'A politician without a vision is an administrator'
Photo: Lex Kleren / Design: Sébastien Héraud
A member of the Luxembourg Socialist Workers' Party (LSAP), Etienne Schneider has been economy minister since 2012. An advocate for a wide-ranging diversification of Luxembourg's economy, he has galvanised some and left others sceptical of his flagship space resources project.
The Luxembourg Times's Barbara Tasch talked to Schneider about his vision for the country, the challenges of being a socialist economy minister and what qualities the next Prime Minister should possess.
Barbara Tasch: What are the greatest challenges facing Luxembourg over the next five, 10, 30 years?
Etienne Schneider: The challenge we have is ensuring high growth continues because we need relatively high growth to keep our wealth at the same level. That means, to keep our social systems at the same level, we need growth of 3-4% each year. We also see that, at some point, if we go on like this, growth will come to its limit, at least when it comes to certain aspects, like traffic. Everybody can see it. Everybody is annoyed when they are regularly stuck in traffic. Those are problems we must solve.
When it comes to the environment and land use, we must also manage all of that differently. That means we really must try to shape growth in a sustainable way. That is why we did the Rifkin study, among others, to see how we can ensure that, with digitisation, we still have high growth in future but without all the negative effects that growth normally carries.
That is one point. The second, also linked to digitisation, is how we handle it so everyone still has a job in a digitised world. Many experts are saying this is the first industrial revolution that will lead to more jobs being lost than created, and if that happens, one of the problems is that the people losing jobs from it won't necessarily be able to fill the new ones being created, in terms of qualifications. That means we must build that bridge to ensure people can do those new jobs. We must adapt our school systems, adapt our continuing-education programmes, and we have to see how we can handle it if, through digitisation, our productivity increases – which is the goal, that, through robotisation, through digitisation, through artificial intelligence, we get more and more productive because we need fewer people.
BT: As economy minister, what has been your biggest challenge in achieving sustainable growth?
ES: There's not one single, big challenge. Unfortunately, there are a lot of them. Digitisation is one. The more we digitise, the less negative effects we'll have on our environment, on our traffic, etc. That's one point. Remote working is another one. That we try to, through digitisation, use those means to enable more people to partly work from home. Every person who works from home isn't stuck in traffic anymore – that's a win-win. It's a win for the person, and it's easier to organise your private life when you can work from home, especially families with small children. It's also a win because traffic problems and environmental issues are reduced. That is one of the themes that will become important in the coming years.
And then, of course, creating new economies, such as the sharing economy, the circular economy, those are models we really want to develop in future. And there is the whole ecological aspect of how we can convert all our energy supply into renewable energy and how, through this, we can further diminish nuisances for the environment.
There are hundreds of other subjects – for example, when it comes to our building style, building higher and in a more compact way, using less land to house more people. All those things are challenges. Whoever is in government next time will have to continue dealing with this. It's not as if we haven't dealt with them, but it must be continued.
BT: In the short term, what do you see as a top priority for investments?
ES: We're trying to convert our economy to a high-tech economy, which means acting a lot in the digital area because that's where a high added-value is created, and that's what we need. It won't bring us anything to go after thousands more jobs where, in the end, most people are earning minimum wage. That doesn't bring added-value, quite the opposite. In the long run, especially if frontaliers fill them, through the export of social benefits, it's not good business, macro-economically speaking, for the country. We have to get away from that and move toward jobs that have a high added-value, and that is mainly in the digitised world.
BT: Your government has led ambitious plans to diversify the economy, but, with the introduction of the clauses passerelles at the EU level, Paradise Papers and Brexit, Luxembourg could quite soon face a crisis in terms of tax revenues. Do think there's a need to further diversify the economy?
ES: I think so, but I don't see the situation so negatively. I think that's what we've done when it comes to the financial sector – we conformed to all the international rules during this government, and the financial place survived and even set itself up pretty well. The financial sector is in a good, healthy situation. Things that are still coming like LuxLeaks, the Panama Papers, those are inheritances from a previous time. Those are all old dossiers. That we must deal with them now is evident, we don't have a choice. But the fact is, we complied, and that's what's important. We now build up our financial sector in a transparent way. It is evolving well and, contrary to what many experts were saying – that, if Luxembourg conformed to international rulings, we would lose thousands of jobs – the opposite happened. In this government's legislature, 2,000 new jobs were created. That shows that "cleaning" our financial sector was not a disadvantage for us.
