Emea Economic Insight December 2010


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Manpower EMEA Economic Insight for December 2010. Looking at the key indicators for the EMEA jobs economy

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Emea Economic Insight December 2010

  1. 1. Manpower EMEA Economic Insight Issue 8. December 2010Euro area and EU27 employment stable EMEA Macro Economic InsightThe number of persons employed in both the Euro Employment growth rates across the EUArea and the EU27 was stable in Q3 2010 compared Quarter on Quarterwith the previous quarter, according to the latestfigures released by Eurostat. In Q2 2010 employmentgrew by 0.1% in both zones. Falls in employmentwere recorded in construction (-1.1% in the Euro Areaand -1.0% in the EU27) and manufacturing (-0.3% and-0.2% respectively). Agriculture fell by 0.2% in theEuro Area, but grew by 0.4% in the EU27. Financialservices & business activities increased by 0.3% inthe Euro Area and by 0.2% in the EU27. Other servic-es (which mainly include public administration, healthand also education) rose by 0.2% and 0.1% respec-tively. Trade, transport & communication servicesgrew by 0.1% in the Euro Area and remained stable inthe EU27. Compared with the same quarter of the previous year, employment fell by 0.2% in boththe Euro Area and the EU27 in the Q3 2010. In the second quarter of 2010, employment decreasedby 0.6% in both zones. Eurostat estimates that, in the third quarter of 2010, 221.2 million men andwomen were employed in the EU27, of which 144.5 million were in the Euro Area. These figures areseasonally adjusted.Mixed results for Q1 2001 European MEOS Increase in hourly labour costsResults for the Q1 2011 global MEOS suggest a more Hourly labour costs in the Euro Area rose bypositive start to the new year for the global labour market. 0.8% in the year up to the third quarter of 2010,Data reveals improved hiring expectations from 12 months compared with 1.6% for the previous quarter.ago in 28 of 39 countries and territories, including the G7 This is the lowest increase registered since thecountries of Canada, France, Germany, Italy, Japan, the start of the series in 2000. Across the whole ofUK and the United States, where hiring plans are stable or the EU27, the annual rise was 1.2% up to theimproved from both the fourth quarter of 2010 and this time third quarter of 2010, compared with 1.5% forlast year. Despite continued mixed results across Europe, the previous quarter.German employers are reporting their strongest hiring planssince early 2008. The stability and incremental improvement The breakdown by economic activity showsreflected in the data for the G7 countries indicates progress that in the EU27, labour costs per hour grew bytowards recovery for the global labour market. In fact, Net 0.7% in industry, 0.4% in construction and 1.5%Employment Outlooks for the G7 countries are all in positive in services.territory for the first time since the third quarter of 2008. Euro Area annual inflation stable at 1.9%Employer hiring plans continue to be mixed across the 21 Euro Area annual inflation was 1.9% in Novem-countries surveyed within the EMEA region, with positive ber 2010, unchanged compared with October. Aactivity expected in 14 countries. While Net Employment year earlier the rate was 0.5%. EU annual infla-Outlooks weakened in 11 countries from three months ago, tion was 2.3% in November 2010, unchangeda year-over-year comparison reveals stronger outlooks in 12 compared with October. A year earlier the ratecountries. Hiring activity in the EMEA region is expected to was 1.0%. In November 2010 monthly inflationbe strongest in Turkey, Germany and Sweden and weak- was 0.1% in the Euro Area and 0.2% in the EU.est in Greece and the Czech Republic. The strong hiringpace anticipated in Turkey is due in part to demand in the The lowest annual rates were observed inconstruction sector where 45 percent of employers intend to Ireland (-0.8%), Slovakia (1.0%) and theadd staff. Netherlands (1.4%), and the highest inThe bright spot in Europe continues to be Germany, where Romania (7.7%), Estonia (5.0%) and Greecethe unemployment rate is at its lowest in 18 years. Engi- (4.8%). Compared with October 2010, annualneers and financial professionals continue to be in high de- inflation rose in ten Member States, remainedmand. The hiring forecast from Finance and Business Ser- stable in five and fell in twelve.vices employers is the strongest outlook since the surveybegan in the German market in 2003. In contrast, employer The lowest 12-month averages were in Irelandhiring confidence in the Greek and Spanish markets contin- (-1.8%), Latvia (-1.5%) and Slovakia (0.6%) andues to erode. However, data for Italy shows improved hiring the highest in Romania (5.8%).expectations for the third consecutive quarter resulting inthe first positive forecast from Italian employers in more The next issue of Insight will be published onthan two years. Employers in Bulgaria, Slovenia and Turkey 25th January 2011were surveyed for the first time this quarter.
