E
XTRA - EU EXPORTS AND EMPLOYMENT
N. Sousa1, J. M. Rueda-Cantuche2, I. Arto2, and V. Andreoni2*
Issue 2 - 2012
* The views expressed in this document are the authors' and do not necessarily
reflect those of the European Commission.
Abstract
This note provides an overview of the employment impact of exporting activity
in the EU. We find that the exports of goods and services to the rest of the
world supported around 25 million jobs in Europe in 2007 (an increase of 3
million since 2000). Two main additional insights stand out from this analysis:
the importance of the complementary relation between the Single Market and
external trade for job creation in Europe, and the “servicification” of the
employment supported by exports.
Executive Summary
As labour markets continue to be under intense strain across the world’s main
economies, policymakers take up ever greater interest in the role of trade in
promoting job creation. While the relationship between trade and employment
is intricate and does not lend itself to be conveyed in simple terms, this analysis
puts forward a number of elements to improve the communication of the
positive impact of trade on the creation of new jobs opportunities.
Editor:
Lucian Cernat
For further
information:
http://ec.europa.
eu/trade/analysis
/chief-economist/
ISSN 2034-9815
We do this by quantifying how many jobs in the EU (and in each Member State)
are supported by sales of goods and services to the rest of the world, over the
period 2000-2007. This is done in a comprehensive way that takes into account
not only the jobs to be found in the exporting firms but also in the upstream
firms that supply inputs that will be used for producing the exported goods and
services. The evolution of the number of jobs supported by exports over time,
and even more the marked differences across the EU Member States, shows
that the relationship between trade and jobs is complex and reflects to a great
extent several structural features of each economy, which we also sought to
bring to light.
Some important facts and figures can be highlighted from this analysis:
•
1
2
Exports are important drivers for job creation in the EU
DG TRADE, Chief Economist and Trade Analysis Unit.
Joint Research Centre's IPTS, Sustainable Production and Consumption Unit.
•
•
•
1. Between 2000 and 2007 the number jobs supported by extra-EU exports
increased by around three million, bringing the total to around 25
millions.
2. The contribution of extra-EU exports to total employment has remained
on average at around 10.3% (despite some variation over time).
Exports of manufactured products are still the main engine for job creation
but a phenomenon of “servicification” of the employment base is underway
3. Exports of manufactured goods supported around 15.7 million jobs in
2007. However, only 8.7 million jobs of these jobs were to be found in
the manufacturing sectors.
4. Around 5.7 million jobs were actually created in services sectors to
supply the exporters of manufactured products with supporting auxiliary
services.
5. While export supported employment in the manufacturing sectors barely
increased (350.000 additional jobs from 2000 to 2007), in the services
industries it increased by almost 3 million jobs.
The Single Market is a cornerstone for the EU ability to create jobs when
trading with the rest of the world
6. When EU firms export they create jobs not only in the Member State
from where the goods and services are shipped out to the rest of the
world but also across the Single Market.
7. The number of jobs generated indirectly in other EU countries as a result
of export activities, which we identify as a "Single Market" effect,
amounted to almost 9 million jobs in 2007.
8. This "Single Market" effect grew from 5.7 million jobs in 2000 to almost
9 million in 2007, which represents an increase of 55.4%.
The profile of EU exports is continuously changing, with inevitable reflections
on labour markets
9. Around 16.7 workers were employed in the EU per million euros worth
(in constant prices) of exports to the rest of the world in 2007 (down
from 20 in 2000).
10. EU exports have become more vertically integrated with foreign
suppliers: imported inputs represented up to 15% of the value of
exports in 2007 (up from 13.6% in 2000).
2
Introduction
This study provides a prima facie quantification of the aggregate number of jobs
that are directly and indirectly associated with EU exports to the rest of the
world. For this, we use new input-output and employment data for the EU and
each Member State for the years 2000-2007. The advantage of the adopted
methodology is that it allows us to capture not only the jobs to be found in the
firms that are directly engaged in exporting but also the employment in
upstream industries that supply the necessary inputs to these firms. With this
we achieve a much more accurate quantification of the impact of exports in the
creation of jobs opportunities for EU citizens. Moreover, the analysis also
permits us to offer some insight into the factors driving the evolution over time
and behind the apparent differences across Member States. Annex 1 provides
additional details on the methodology and data used.
