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Top manager at Unilever on
impediments to entrepreneurship in Europe
High taxes, long vacations, working
little, too many rules: Europe is on the verge of asphyxiation. Unilever top
manager Antony Burgmans stresses fast and far-reaching reforms. As president
of the EU, the Netherlands must now take the lead. “If we’re ending up
finishing last, it’s our own fault.”
When Antony Burgmans, the Dutch top
manager of Unilever, was celebrating the expansion of Europe in Warsaw, he
gave the Poles good advice. “Please don’t take over our bad habits” he
said to his political and entrepreneurial friends in Warsaw. “Otherwise the
economic blooming of which both you and we profit from will disappear
quickly.”
The high taxes in Western Europe,
the short working week, the long vacations, the government drive to interfere:
the discouragement of entrepreneurship. “More and more the fearful vision of
Europe as a cultural museum of the world looms in my mind, being left behind
by the US and the new Asian giants, China and India”, says Bergmans in his
office on the highest floor of Unilever headquarters in Rotterdam. The
British-Dutch company - known by its Magnum ice cream and Cornetto, Omo, Becel
and Calvin Klein - is the biggest producer of consumer items in the world.
Burgmans himself is a sober
Rotterdamer. His father was a captain in commercial shipping. Antony was born
within arm’s reach of the Unilever building. He has been working for the
company for thirty years now and since 1999 as the highest boss, chairman of
the board of directors. He is also active in the European Round Table of
Industrialists, a fellowship of top managers of the fifty most important
European companies such as Fiat, Volvo and Philips. As chairman of the working
group European Expansion, he strives for a stronger and more democratic
European Union (“otherwise voters will drop politicians like a sacks of
potatoes”).
“The European economy is growing
far too slowly”, he says. “The gap between Europe and other economic power
brokers, the US and Asia, is growing. If we don’t adapt to the new reality,
Europe will unavoidably experience a downfall.” As president of the European
Union The Netherlands has an outstanding opportunity to put growth at the top
of the European agenda this coming half a year. “Time is ticking”, says
Bergmans. “If Europe takes steps in the area of economic and social
innovation now, the changes can take place without social dislocations. Then
it will be possible to take care of the weak in society. The noble goal was to
establish a righteous society with equal chances. In practice one sees however
that people who have little become the first victims.”
Lately Burgmans stayed at the Van
den Bergstichting in Noordwijk, an establishment which takes care of the
mentally handicapped. These social trips are encouraged at Unilever to
maintain a feel for society. “Handicapped people too have to deal with
budgetary shortages, that’s the place where society’s true weak are. If we
take in-depth measures now, we will be able to guarantee a safety net for the
weakest.”
What can The Netherlands do as
president of the Union to put the European economy in a higher gear?
“The Netherlands can ensure that
a European action program will be made whereby investments in education and
innovation receive priority. Take the European budget. Almost half of the 100
billion euros is given to agriculture, where a lot of money goes to French
farmers. With all due respect to the agrarian world but agriculture can barely
be called an industry of the future. Meanwhile, in that same France, thousands
of unhappy scientists take to the streets, because insufficient money is being
invested in scientific research for modern technologies.
That’s unacceptable. The
distribution of European budget funds must see other choices. The innovative
and creative forces in society are being systematically suppressed. Taking
risks is discouraged, because it is seen as a threat by the existing social
contract between politicians and voters. They keep each other in a gridlock.
The politicians take care of a nice warm blanket and in exchange for that they
get the votes of many in the elections.
We see this tendency in The
Netherlands and other European countries. In the European Union 50 percent say
they prefer to be in paid employment, in America this is less than 35 percent.
The Dutch and Europeans are more in need of psychologists, who can work on
taking away the fear of risks then they need politicians. Yet politicians must
show the way. The biggest impediment for innovation is all in the head.”
Four years ago the European leaders
of state agreed in Lisbon that Europe must become the most competitive and
dynamic knowledge economy in the world. Have these words been put into action?
‘That’s in 5.5 years. The time
is ticking, because up to now, little of the Lisbon agenda has been made real.
