Reversal of global migration trends due to the crisis, on the chosen example.

The economic crisis which hit Europe, has left its mark in the labor market. In a particularly difficult situation were young people just entering the labor market, for which there is no place. This forced many of them to consider the decision to emigrate from their homeland. For many years remained constant trend in this area. Countries which were characterized by a high rate of emigration (in the European scale- usually countries of the “new union” – Central and Eastern Europe, in the world’s scale- former colonies- Spanish, Portuguese and French), whose citizens have decided to move to countries with a higher standard of living. There was also a group of countries that were typical destination for immigrants. Citizens of the “New Union” countries usually decided to move to Germany, the UK and France. The destination of the newcomers from the former colonies, was the home countries of these colonies- France, Portugal and Spain. Large influx of immigrants from Africa have been registered also in Italy and Greece.

The economic crisis with his affect on the U.S. and Europe caused a reduction in the living standards of many people in the Old Continent. By this we can see a change in the global migration trends. It turns out that people in countries such as Portugal and Spain-seen so far as a haven for immigrants, now consider the possibility of moving to another part of the world in search for jobs. However, the Spanish immigrant profile is significantly different from the immigrants from central and eastern Europe. Poles, Lithuanians or Hungarians who decide to emigrate are often well educated and who know the languages ​​of the countries to which they wish to move. Their decision to leave the country is a cause of “brain drain” in the homeland. Often the situation forces them to work below their qualifications in the country of destination.

Most of the young people in Spain decide to abandon schools very early, not earning an education that allows them to be skilled labor force abroad, the problem is also the lack of foreign language skills. Perhaps that is why it is easier for them to decide to move to a country that is former colony. Especially now, when the economic situation in Latin America and the development of the continent in recent years has caused a reduction in unemployment to an approximately 6% (as shown in the figure below data in %, year 2012).

slika alicja

http://wyborcza.biz/biznes/1,101716,13266980,Latynosi_znalezli_patent_na_bezrobocie.html

Of course it is not so that every person who decide to leave Spain does not have education and does not know foreign languages. There is a group of highly educated people who emigrate because of the inability to find a job in their profession for decent wages. Here is another difference between an immigrant from Eastern Europe and Spanish. They do not decide to work below their qualifications, as it is in the case of Poles travelling to England for example. Interestingly, in recent years we have seen an increase of immigrants from Spain in Poland, which seem to be quite unattractive country for migrants from the west. However, it appears that the Spanish engineer that could count on a salary of 800 euros per month, which in Spain is a small amount in Poland with its lower cost of living, accept the offer and work in another country treats not only as a way to survive the crisis, but also interesting experience in his career.

Spaniards are the largest group among immigrants from Western Europe in Poland. Often they are trying for management positions in Spanish companies, or a job as a teacher of Spanish. Why they are choosing Poland? A large group of Spanish immigrants in Poland are former Erasmus, who knew the country while on international exchange, and more recently, people who had the opportunity to meet and like the country during the Euro 2012 Championships.

I believe that if the financial situation force someone to emigrate can not be considered to be the most optimistic and the best situation. However, a trend which can be observed in recent years, shown here on the example of Spanish immigrants, is in my opinion very interesting from the point of view of the international labor market. I think a few years ago, no one expected that Spain, a country receiving a large group of foreign workers in 2012 will record a negative migration balance.

                                                                                                                                                                                                           Alicja Falińska, Blaž Kralj
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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/

 

 

 

The most important challenges for the labour market in Poland

Since a few years there is a visible mismatch between what the employers expect from their future employees and what kind of expectation the employees can meet. Nearly ¾ of employers have now difficulties with finding candidates corresponding with their requirements.

As an attempt at changing this situation for the better there was a conference trying to find answer the most important questions.
The first identified problem is stagnation in spite of the steady growth of employees. According to the research, every year since 2010 about 17% of employers were looking for employees. However, combined with increasing uneployment polish labour market  still remains stagnant. Another factor of high unemployment is incompatibility. Job seekers often represent not adequate skills or professional competence (related to the specific job on a certain posts) and connected with self-organisation. The greatest shortage in labour market is seen in jobs related to construction and professionals in strict areas. On the other hand, professions in which there has been noted an excess are salesmen, office workers and labourers in areas such as industry, mining and transport.
Unfortunately, the economic growth is still not sufficient and there is still not enough new workplaces. Up to 90% of employers looking for new workforce intended to hire within the scope of rotation on already existing positions. Percentage of new created posts remains on a stable level in comparison to previous years (10% in 2010, 9% in 2009).