However, this work must be regarded only as a partial attempt to shed light
into the ever more intricate relationship between trade and jobs. An analysis
based on input-output relations is necessarily aggregate and static. From a
dynamic perspective, it is important to look into effects associated with the
reallocation of production factors. To the extent that trade openness3 leads to
efficiency gains and spurs additional innovation, it reinforces in the long-run the
competitive position of firms paving the way for a more sustainable
employment base. However, this process generally takes place through
industrial restructuring that implies both job creation and destruction. The net
impact on the labour markets becomes difficult to pin down and predict.
Analyses with micro-level data would be better suited to quantify it.
EU employment supported by exports to the rest of the world
25 million jobs in
the EU are
supported by
exports to the
rest of the world
During the period 2000-2007, total employment in the EU grew by 6.8%, from
210.1 million jobs to 224.3 million. This corresponds to an average yearly
increase of 0.9% (see Figure 1). The exports to outside the EU increased much
more remarkably, over the same period: 35.2% (in constant prices), or 4.4%
on average per year. In absolute terms extra-EU exports increased from €1.1
trn in 2000 to €1.6 trn in 2007.
This strong growth in sales to the rest of the world was associated with an
increase in the number of jobs dependent on sales to foreign markets. Between
2000 and 2007 the number of jobs supported by extra-EU exports increased by
around three million (or 13.7%), bringing the total to around 25 million (see
Table 1) . This corresponded to 11.2% of the total EU27 employment in 2007
(up from 10.5% in 2000) as shown in Figure 1. Underlying this evolution is the
rise in the ratio of extra-EU exports to GDP from 12.1% to 13.1% over the
same period (see annex 3).
The contribution of exports to total employment in the EU has remained around
10.3% on average between 2000 and 2007. Still there was some variation
throughout this period. The number of jobs supported by extra-EU exports
declined between 2002 and 2004. But, this trend was subsequently reversed
4
Not only exports but also imports and foreign direct investment.
Whenever results for the EU27 are reported, they do not refer to the sum of the effects for the 27 Member States but to the
results calculated with the recently published EU27 consolidated supply and use tables (Eurostat, 2011). With the EU27
supply and use tables intra-EU trade flows are considered to be domestic transactions (including re-exports from EU countries
to the rest of the world).
3
4
3
and the employment associated with exports reached 25 million jobs in 2007.
Figure 1: Number of jobs supported by extra-EU exports (in thousands)
and contribution to total employment (in %)
Source: Own elaboration.
There
Exports of
manufactured
products
continue to
support the
greatest number
of jobs but the
importance of
services is
increasing
are some interesting differences to highlight in terms of the evolution of
the contribution of exports to employment by broad product categories, as
shown in Table 1. The number of jobs supported by extra-EU exports of
manufactured goods increased by 6.6% between 2000 and 2007 while those
embodied in the exports of services increased much more: 34.8% on average.
In contrast, the employment associated with exports of agricultural, fishing and
mining products fell by 18.2%. Still, exports of manufactured products remain
responsible for the largest contribution to total employment: nearly 16 million
in 2007 (around 64% of total). Exports of "other services " (5.6 millions of jobs
in 2007) and "trade and repairing services" (2.9 millions of jobs in 2007) also
generated important contributions to the creation of employment in Europe.
5
Table 1: Employment supported by extra-EU exports by product in
2000-2007
"Other services" include: Hotel and restaurant services; Land transport; transport via pipeline services; Water transport
services; Air transport services; Supporting and auxiliary transport services; travel agency services; Post and
telecommunication services; Financial intermediation services, except insurance and pension funding services; Insurance and
pension funding services, except compulsory social security services; Services auxiliary to financial intermediation; Real
estate services; Renting services of machinery and equipment without operator and of personal and household goods;
Computer and related services; Research and development services; Other business services; Public administration and
defence services; compulsory social security services; Education services; Health and social work services; Sewage and
refuse disposal services, sanitation and similar services; Membership organisation services; Recreational, cultural and
sporting services; Other services; Private households with employed persons.
