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European employment

Saws to ploughshares

Feb 17th 2011, 16:33 by The Economist online

ACROSS the European Union, countries are finding it difficult to provide jobs for their citizens. Youth unemployment is a particular concern. But even for those lucky enough to be in work, the pattern of employment varies widely across the continent. Using data from Eurostat, the official EU statistics body, our interactive chart, below, breaks down the employment make-up of each of the 27 EU member states, along with Norway. The ex-communist countries that joined the EU after 2004 lead the industry pack, while work forces in the richer, northern states tilt towards services. Romania and Bulgaria, the two poorest and newest EU members, top the agriculture list.

 

 

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Marie Claude wrote:
Feb 17th 2011 5:59 GMT

funny this map, industry employment is more emphasized in Eeastern Republics and in the "Mediterranean club" and or Ireland, one wonders why? low cost jobs anyone?

Tomas Marny wrote:
Feb 18th 2011 2:38 GMT

@Marie Claude

Industrial employment in Eastern Republics(sic) is the legacy of (mis)implementation of Marxism – industrial production was the main type of “productive work” bringing surplus value and capital that was worshiped by Marx/Leninists (smoking chimneys were their symbol of success).

It’s, of course, rather a burden today that makes the countries and their citizens look poorer as their average incomes are lower than in services. Yet, it’s better than if people were unemployed and somebody has to do the real work ;-)

The trend of shifting towards services is clearly visible there but the governments realize that their lag cannot be fully caught up (e.g. reputable financial centres in Europe are already established and it’s unlikely that a new Frankfurt / Zurich / City would emerge) so they try to (re-)optimize their educational systems for the needs of industry to cover the higher added value industrial positions (low added value jobs will be more and more mechanized by intelligent machines). They know that not everything can be imported from China and long experience in the field can be a distinct advantage…

Feb 18th 2011 2:19 GMT

around 20-25% seems like a good place to be. Not surprisingly the UK does the least amount of industrial work, preferring to have a big financial industry that steal and rip of that work from others.

Feb 18th 2011 2:23 GMT

Industrial expertise and high tech industry is vital for any healthy economy. Germany with 25% industry is far better off in the long run than France and the UK with 19% and 16%.
A bigger agriculture sector should also be counted as positive, as it is the fundamental of every society that they have food.

Beyond that the service sector needs to be split into several categories, mainly productive and unproductive ones.

ergaster wrote:
Feb 18th 2011 2:26 GMT

Why not simply list the percentage of the total economy that is knowledge based services rather than its share of the services part?

"of which knowledge-based" is a very strange category and not very meaningful. A country with 90% agriculture and a 10% service sector of which 80% is knowledge based would come out on top.

One can calculate the percentage of the total economy that is knowledge based services, by multiplying the "of which knowledge-based" percentage with the services percentage. It seems that The Netherlands would come out on top in that case.

ChrisFrance wrote:
Feb 18th 2011 2:46 GMT

Over the last decade or so, Countries in Central and Eastern Europe have been quietly and steadily building quiet hefty industrial and export sectors. So for example in 2010, export out of Poland was roughly 125 billion euro, that is an increase of more than 100% over 2004 levels. This figure is expected to rise by 12% in 2011. Similar numbers can be found for Slovakia and the Check Republic.

But there is something else going on here which is in stark contrast to the situation in the US, and is a key benefit of having the EU. Companies from Western Europe are outsourcing to Eastern Europe. Some may suggest this is bad but actually this is very good. Why? Because if they did not outsource there these investments and jobs would simply go to China. Secondly, countries in the East of Euope are able to attract not only businesses from Western Europe but from much further as well, from places like Korea, Japan and the US, to name just a few.

Thus having this "ostblock" as some refer to it is very beneficial because "it keeps the jobs within the EU," otherwise these jobs would simply go to China, which is exactly what is happening in the US.

ExDub wrote:
Feb 18th 2011 4:30 GMT

Your chart of total employment gives "Total employment as % of labour force". Is that right? If that is true then the average EU unemployment rate would be 35%, which is impossible. I think the denominator must be the total working-age population. I thought labour force only included working-age people who were working or looking for work, and therefore excluded those not looking for work, i.e. mothers of young children, the disabled, early retirees and people who have given up looking.