Another factor contributing to the current situation is a general European problem with the ageing society existing also in Poland. Indicators of employment for the older generation is one of the most unfavourable in the whole Europe. In 2011 according to the research of BKL, only 49% of men aged 50-64 were finding employment (average in the EU – 65%). In case of women the indicator is even worse – 48% (EU 63%). Fortunately, the situation is slowly changing, as in the 2012 the rates were 50% for men and 51% for women but still more time is necessary for more visible improvements.
Connected with ageing of the society is lack of motivation among people over 45 years old for further education and self-improvement. That creates another factor discouraging employers from hiring them instead of younger and better educated candidates.
However, the situation of graduates is not better. The unemployment rate among young people is growing and the average salaries also dropped slightly. These days, young people have to be very well oriented in the labour market situation and choose wisely their future studies or vocational school. Good choice may guarantee a good, well-paid job whereas thoughtless choice may lead to unemployment or low-paid job.

Sources:

http://pl.wikipedia.org/wiki/Rynek_pracy

http://pokl.parp.gov.pl/index/more/31860

 

/By Emilia Janaszkiewicz, Alicja Łoś/

Latvia – eurozone

Small Baltic state –  Latvia decided to apply to join euro zone in 2014Latvia pegged its currency to the euro after joining the European Union in 2004. Small and limber economy – Latvia should slide more easily into the currency bloc than larger states like Poland and the Czech Republic and have remained keener on joining throughout the banking and debt crises.

Many Latvians’ mortgage loans are in euros  – meaning a switch would decrease currency risk and most see the currency as a lesser long-term risk than the lat. They are also keen to entrench their links with western Europe to keep former imperial master Russia at arms length.

But while the country’s leadership is keen on the project, polls show much of the population are worried that a currency switch will drive prices higher and take control of the economy out of Latvian hands.

To join the euro zone, Latvia needed to ask for an assessment by the European Commission and European Central Bank of its readiness to switch currency. At the moment of writing Latvia fulfills all five Maastricht criteria and should thus be set for adopting the euro on 1 January 2014. True, besides the five quantitative criteria (on inflation, exchange rate, long-term interest rates, budget deficit and government debt) a country is also supposed to be evaluated on the basis of ‘sustainability’ of e.g. low inflation but that never seems to have played a major role. (Estonia was invited to join at a time of negative inflation, which is hardly sustainable). For all the recent newcomers, Slovenia, Malta, Cyprus, Slovakia and Estonia, it seems to have been the case that fulfilling the five means you’re in and I do not envisage this to be different in the case of Latvia.

“This is a day that will enter Latvia’s history,” Finance Minister Andris Vilks told reporters when he, Prime Minister Valdis Dombrovskis and central bank chief Ilmars Rimsevics signed the application.

eurozone

The application will be handed over in Brussels. A report on Latvia’s euro hopes will be prepared by the European Commission and the European Central Bank. Finance ministers are expected to take a final decision in July.

Latvia says it meets all the economic criteria needed to be accepted into the euro zone. The criteria relate to levels of debt, deficit, inflation, long-term interest rates and having a stable peg to the euro.

Dombrovskis said after the signing that the euro would benefit Latvia in terms of increased investment, lower currency.

The Eurozone may bring many benefits to the Latvian economy but economic development still rests with the Latvians and economic convergence is not automatically guaranteed by the euro. Thus the hard work does not end on 31 December 2013 – it begins on 1 January 2014.

Enthusiasm for the euro waned across much of eastern Europe after Greece’s problems emerged in 2009 and drove the currency bloc into a series of sovereign bailouts which has split its members economically and raised questions of its broader viability.

Much of those nerves have eased for now on the back of strong action by the European Central Bank last summer and membership has inched back onto the agenda in the region’s biggest economy, Poland.