5
4
Products
2000
Agriculture, fishing and mining pro
912
Manufactured products
14.736
Electricity, gas and water
23
Construction work
49
Trade and repairing services
2.077
Other services
4.203
TOTAL
22.000
2001
2002
2003
836
822
782
15.051 14.904 14.396
32
45
48
47
50
49
2.085 2.041 1.874
4.240 4.558 4.345
22.291 22.419 21.493
2004
654
13.632
40
40
1.892
4.459
20.717
2005
2006
2007 % 07-00
671
730
746 -18,2%
13.911 14.478 15.707
6,6%
49
50
46 99,3%
42
42
58 17,3%
2.116 2.220 2.862 37,8%
4.647 4.926 5.601 33,3%
21.435 22.446 25.020 13,7%
Source: Own elaboration. Unit: Thousands of jobs
Many of the jobs
that are
supported by the
exports of
manufactured
goods are in fact
in services
A more disaggregated analysis allows a more refined identification of the broad
product categories whose exports contributed the most to employment in the
EU27. This ranking shows that exports of machinery and equipment, motor
vehicles, chemicals and other business services embody the largest number of
jobs. In 2007, these five products were responsible for around one third of the
total jobs associated to extra-EU exports.
An important point to take into account from the above is that jobs that are
associated with the sales to the rest of the world of manufactured goods are not
necessarily all to be found in the manufacturing sectors. The employment
embodied in the exports of a product includes all the jobs (throughout the
whole economy) that contributed to its production. These may be found in
number of upstream industries. Figure 2 and Table 3 delve further into where
the jobs supported by each type of exported product can ultimately be found.
As Figure 2 shows, many of the jobs that are supported by the exports of
manufactured goods are in fact to be found in services sectors. According to our
calculations in 2007 the exports of manufactured goods generated the largest
number of jobs in the manufacturing industry (8.7 millions, corresponding
broadly to 55.4% of total) but they also supported 4 million jobs in the "other
services" sectors and 1.7 millions in the "trade and repairing activities" sectors.
In fact, the analysis shows that in 2007 the exports of manufactured goods
created almost the same number of jobs in the service sectors as did the
exports of services. These results also suggest that the exports of manufactured
goods still represent a main engine for job creation across Europe (although not
necessarily manufacturing jobs).
Figure 2: Industry origin of the embodied employment by exported
product (2007)
16000
14000
12000
10000
8000
6000
4000
2000
0
Agriculture, fis hing and m ining products
Manufactured products
All s ervices
Agriculture, fis hing and m ining
Manufacturing industry
Electricity, gas and water supply
Construction
Trade and repairing activities
Other service activities
Source: Own elaboration. Unit: Thousands of jobs
5
Table 2 provides more detailed information by showing the full matrix of the
contributions, in terms of jobs, of the different industries (rows) to all the
different products exported (column). Thus, it shows the total number of jobs
that in each industry (rows) are associated with exports of each product
(columns). For example, it illustrates well the fact that the export of a car
(manufacturing product) requires labour inputs from different industries,
including services and even construction. Conversely it shows that, out of the
9.5 million export-related jobs in the "other services" sector, 42% were linked
to the production of manufactured products. Furthermore, out of the 403 000
construction workers that work for foreign market sales, only 34 thousand are
actually contributing to total exports through the foreign sales of construction
services, the rest contributes via the sales to the domestic industries that will
eventually export.
