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EMEA Economic Insight November 2010



Manpower EMEA Economic insight report looking at the stories behind the jobs economy

Manpower EMEA Economic insight report looking at the stories behind the jobs economy



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    EMEA Economic Insight November 2010 EMEA Economic Insight November 2010 Document Transcript

    • Manpower EMEA Economic Insight Issue 7. November 2010EA16 and EU27 government deficit at 6.3% and EA16 annual inflation up to 1.9%, EMEA Macro Economic Insight6.8% of GDP respectively. Government debt EU up to 2.3%increases to 79.2% and 74.0% EA16 annual inflation was 1.9% in OctoberIn 2009, the government deficit and government debt of 2010, up from 1.8% in September. A yearboth the EA16 and the EU27 increased compared with 2008, earlier the rate was -0.1%. Monthlywhile GDP fell. In the EA16 government deficit to GDP ratio inflation was 0.4% in October 2010. EUincreased from 2.0% in 2008 to 6.3% in 2009 and in the annual inflation was 2.3% in October 2010,EU27 from 2.3% to 6.8%. In the EA16 government debt to up from 2.2% in September. A year earlierGDP ratio increased from 69.8% at the end of 2008 to 79.2% the rate was 0.5%. Monthly inflation wasat the end of 2009 and from 61.8% to 74.0% in the EU. In 0.3% in October 2010. Compared with2009 the largest government deficits in percentage of GDP September 2010, annual inflation rose inwere recorded in Greece (-15.4%), Ireland (-14.4%), the fifteen Member States, remained stable inUnited Kingdom (-11.4%), Spain (-11.1%), Latvia (-10.2%), six and fell in five.Portugal (-9.3%), Lithuania (-9.2%), Romania (-8.6%),Slovakia (-7.9%), France (-7.5%) and Poland (-7.2%). No Unemployment remains staticMember State registered a government surplus in 2009. The EA16 seasonally-adjusted unemploymentlowest deficits were recorded in Luxembourg (-0.7%), rate was 10.1% in September 2010,Sweden (-0.9%) and Estonia (-1.7%). In all, 25 Member compared with 10.0% in August. It wasStates recorded a worsening in their government deficit 9.8% in September 2009. The EU27 un-relative to GDP in 2009 compared with 2008, and two employment rate was 9.6% in September,(Estonia and Malta) an improvement. unchanged compared with August. It was 9.3% in September 2009. Estimates showEA16 and EU27 GDP up by 0.4% that 23.109m men and women in the EU27,GDP increased by 0.4% in both the EA16 and the EU27 of whom 15.917m were in the EA16 wereduring the third quarter of 2010, compared with the previous unemployed in September 2010.quarter, according to the latest estimates published by Compared with August, the number ofEurostat. In the second quarter of 2010, growth rates were persons unemployed increased by 71,000+1.0% in both zones. Compared with the same quarter in the EU27 and by 67, 000 in the EA16.of the previous year, seasonally adjusted GDP increased Compared with September 2009,by 1.9% in the EA16 and by 2.1% in the EU27 in the third unemployment rose by 0.656m in the EU27quarter of 2010, after +1.9% and +2.0% respectively in the and by 0.424m in the euro area.previous quarter. During the third quarter of 2010, US GDPincreased by 0.5% compared with the previous quarter, after EA16 annual inflation up to 1.9%,+0.4% in the second quarter of 2010. US GDP rose by 3.1% EU up to 2.3%compared with the same quarter of the previous year (+3.0% EA16 annual inflation was 1.9% in Octoberin the previous quarter). 2010, up from 1.8% in September. A year earlier the rate was -0.1%. Monthly infla-Industrial production down by 0.9% in EA16 and tion was 0.4% in October 2010. EU annualdown by 0.5% in EU27 inflation was 2.3% in October 2010, upIn September 2010 compared with August 2010, season- from 2.2% in September. A year earlier theally adjusted industrial production fell by 0.9% in the EA16 rate was 0.5%. Monthly inflation was 0.3%and by 0.5% in the EU27. In August 2010 production rose by in October 2010. Compared with Septem-1.1% and 0.9% respectively. In September 2010 compared ber 2010, annual inflation rose in fifteenwith September 2009, industrial production increased by Member States, remained stable in six and5.2% in the euro area and by 5.8% in the EU27. fell in five. Retail volume trade down by 0.2%Construction output down by 2.1% in EA16, in EA16, down by 0.1% in EU27down by 1.7% in the EU27 In September 2010, compared with AugustIn the construction sector, seasonally adjusted production 2010, the volume of retail trade decreasedfell by 2.1% in the EA16 and by 1.7% in the EU27 in Sep- by 0.2% in the EA16 and by 0.1% in thetember 2010, compared with the previous month. In August, EU27. In August retail trade fell by 0.2% inproduction decreased by 0.4% in the EA16 and remained both zones. In September 2010, comparedstable in the EU27. Compared with September 2009, output with September 2009, the retail sales indexin September 2010 dropped by 8.1% in the EA16 and by rose by 1.1% in the EA16 and by 1.3% in3.6% in the EU27 the EU27.