If we take it as the total working-age population, then the country that jumps out of that chart is Italy, which has a participation rate of only 57.5%, the lowest of any European country other than Hungary. In other words, 42.5% of the Italian working population don't work. I wonder why - it certainly isn't because they're having kids, their fertility rate is terrible.

cegorach wrote:
Feb 18th 2011 7:57 GMT

There are some suprises - at least to me personally - just like the large concentration of industry in Estonia or number of people emloyed in agriculture in Romania.

Clearly despite decades of changes some countries remain specialised in some areas of economy than other.
From the map you could still find out that Czech Republic was a hub of industry in Austro-Hungary or that the Netherlands were known as a financial center.

For my country it again shows that some reforms need to be implemented sooner than later - early retirement plans for uniformed services or for certain powerful lobbies such as coal miners reduce the number of people officially in employement while actually still capable of working, sometimes abroad or in grey zone of the economy.

As well as shows that industry remains very important part of the economy - with 100% export growth from 2004 it is no suprise - and that small, overpopulated farms of Lesser Poland and Lubelskie take a large share from the work market.
In the past this region ws known for numbers of emigrants it 'produced' - to USA and Canada as late as in 1980s - a large share of them Jewish, in the future it might be hub of 'green' food production but also for highly specialised manufacture such as the airplanes and helicopters from factories in Świdnik and Rzeszów which were selected for this purpose as early as in 1937 (part of COP project).
A4 motorway should help with changing local conditions, but hopefully not too much.
Perhaps it is selfish but I'd like to eat food which tastes and smells as food as long as possible.

JoeSolaris wrote:
Feb 19th 2011 4:03 GMT

@MC:
Low taxes count more than low wages.

Marie Claude wrote:
Feb 20th 2011 11:22 GMT

Joe solaris

right, though low wages make the difference, see how "service" jobs delocated from Ireland to Poland in the past year, not only from Ireland, I know that some Luxemburger banks of businesses delocated their accountability into Poland too.

Say, this EU neoliberalism is killing european economies, and is going to create conflicts between EU countries

cegorach wrote:
Feb 20th 2011 8:17 GMT

@Marie Claude

Indeed it must be it.
Though you might consider the fact that Central Europe is still a fresh market for a number of services - including banking and all what it needs.
Someone might realise that if there are X % people without a personal account it is reasonable to expect this sector of economy will grow in the future.

Unfortunatelly for example banking won't see too much prospects for profit in Ireland nowadays or in close future.

In addition it looks like Central Europe doesn't suffer from economic slowdown and shouldn't suffer (unless there is a major catastrophe) for a long time, will be for some time major production center for foreign and local companies, and provides somewhere around 100 000+ custumers.

Only a fool wouldn't try to expand activities in the region which invested heavily in production, for decades shouldn't run out of construction projects (also thanks to legacy of communism - there is a massive shortage of flats in Poland alone) and where banking system remains healthy also thanks to strict regulation.

Balcans might be next, Turkey and Caucasus might be next, Ukraine and Belorus might be next - but all of them are relatively close and everyone who adapts to local conditions now might be a winner in close future.

Companies which invested in the 1990s for example already employ local managers leading their expansion in former Soviet Union.

No risk no gain, but what was more or less a gamble in the past after the expansion of the EU in the 2000s is a sensible business decision.

Like it or not, but it is better than India or China, plus this way some cuntries will become net contributors sooner than expected.

If there was another Greece in the region that could be a problem, but even in Bulgaria situation shouldn't be that bad.

greatmongo wrote:
Feb 21st 2011 2:35 GMT

Marie Claude

You seem to have a big problem with the Eastern part of the EU....

Anyway earnings in Warsaw are not that behind those of Berlin and yet the unemployment in Warsaw is 3,5% and in Berlin 13%....
Also adding up Ireland as a place for "low cost jobs" just shows how little you know.

Eastern Europe has a lot of growing up to do and it clearly makes sense to invest there. As somebody pointed out why start a real estate company in Italy or France where there will be simply no growth in the next years?