Table 2: Industry origin of embodied employment by exported product
in 2007
Product
Agriculture,
fishing a nd
Industry
Ag riculture, fishing and mining
Manufa cturing industry
Electric ity,
Trade and
mining
Ma nufactured
ga s a nd
Cons truction
repairing
Other
Industry
products
produc ts
wa ter
work
services
s ervices
TO TALS
572
893
4
1
66
82
1.617
47
8.707
6
8
227
367
9.363
Electricity, ga s and wa ter supply
5
139
16
0
12
24
196
Cons truction
8
225
2
34
36
99
403
Trade and repairing ac tivities
34
1.777
4
4
1.843
305
3.966
Other service a ctivities
80
3.967
15
10
678
4.725
9.475
746
15.707
46
58
2.862
5.601
25.020
Product TO TALS
Source: Own elaboration. Unit: Thousands of jobs
When the analysis is done by looking at the embodied employment by industry
(or in other words by looking at the number of jobs created in a given industry
to satisfy the total foreign demand for EU products), the importance of services
in creating job opportunities associated with exports comes out even clearer
(see Table 3). For example, the "other service activities" sector benefitted from
the creation of 9.5 millions of jobs linked directly or indirectly to the exports of
products (goods and services) in 2007. Almost the same number of jobs was
found in the manufacturing sectors. These two sectors amounted to three
quarters of the total employment associated with extra-EU exports.
It is clear that the contribution of the service industries to total exports is
increasing: while the number of jobs supported by exports of the manufacturing
sectors barely increased by 350.000 since 2000, in the industries providing
other service activities it went up by around 3 million. This again illustrates the
job creation potential of services sectors, which support EU export activities
despite the fact that until recently the same sectors were often seen as being
focused on non-tradable activities.
6
Table 3: Employment associated with extra-EU exports by industry in
2000-2007
Industries
2000
2001
2002
2003
2004
2005
2006
2007
% 07-00
Agriculture, Fishing, Mining
1.987
1.877
1.749
1.646
1.427
1.458
1.501
1.617
Manufacturing industry
9.016
9.154
9.122
8.746
8.237
8.392
8.672
9.363
3,8%
181
182
186
174
168
175
184
196
7,9%
Electricity, gas and water supply
Construction
Trade and repairing activities
Other services activities
TOTAL
-18,6%
339
348
342
326
312
328
349
403
19,0%
3.081
3.116
3.124
2.962
2.938
3.110
3.300
3.966
28,7%
7.396
7.613
7.897
7.639
7.635
7.971
8.439
9.475
28,1%
22.000
22.291
22.419
21.493
20.717
21.435
22.446
25.020
13,7%
Source: Own elaboration. Unit: Thousands of jobs
A more detailed analysis of the top-10 industries that record the largest
numbers of jobs supported by extra-EU exports is reported in Table 4.
Table 4: Employment associated with extra-EU exports by industry in
the EU27 (2000-2007), top-ten industries
Rank
Industries
2000
1 Other business activities
Wholesale trade and commission trade, except of motor vehicles
2
and motorcycles
Retail trade, except of motor vehicles and motorcycles; repair of
3
personal and household goods
4 Manufacture of machinery and equipment n.e.c.
5 Agriculture, hunting and related service activities
Manufacture of fabricated metal products, except machinery and
6
equipment
7 Land transport; transport via pipelines
8 Manufacture of chemicals and chemical products
9 Manufacture of motor vehicles, trailers and semi-trailers
Supporting and auxiliary transport activities; activities of travel
10 agencies
SUB-TOTAL
Source: Own elaboration. Unit: Thousands of jobs
SEC74
2007
2,800
3,862
1,531
1,825
SEC29
SEC01
1,102
1,224
1,637
1,525
1,346
1,320
SEC28
921
1,087
SEC60
SEC24
SEC34
862
657
625
968
688
666
SEC63
481
640
SEC51
SEC52
11,841 13,927
Comparison across Member Sates
The contribution
of extra-EU
exports to total
employment has
been fairly stable
over time…
One of the key finding from this analysis is that the contribution of extra-EU
exports to total employment has been fairly stable over time. This is not a
surprising result because, although cyclical drivers play a role (not least the
evolution of exports), this indicator mainly reflects structural features of the
economy. This point comes forward even more strikingly when the analysis is
carried out at the Member State level . The contribution of exports to the rest of
the world to total employment varies markedly across the EU, reflecting
structural idiosyncrasies of the different Member States. Figure 3 shows that in
2007 the ratio of employment supported by extra-EU trade over total
employment ranged between 3% in Greece and 13.1% in Malta.