    • Manpower EMEA Economic Insight Issue 7. November 2010EU contagion in the spotlight Disparity of holiday season EMEA Economic InsightThe finances of the Irish Republic are under major scrutiny after the A new report by the EU highlights thecountry’s government and central bank finally accepted a European seasonal distribution of demand forUnion led bail-out, supported by the IMF. The exact figure is still to tourism, with Europeans taking 46% ofbe determined but is expected to be in excess of €90bn. their holidays in Q3. This is one of the mainThe so called “Celtic Tiger economy” was initially built around the challenges and also opportunities facingproperty market, but since the start of the financial crisis in 2008, the European tourism industry. Extendingthe construction sector has seen a dramatic fall in output. House the tourism season or spreading tourismprice values are estimated to have fallen by between 50% and 60% activities more evenly throughout the yearand bad debts which primarily involved debts by construction can significantly boost the sustainabilitydevelopers have left the main Irish banking groups facing serious and competitiveness of Europeanliquidity problems. Those liquidity problems were initially solved tourist destinations as well as having aby part nationalisation of the banking sector but with the on-going direct impact on the jobs economy for theproblems in the economy, tax revenues have also taken a sharpdecline. The revenue gap between Government spend and tax tourism sector.revenues is currently running at 12% of GDP with current figuresthis year showing that Ireland has a budget deficit equivalent to EU27 surplus in trade in goods32% of GDP. Due to these factors the Irish Government is now with the USA almost doubled infacing liquidity problems of its own. The three main Irish bankinggroups have wholesale debts amounting to €110bn, which are due the first six months of 2010, deficitfor repayment in a little over three years. Without EU backing, this of €7bn in trade in services in 2009is unlikely to be rolled over and therefore would have placed even The USA remains the EU’s largest tradingmore pressure on the whole of the Irish economy. Coupled with partner for both goods and services, andthe increasing likelihood of personal bad debt adding to the total there are also significantdebt mountain, confidence in the Irish economy is at a low point. investment flows between the two part-However to try and stabilise the situation both the UK and SwedishGovernments have offered direct loans to the Irish Republic. ners. However, a steady decline of the share of the USA in total EU27 trade inFurther political problems may also be encountered as Ireland has goods has been observed over recenta relatively low level of corporation tax (currently 12.5%) which years. In 2000, the USA accounted for 28%French and German politicians claim give Ireland an unfair of total EU27 exports, compared with 19%advantage in attracting foreign investment. Political pressure may in 2009. The share of USA in total EU27be placed upon the Irish Government to revise upwards the imports also fell over this period, from 21%corporate tax rate as a condition of receiving EU/IMF bail-out in 2000 to 12% in 2008, before recoveringmoney, however the Irish Government has resisted calls to increasethe rate so far. Several major corporations based in Ireland have slightly to 13% in 2009. Among the EU27also questioned the need to raise the corporation rate. Member States, Germany (€30bn or 27% of EU exports of goods) was by far the largestBut the current crisis in Ireland has placed more emphasis on the exporter to the USA in the first half of 2010,financial concerns about Europe’s other highly indebted countries. followed by the United Kingdom (€18bn orGreece has now announced their formal austerity budget plan 16%), France (€11bn or 10%), Italy (€10 bnwhich aims to cut the 2011 public deficit to 7.4% of GDP. After the or 9%), Ireland and Belgium (both €9 bn or€110bn bail-out that it received in May, this would mean a €5bn 8%). Germany and the UK were the larg-reduction on the projected 2010 deficit. Major cuts to healthservices and the defence budget are planned along with an est importers (€15bn or 18% of EU importsincrease in sales tax to 14% (from 11%). The third trance of the bail each), followed by the Netherlands (€13bnout money has been issued (worth €9bn) but despite the existing or 16%) and France (€10 bn or 12%). In thecuts the Greek Government has been told to broaden the tax base second quarter of 2010, the EU27 externaland eliminate further wasteful spending. current account recorded a surplus with the USA (€19.4bn), Switzerland (€9.6bn),The primary worry is that other indebted nations such as Portugal Hong Kong (€5.7bn), Brazil (€5.2bn),and Spain may also seek additional funding, but as bond yields Canada and India (both €1.8bn), and ahave increased, any addition borrowing will prove to be much moreexpensive on the international money markets. This will just add deficit with China (-€31.5bn), Russiato the existing debt burden, therefore the need to borrow from the (-€13.0bn) and Japan (-€8.6bn).newly established EU central fund may increase.Industrial relation problems will also hit Portugal this week as a Is this your copy of thegeneral strike has been called for the 24th November in protest at Manpower EMEA Economic Insight?major cuts to civil service pay and pensions. Email graham.murphy@manpower.com to subscribeTherefore the outlook is far from clear at present.