The Czechs and Hungary remain far more skeptical while Romania and Bulgaria are still far from fulfilling the Maastricht criteria for joining. Latvia kept its peg to the euro even when some economists said a devaluation would have helped ease its downturn in 2009 and the government had to slash public sector wages and hike taxes instead.

Despite its current relatively high growth rates, at 5.1 percent year-on-year and 1.3 percent quarter-on-quarter in the last three months of 2012, the country remains one of the poorest countries in the EU along with Bulgaria and Romania. Latvia will become the 18th country to join the euro area, and the second Baltic state to do so.

But the main question is – how the currency change will affect employment  and population number in general and is it really the best way to defeat economic crisis ?

images

/By Andrea Blažević, Antea Božić, Kristina Piene and Agita Sarkane/

Sources:

http://www.ir.lv/2013/4/29/latvia-in-the-eurozone-lots-of-work-ahead accessed on 28.04.2013

http://www.euronews.com/2013/03/05/latvia-applies-to-join-the-eurozone/ accessed on 28.04.2013

http://www.reuters.com/article/2013/03/04/us-latvia-euro-idUSBRE9230EK20130304 accessed on 28.04.2013

The Impact of Automation on Global Labour Market

Automation is the use of machines, control systems and information technologies to optimize productivity in the production of goods and delivery of services. Automation plays an increasingly important role in the world economy and has been responsible for the shift in the world economy from industrial jobs to service jobs in the 20th and 21st centuries.

It is obvious that automation has many benefits, such as increase in productivity, quality and consistency of output. One more advantage is reduced direct human costs and expenses. But increasing automation leads to an increase in unemployment because human labour is replaced by machinery.

There is a book regarding this topic from 1995 written by American economist Jeremy Rifkin: “The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era”. He predicted devastating impact of automation on blue-collar, retail, wholesale employees and the growth of third sector.

The-end-of-work-bookcover

According to the International Federation of Robotics (IFR), global sales of robotics increased by 38.0% in 2011. China, Germany and the USA are the major drivers of this growth, though the biggest users of robotics are Japan and South Korea. The increased use of robotics in these markets has helped to contribute to a sharp rise in labour productivity in some of them. China saw its labour productivity more than double between 2007 and 2012.

Labour productivity in selected countries: 2007 – 2012

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Source: Euromonitor International from International Labour Organisation (ILO)/Eurostat/national statistics

Automation can save money on wages paid to staff, and also on labour taxes paid to the government. This can increase profits and competitiveness and it can be used to fill labour shortages: China is rapidly increasing its use of automation to counteract the predicted decline in its labour force due to the effects of its one child policy. It can also improve countries’ competitiveness by boosting labour productivity. On the other hand, the growing use of robotics and automation can contribute to long term structural unemployment, which means unemployment that can often be long term as it is part of a fundamental shift in the skills needed by an economy. This can weaken consumer spending and consumer confidence levels.

The use of automation and robotics is forecast by the IFR to increase in all regions by 2015. Asia/ Australasia is set to see the biggest increase and this will primarily be driven by an increase in China.

Estimated Operational Stock of Multipurpose Industrial Robots by Region: 2010, 2012, 2015

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Source: The International Federation of Robotics

The forecast increased use of automation could contribute to an increase in unemployment rates globally, as the working age population aged 15-64 is set to grow from 4.6 billion in 2012 to 5.0 billion by 2020. Many of the increased numbers of the economically active global population may be competing for a reduced number of available employment opportunities as a result of automation.

/By Andrea Blažević, Antea Božić, Kristina Piene and Agita Sarkane/

Sources:

http://blog.euromonitor.com/2013/04/the-impact-of-automation-and-robotics-on-the-global-labour-market.html accessed on 26.04.2013

http://en.wikipedia.org/wiki/Automation accessed on 26.04.2013

http://en.wikipedia.org/wiki/The_End_of_Work accessed on 26.04.2013

Spain’s labour reforms

Protesters shout slogans against job cuts outside Madrid's Bank of Spain

Now Spain is facing with labour market reforms. Madrid’s labour market reforms are unlikely to contribute to improved economic performance, despite recent claims An old spectre is returning.  Spain’s labour market reforms are the basis of the country’s improved economic performance. By limiting possible wage claims and negotiating flexible working conditions, companies in the car industry and beyond have become more competitive and boosted their exports.

