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Employment and Social Developments in Europe 2014
3.2.1. Stronger cross-border Chart 26: Employment share of employment in knowledge intensive
transmission in the future services and manufacturing — 2012
A key question concerns the extent 60
to which structural developments in
the economy strengthen the channels 50
through which domestic employment 40
and social developments are transmit-
ted across borders, and can this affect % 30
upward convergence.
20
It can be expected that recent or future
developments, such as the establishment 10
of a banking union, further strengthen- 0
ing of the European Single Market, and LU SE DK BE UK DE IE FI FR MT NL HU SI CZ AT SK ES IT EE LV EL CY LT PL PT HR BG RO
technological developments (including
trans-European networks), will together Source: DG EMPL calculations based on Eurostat (htec_emp_nat2).
reinforce the channels through which Notes: employment in knowledge-intensive services and high- and medium-high-technology
manufacturing. UK is 2011 observation.
cross-border effects are transmitted
within the EU, namely international trade,
knowledge networks, migration and capi - supply chains also increase countries’ Due care will have to be given to cross-
42
tal flows ( ). exposure to developments in the rest border effects that may have an adverse
of the world and their sensitivity (both impact on convergence. First, employees
Expanding international trade positively and negatively) to EU labour and employers do not always have the
and supply chains market conditions (see Elekdag and Muir skills to use and apply (new) knowledge
(2013) for aspects relating to Germany, in an optimal way (see, for instance,
43
The continued opening of national the Czech Republic, Hungary, Poland and Audretsch and Keilbach (2010)) ( ).
markets to international trade and the Slovak Republic). Second, depending on the nature of the
the expansion of value chains across activity, increasing returns in the accu-
borders should allow countries to fur- Stronger knowledge diffusion mulation of knowledge may lead to a
ther exploit their comparative advan- across borders stronger geographical pooling of highly
tages — with potential to increase skilled workers. Such agglomeration
upward convergence between countries. Knowledge is expected to become an effects may however carry negative
Nevertheless, such developments will increasingly important driver of pro - externalities for the countries/regions
also make national labour markets more ductivity growth and job creation in from which the high-skilled workers
sensitive to labour market conditions the future (see, European Commission, move ( ). On balance, there is a risk
44
in their trading partners and to gener- 2014a). Hence, fostering the diffusion of that such outcomes may weaken con-
ate spill-over effects stemming from knowledge across borders may become vergence across regions and countries.
developments inside and outside the a strong force in support of sustainable
EU, thus calling for changes such as a upward convergence through catching- Nevertheless, not all knowledge-intensive
stronger coordination of working condi- up (see, for instance, Guerrieri et al., activities are subject to agglomeration
tions across the EU. 2005). effects, and further decreases in trade
and transaction costs that strengthen the
First, when markets are opened further, Indeed, there are still major cross-country connectivity of agents with the outside
economic developments in the (main) differences in the share of employment world (such as the expansion of Trans-
trading partners impact more strongly between knowledge intensive services European networks) may put downward
domestically. Second, the further expan - and manufacturing, indicating a strong pressure on agglomeration effects (see,
sion of supply chains across borders catch-up potential for the Member States for instance, Baldwin et al., 2001). More
facilitates the spread of technologies that joined the EU in 2004 or later, as importantly, efficient and effective use
thereby strengthening upward conver- well as Portugal, Greece, Italy and Spain of public funds to boost local innova-
gence of productivity. Nevertheless, such (see Chart 26). tion capacity has the potential to remedy
43
( ) In this context it is important to note that
the private sector may underinvest in
private research and innovation, as well as
skill formation, while such outcomes may
intensify if labour becomes more mobile.
44
( ) See, for instance, European Commission
( ) Although an analytical distinction will (2012), Chapter 6, and European
42
be made between four channels, due Commission (2014) EU Employment and
recognition will be given to possible Social Situation Quarterly Review, June
interactions. 2014, supplement on mobility.