Further diversification is very important to me, and what I've noticed as economy minister is that the sectors we decided to develop 10 years ago – biotech, health tech, ecotech, ICT, logistics – are all sectors every other country is also developing. That means that, there, competition is huge. That's why I thought long about it, about how we needed a sector where we have a unique characteristic, where we're in the driver's seat and where no one else has come to that idea or dared to develop it, and that is the space resources initiative. There, we're really the first in Europe that really want to do this, and worldwide the second. And with an enormous success. We had last week the space conference here, where we expected 150-200 people, and there were more than 400 who came from the whole world. We are drowning in contacts from all the people who want to work with Luxembourg and come to Luxembourg, and that is exactly what we need.
We need a sector that looks far into the future that we now have the time and means to develop. We know it will take a few years before it brings money into the state budget, but we have the time because we are independent from it and have other sectors that are still working well today. It is important for a politician to have a vision for the future, to think about how to develop new sectors in case some of the current ones stop working as well. That's the goal of the space resources initiative.
BT: Do you think voters in Luxembourg will have the patience to wait for the returns? And how does the government, or you as economy minister, convince sceptical voters the project will be profitable?
ES: I can at the most give them examples from the past. When we had to diversify the Luxembourgish economy during the '70s because the steel industry stopped working, we decided at the time we wanted to become a financial centre. We had three or four banks in the country. Everyone at the time was shaking their heads, saying 'why should Luxembourg become a financial centre? How should that work?' Today, we are one of the most important financial centres in the world.
When we founded SES in the '80s, no one believed in that either. No insurance company was willing to insure the first satellite launch because the risk was too high. The government stepped in and gave that guarantee, which, at the time, was huge. Today, we are a big shareholder in a company that has created thousands of jobs and that attracted a number of companies with a sector – the space sector, in general – that is today 2% of our GDP and the highest in the EU. No one believed in it. When you read the debates from the Chamber from that time, there are crazy stories that emerged of what people were scared might happen, that the satellites would fall on our heads and that we would be responsible as a government.
If, as a politician, you only do what people understand straightaway to be re-elected, then you are out of place. As a politician, you need to have a vision for your country, even if you won't profit from it yourself. I know that, until the next elections, I won't have convinced people it's the right thing, but, at some point, they will say 'ah, Schneider was right after all with what he did'. But I could also do what the opposition is doing and talk badly about everything and be against growth just because I know people will then say 'oh, he is right because we'll have less traffic' but not telling people what the consequences are, that they will then have to get by with less money, less social benefits, less pensions. I don't want that.
I am seeing a good and positive future for this country, and I have many ideas of how to do that. Rifkin is one idea on how we are preparing this, building new sectors that are viable for the future, like the space sector. A politician without a vision is an administrator, and to be an administrator, you don't have to be elected. I know it's hard to convince people of those types of ideas, especially as, when I was first confronted with that idea five years ago, I thought it was a bit crazy. But I learned a lot about it, and I have a huge number of contacts, and, despite everything, I am convinced it's going to work.
BT: How long will it take for space resources to become profitable?
ES: In a sense, it's already profitable now because we are getting all these companies doing research here in Luxembourg. We recently announced that yet another company was coming, Spire. It is creating 250 jobs, and those are high-tech jobs. Those are people being paid well, who pay taxes, who also contribute to the social funds. In that sense, you already have a payback.
But until we can say the payback is similar to that of a financial place, that's going to take another few years. You're also always bound to the creation of disruptive technologies, which are regularly coming out, and when you are standing in front of a problem, thinking how long could it be before I have that problem solved, before I can take it a step further, sometimes there's an idea that comes and brings everything miles forward, and that's especially true in the space sector. The sector's evolution over just the last four years is huge, and it will likely be even bigger in the next five years. That's why it's hard to say whether it's going to be in the next five, 10 or 15 years. But already now we have positive fallout, and not just through attracting businesses here, which creates jobs, but also because of the whole research being developed here.