There is an immense brain drain going on: some four hundred thousand
scientists have left the European Union and have moved to the United States
(US). In the US there are better research facilities, career opportunities and
salaries and a more challenging research culture. According to The Economist
Harvard has 18 billion dollars in its safe, that’s more than twice as much
as the funds of all the British universities put together.
At Unilever we literally encounter
how slow the windmills in Brussels turn in the area of new products. Our
request for distributing our cholesterol-reducing Becel pro.activ spread took
26 months to process. Recently we had to wait for sixteen months to get our
new yoghurt products and Becel pro.activ milk through. In the US the procedure
for such innovative products takes a total of three months.’
Which measures are needed to make
the European economies more competitive?
‘As president of the European
Union, The Netherlands can push for an intermediary evaluation of the Lisbon
agenda and place some critical observations. If the European leaders confirm
these goals anew, then some changes will have to be made. Increasing the
amount of employed from 60 to 70 percent, a yearly growth of 3 percent, a
halving of the amount of 18 to 24 year-olds without qualifications for the
labor market, investing 3 percent of the gross national product (GNP) in
research and development of new products - these have by far not been reached.
Are the goals set out at Lisbon not
too ambitious?
‘No, certainly not. The European
population has a right to live in one of the most prosperous economies of the
world. That’s the case at the moment so why wouldn’t you keep it that way?
But because of increasing globalization we are also dealing with economic
powers such as not only the US but also India, China, and Brazil. Of the top
six largest economic powers in 2050, only the US and Japan will have a place.
Who gets left out? The UK, France, Germany and Italy - the whole European
representation.
‘It is of course fantastic that
newcomers such as India and brazil acquire a full worthy economic position.
But we do have to take care that this progress does not occur at the expense
of Europe. That’s why reform is urgently needed. Either we go forth, or
Europe slides into a secondary ranked region. We will not let ourselves end up
last. If it does happen, it will be our own fault.’
In the meantime more and more West
European are shifting their production to Eastern Europe and Asia.
‘The speed with which Europe
adapts must rise. Companies in Europe have to deal with a jungle of rules. I
attach particular importance to a review of the government’s tasks. The
initiative of the government must shift to the citizens. In The Netherlands a
host of jams have emerged, on the road, on the railways. There are jams of
unnecessary bureaucratic rules, jams of people looking for housing, jams in
health care and in political decision making. There are jams at the borders
whereby high-value knowledge workers cannot enter our country because of
burdensome visa extensions - luckily that will change in October when the
entry procedures for highly educated migrants will be loosened up.
The jungle of rules has an
asphyxiating effect on every particular initiative - not only in The
Netherlands, but also in France, Germany and Italy. For European entrepreneurs
the overregulation is in the top ten of the greatest risks for the business
community. In The Netherlands alone the administrative costs amount to 17
billion euros.’
How are citizens to take more
initiative?
‘The government subsidies must be
rolled back. In The Netherlands alone the government extracts 44 percent of
the GNP from society and then subsequently channels it back via subsidies. In
Germany and France too the government weighs too heavily on the economy. While
the business community is being purged, the government keeps on expanding. A
number of subsidies in The Netherlands must be abolished such as the tax
deduction of pension premiums, rent subsidies and mortgage payments.’
So scraping the entire mortgage
payment tax deduction?
‘Yes, the whole tax deduction of
mortgage interest must be eliminated. It’s the wealthiest who most benefit
from that. Listen, if you want to do it properly, do it well. It’s about the
whole framework, everything is interlinked. It is essential that in exchange
for removing tax deductions a significant reduction of taxes is put into
place. There must be a basic tariff of 25 to 30 percent for everybody, for
citizens and companies. The personal tax allowance for people who really have
very little earnings will be raised. Hereby you leave financial means in
society. You can expect the population to do something with that.
Besides this a review of the social
contract with society is indispensable. More proper responsibility for pension
provision, longer working periods, less vacations. Why do we need seven weeks
of vacation per year? It doesn’t have to be ten days like in the US, but
four weeks should do too.
It is expected that employees
should work longer with wage moderation, while managers with high salaries and
substantial option packages get to go home with very lavish pension
arrangements, not to mention the business scandals.
