Delocalization is not a huge job-killer but innovation boost

Globalization brings new opportunities and markets for business and companies. It also brings more choice and lower prices for customers. But for workers it can mean the loss of jobs and the erosion of incomes, living standards. So what makes companies decide to locate their business in the EU? Is it inevitable that they abandon European countries for low-cost, poorly-regulated locations elsewhere? And what does it mean for European integration if production and jobs move from one Member State to another?

 According to its European Restructuring Monitor (ERM), only 8% of announced job losses were due to jobs being moved elsewhere in the period between 2003 and 2006, but varied from country. The research also shows differences in sectors. The sector with  the highest proportion of EU jobs lost through delocalization was banking and insurance, a service sector with a generally high-skill profile.

The research also confirmed that the consequences of globalization are: loss of employment, loss in wages, increase in productivity, decrease in production cost, increase in export to offshored locations, investment of repatriated earnings, reemployment off laid labor. Employers, for their part, often stress the need to be able to react flexibly in the face of increased international competition and best represented when outsourcing parts of their production to other countries or operating sites in various countries.

Recently, some observers have showed that employers now use foreign outsourcing not only for manufactured goods, but also for labour services such as engineering, informatics and payroll administration, that becomes nowadays very favoured.

You can read more here http://www.eurofound.europa.eu/press/releases/2008/080602.htm and here http://ocw.mit.edu/NR/rdonlyres/Urban-Studies-and-Planning/11-482JFall2003/D27440EC-D3C9-4ED4-8492-20910A1804D4/0/offshoring_jobs.pdf

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3 thoughts on “Delocalization is not a huge job-killer but innovation boost

  1. It is true. There are winners and losers concerning globalisation. But I think it is funny, because it is like a metaphor to humanity. Every man is the architect of his own fortune. I think every country has also strenghts and weaknesses an can compete in something.

    Reply
  2. In Hungary, because of the economic crisis, and because of the ending of lot of foreign companies’ tax free or tax reduced period, the companies moved to other EU member states in the neighbourhood of Hungary. We lost so many working places, and now the unemployment rate radically increased. So the globalization have a lot advantage, but sometime it can couse worse situations too.

    Reply

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