  2. 2. Manpower EMEA Economic Insight Issue 8. December 2010EU End of Year Summit Student demos in UK and Italy EMEA Economic InsightLeaders of the EU meet in Brussels last week for their Mass student demonstrations have takenend-of-year summit. Top of the agenda were the continu- place in central London over the last fewing efforts that central governments have taken to tackle weeks. In the most recent, over 50,000 stu- dents took to the streets in protests at cuts tothe on-going debt crisis. Discussions primarily focused on education funding and a rise in tuition fees.the improvements to the €750bn joint EU/IMF loan facility. However, the demonstration, the third in asMinisters also spoke about the need to create a permanent many weeks, failed to stop the UK Parliamentsystem for handling financial crises from mid-2013. from voting for reform. Similar action alsoFollowing the meeting further pressure may also be put on took place in Naples, Italy where thousandsthe European Central Bank to step up its bond-buying of high school children took to the streets inprogram to help countries such as Portugal, Ireland and protest at University reform bills.Greece raise further capital. New Report on Youth UnemploymentMonster Employment Index rises The global economy is recovering but youthThe November Monster Employment Index Europe reported unemployment is getting worse, according toa 22% increase in online job opportunities compared to a new OECD report.year-earlier levels with transport, post & logistics and “Off to a Good Start? Jobs for Youth” says thatproduction, manufacturing, maintenance & repair exhibiting young people are more than twice as likelythe most robust annual growth. Italy noted the largest jump to be unemployed as the average worker. Yetin opportunities on a monthly basis, whilst Germany and few governments are taking proactive stepsSweden had the sharpest annual growth. Manufacturing and to boost employment opportunities.export activity across Europe continues to be a key driverin the rising levels of job opportunities across the continent, Youth unemployment rates in the OECDwith both sectors reporting substantial growth over the past area are expected to remain at around 18%12 months. in 2011 and 17% in 2012. This is more than double the total unemployment rate, whichNew survey reveals growing talent shortage stood at 8.6% in October 2010.New research by the Ifo Institute for Economic Research “Investing in young people is vital to avoid aat the University of Munich reveals that 40% of companies scarred generation at risk of long-termhave problems with finding specialised staff. In the services exclusion,” said OECD Secretary-Generalsector (excluding distribution) the reported shortage was Angel Gurría. “We can learn from countriesmore than 47%. Medium and large scale firms are equally that have made it easier for young people toaffected by the problem. Only small businesses (50 find jobs. It will help us strengthen theemployees or less) reported fewer problems in finding economic recovery while taking care of thesuitable personnel. most precious asset our countries have.”By 2015 two thirds of the surveyed firms forecast a Further strike activity in Greece‘medium’ or ‘strong’ shortage of specialists. By 2020 this Public and private sector workers staged yetfigure increases to +71%. SME businesses see bottlenecks another general strike helping to shut down public life across wide areas of Greece.especially for employees with qualified vocational training Transport networks, including the main port(59% and 66%, respectively) and fear that the situation will of Piraeus and Greek airspace as well asworsen in the future (64% and 67% respectively for 2015). hospitals, government offices, schools andCompanies with 500 or more employees mainly complain TV and radio stations were affected. Howeverabout a shortage of academics (60%). Of the large firms, this had little effect on the Government of36% reported that they have problems finding George Papandreou as they voted in favouremployees with vocational qualifications. For the future, of accepting austerity measures as part of thehowever, these firms expect a growing shortage in this area. EU/IMF back bailout package. Further strikeBy 2020, 64% expect to see a shortage of specialists in action is likely in the new year as protestors continue to demonstrate against changes tovocationally trained staff. In order to counteract the scarcity social security and pension benefits and cutsof specialists, companies are concentrating on targeted fur- to the public sector workforce.ther education and professional training (71%). Almost halfof the surveyed firms have special measures to strengthenthe company loyalty of their specialists. Strategy measuressuch as outsourcing, acquisitions and co-operations are Is this your copy of thebeing used by 15% of companies. Relocation of production Manpower EMEA Economic Insight? Email graham.murphy@manpower.com to subscribeto other countries was also listed as a response to theshortage of specialists.
