Textile industry in difficulties

Textile and apparel industry in Croatia is in extremely bad situation considering complex conditions of workers and especially technology. Despite government initiatives industry is s till in crisis. Layoffs, salary cuts and increasing pressure from other cheaper textile imports are the main problems. Also textile and apparel industry have difficulties in marketing its products to the domestic market. Only companies which have made substantial investments and have already modernised their manufacturing technology have good prospects. So, what should they do in the future?

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Primarily, textile and apparel companies should look at themselves and notice that, at the moment, they are not managing to adapt to existing requirements of changing market conditions. Also they are slow in recognizing future needs of potential customers, modernizing and restructuring production.
One of the proposed solutions is to produce value-added products and own brand products, as well as the consolidation of textile and apparel companies. We need changes in human resources, innovation and market repositioning and all that has to match with capacity of the industry. It’s necessary, for each of this solutions, to invest financial capital but at this moment industry does not have it. Half of the market share is determined for only a few companies and in this industry only they operate with a profit. Althought the textile and apparel industry in Europe applied policy for sustainable growth and development of such industries, in Croatia there is still no scientifically based economic and social platform for the reconstruction of the textile and apparel industry. That implies a number of various consequences like manufacturers of textiles and apparel industry are importing 90% of raw materials for production.

For now, textile and apparel industry in Croatia is trying to overcome the global recession by relying on state aid and on the financing of production facilities. Various production and bussines models helped textile apparel industry in EU to make positive results so Croatian industy should follow the lead of these industries. At this moment, the industry has two main goals ahead of EU accession: to change production structures according to higher quality price brackets and to improve business operations and apply innovations and knowledge.

Source: http://hrcak.srce.hr/file/112289

Authors: Ivana Mišura, Antonella Cassarà, Tedi Marković and Isabel Tina Braun.

The Great Recession and the current situation

The Great recession is a global economic decline that began in December 2007 and took a particularly sharp downward turn in September 2008.

The outbreak phase of the crisis, manifested as a liquidity crisis.

The bursting of the U.S. housing bubble caused the values of securities tied to U.S. real estate pricing  to plummet, damaging financial institutions globally.

The global recession has affected the entire world economy , with greater difference to some countries than others.

The proximate cause of the crisis in 2008 was the failure or risk of failure at major financial institutions globally. The European housing bubbles began to deflate during the 2007-2009 period, depending on the country.

The origin of these housing bubbles involves two major factors:

-Low interest rates in the U.S. and Europe following the 2000-2001 U.S. recession;

– Significant growth in savings available from developing nations due to ongoing trade imbalances.

These factors caused a large increase in demand for high-yield investments. Large investment banks  fueling housing bubbles in the U.S. and Europe

The crisis in Europe generally progressed from banking system crises to sovereign debt crises, as many countries elected to bailout their banking systems using taxpayer money.

Several countries received bailout packages from the European Commission, and European Central Bank, which also implemented a series of emergency measures, but five years after this great recession the world economy is still struggling to recover.

During 2012 a growing number of developed economies have fallen into a double-dip recession:

– firms and households is holding back normal credit flows and consumer and

investment demand;

-unemployment remains high;

-fiscal austerity responses to deal with rising public debts are further deterring economic growth, which in turn is making a return to debt sustainability all the more difficult;

-bank exposure to sovereign debts and the weak economy are perpetuating financial sector fragility, which in turn is spurring continued deleveraging.

This are the causes and the current situations.

 

 

 

 

Authors: Antonella Cassarà, Tedi Marković, Isabel Tina Braun, Ivana Mišura 

Sources:

http://www.un.org/en/development/desa/policy/wesp/wesp_archive/2012wespupdate.pdf

http://en.wikipedia.org/wiki/Global_economic_crisis

 

Is there a light at the end of the tunnel for Croatian labour market?

It is well known that the world, in general, is in enormous economical crisis. Some countries, however, have found a way to recover and start building up for the future.
Croatia is not among those lucky few countries.

