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Final presentation

  1. 1. Joint Presentation ETHZ- LUMS The Social Impacts of the Crisis in EuropeCopyright ©2008 ShARE. All Rights Reserved
  2. 2. THE IMPACT OF THE CRISISON EUROPEAN COMPANIES Tristan Guigue Copyright ©2008 ShARE. All Rights Reserved 2
  3. 3. General Outlook Latest data covering the end of 2008 and January and February 2009 show that EU labour markets are starting to react more strongly to the current economic downturn, as recently released data confirm that the EU has entered recession following a marked decline in GDP (by 1.5%) in the fourth quarter of 2008. Companies have announced substantial job reductions in several sectors in recent months, while business and consumer confidence, job vacancies and firms employment expectations have generally continued to fall. However the deterioration in economic sentiment appears less pronounced in February than in previous months, and there are even tentative signs of stabilisation in confidence in retail and financial services together with an improvement in employment expectations in the months ahead in these sectors.Source: Monthly monitor report of the European Commission Copyright ©2008 ShARE. All Rights Reserved 3
  4. 4. By Sectors and Countries The manufacturing, financial services and transport and communication sectors have been hit hardest by announced job reductions in January and February. • However, the hotels and restaurants and quarrying sectors announced more job creation than job losses in February, while the retail sector still showed signs of resilience although posting considerably fewer job gains than in the previous month. Compared with a year ago, unemployment rates have risen in the majority of EU Member States, with the most substantial rises being in the Baltic States, Spain and Ireland. Only four Member States still had lower unemployment rates compared to a year ago, namely Bulgaria, Slovakia, Germany and Poland. Young people more affected than experienced people. Men affected more than Women.Source: Monthly monitor report of the European Commission Copyright ©2008 ShARE. All Rights Reserved 4
  5. 5. Hiring and Restructuring Trends Hiring intentions for the first quarter of 2009 have generally worsened, down 2 to 9 % Overall, between last October and the end of February, 770 restructuring cases were reported, with two-thirds of the announced job cuts taking place in just five Member States, namely the UK (143 000), Poland (43 000), Germany (28 000), Italy (19 000) and the Czech Republic (19 000) In February the largest restructuring cases involving job losses were in: • financial services: Royal Bank of Scotland (22 300 jobs) and RSA (1 200) in the UK, ING (2 700) in the Netherlands, HypoVereinsbank (2 500) in Germany and PZU (1 500) in Poland; • manufacturing: Bumar Labedy (1 600) in Poland, Harman/Becker (1 000) in Germany; • retail: Stylo (2 500) in the UK; • transport and communication: Poczta Polska (1 500) in Poland, SR Technics (1 135) in Ireland. Source: Monthly monitor report of the European Commission Copyright ©2008 ShARE. All Rights Reserved 5
  6. 6. European Companies Situation – Job losses Copyright ©2008 ShARE. All Rights Reserved 6
  7. 7. Management of Crisis within Companies Each company has different way to handle the crisis but there are some common rules given by the European Commission : Inform and consult the workers about the economic and social situation and future prospects. Inform and consult the workers in special procedures where collective layoffs or transfers are envisaged Make sure the workers’ rights are protected Involve the workers • Make the company’s situation and strategy understood • Explain and give the reasons for change in good time • Allow workers to make their views known Manage the restructuring process • Look for alternatives to dismissals • Establish a social plan to alleviate the social consequences • Establish monitoring mechanisms Take care of the future • Anticipate as far as possible the evolution of jobs • Maintain and develop workers’ competencesSource: Department Social Affairs of the European Commission Copyright ©2008 ShARE. All Rights Reserved 7
  8. 8. UNEMPLOYMENT SYSTEMS Elisa Park Rafaël Klein Copyright ©2008 ShARE. All Rights Reserved 8
  9. 9. Unemployment in France, Germany and Switzerland Labor force statistics for the three countries with OECD data Source : OECD Statistic website consulted on 04.01.2009 Copyright ©2008 ShARE. All Rights Reserved 9