    • Manpower EMEA Economic Insight Issue 7. November 2010OECD Reports mixed speed recovery Netherlands: EMEA Country InsightA recent report by the OECD points to a mixed speed Pension agreement reachedeconomic recovery taking place with Europe, which was The Dutch government has been able toalso the conclusion of the Q4 MEOS report released in reach agreement with coalition partners toSeptember. Economic expansion is likely to continue in raise the state retirement age from 65 toGermany and the resource rich Russia. However, there is 66. The new age limit will likely come intolikely to be a slowdown in France, Italy and the UK, the force in 2020. The initial idea was to raiseimpact of which is likely to be felt in Q1/Q2 2011. the age in line with life expectancy but this has proved a step too far for someFocus remains on unregistered workers coalition partners. In another change toResearch by Visa Europe recently reported that the grey the Dutch pension regulations, a one yeareconomy within Italy could account for as much as 22% of exemption is being introduced in 2011 soGDP. Unregistered work was particularly prevalent in the that pension funds can make theagricultural, construction and tourist sectors. Turkish necessary changes to their equity base.officials have also recently released figures indicating that The changes are necessary to ensure that39,000 employers have been fined in the last two years as a premiums remain affordable followingtotal of 850,000 people have been caught working on an changes to how they are calculated inunregistered basis. future. Without the extension pension levels would have been cut, indexationRussia: may have been removed or considerableConfusion over pension age increases to premiums would have had toThe Russian President has stated that there are no plans be introduced.at present to increase the state retirement age in Russia.Currently the state retirement age is 60 for men and 55 for Bulgaria:women. This follows earlier reports that the Russian Finance Extension of free travel areaMinister is looking at raising the retirement age to 62 for menThe Bulgarian Government is looking toand 60 for women. enter into negotiations to gain membership to the Schengen agreement.POLAND: The agreement allows for borderlessChanges to bank holiday rules travel between the majority of EU memberPoland has announced an amendment to the Labour Code states. However several original EUmaking January 6th a public holiday. The code has also been members are opposed to Bulgarian entryamended so that employers will also no longer be obliged to in the near future.give employees an additional day off if future public holidaysfall on a Saturday. The changes to the code come into effect European pensions benefitsin January 2011. New research reveals that nearly 50% of European workers would sacrifice pay forSWEDEN: a higher pension contribution by their em-European jobs days organised for unemployed ployer, compared to only 13% who wouldSweden’s National Public Employment Service is currently give up some of their salary for extra holi-organising a series of one-day workshop encouraging the days. 7,500 workers from across Belgium,unemployed to seek employment opportunities outside of Denmark, France, Germany, Ireland, TheSweden. The workshops, run in conjunction with the Netherlands, Norway, Spain, SwitzerlandEuropean Job Mobility Portal, are initially targeting areas in and the UK were surveyed for the Europe-northern Sweden where unemployment in some local areas an Employee Benefits Benchmark survey.is currently over 12%. Job opportunities are focused inSpain, Norway, the UK, Germany, and the Czech Republic. UK Mixed reaction to migration reportSLOVAK REPUBLIC The latest Migration Advisory CommitteeLanguage skills updated report says that achieving the govern-The Slovak government has announced that English lan- ment’s target of reducing visas for skilledguage will become a compulsory subject in all elementary workers will mean thousands of fewerschools. The change, which was originally announced in visas will be issued. Business leaders haveSeptember, follows news that 50% of current job expressed concern that changes do notadvertisements ask for English language skills. damage the fragile recovery, which is partly dependant upon skilled migrants.