6
It is important to stress that the figures for each Member State do not include the jobs that are associated with intra-EU
shipments that end up being re-exported to the rest of the world. This employment effect is not captured at the individual
Member State level although it is included when the calculation of the EU aggregate (where all intra-EU trade relations are
considered to be "domestic"). For this reason the figures for the EU27 and the figures for each Member State are not strictly
comparable.
6
7
Figure 3: Employment supported by extra-EU exports as a percentage
of total employment (2007)
…while
structural
characteristics
explain
differences
across Member
States
Unsurprisingly, in general the share of employment supported by extra-EU
exports tends to be the highest in smaller countries, notably Malta, Ireland
(12.2% in 2007), Finland (11.6%), and Luxembourg (11.3%). Among the
bigger economies, it is in Germany that the extra-EU exports made the largest
contribution to total employment (9.6% in 2007), followed by the UK (8.1%),
Italy (7.7%), and France (7.1%). In contrast, in Spain this ratio was notably
lower (4.1%). in 2007, the largest number of jobs supported by extra-EU
exports could be found in Germany (3.8 million), UK (2.4 million), Italy (1.9
million), and France (1.8 million).
Also the variation between 2000 and 2007 of the contribution of extra-EU
exports to employment in the different Member States reveals marked crosscountry differences, as shown in Figure 4. For example, this ratio increased by 4
percentage points in Luxemburg while it decreased by 11.2 and 8.8 percentage
points in Cyprus and Slovakia, respectively. In general, the new Member
States have seen the most pronounced declines; arguably reflecting some of
the profound structural changes their economies underwent in this period, not
least the process of integration with rest of the EU. This has been followed by a
progressive redirection of exports towards other EU Member States. Among the
largest Member States, Spain shows the largest decrease (almost one
7
It is important to note that given the small size of these countries any fluctuation in the export flows is amplified in relative
terms.
7
8
percentage point) of the share of employment supported by extra-EU exports.
Such decline per se does not necessarily imply that external trade is becoming
less important for these economies (not least for employment creation) as
increasingly their exports within the Internal Market are eventually embodied in
the sales of other Member States to the rest of the world. This point is
discussed at length in the following section.
Figure 4: Employment supported by extra-EU exports as percentage of
total employment in the EU 27 and Member States (2000 – 2007)
22%
20%
18%
16%
14%
12%
2000
2007
10%
8%
6%
4%
2%
0%
tm
ie
if
lu
27U
E
de
se
is
dk
tl
ee
cy
be
gb
lv
ta
ti
ln
rf
bg
hu
zc
sk
lp
ro
se
tp
rg
Source: Own elaboration and EUKLEMS Project (2009)
Drivers of the relationship between employment and extra-EU exports:
some preliminary insights
The distinct evolution patterns across Member States highlighted above points
to the interplay of several factors in explaining the relationship between trade
and employment in Europe. The table in Annex 3 shows a full decomposition of
the figures for each Member State and the EU27, which allows drawing some
preliminary conclusions about the drivers of these cross-country differences.
The relative
importance of
integration with
the rest of the
World versus
integration with
the rest of the
Internal Market
A priori, the more a Member State trades with the rest of the world relative to
the intra-EU trade, the larger the contribution of extra-EU exports to
employment in relative terms. Across Member States there are marked
differences in terms of the share of extra-EU exports over total exports and in
terms of its evolution over the period between 2000 and 2007. Still, this ratio
grew in several Member States, which is consistent with the apparent increase
in the contribution of aggregate extra-EU exports to employment.
However, a redirection of exports from the rest of the world towards the rest of
the EU has been particularly marked in the new Member States (still in the early
stages of economic integration with the Single Market). For example, in
Slovakia this ratio decreased from 45.4% to 14.2%, Cyprus from 57.9% to
28.5%, in Bulgaria from 46.1% to 23.6% and in the Czech Republic, from
33.7% to 15.9%. This shift towards the Internal Market also occurred in some
9
The Internal
Market and
external trade are
complementary
realities.
of the “old” Member States such as Germany, where the ratio of extra-EU
exports over total exports fell from 46.4% in 2000 to 38.8% in 2007, and
Austria (where it declined from 37% to 27.6%). This is arguably a reflection of
the enlargement of the Single Market and the expansion of intra-EU production
chains.