  10. 10. Unemployment in France, Germany and Switzerland Unemployment rates - FranceIt remains one of the highest in Europe. The currentGovernment is experiencing the Revenu de solidaritéactive.Unemployment was already on the rise beforethe financial crisis heightened. Data showing a jump inthe number of jobless people in August.There could be as many as 52,000 jobs lost during thesecond semester of 2008, increasing theunemployment rate to 7.4% by the end of the year. Copyright ©2008 ShARE. All Rights Reserved 10
  11. 11. Unemployment in France, Germany and Switzerland Unemployment rates - GermanyDue to the crisis, the German government bailed outHypo Real Estate.In early December German Finance Minister PeerSteinbrück indicated that he does not believe in a"Great Rescue Plan" and indicated reluctance tospend more money addressing the crisis. Copyright ©2008 ShARE. All Rights Reserved 11
  12. 12. Unemployment in France, Germany and Switzerland Unemployment rates - Switzerland Switzerland has a more flexible job market than neighboring countries and the unemployment rate is very low. However, the effects of the worldwide economic slowdown have become evident on the Swiss labour market . This is shown on the unemployment level recorded by employment offices . This particularly – although not only – applies to the sectors of the economy which are largely dependent on exports. Copyright ©2008 ShARE. All Rights Reserved 12
  13. 13. Situation in Germany Copyright ©2008 ShARE. All Rights Reserved 13
  14. 14. Full service provided by Germany’s biggest publicagency German government gives very high Agency offers the whole range of services for importance to the unemployment agency unemployed under a unified framework  Allocation of financial aid  Consulting and Mediation: • Free consulting by agency staff • Created in 1927 during the Weimar • Service partly available in Turkish Republic • Bigger restructuring and renaming in 2002 as result of unemployment policy  Self-information sources: reforms • Employment Information Centre (BiZ) • Centralized (federal) organisation • BERUFENET: Database with job- • ca. 98.000 employees offers, linked to external (private) databases • 660 branches and vast internet offer • KURSNET: Database with formation & • Budget: €43,7 billions (2007) continuing education offers • Ongoing discussions in public & politics  Other services: • Psychological & medical service • Service unit for job-seeking abroad (especially within EU) Source: Bundesagentur für Arbeit, Bundesministerium für Arbeit und Soziales Copyright ©2008 ShARE. All Rights Reserved 14
  15. 15. Two main approaches to help unemployed peopleto find a new job  Employees are obligated to register at the agency at least 3 months before termination of a job: Information, • Meeting with agency staff mandatory Consulting • Active search for new job mandatory & Mediation  Agency units for specific sectors: • Consulting units for artists, academics, seamen etc. • Agencies directly located in many universities  Free formation/ongoing education is granted after receiving “Education Voucher” (Bildungsgutschein): Formation • Early formation-consulting with agency staff & mandatory Ongoing • Agency inspects the need for formation (profile education screening, psychological test and other sources helping to define requirement) • Education Voucher on top of financial aid Source: Bundesagentur für Arbeit, Merkblätter Copyright ©2008 ShARE. All Rights Reserved 15
  16. 16. Situation in France Copyright ©2008 ShARE. All Rights Reserved 16
  17. 17. After decades of a clustered unemployment systemestablishment of a new single agency in France One of the new French president’s first reform Agency in progress of consolidating to unify clustered agency system all services into a unified framework  Allocation of financial aid  Consulting and Mediation: • Free consulting by agency staff • Created in late 2008 after merging  Self-information sources: ANPE and Unédic/Assédic networks • En Ligne Pour l’Emploi : Internet chats • Further merger with AFPA formation with companies and agency staff agency in progress • Centralized (national) organisation  Other services: • ca. 45.000 employees • Unemployment Card to get discounts • Budget: €2,6 billions (2006, ANPE) (like students) • New, unified service for unemployed Source: Pôle emploi, Ministère du Travail, des relations sociales, de la famille, de la solidarité et de la ville Copyright ©2008 ShARE. All Rights Reserved 17
  18. 18. Still clustered and opaque approaches to helpunemployed people to find a new job  Registration as unemployed at Assédic: Information, • Meeting with agency staff mandatory Consulting • Active search for new job mandatory & • Obligation to deal with job offers corresponding to personal profile Mediation  Handled by AFPA agency: • Formation-consulting and validation by Pôle Emploi Formation staff mandatory to get redirected to AFPA & • Subsequent interview with AFPA staff mandatory Ongoing • Part of Personalized Action Project (CRP, PAP) education  For 16 to 25 year olds: • Free 1-2 year formation without any prerequisites to enter public service (PACTE) Source: Pôle emploi, Assédic, Association nationale pour la formation professionnelle des adultes Copyright ©2008 ShARE. All Rights Reserved 18