    • Manpower EMEA Economic Insight Issue 7. November 2010Unilever puts sustainability at centre of new China’s C919 passenger jet wins EMEA Employment Insightglobal business model. first ordersFMCG giant Unilever has revealed a new business model The Commercial Aircraft Corp of Chinawhich puts sustainability at the centre of its global (Comac) has taken its very first orders foroperations. During the launch of the company’s the C919 passenger plane. The move couldSustainable Living Plan, Paul Polman, CEO, revealed plans mark the start of a challenge to theto halve the environmental impact of its products while dominance of both Boeing and Airbusdoubling sales over the next 10 years. Unilever made three who have virtual control of the commercialoverarching commitments to be achieved by 2020 and said passenger aircraft industry sector. Theit would produce an annual report on its progress towards company’s chief accountant, Tian Min, onachieving these goals of: announcing the order said: “In the future •50% reduction in the environmental impact of its products in we expect to see 3,000 new planes in terms of water, waste and greenhouse gases. China and more than 30,000 new planes •Source 100% of its agricultural supplies from sustainable globally. So this is a very big market.” The sources. C919 competes directly with Boeing’s 737 •Improve the health & well-being of one billion people across and the Airbus A320 with Comac expecting the world. to sell more than 2,000 C919s over the nextA number of other leading multinational companies have 20 years. According to recent estimates themade similar sustainable impact commitments most highly competitive segment could be worthnotably WalMart, the world’s largest public corporation by as much as $1.7trillion over the next 20revenue, which has introduced sustainability criteria as part years. Comac expects to start building theof its official product-sourcing process. Earlier this month, aircraft next year, which is currently in theUnilever reported profits of €1.35bn for the three months to engineering development phase, followedthe end of September 2010. by a maiden flight in 2014 with first deliveryVisit www.sustainable-living.unilever.com/the-opportunity for details expected in 2016.Walmart seeks merger with Massmart. The Comac news coincides with the launchWalmart, the worlds largest retailer, has announced that they of the new whitepaper by Manpower on theare in talks to buy Massmart, a South African wholesaler, for Chinese market. Manpower’s new Fresha reported $4bn. Massmart, with approx 250 stores, Perspectives Paper: Winning in China:operates across Sub-Sahara Africa. Building Talent Competitiveness, advises both foreign and Chinese private-ownedIn a separate announcement, Walmart’s UK operation, companies on how to win the talent war.ASDA, announced expansion plans which could create in The paper is based on Manpower’s 2010excess of 7,500 jobs. Foreign and Chinese Private-Owned Companies Talent Competitiveness Survey.Toyota reports profits continue to soar Visit www.manpower.com/research/research.cfm for detailsProfits at Japanese carmaker Toyota have continued to soar,with second quarter earnings nearly doubling to 98.7bn yen. Banco Bilbao enters TurkishThe company raised its profit forecast again, predicting banking sector.earnings of 380bn yen for the full year. However Executive The Economist reports that Spain’s BancoVice President Satoshi Ozawa spoke of a “very tough busi- Bilbao Vizcaya Argentaria has made itsness environment, characterised by the radically and seri- first large scale acquisition outside of theously appreciated yen in recent months as well as the risk of Spanish-speaking market. In earlyslowdown in demand recovery in the both the United States November Banco Bilbao announced thatand Europe.” it was acquiring nearly 25% of Garanti, Turkey’s second-biggest bank. BBVA hasScania AB and MAN SE confirm merger option launched a €5bn rights issue to help fundCommercial truck manufacturers Scania AB of Sweden and the deal.Germany’s MAN SE have confirmed that they are looking ata potential merger. Volkswagen AG, a major shareholder inboth operations is believed to be active in the negotiations. How will the changing world of work affect you?Cost synergies, manufacturing processes and R&D Watch out for the next MEOS Report which is releasedoperations are cited as the main reasons behind the on 7th December.exploratory talks.