Nonetheless, it is important to stress that this does not mean that for the EU as
a whole, nor for these countries in particular, extra-EU trade has become less
important for job creation. What it means is that it now plays a rather more
indirect role: often countries export to other Member States, from where
ultimately exports are shipped to the rest of the world. Such creation of intraEU value chains is a result of the Single Market programme itself and is a
cornerstone of the EU external competitiveness.
We aimed to quantify the contribution of the "Single Market" effect on the
creation of employment supported by sales to outside the EU. In other words,
we quantified the employment associated with intra-European supply of goods
and services that were subsequently used as inputs to produce goods and
services for exporting to the rest of the world.
Based on our calculations, the number of jobs associated with this "Single
Market" effect amounted to almost 9 million jobs in 2007, which represented
around 35% of the total 25 million jobs that were supported by exports across
the EU. In 2000, the contribution of the "Single Market" effect to export-related
employment was considerably lower (around 25%), having steadily increased
over the period 2000-2007 (see Figure 5). These figures stress the importance
of the Single Market, and of the increasingly deeper levels of European
integration, in promoting employment across the EU.
Figure 5: “Single Market” effect in terms of employment (2000 – 2007)
Source: Own elaboration.
The list of industries that benefitted the most in terms of job creation from this
indirect intra-EU trade effect can be found in Table 5.
10
Table 5: Intra-EU effect of internal market on employment (2007)
Rank
1
2
3
4
5
6
7
8
9
10
Top-ten list of industries
Other business activities
Agriculture, hunting and related service activities
Wholesale trade and commission trade, except of motor vehicles
and motorcycles
Manufacture of machinery and equipment n.e.c.
Retail trade, except of motor vehicles and motorcycles; repair of
personal and household goods
Manufacture of fabricated metal products, except machinery and
equipment
Land transport; transport via pipelines
Manufacture of chemicals and chemical products
Manufacture of basic metals
Manufacture of motor vehicles, trailers and semi-trailers
SUB-TOTAL
Source: Own elaboration. Unit: Thousands of jobs
2007
SEC74
SEC01
1,185
626
SEC51
625
SEC29
441
SEC52
433
SEC28
418
SEC60
SEC24
SEC27
SEC34
342
288
257
254
4,869
Although important, the geographical profile of exports does not explain all.
There are examples where, despite a high share of extra-EU exports (over total
domestic final demand), the number of jobs supported matter relatively little in
terms of total employment. For instance, while almost 46% of France's exports
are sold outside the EU, the jobs they support make up just around 7.1% of
total employment in 2007 (considerably less than the 11.2% for the EU as a
whole). In contrast, there are countries for which the employment effects are
considerably high with respect to the relatively low shares of extra-EU exports
e.g. Belgium (in 2007 extra-EU made up only 24% of total exports but
contributed to 8.1% of total employment).
Changes in the composition of the economy also matter to explain crosscountry differences over time. In particular, the relative importance of the
tradable sectors (i.e. industries producing output that can be directly sold to
consumers in other countries) in the economy varies greatly from country to
country . In 2007, the ratio of total exports to GDP ranged from 116.6% in
Luxemburg to 14.7% in Greece. Moreover, this ratio changed greatly from 2000
to 2007. In several countries there was a noticeable shift towards non-tradable
(mostly services) production. In Ireland for example, the ratio of total exports
to GDP fell from 93% in 2000 to 59.1% in 2007. The same evolution (albeit less
pronounced) can also be observed in 16 other countries such as Belgium,
Cyprus, Estonia, France, Greece Hungary, Latvia, Lithuania, Luxembourg, Malta,
Portugal, Romania, Slovenia, Spain, Sweden, and the United Kingdom (see
Annex 3).
This shift towards non-tradable productions was particularly noticeable across
the older Member States, where the ratio of exports to GDP fell in 9 out of the
15 economies. This could, to a certain extent decrease the contribution of
exports for job creation. The reasons for this structural change are manifold and
further research (well beyond the scope of this paper) would be required to fully
establish them.
8
Changes in the
composition of
the economy
The ratio of total exports to GDP is used here as a (imperfect) proxy of the relative importance of the tradable sector in a
given economy.