‘The confidence in the business
community has of course suffered a major blow. It is the responsibility of
enterprises, with the help of the Tabaksblat [previous chairman of the board
at Unilever] code, to re-instill that confidence. But dishonesty is difficult
to deal with. Criminal behavior should simply be punished.
The high pressure of duties in
Western Europe is another problem. Improving our competitive position should
be on the top of the European agenda, otherwise the employment situation will
only further crumble and economic growth will only be left to America and
Asia. That’s why the Round Table of European Industrialists is an advocate
of a super commissioner for Economic Affairs in Brussels. We must concentrate
on attracting capital, technology and on the improvement of human qualities.
This plea was submitted by the Round Table ten years ago, but there has barely
been any improvement. Adjustment of the welfare state is one of the difficult
processes with which Europe will have to undergo during the next ten to
fifteen years.
Europe is nearing a doom scenario.
The aging process is disastrous. Within thirty years the Europeans will be on
average fifteen to twenty years older than Americans. So don’t be scared of
the Poles. Get them in, together with other immigrants, high- and
low-skilled.’
These forms of social innovation
require political courage.
‘Do not underestimate the
Europeans. Ten years ago nobody would have thought it to be possible to expand
the Union by ten new countries to 25 member states. With the European
Constitution we establish the fundamentals for a lasting Union. That is really
important for creating the structures necessary to combat conflicts.
Therein lay everyone’s rights as
well as duties. Turkey should join now too, if it satisfies the required
criteria. That’s what the Netherlands as president [of the Union] should
strive for. Europe benefits from a stable Turkey. If the Turks belong to the
Union, integration of Muslims will proceed much better too. With seventy
million Turks we enlarge the European market and enhance welfare.
Europe has an enormous potential.
As soon as the need of the man comes, a Margaret Thatcher will rise. I have
all the faith that in the present generation of European political leaders
there are some who dare to say what the stakes are. Prime Minister Balkenende
and minister Brinkhorst in any case do not shy away from it. I only fear
things will have to get worse in order for them to get better again. But I’m
optimistic.’
Burgmans’ Action Points:
An action program of Unilever top
manager Antony Burgmans for The Netherlands as president of the European
Union:
-
Turkey to join the EU
-
Revitalization of the ‘Lisbon
agenda’: make Europe the most competitive knowedge economy
-
Implementation of 40-hour working
week
-
Less vacations: Not 7 but 4 weeks
-
Less European money to agriculture,
invest it in innovation and education
-
Eliminate unnecessary
administrative rules and subsidies
-
Especially for The Netherlands:
eliminate tax deduction of mortgage payments, of pension premiums and of rent
subsidies in exchange for less taxes. A taxation rate of 25 to 30 percent for
everybody
-
Doors open for immigrants, high-
and low-skilled
-
Implementation of a European
Constitution, Europe to be more efficient and democratic
- Appointment of a super commissioner
of Economic Affairs in Brussels
Who is Antony
Burgmans?
Antony Burgmans was born in 1947 in
Rotterdam. He studied business economics in Nijrode and social sciences in
Stockholm. In Lancaster he obtained his MBA.
In 1972 Burgmans got his first job
at Unilever, then already a marketing assistant at the soap brand Sun.
Thereafter he did marketing and sales in The Netherlands, Germany and
Indonesia. In that last country he became head of management at Unilever
Indonesia. The promotions followed one another regularly: In 1991, director of
products for personal care at Unilever, in 1994, director of the group ice and
freezable foods of Unilever Europe, in 1998, vice-chairman of the board of
directors at Unilever and the year after that - as the successor of Morris
Tabaksblat - chairman of the board of directors.
Besides that, Burgmans is chairman
of the working group Expansion of the European Union of the European Round
Table, a think tank of the fifty most important enterprises in Europe. Antony
Burgmans is married and has a son and a daughter. Some of his favorites are
paintings of Dutch masters from the sixteenth and seventeenth centuries.
Unilever has 243,000 employees and last year it made a turnover of 43 billion
euros.
by Michèle de Waard
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