  3. 3. Manpower EMEA Economic Insight Issue 8. December 2010BALKANS GERMANY EMEA Country InsightA new tax agreement has just reached between Romania and The German public sector is likely to see aBosnia-Herzegovina. The agreement will pave the way for a tough pay negotiation and settlement for 2011.number of investments by Romanian companies in the Bal- Unions have approached the talks with de-kans. It will also enhance economic migration between both mands for a flat rate increase of €50 per monthcountries. plus a 3% salary increase.BULGARIA IRISH REPUBLICThe Bulgarian parliament has voted to increases the state Following acceptance of the ECB/IMF bail-outretirement age from 2021. The amendments to the Social funds, the Irish government has announcedInsurance Code will also introduce stage rises in pension that a new 90% marginal tax rate will apply thiscontributions from 2012. year to bonus payments in the financial sector. Following a public outcry the govern-IRISH REPUBLIC ment has also blocked bonus payments ofAusterity measures by the Irish government will mean that the €40m to senior executives and managers atnational minimum wage will fall from €8.65 to €7.65 an hour Allied Irish Bank.for all new employees. Rates to current employees will not bechanged. NETHERLANDS A private members bill submitted by both theLATVIA CDA and Groenlinks parties is seeking to relaxThe national minimum wage in Latvia will rise on January 1st legislation around an employee’ rights to flex-2011 by 11.1% from €254 to €282 a month. This will affect a ible working hours and also their right to worktotal of 182,600 employees. from home. The bill is an extension to existing legislation.RUSSIAN FEDERATIONDespite cutbacks and austerity measures in several countries SWEDENacross Europe, civil servants working for central government Tripartite discussions between Government,departments in the Russian Federation saw their pay rise by employers and trade unions are currently5.2% between January & September 2010 when compared to taking place to discuss potential changes tothe same period last year. Average earnings are now €1266 per the current immigration rules for workers frommonth for Russian civil servants. outside of the EEA. Discussions centre around the problem of hard-to-fill vacancies and theBELGIUM existing level of protection for employees.Despite the rejection of the plan by the socialist union ACOD,the Belgian rail operator SNCB, is to restructure its opera- PORTUGALtions and form a new freight subsidiary which will be known as The European Union has placed pressure onSNCB Logistics. SNCB was able to reach agreement with the Prime Minister Jose Socrates to amend Por-ACV-Transcom trade union which means that the reforms can tugal’s Labour Code. Reductions to the levelgo ahead. of compensation paid to dismissed workers and making employers share some of the costUNITED KINGDOM burden via a new central redundancy fund areThe UK has released quota details for non-EEA skilled migrant two of the main proposals. There is also theworkers which will come into force from 1st April 2011. Total further potential to encourage flexible workingnumbers will be substantially reduced with “Tier one” workers by allowing workers to negotiate individuallycut from 14,000 to just 1,000 and “Tier two” workers capped at on working hours.20,700. There will be no intra-company quotas but employeeswill only be able to transfer into the UK if they earn in excess of RUSSIAN FEDERATION:£40,000 and will be able to stay for a maximum of 12months. There are an estimated 1.2m people with dis-However there is now confusion over the legality of the new bill abilities living in Moscow and a new socialas the High Court has deemed the new law illegal. integration scheme has been launched by the Social Welfare Department of Moscow. Individ-SPAIN ual schemes include adapting public buildingsThe government has proposed that the minimum wage should and the transport infrastructure as well as therise by 1.5% to €642.80 per month on January 1st 2011. How- establishment of 800 retraining centres.ever the government is likely to receive widespread opposi-tion to the raise from both employers, as it is unaffordable and ITALY:trade unions, as it is not high enough. The Italian National Insurance Institute for Workplace Injuries (INAIL) has launched aCZECH REPUBLIC health and safety drive aimed at improvingAgricultural workers in the Czech Republic (who earn on aver- H&S through technical investments and newage €700 per month) have decided to called off widespread working practices. A fund of €60m has beencollective action and to accept a new pay offer of 2.7%. set aside for the project.