In that sense, it already is a success story, just looking at how there are already 100 companies in the pipeline wanting to come to Luxembourg or waiting to work with us. We have a lot of countries that want to work with Luxembourg. Everyone wants to work with us.
BT: Space is already 2% of Luxembourg's GDP. How high do you think that percentage will get?
ES: I hope that, in 10 years, we're at 5%.
BT: Growth is not a problem in Luxembourg at the moment, but, what you often hear from the opposition is that the growth should be more qualitative and sustainable. What are the challenges there in achieving both?
ES: I must correct you because there's not much coming from the opposition. The thing that comes back over and over again is that 'this growth is not sustainable, that growth is not good', but there is never any idea put forward on how to make it better.
I recently organised this debate about Rifkin in the Chamber, where we are trying to look at all these tools, with 350 experts on how we can make our growth sustainable, so we can continue to grow without all the negative influences from growth. That's why I had a debate in the Chamber. Not one proposition came from the opposition. I was especially disappointed by the CSV, as they are always criticising growth but never say what they would do differently. Except from questions, I didn't get anything from them. I did not get a single proposition, even though Rifkin's case is 450 pages long … 450 pages of ideas written down of everything we can do, and a number of ideas were developed through those platforms, among others, in regards to our future energy supply, how we could completely switch over to renewable energy … how we could solve our traffic problems, through car sharing, through electro mobility, through driver-less driving.
All of these are concepts we are partly already converting, through the smart-meter installation, through the installation of the electric car-charging stations throughout the country, through an agreement we've now signed with France and Germany to bring autonomous driving forward, so we can work together on the things that are still missing for it to really work.
Those are not just ideas but things the government is already doing, to make the growth more sustainable in the future so people don't drown in traffic anymore. We also must make sure we enable more remote working, to ensure that, on average, if everyone working in Luxembourg were to work from home one day a week, that's one of five days, then traffic would be reduced by 20%. Those are easy means that are also possible nowadays through digitisation. Of course, not everyone can work from home because it's not possible for every job. The waiter who is supposed to work a lunch shift can't do it from home, that's evident. But there are other jobs where you could work from home for more than one day a week. All those things are means through which we can solve our problems.
Tomorrow, a citizen won't buy cars but mobility. What does that mean? He will have public transport made available that is efficient, a combination of bus, tram, train, everything that is being developed. All the investments that are made will bring us forward. Then, through the combination of electro mobility and autonomous driving, combined with the new technologies we already have on our smartphones, we want to ensure people don't buy their own cars anymore, but that they can have access to a car when they need one. So that I can say with my phone through an app that I need to go to the Kirchberg from the ministry here in 10 minutes and then have a car come to the door that does not have a driver, that is electric, that brings me from here to the Kirchberg and only calculates that route, which I then pay for. All of that instead of buying a car because it's an expensive investment, I have to pay back a loan for years, on which I pay taxes every day and insurance, where I have to pay parking, where, when I buy an apartment, I have to pay another €60,000-70,000 to have a parking space for my car. Those are huge costs for a car that just stands somewhere for 23 hours on average, out of 24 hours. But I still pay for it for 24 hours.
BT: We're getting Google. Amazon Prime was just announced. How do you want to ensure that local commerce will be able to survive in Luxembourg?
ES: We have one problem here, it's that our SMEs and our business world, our tradespeople, are not present enough on the internet. They don't commercialise and sell their products enough online. We made an analysis of what that was linked to, and we found out that a lot of them said they were too small to manage an internet site, they said it was too much work and that there were not enough of them and that, if they had to hire a person to do just that, then they would not earn anything through it anymore.
The economy ministry has therefore now done this pro-commerce pact with the SMEs, where we are saying that we are putting everything in place, and you can all profit from it. We are now going to ensure that those businesses will be able to better use digitisation to bring their product to everyone. We can only help them. We are bringing the infrastructure and managing it for them, and they only need to take a subscription and profit from it. I believe that is necessary. Otherwise, they run the risk of eventually having to stop.