Finally your ridiculous comment : "EU neo liberalism is killing european economies"

So what is the solution? Tariffs ? So "French cars will be done in France" as Sarkozy has said? Or maybe we should even have tariffs between regions so Bavarian Cars would be done in Bavaria?

How far are you able go with it?

Maybe until the point in which you realize that numerous countries have also increased their exports to eastern bloc? Polish exports have doubled in last five years but imports have grown strongly as well.

More trade = more relations = more wealth

Forlana wrote:
Feb 21st 2011 9:00 GMT

>Marie Claude: "service" jobs delocated from Ireland to Poland .... EU neoliberalism is killing european economies<

We have agreed for the EU15 banks, shop chains, corporation etc. getting into our market almost tax-free and delocating profits back home in the 1990ties. Part of EU15 prosperity in the last 20 years was build thanks to 'new EU' being in. EU15 economies' did not feel killed back then. Now is the part of the deal we, in CEE, have been awaiting - the street is two-way, part of the process is serivce jobs' delocation. We are simply becoming an integral part of the EU economy. Without which 'old15' will not be able to maintain the life level it got used to (saving on military thanks to US, and saving on taxes etc. etc. thanks to CEE)
You can't stop what you call "EU liberalism" without a major revolution, but you are too lazy and not hungry enough for that. You will manage :)

Regards from Warszawa

pedrolx wrote:
Feb 21st 2011 1:10 GMT

this data is wrong for Portugal:

http://www.pordata.pt/azap_runtime/?n=4

Per sector:

agriculture: 10.9%
Industry: 27.7%
Services: 61.4%

An Drew wrote:
Feb 21st 2011 2:09 GMT

The thing that catches my eye is Britain's 81.2% service sector. Actually I think it's kind of interesting.

Cutters wrote:
Feb 21st 2011 2:36 GMT

It seems the the UK and the Dutch are following pretty much the same model.

Econ1776 wrote:
Feb 21st 2011 3:16 GMT

The opening sentence pegs the employment problem. Everyone's says the problem is that "countries are finding it difficult to provide jobs for their citizens." Countries don't provide jobs. Jobs have nothing to do with citizenship.

Entrepreneurs provide jobs. In the private sector, people are employed when they provide a valuable service to other people. Of course, some alway try to use by use government coercion to get jobs, but that's a negative sum game.

What can countries do? Adam Smith wrote out the answer more than 200 years ago:

"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things."

BailoutNation wrote:
Feb 21st 2011 5:43 GMT

I've often wondered what people in Europe do. Seems they all work in shops or restaurants, with the shopkeepers eating at bars/restaurants and the bartenders/waiters/chefs buying clothes from the shops, round and round it goes, keeping the economy going. Everybody who isn't involved in the clothing/design industry is involved in the wine/food industry, with the occasional bankers, real estate agents, bureaucrats, tourists, train engineers/taxi drivers, and at least in Germany, industry workers bringing in some outside money to add to the circulation.

Substitute industry in Germany with goat tending and camel herding, and Europe basically has the same economy as MidEast, with more bankers, real estate agents and bureaucrats. Old world economy with old world professions. And they wonder why young people can't find work, just like the midEast.

Feb 21st 2011 6:42 GMT

I think Bulgaria, Romania and Poland are best positioned to weather the next 25+yrs much better than the rest. Why? We have to look forward and not so much in the rear view mirror: The world is going to need agriculture and industries more than the infinite expansion of Service - YOU CAN NOT EAT SERVICE! Without agriculture and industry, service alone, though important, is meaningless - much less financial.

jouris wrote:
Feb 21st 2011 6:42 GMT

@maximus zebra A bigger agriculture sector should also be counted as positive, as it is the fundamental of every society that they have food.

Actually, just the opposite. You do want an agricultural sector which can feed your people (unless you are in a situation like Singapore), but you do not want to spend a lot of human capital on it. The only advantage of having a lot of people involved in agriculture is if you are trying to give people who would otherwise be unemployed something to do. But ideally, you want a small number of people actually involved in agriculture.

Labor-intensive agriculture just doesn't add enough value to make high wages there viable. Better to have most of your people doing things where they do add lots of value. And keep the number of people in agriculture low enough that, per capita, they are adding lots of value as well.

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