  4. 4. Manpower EMEA Economic Insight Issue 8. December 2010PepsiCo in acquisition mode Apax in exclusive talks for Denmark’s ISS EMEA Employment InsightPepsiCo has announced that it is buying a majority 66% Apax, the private equity firm is in exclusivestake in the Russian dairy & fruit juice maker Wimm-Bill- talks to buy Danish cleaning giant ISS for $8.5Dann for a total of $3.8bn. PepsiCo also announced that it billion. ISS, one of the world’s largest facilities services firms, employs more than 500,000will buy the remaining shareholding once the initial purchase people, is currently owned by a consortiumhas been formalised. The deal is believed to be the biggest headed by Goldman Sachs & Swedish buyoutdirect foreign investment in Russia outside of the energy firm EQT. Apax is talking to major sovereignsector. Announcing the deal PepsiCo said in a statement wealth funds and also large pension funds to“The transaction will establish PepsiCo as the largest food finance the dealand beverage business in Russia, making it a leader in thecountry’s fast-growing dairy category and build its pres- Icesave compensation agreement reached Iceland has reached agreement with bothence in key markets in Eastern Europe and central Asia” the Dutch and UK governments over com-Wimm-Bill-Dann was started just 18 years ago with a hand- pensation payments following the collapseful of employees based in one room,” said Sergei Plastinin, of Icesave in 2008. Icesave, a subsidiary ofWimm-Bill-Dann chairman. “Today we have over 16,000 Landsbanki collapsed in October 2008 alongpeople and 38 production facilities.” The completion of the with two other major Icelandic banks leav-acquisition is still subject to regulatory approval. ing 400,000 Dutch and UK account holders without compensation. Following the collapseGazprom & Royal Dutch Shell form alliance of its major lending institutions, Iceland wasGazprom and Royal Dutch Shell signed an agreement “to plunged into a deep recession. This in turn ledpursue broader co-operation”, such as giving Russia’s to a major political storm between the UK andambitious state-backed gas company access to Shell’s Iceland. A thawing of relations has occurredupstream assets outside Russia. The companies have as the UK has recently stopped opposing the plan for Iceland to join the European Union.worked together in recent years but fell out in 2006 in adispute over the Sakhalin 2 liquefied-gas project. New German-French bridge opens Germany and France have opened a newPotential Italian pipeline sale bridge linking Strasbourg and Kehl across theE. On is in exclusive negotiations with a financial consor- river Rhine as part of an ambitious high-speedtium to sell its Italian gas network. The Italian gas network rail network to span the EU. The new link willincludes more than 9,300 km of gas pipelines reaching form part of a high-speed rail link from Paris600,000 customers. E. ON is considering an agreement to Bratislava. The 239m steel bridge took overwith the consortium for an amount between €300-€350m. three years to build at an overall cost of €63m.Italian and Chinese make move on Draka. Novartis agrees $13bn Alcon deal Novartis , the Swiss pharmaceuticals giantDutch industrial cable maker Draka is subject to a counter has agreed to buy the remaining shares of UStakeover bid by Chinese industrial group Xinmao. The €1bn eye-care company Alcon. The deal is expect-bid is being part financed by Chinese banking giant Minsh- ed to cost Novartis in excess of $12.9bn. No-eng bank. Xinmao will offer full details to the Dutch regula- vartis has been trying to acquire the remainingtory authorities by 14 February 2011, although it has stated shareholding since January, when it raised itsthat it sees no problems in concluding the deal. However, stake in the firm to 77%. It has also re-insti-Draka is provisionally moving ahead with a takeover by gated a $10bn share buyback programme.Prysmian of Italy for €840m. Draka is sought after because Deutsche Telekom reach agreement withof its knowledge across several key industrial areas includ- Vivendi over PTCing automotive, data and green energy. The battle to secure German Telecoms giant Deutsche TelekomDraka has also turned political, with both Italian politicians has finally reached agreement over theand the EU’s industry commissioner expressing major purchase of Polish mobile telecoms operatorconcerns that China’s move into European markets and Polska Telefonia Cyfrowa (PTC). The ongoingEurope’s tough stance on cartels could undermine European battle with Vivendi started in 2006 with thecable makers’ competitiveness. initial purchase of PTC, when the agreement reached split PTC into several business units.Russian and Indian joint agreement. Deutsche Telekom has agreed to settle allRussian Prime Minister Dmitry Medvedev has just returned ongoing legal disputes at a cost of €1.4bn.to Moscow following a two-day visit to India. The twocountries signed agreements on defence, energy and How will the changing world of work affect you?industrial trade, with both Medvedev and Indian PM Watch the latest world of work trends videoManmohan Singh vowing to double trade over the next four “Winning in the World of Work”years from the current $10 billion. www.manpower.com/press/wnww.cfm