8
11
Changes in the
composition of
the exported
goods and
services
A gradual shift of the economy towards more capital-intensive sectors or/and
the adoption of labour-saving technologies within each sector, also affect the
possible contribution of exports to job creation in the different Member States.
This could further explain why in some countries, such as Finland, the
contribution of extra-EU exports to total employment has declined over the
period (from 13% in 200 to 11.6% in 2007) while the weight of exports in GDP
has grown, and an increasing share of those exports was destined to outside
the EU.
Table 6: Embodied employment per million euros of extra-EU exports
Embodied
Embodied employment
employments in Extra- per million € of extra-EU
EU exports (in '000s)
exports
Member States
2000
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
EU27
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
384
344
276
59
514
236
56
22.000
299
1.639
3.580
231
344
196
1.719
118
96
19
20
572
683
178
946
280
113
808
372
2.241
2007
336
356
207
28
303
256
57
25.020
290
1.824
3.804
128
237
253
1.927
89
134
38
22
637
760
175
441
108
93
839
430
2.423
2000
12,5
9,0
159,6
26,0
55,9
10,2
44,1
19,8
11,5
13,7
13,4
21,6
37,6
6,1
14,9
82,8
71,7
5,6
20,1
13,8
62,6
33,9
226,0
56,9
34,4
17,1
7,1
15,6
2007
10,0
7,6
71,7
19,1
27,3
6,3
24,5
15,4
7,8
11,7
10,4
9,2
23,3
5,1
12,0
39,0
39,0
3,4
21,8
9,8
39,5
32,0
59,9
25,2
21,4
11,5
8,3
12,2
Source: Own elaboration and EUKLEMS project (2009)
Additional data would be necessary to fully investigate these hypotheses. We
analysed the evolution of the number of jobs per million of euros of extra-EU
exports (see Table 6). In 2000, nearly 20 jobs in the EU were supported by
each million of euros worth of extra-EU exports. By 2007 this figure had
declined to around 15 (or 16.7 if we isolate the price evolution in extra-EU
exports by using constant year 2000 prices ). This trend is common to all
9
Extra-EU exports have been deflated using the series in volumes published by Eurostat for total exports with base year
2000.
9
12
Member States except Malta and Sweden (the former being a very small
economy and the latter exhibiting in 2000 already one of the lowest ratios in
the EU). Overall this provides some indication that EU exports may indeed have
become more capital intensive.
Figure 106: Embodied employment per million euros of extra-EU exports
(2007)
The evolution of domestic value added and employment supported by extra-EU
exports provides additional insight. In 2000, the value added associated with
extra-EU exports amounted to nearly €929 billion climbing to €1,338 billion in
2007 (in current prices) and €1,161 billion (in constant prices of the year
2000). These figures amounted to 11.4% of the total value added of the EU in
2000 and 12.1% in 2007. At the same time, the ratio of value added to
employment increased from €42.2 million to €53.5 million per thousand
workers. When using deflated embodied value added, this evolution is less
remarkable as the ratio in 2007 increases just to €46.4 million per thousand
workers. Still, all this provides some additional indication that EU exports may
indeed have become more capital intensive over time.
Interestingly, the countries with the highest embodied productivity correspond
to 14 out of the 15 older Member States in 2007. This clearly indicates that the
older Member States export to the rest of the world goods and services with
11
Embodied productivity is calculated by dividing the value added embodied in extra-EU exports (in millions of euros) by
embodied employment (in thousands jobs).
Embodied value added has been deflated using the same deflators as those of the gross value added (Eurostat).
10
11
13
higher value added per worker than the new Member States. The same
conclusion holds when the analysis is done on using embodied value added at
constant prices.
