Restructuring activity in Europe declines but job losses still outweigh job gains

Large-scale restructuring activity in Europe continues its recent trend of decline, however one where job losses continue to predominate over job gains, according to the latest quarterly report from Eurofound’s European Restructuring Monitor (ERM). Unemployment continued to worsen during the same period, although the pace of decline has slowed. Between 1 January 2010 and 30 March 2010, the ERM recorded a total of 244 restructuring cases, of which 160 were cases of restructuring involving job loss. The number of announced job losses totalled approximately 80,000 in the quarter as against announced job creation of just over 30,000 new jobs.

The global economic recovery appears to be on a firmer footing in early 2010, although the strength of the recovery in the EU lags somewhat behind developments elsewhere. The rate of increase in unemployment in the EU has moderated somewhat but is still rising: it reached 9.6% in February 2010, nearly three percentage points higher than at its most recent trough in early 2008. The lowest unemployment rates were reported in the Netherlands (4%) and Austria (5%), followed by Luxembourg (5.5%). The highest levels were again recorded in the Baltic countries of Latvia (21.7%), Estonia (15.5%) and Lithuania (15.8%) as well as in Spain (19%). There has been a disproportionate unemployment impact on younger, male, private sector and unskilled/semi-skilled workers, reflecting the fact that the majority of jobs lost have been in manufacturing and construction.

The ERM shows that internal restructuring accounted for over 70% of the 80,156 announced job losses in large-scale restructurings during the first quarter of 2010, with bankruptcy / closure accounting for 24%. The greatest number of announced job losses were observed in the UK, with 18,504 jobs due to be lost, followed by Romania (14,129 jobs) and Germany (12,040 jobs).

The report also shows that out of the 31,725 announced job gains some 9,810 jobs were announced in the UK, 4,208 jobs in Germany and 4,150 jobs in Romania. The retail trade is the sector reporting the greatest job creation (10,170 jobs), followed by hotels and restaurants (4,200 jobs), other business activities (2,170 jobs), auto manufacturing (1,859 jobs) and computer and related activities (1,853 jobs).

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