Corruption, nepotism, lack of vision by the politicians, very little production and many other negative factors  took its toll on the quality of living in this country. Considering the time length of this economic crisis we can easily say that for Croatia recession has grown into something we have all been trying to avoid – an ever lasting depression.
The government has introduced all kinds of taxes, stifling its own citizen’s purchase power, which is now very low, unemployment rate is among the worst ones in all of Europe and it is also worth noting that Croatia is one of the most centralized countries in Europe.

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With all that being said, it is quite natural that thousands and thousands of people are leaving the country in despair. Everyone is hoping the situation will improve after the country finally enters the European Union on 1st of July this year (2013), but there are already some predictions that many member countries have decided to impose restrictions for Croatian people seeking for employment. So they are turning to other options like Australia and in larger part – Canada.

Canada has 67 immigration programs for legal staying, out of which more than 50 for those who have already received a work permit for long-term stay. The good news is that the local authorities annually issue 275 work permits for the Croatians under the Working Holiday programme in Canada which all Croatian citizens in the age range of 18-35, without criminal record and who can prove that they are in posession of 2500 Canadian dollars for a new beginning can apply for. That’s the most common way the Croats get legally employed when they decide to move across the Atlantic. They obtain a work permit, which is not tied to a specific employer, upon arrival find any kind of job, and then seek for better employment. Canada introduced the aforementioned programme for Croatia in June 2011 and next year it is realistic to expect a multitude of applications for it.

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The crisis that has been affecting Europe and the rest of the world has seen many nations watch their citizens pack their bags and try their luck across the Atlantic, but only the Croats managed to get close to the gigantic countries like China, India, Pakistan and dictatored North Korea. Just for comparison, Croatia is right behind India, a nation with population of over 1.2 billion people when it comes to seeking an asylum in Canada. In the first 9 months only of the year 2012, 510 Croats applied for asylum in Canada, a little bit less than the citizens of India – 534.

So a million dollar question is: can Croatians weather the storm and refrain from continuous emigration in pursuit of better life?

Sources:

http://www.jutarnji.hr/zbog-boljeg-zivota-hrvati-spremni-i-lagati-da-ih-u-domovini-zlostavljaju-/1068337/

http://www.dzs.hr/default_e.htm

Authors: Tedi Marković, Isabel Tina Braun, Ivana Mišura and Antonella Cassarà

The global situation on labour market

In the fifth year after the outbreak of the global financial crisis, global growth has decelerated and the effect is still continuing. Unemployment has started to increase again.  According to The United Nations,  the number of unemployed in the world reached 197 million in 2012 and was expected to increase further. According to the report, this year unemployment will rise to 5.1 million.

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Sources:

http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_171681.pdf

If the economic and labor market trends continue in this way, there is a big risk. The ILO projects 400 million new entrants into labour markets over the next ten years . 400 million new jobs will be needed simply for prevent a further increase in global unemployment.

International Labour Organization, about 39 million people in the labor market is predicted taken. General Director Guy Ryder of ILO   has stated that uncertain economic situations and policies are insufficient to prevent it. In this instance have resulted in lost into investment and low demand for employment force.

According to ILO report at the beginning of the world is most affected by unemployment are young people. About 13 percent of those under the age of 24 is unemployed. The lowest unemployment rate among young people in Germany, Austria and Switzerland.

Sources:

http://www.bbc.co.uk/turkce/haberler/2013/01/130122_un_turkey_unemployment.shtml

http://www.bbc.co.uk/news/business-16695096

Written by Latife Cansu Bayar, Eyüp Dönderalp, Lucija Kacin and Lenka Filova

European Focus on Labour Market

The EU labour market in 2011 was marked by a sudden interruption of the timid recovery in employment. Employment started falling in the mid of 2011 amid a reduction of job finding rates and a new process of job shedding concerning most of the EU, with job separations surging in a few countries, notably Greece and Portugal. The current weakening of the labour market is mostly the result of worsening economic activity linked to the aggravation of the sovereign crisis. About 40% of the growth in unemployment for the overall EU since 2008 is due to the massive increase in Spanish unemployment. After four years with the beginning of the financial crisis, finding job rates remain low in most member counties. Youth unemployment rates increased dramatically in Greece, Portugal, Spain. Since the start of the crisis, most EU countries have taken an active reform stance, and managed in some cases to pass ambitious reform plans. Some countries have high unemployment and large external imbalances for this reason they try to improve their responsibility and labour market adjustment by reforming their job protection. Unemployment is becoming a very serious issue in a number of EU countries, with increasingly visible economic, social and political implications. The rate of the unemployment should be decreased that’s why the countries should create new conditions for the build up trust and to keep it labour demand on the stable basis. In several countries, these reforms usually politically were recently carried out within the framework of structural adjustment programmes. For examples Greece, Spain, Italy, and Portugal, took measures. Also in this countries by taking new tax reforms, could create the conditions for better mobilising labour supply and demand. In the countries should concerned by high youth unemployment policies and also focus on easing the school-work transition, including by an effective use of apprenticeship systems.On the basis of increasing poverty and social exclusion, increasing unemployment and reduced income lies.After the increase of the sovereign debt crisis in the euro area, investments and consumption decisions have influenced. Unemployment in the EU as a whole grew, in contrast with other world regions.The unemployment rate in the euro area is currently at the highest level and unemployment performance at unprecedented levels. The number of unemployed in April 2012 was 17.4 million for the euro area, almost 25 million in the EU. The number of job losses since 2008 amounts to about 5 million for the EU; 3 million for the euro area.
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In 2011, the euro area was the world region with the highest unemployment rate. Since second half of 2011, unemployment developments in industrialised countries have started to diverge, mainly as a consequence of a more sustained recovery in the US and Canada compared with the EU and Japan.In Japan, GDP growth turned out negative following weak external demand and the supply chain disruptions related with the earthquake and flooding in Thailand. Conversely, in many other industrialised countries, most notably Canada, Australia, and New Zealand, unemployment remains above the pre-crisis average in spite of the recovery.In the United States, relatively stable real wages were associated with sluggish job creation amid strong recovery of productivity growth. In Japan, the limited adjustment in head-count employment during the 2011 contraction coincided with a substantial increase in real wages, mostly attributable to price deflation

The European employment strategy seeks to create more and better jobs throughout the EU. It takes its inspiration from the Europe 2020 growth strategy. In response to the high level of unemployment in Europe, the European Commission launched in April 2012 a set of measures to boost jobs, the so called “Employment package”.

  1. 1. Support job creation
  2. 2. Restore the dynamics of labour markets
  3. 3. Strengthen the governance of employment policies

Flexicurity is an integrated strategy for enhancing, at the same time, flexibility and security in the labour market.

Working with national governments, social partners and academics the EU has found acommon flexicurity principles and has explored how countries can implement them through four components:Flexible and reliable contractual arrangements,Comprehensive lifelong learning strategies,Effective active labour market policies,Modern social security systems

Integrated flexicurity policies play a key role in modernising labour markets and contributing to the achievement of the 75% employment rate target set by the Europe 2020 Strategy.

Sources:

http://www.oecd.org/

 http://data.worldbank.org/data-catalog/world-development-indicators

http://www.worldbank.org/

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

http://www.wikipedia.org/

 

Written by Latife Cansu Bayar, Eyüp Dönderalp, Lucija Kacin and Lenka Filova

 

CYPRIOT CURRENT SITUATION

 

CYPRIOT CURRENT SITUATION-

 

 

In order to avoid being thrown away from European Union, Cyprus had to accept last minute bailouts. Of course to achieve this supposrt they have to make some sacrefices-in this case it will affect depositors, who put their savings in the Cypriot banks.This is supposed to be the way to prevent collapse of the economy.The country agreed to tax bank accounts holding 100,000 Euros. Now the tax is expected to be raised to 5,8 billion Euros and generally as Stefan Kourbelis(manager at centrum hotel in Nicosia) said, it can be seen as an experiment made on a smaller country which is not of great importance so the eventual damage can be bearable. I think he reffers to the previous problematic situation in Ireland, Greece, Portugal or Spain where depositors haven’t been touched by a crisis so deeply as in Cyprus.