Spain’s unemployment rate now is 27,2%, and not falling particularly rapidly. Comparing with the previous year april unemployment rate raised by almost 3 %.  The current account deficit is falling, less as a result of increased exports and more because imports fell dramatically as domestic demand collapsed in the wake of the housing and financial crisis. It is unclear if growth will pick up enough in the short run to avoid a rise in the debt-GDP ratio. Meanwhile official figures in France also showed a fresh record high in unemployment. Some 3.2 million people are now searching  work in the eurozone’s second-largest economy.

spain-unemployment-rate

Source: tradingeconomics

The total number of unemployed people in Spain has now passed the six million, although the rate of the increase has slowed. Spain’s labor costs have been falling, because businesses are taking advantage of their new found freedom “fire” and “hire.”

The key reason, of course, why even the tiniest shimmer of light has to be greeted with jubilation is that wages are always seen as the problem – even in a financial catastrophe-induced economic crisis. For policy-makers, austerity is ultimately self-defeating: current accounts are outcomes, not policy tools, and competitiveness is difficult to target, consisting, as it does, of price and quality relative to what others do.

Workers and skills may have to be matched more closely  – may be good grounds to reform labour with the demand for them.Spain may have a particularly nasty dual labour market – with well-protected insiders and weak, usually unemployed, outsiders – which requires adjustment so that more unstable work will lead to stable jobs.

But it is naive to think labour market reforms will lead to growth, or even to falling unemployment – except, perhaps, in a very narrow margin. Aggregate unemployment falls, all other things being equal, when economic growth outstrips productivity growth. And with productivity rising fast (possibly, or probably, as a result of the crisis, which may have weeded out the very weak companies, thus pushing up average productivity), and growth limping behind, that is not going to happen soon.

By Andrea Blažević, Antea Božić, Kristina Piene and Agita Sarkane

Source:

http://www.guardian.co.uk/commentisfree/2013/feb/17/spain-labour-reforms-wont-bring-growth accessed on 27.04.2013

http://www.bbc.co.uk/news/business-22290422 accessed on 27.04.2013

http://www.tradingeconomics.com/spain/unemployment-rate accessed on 27.04.2013

Employment developments at sectoral level in EU

 

While manufacturing and construction have driven the fall in employment, job creation in services, namely non-market services, mitigated these big drags on employment in a large number of countries. After two years of negative growth, job creation resumed in 2011 in industry and construction in most Member States.

Employment growth in different sectors: 2008-2011 (%)

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Source: Commission services.

In some countries, the construction sector has also been a major drag on employment and in fact the sector that recorded the most dramatic consolidation. The number of employed in construction nearly halved in Ireland, Spain and the Baltic countries over the latest number of years, with construction alone amounting to around half of the total job losses in these Member States. Even in other Member States with much milder employment reductions, construction jobs have fallen by large margins. Only in a minority of countries, employment in the sector has actually risen and almost always by small margins.

Declining jobs in industry have contributed the most to rising unemployment. For the EU as whole, the sector accounted for slightly more than half of the net job destruction. In fact, jobs in industry have declined in every single Member State barring Luxembourg (where it has little weight on employment) since the beginning of the crisis; cumulated job falls close to or beyond the double digit mark were recorded in half of the Member States, most severely in Spain, Lithuania and Greece. However, in many industrialised countries employment in manufacturing has been declining since well before the 2008-2009 recession as a consequence of shifts of production toward developing countries.

Market services had a mixed employment performance, with around half of the Member States recording net employment growth (notably, Poland, Malta and Germany) and the other half net employment losses (e.g., Latvia, Ireland and Greece).

Non-market services, notably the public administration, was the only sector where net employment gains were recorded in most countries (major net losses only in Latvia and Bulgaria). Unlike other sectors, employment in non-market services lost momentum in 2011, reflecting public finances consolidation dynamics also over the government wage bill.

/By Andrea Blažević, Antea Božić, Kristina Piene and Agita Sarkane/

 

Sources:

http://ec.europa.eu/economy_finance/publications/european_economy/2012/pdf/ee-2012-5_en.pdf accessed on 28.04.2013