The problem begins once a client decides to buy a product not in the shop but on Amazon. Once he's decided that, and he tries it and it works well, try telling him he should still buy in shops. Why should he still drive to the Belle Etoile, for example, and drive around the parking six times until he finds a place, then eventually runs in through the rain and has to stand around and wait at the checkout to get the product when he can just order it online and gets it delivered straight to his home or work or wherever he wants, without any problems, without having to move. And that's the challenge.
We have to take the tradespeople, the shopkeepers, by the hand so they don't get overwhelmed and crash. That's extremely important to me. I must admit I have never bought something over Amazon for the simple reason that I am trying to support our local economy as much as I can, and I go shopping in Luxembourg. I also don't go shopping over the border, I don't go to Trier, I am staying here because I try and support our commerce here. There I am one of the few, probably. I see how people complain about those poor grocers and poor local tradespeople, but they still don't shop there. They go to the discount supermarket or over the border. You can't do that. Either you want to support them and you are ready to pay a bit more to do that, or you shouldn't complain.
BT: How has Luxembourg's unique position in terms of GDP, size, industry and, ultimately, its bad reputation influenced your work as economy minister?
ES: We have that bad reputation in the press and maybe in some people's public opinion when scandals like Panama Papers or LuxLeaks surface. That always throws us backwards, image-wise. As economy minister, when I am abroad, I am normally with other economy ministers or with other ministers and with companies. First, when I am with other ministers, they also know all the things not going well in their countries, so there no one would openly criticise anyone else because they all know if you started accusing someone of something they would come back with something else because no country is saintly in all departments. With the companies, the problem doesn't exist either. Companies abroad see Luxembourg as a government that really does something for its economy, which is very proactive when it comes to the development of the economy, and they see that as extremely positive. I have never had negative experiences in that sense.
BT: You've already said you are going to run for prime minister next year. For you, what is the most important quality Luxembourg's prime minister should have?
ES: First of all, if you are going into an election not wanting to be prime minister, then you don't need to go into the elections at all. If I go to be second, then I don't need to start – that's not my philosophy regarding elections. It's very clear I want to be prime minister and have no quarrel with Xavier Bettel because he understands that and also wants to be prime minister again, just as Claude Wiseler wants to be prime minister, too.
What a prime minister needs is to a have a vision of how he wants to move the country forward. That's one thing, and then he needs to be a strong federator to be able to keep people and society together, to ensure social justice is improved – that it doesn't just endure but gets better. It's ensuring that the gap between those who are doing well and those who are doing less well doesn't widen.
For me, that's the big challenge of the next government. If we look at it historically, just the last 10 years, 2008 to 2013, we were in the middle of the economic and financial crisis, the biggest one to hit us since the 1920-30s. That was a period during which the government came under massive pressure because all the revenues plunged. We had to triple our government debt to somehow stay above board, to somehow allow people to retain a certain comfort, without doing drastic cuts. Then came the period in which we're in now, 2012 to 2018. There, we've managed to bring the ship back afloat, we've sanitised our government finances, we've improved our competitiveness, and we've come from a period with no growth to a period with good growth. We've now consolidated that, we ensured our economy worked again.
The next period, and that's the most important one for me, is the one in which we have to ensure the good situation we have now is more profitable for people, and that we bring social justice back to the foreground.
BT: And what's the characteristic you need to do that?
ES: You need a huge will and determination to be prime minister. You can't change your mind, you can't be afraid every time a critique comes. You need a clear vision of what you want to do, and you need to follow through on it, even if it's sometimes hard, even if it is hard to convey.
But, in the end, it's for voters to decide whether it was good or not. A politician who doesn't really have a vision for the future, and doesn't really have a desire to shape the future, and who scares people of the future … that's not our job. Our job as politicians is not to scare people of the future. Our job as politicians is to bring solutions to people for the future, and that's important, and there I really see a big discrepancy with the CSV, which is playing with people's fears to win elections. I find that very disappointing because I don't think that's appropriate. You can't want to become prime minister that way, by scaring people. I am not doing that. I believe in the future, in progress and in this country and its capacities to shape the future in a better way than the past. We've always managed to do that, and we'll keep managing to do that.