 

 

In my opinin it is understandable that reach countires like Germany or the Netherlands do not want to be ”breakwinners” for poorer counties, supporting them continuously with their money. It brings out the concern about the efficiency of the Euro zone, because as Iraland’s Finance Minister Michael Noonan said the euro zone will face a lot of obstacles until the Cyprus issue is resolved,in particular the issue how bank depositors will be treated.

 

 

 

As we know the government extended the holiday for banks to put stop for run on banks. In addition banks are supposed to limit daily withdrawals. I consider that even though it might be helpful and it can slow the smuggling, it will anyway threathen to the local economy. It’s almost sure thet the capital control arrive to Cyprus to late, actually few years after it should be introduced.The new control’s target is to stop money from fleeing too fast, so in other words it deacrease the amount which anybody can take out of the Cypriot.It is claimed to be just temporary but if it will work I wouldn’t be so sure. During 2008 and 2009 Cypriot became good place for hot money.That was caused by the fact that Cypriot banks paid higher interest rates on euros and very often did not have a lot of requirements like for example the knowledge where those money come from. The Asian currency crisis of the 1990 showed how unstable country situation can be, taking into consineration hot money.

 

 

 

I think looking at Cipriot situation we can find many similarities with the event whhich occured in Ireland before.The also took advantege of capital inflows but in the end the oversised banking system failed and then when foreigners wanted their money at once, Ireland decided to support their banks leading to virtual bancrupcy of the country’s government.

 

 

 

Nowadays cypriot depositors like for example Mr. Argotis (an independent financial executive) feels really unsatisfied and angry about their current position, he says “We were a member of the European family.Now it seems they want to push us out of the euro.” Within Cyprus as people realize how badly the national economy might be influence by the combination of capital controls on the flow of money out of the country and the freeze on the account of bank deposits, feelings of dissappointment is increasing. Some establishment figures are now discussing the option of leaving the euro currency union.

 

I think we can also connect Cyprus economic and financial problems with U.S mortgage crisis from 2007.That time Cyprus suffered the sharp drop in the local business activity and tourism sector.

Cypriot debt compared to Eurozone average

 

What is more unemployment in the country has been rising. The Cyprus economy has been influenced especially hard by the several bailout packages Greece was granted during the last few years.Cyprus was already going on with loans from Russia and the Greek crisis has only intensified its difficult position.Russia won’t help Cyprus. But on the other hand if Cyprus collapse, Russia would lose a lot because they have assets and holdings with a value of 24 billion euros

 

In my opinion the world is concerened about Cyprus mostly because its close ties to Greece- falining economy in one country will devastate the other one.What follows that- it will reflect on the E.U.,already weakened because of debts crisis. When it comes just to bare Cyprus there is not really any consequences in Europe because Cyprus production is just 0.2 % of the Eurozone production.

 

Sources:

http://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financial_crisis

http://topics.nytimes.com/top/news/international/countriesandterritories/cyprus/index.html

http://www.bbc.co.uk/news/world-europe-21992745

 

/By Emilia Janaszkiwicz,Alicja Łoś/

 

 

 

Andalusia: Romania and Bulgaria Left out of Spain’s Labour Market

 

With the accession of Romania and Bulgaria, there has been a transitional period of seven years to limit the certain conditions. Those limitations refer to the free movement of workers and can be applied by the European member states. Now, Spain applied those restrictions to help their country out of the economic and labor crisis.

Due to the poor situation of the Spanish labour market, the European Commission agreed on the prolongation of the restrictions regarding Romanian as well as Bulgarian workers. But the restriction is only a temporary limitation to ease and loosen the tense situation of the Spanish and especially the Andalusian labor market. However, the restriction expires on December 31, 2013 and no further prolongation is admitted. Reason for this decision is the “Act of Accession” from Romania and Bulgaria of 2005. A specific clause allows member states to reintroduce restrictions concerning the exclusion of Romania and Bulgaria from their national labor market but only if there are serious problems and only if the European Commission agrees on the request of the member state.

