EMCC European Monitoring Centre on Change

Annual report 2013

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ERM report 2013 – Monitoring and managing restructuring in the 21st century

The 2013 annual report from the European Restructuring Monitor (ERM) presents a retrospective of over a decade of measuring the impact of large-scale restructuring activity in Europe.

It summarises restructuring trends based on a restructuring database that includes details of over 16,000 large-scale restructuring events. In particular, the report focuses on comparing activity in the pre-crisis period (2003–2008) with the post-crisis period (2008–2013), and places the spotlight on the phenomenon of offshoring, charting the decline in offshoring activity by European firms since the onset of the crisis.

 

 

Key findings

  • Currently there are six million fewer Europeans in employment than at the outset of the economic crisis. The crisis has resulted in an increasing polarisation of labour market performance across the EU, with unemployment rates ranging from below 5% (in Austria) to nearly 28% (in Greece).
  • The crisis and post-crisis periods have seen a notable increase in the share of restructuring job loss attributable to bankruptcy or closure, and a decrease in the share attributable to offshoring or relocation as well as mergers and acquisitions.
  • In sectoral terms, the destruction of employment has been felt most acutely in manufacturing and construction. Together, these two sectors account for well over 100% of the net employment losses experienced since 2008.
  • Employment has held up relatively well – and indeed has even grown – in some knowledge intensive service sectors (health, education, IT and information services, and professional, scientific and technical activities) before, during and after the crisis.
  • Austerity policies have meant that employment resilience has shifted from predominantly publicly funded sectors in 2008–2010 to private service sectors from 2010 onwards. Many of the largest ERM restructuring cases since 2008 have been implemented in public administration, which has accounted for a much higher share of overall announced job loss since 2008.
  • The auto/transport sector is one of the few major manufacturing sectors in which employment levels have grown over the past decade. Nearly all of the net gains have come in eastern European countries, confirming an eastward shift in production.
  • The crisis has significantly lowered the rate of offshoring in Europe. The offshoring share of ERM restructuring job loss peaked before the 2008–2009 crisis (quarterly range: 6%–12%) and has been lower since (quarterly range: 2.5%–6%).
  • Half of offshored jobs remain in Europe. The main destination country grouping is the 2004–2007 enlargement countries, which account for one-third of relocated jobs. Another third of jobs offshored from Europe go to Asia.
  • At least one in every six jobs (17%–18%) lost through restructuring in Denmark, Ireland and Portugal was offshored, much higher than the EU average of 6%.
  • Manufacturing accounts for the majority of offshored jobs in all Member States except the UK, where services offshoring predominates.
  • Over a quarter (28%) of offshoring job losses in non-domestic, EU-owned firms were a consequence of either full reshoring or partial reshoring to the country of ownership. German and Italian firms were those most likely to reshore.

The extensive documented use of the restructuring events database by policymakers and researchers attests to its value as a unique source of cross-national data on the impact of largescale restructuring on employment over the last decade. The report also includes a critical assessment of all ERM activities including the two newer policy-oriented databases: public support instruments and restructuring legislation.

The report draws on data from the European Union Labour Force Survey.