222
3.2.1. Stronger cross-border Chart 26: Employment share of employment in knowledge intensive
transmission in the future services and manufacturing — 2012
A key question concerns the extent 60
to which structural developments in
the economy strengthen the channels 50
through which domestic employment 40
and social developments are transmit-
ted across borders, and can this affect % 30
upward convergence.
20
It can be expected that recent or future
developments, such as the establishment 10
of a banking union, further strengthen- 0
ing of the European Single Market, and LU SE DK BE UK DE IE FI FR MT NL HU SI CZ AT SK ES IT EE LV EL CY LT PL PT HR BG RO
technological developments (including
trans-European networks), will together Source: DG EMPL calculations based on Eurostat (htec_emp_nat2).
reinforce the channels through which Notes: employment in knowledge-intensive services and high- and medium-high-technology
manufacturing. UK is 2011 observation.
cross-border effects are transmitted
within the EU, namely international trade,
knowledge networks, migration and capi - supply chains also increase countries’ Due care will have to be given to cross-
42
tal flows ( ). exposure to developments in the rest border effects that may have an adverse
of the world and their sensitivity (both impact on convergence. First, employees
Expanding international trade positively and negatively) to EU labour and employers do not always have the
and supply chains market conditions (see Elekdag and Muir skills to use and apply (new) knowledge
(2013) for aspects relating to Germany, in an optimal way (see, for instance,
43
The continued opening of national the Czech Republic, Hungary, Poland and Audretsch and Keilbach (2010)) ( ).
markets to international trade and the Slovak Republic). Second, depending on the nature of the
the expansion of value chains across activity, increasing returns in the accu-
borders should allow countries to fur- Stronger knowledge diffusion mulation of knowledge may lead to a
ther exploit their comparative advan- across borders stronger geographical pooling of highly
tages — with potential to increase skilled workers. Such agglomeration
upward convergence between countries. Knowledge is expected to become an effects may however carry negative
Nevertheless, such developments will increasingly important driver of pro - externalities for the countries/regions
also make national labour markets more ductivity growth and job creation in from which the high-skilled workers
sensitive to labour market conditions the future (see, European Commission, move ( ). On balance, there is a risk
44
in their trading partners and to gener- 2014a). Hence, fostering the diffusion of that such outcomes may weaken con-
ate spill-over effects stemming from knowledge across borders may become vergence across regions and countries.
developments inside and outside the a strong force in support of sustainable
EU, thus calling for changes such as a upward convergence through catching- Nevertheless, not all knowledge-intensive
stronger coordination of working condi- up (see, for instance, Guerrieri et al., activities are subject to agglomeration
tions across the EU. 2005). effects, and further decreases in trade
and transaction costs that strengthen the
First, when markets are opened further, Indeed, there are still major cross-country connectivity of agents with the outside
economic developments in the (main) differences in the share of employment world (such as the expansion of Trans-
trading partners impact more strongly between knowledge intensive services European networks) may put downward
domestically. Second, the further expan - and manufacturing, indicating a strong pressure on agglomeration effects (see,
sion of supply chains across borders catch-up potential for the Member States for instance, Baldwin et al., 2001). More
facilitates the spread of technologies that joined the EU in 2004 or later, as importantly, efficient and effective use
thereby strengthening upward conver- well as Portugal, Greece, Italy and Spain of public funds to boost local innova-
gence of productivity. Nevertheless, such (see Chart 26). tion capacity has the potential to remedy
43
( ) In this context it is important to note that
the private sector may underinvest in
private research and innovation, as well as
skill formation, while such outcomes may
intensify if labour becomes more mobile.
44
( ) See, for instance, European Commission
( ) Although an analytical distinction will (2012), Chapter 6, and European
42
be made between four channels, due Commission (2014) EU Employment and
recognition will be given to possible Social Situation Quarterly Review, June
interactions. 2014, supplement on mobility.
222