On January 1, 2007, Bulgaria and Romania entered the European Union. Only two years later Spain opened up its labor market on the free movement of workers. Only two years later in 2009. Bulgarian and Romanian workers had the possibility to interact in the Spanish labor market until August 2011. Even though the Bulgarian and Romanian do not interact anymore, the situation of the Spanish labor market deteriorates further and further. The EU Commissioner for Employment, Social Affairs and Integration László Andor searches for other reasonable causes. The political and economic crises have left their scars in Spain. But according to Andor, is the restriction of the Spanish labor market is not the right decision to improve the situation of the labor market and its high unemployment, especially the high unemployment of the youth. As a conclusion Andor adds that it is a must to observe the Spanish labor market in the following to add new restrictions or loosen the other ones to improve the situation.

 

Situation in Andalusia – Spain’s Poorhouse

There are over 8,4 million people living in Andalusia which makes it the biggest region in front of Catalonia and Madrid in Spain.The region has many problems caused by the economic crisis, like the whole country in general. It has to be said that Andalusia has the highest unemployment rate of over 30% in September 2011 and according to the National Public Employment Service’s Job Observatory in Cordoba the rate increased over 5% when compared to previous year. It is worth noting that women are especially affected.3 Out of the people who are between 16-25 years old there is a staggering unemployment rate of over 50%. This makes Andalusia the region with the worst rate out of the 27 European Member States.4 Compared to the average unemployment rate of 10,7% and youth unemployment rate of 23,4% in 2012. In 2007 the unemployment rate in Spain had an low of 8,3%, but since then the rate increased.5

Spain Unemployment Rate – Percentage of the Labor Force

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Source: http://www.tradingeconomics.com/spain/unemployment-rate

Approaches to Improve the Spanish Labor Market

Unemployment in Spain by Ethnic Origin: Comparison of Romania and Spain.

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Source: http://www.andaluz.tv/nachrichten/nachricht-spanien-international.php?idArt=11596&url=spanien-rumaenien.

In 2012, there were over  17% of Spain’s entire population who have Romanian roots with a tendency to increase. Referring to data from the European Union Labor Force Survey, there is a large number of Romanians who are unemployed.2 Indeed the unemployment of in Spain living Romanians is higher than the unemployment of the Spanish. Nevertheless, the bad management of the politics and the not-implementation into sustainable industries is a further serious drain on the economy.3

Sources:

web1:

EURES The European Job Mobility Portal (2012): “Free movement: Spain”.

http://ec.europa.eu/eures/main.jsp?acro=free&lang=de&countryId=ES&fromCountryId=RO&accessing=0&content=1&restrictions=1&step=2.

[30.04.2013]

web2:

andaluz.tv (2012): „So kann es auch gehen!“.

http://www.andaluz.tv/nachrichten/nachricht-spanien-international.php?idArt=11596&url=spanien-rumaenien.

[30.04.2013]

web3:

EURES The European Job Mobility Portal (2012): “Labour market information, Spain – Andalucía”.

http://ec.europa.eu/eures/main.jsp?catId=452&lmi=Y&acro=lmi&lang=en&recordLang=en&parentId=&countryId=ES&regionId=ES6&nuts2Code=ES61&nuts3Code=null&mode=text&regionName=Andaluc%C3%ADa.

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web4:

andaluz.tv (2012): „Cartama erhält 1,5 Mio. Euro aus Brüssel für Arbeitsbeschaffungsmassnahmen“.

http://www.andaluz.tv/nachrichten_costa_del_sol/det_nachrichten_costa_del_sol.php?idNot=8126.

[30.04.2013]

web5:

andaluz.tv (2013): „Cadiz mit über 40% am schlimmsten betroffen“.

http://www.andaluz.tv/nachrichten/nachricht-andalusien.php?idNot=11115&url=arbeitslosenzahlen-andalusien-spanien.

[30.04.2013]

 

Written by Tina Isabel Braun, Tedi Marković, Ivana Mišura, Antonella Cassarà