP per hour worked as Greece.

Those who wish to bash the European way of doing things often point out that Americans work considerably longer hours. But it is something of a paradox that, in the 1970s, the United States had a considerably higher standard of living than Europe, yet Americans worked fewer hours than Europeans. Today, the gap in living standards has narrowed considerably, yet Europeans on the whole work fewer hours.

However, even if Americans do put in the time, they don’t make the most of this time compared with north-western Europeans. In fact, according to OECD figures for 2007, Luxembourg, Norway, Ireland, Belgium, the Netherlands, and France all had higher productivity than the United States.

Contrary to what Mr Nestlé suggests, in some parts of Europe, like Belgium, the problem isn’t how hard an individual works but the number of people out of work. And this has quite a lot to do with the behaviour of multinationals. At first sight, European industry seems to be in trouble. And yet labour productivity in EU manufacturing rose by more than double the rate of overall productivity (46% against under 20% between 1995 and 2007).

And what happened during those good times? Millions of jobs in industry were cut or relocated to cheaper countries – which could lead workers to the conclusion that they are the victims of their own productivity. The same trend has started in services, too, with the outsourcing phenomenon. In addition, there are fears that the forthcoming recovery in Europe could be a jobless one.

Well, how can this be? Many companies, rather than employ more people, will try to extract more bang from each of their workers – Brabeck-Letmathe’s famous work ethic in action. In fact, this is already happening: with the job axe hanging by a thread over the heads of millions of workers in all sectors, many people are putting in extra hours to save their jobs.

The current recession and economic crisis is likely to reverse the gains in work-life balance which Europeans worked so hard to secure. If that occurs, it will be a huge shame.

This article appeared in the Guardian newspaper’s Comment is Free section on 3 May 2010. Read the full discussion here.

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Tags: ambient networks, business, economy, enterprise, european union, greece, industry, innovation, labour, nestle, oecd, productivity, services, south korea, usa, work ethic, work-life balance

Basque Country: In the eye of the financial storm

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