  19. 19. Situation in Switzerland Copyright ©2008 ShARE. All Rights Reserved 19
  20. 20. Umbrella organisation simplifies federal system Regional agencies as part of Agency is service mediator, clustered organisational structure instead of service provider  Allocation of financial aid  Consulting and Mediation: • Federal umbrella organisation (SECO) • Free consulting by agency staff with regional subsidiaries (RAV) • Biggest job database in Switzerland • 130 branches • ca. 2.500 employees  Self-information sources: • Budget: €270 millions • Self Service Terminals in RAV braches  Formation & Ongoing education: • Mediation of formation • Internships • ”Learning-by-doing Placements” • “Motivation Term” Source: SECO - Direktion für Arbeit, RAV Copyright ©2008 ShARE. All Rights Reserved 20
  21. 21. AN INTERNATIONAL SOCIALCHALLENGE Adriano Waszyc Réda Rebib Copyright ©2008 ShARE. All Rights Reserved 21
  22. 22. General Outlook Keynesian approach • Solution through investment and consumption • Through industry – France • Through demand increase – UK Stimuli package • Short run – managing investments • Long run – maturing on innovative industry Protectionism • The temptation is to follow protective measures • But freetrade is the only real solution • Remember protectionism didn’t help at all for the 30s’ crisis…Sources: Capital & Bilan magazine, International Herald Tribune Copyright ©2008 ShARE. All Rights Reserved 22
  23. 23. How is western industry performing? Situation • Western Europe second biggest industry pole • More and more relocations: • Eastern Europe • North Africa • East, South-East, South Asia Strengths • High quantity of qualified workforce • Closer to universitarian networks & star-up nests • Free trade within Europe • Closer to costumers Weeknesses • Expensive! • Can only strive thanks to major economies of scale or highly specialized products • Often highly overcapacity issues Copyright ©2008 ShARE. All Rights Reserved 23
  24. 24. New challenges Somehow the issues are still the same… Question are: • How to remain competitive? • How to increase productivity? • How to attract industries? • But crisis accentuated contrasts between European countries themselves and also the rest of the world. Despite geopolitical disparities, current strategies: • Monetary policies • Fiscal incentives • Government steered investments Outcomes are uncertain • Consumer consumption, will it increase or will people start saving? • Since Europe is a replacement economy, consumption can only be based on innovation. • How to manage the ever growing national debt? Copyright ©2008 ShARE. All Rights Reserved 24
  25. 25. Bank Secret: Switzerland Helping rich individuals to evade tax payment is the Swiss finance markets’ real specialty. Switzerland is the world leader in “offshore private banking” – private banking outside the clients’ country of residence. Swiss banks, or rather increasingly branches of foreign banks in Switzerland, manage about a third of the wealth in this bank sector worldwide. This is more than 2000 billion francs, with a yearly growth rate estimated at 6 to 6.5 percent. Source: Swiss Government Copyright ©2008 ShARE. All Rights Reserved 25
  26. 26. Bank Secret: What happened recently? In February UBS has to give 300 names of wealthy US clients to the US fiscal authority. Mid march the Swiss government decided not to make anymore the distinction between Tax Evasion and Tax Fraud Basically nothing coarse changed to the Bank Secret Principle. The main changes apply to wealthy foreign people trying to escape their home country tax system. Copyright ©2008 ShARE. All Rights Reserved 26
  27. 27. Bank Secret: Impact on a social level The Swiss finance industry employs about 1.4% of the people in Switzerland and represents 12% of the Swiss GDP. Private Bankers in Switzerland fears that the new law, making Tax Evasion and Tax Fraud the same, could dry up the off- shore wealth investments in Swiss Banks. This could have a direct impact on Jobs in this field and Swiss economy. A solution to keep Switzerland a prime investment place is to stress the service quality and the political stability. Strengths which have already been emphasized for decades. Source: FinancialWeek, February 24. Copyright ©2008 ShARE. All Rights Reserved 27

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