Table 7 : Value added embodied in extra-EU exports (2000-2007)
12
Value added
Embodied VA in Extra-EU
over extra-EU
exports (Mio. €)
Member States
exports (%)
Luxembourg
Ireland
Sweden
Finland
Greece
Belgium
Denmark
United Kingdom
Netherlands
Germany
France
Spain
Austria
Italy
EU27
Cyprus
Slovenia
Malta
Hungary
Slovakia
Estonia
Czech Republic
Portugal
Lithuania
Poland
Latvia
Romania
Bulgaria
2000
1.709
14.761
34.049
17.267
6.808
20.439
14.738
78.466
28.676
193.726
90.695
31.435
20.470
81.459
928.845
1.816
1.767
549
4.170
2.907
551
5.897
3.719
822
8.382
912
3.108
1.138
2007
4.854
29.954
37.580
22.501
9.583
26.347
18.830
164.792
43.309
251.908
118.616
54.155
21.585
104.639
1.337.553
1.193
2.802
622
5.823
2.502
1.264
6.637
3.650
2.462
13.721
1.429
5.334
1.583
Source: Own elaboration and EUKLEMS project (2009)
2000
50,1
46,2
65,0
66,4
63,7
53,5
63,9
54,6
69,0
72,5
76,0
66,7
66,9
70,4
83,6
80,5
53,6
55,9
45,6
59,0
43,7
64,1
70,8
61,3
76,8
64,2
74,3
65,9
2007
43,3
60,3
72,8
60,6
68,7
56,0
46,4
82,8
66,8
69,0
76,1
74,1
64,3
65,4
82,2
81,3
64,7
62,0
57,3
58,0
53,9
59,7
66,9
72,0
71,3
62,7
72,4
54,9
Embodied
productivity
(Mio. €/'000
jobs)
2000
89,2
75,3
91,5
57,7
29,5
59,4
62,5
35,0
50,1
54,1
55,3
38,9
53,4
47,4
42,2
31,0
15,6
27,8
12,1
10,4
9,9
11,5
20,9
8,5
12,3
7,7
3,3
4,1
2007
128,8
118,2
87,4
77,7
75,0
74,1
73,7
68,0
68,0
66,2
65,0
64,5
64,3
54,3
53,5
42,5
30,2
28,5
24,6
23,1
22,0
21,9
20,9
18,4
18,0
16,1
12,1
7,7
The embodied value added for the EU27 differs from the sum of the 27 Member States mainly for two reasons: (a) it
includes intra-EU spillover effects and intra-EU feedback effects that cannot be captured using the national IOTs; and (b) it
includes re-exports from intra-European countries to the rest of the world that are not taken into account when using national
IOTs.
12
14
Changes in the
internationalisati
on of EU firms
production
structure
The evolution of the number of jobs supported by extra-EU exports could also
be reflecting changes in the strategy that EU firms follow when integrating
themselves in global value chains. In other words, if EU firms decide to
outsource increasingly larger shares of the production process to outside the
EU, this would, at least in a first instance, reduce net employment in the EU.
To analyse further how changes in outsourcing may be directly affecting the
number of jobs supported by EU exports to the rest of the world, we computed
the widely used vertical specialisation index (proposed in Hummels et al. 2001)
that captures the degree to which inputs imported from outside the EU are used
to produce exports or, in other words, the import content of exports . The
higher this ratio, the less extra-EU exports will contribute to employment in the
EU, ceteris paribus. The results obtained for the EU27 and each of the 27
Member States are provided by Figure 7. The differences between EU countries
are striking as the vertical specialization shares in 2007 range between 5.2% in
Cyprus to 24.7% in Denmark.
13,14
Figure 7: Hummel’s vertical specialisation index (in %): Embodied
extra-EU imports in extra-EU exports, 2007
Note that the relationship between employment and the outsourcing of parts of the production chain that we analyse here
capture only a short-run, static effect. The dynamic relationship between outsourcing and employment levels is much more
complex. For a survey of relevant literature see Crin (2009).
14
See Annex 2 for details on calculation.
13
15
Moreover, there are also important differences in terms of the variation over
time of vertical specialisation, see Figure 8. Between 2000 and 2007, large
reductions can be observed in Lithuania (from 22.2% in 2000 to 12% in 2007),
Slovenia (15.1% in 2000 to 8% in 2007) and Hungary (23.6% in 2000 to
16.6% in 2007). In contrast, in other countries vertical specialization has
increased considerably. This is for example the case of Denmark (from 17.2%
to 24.7%), Luxembourg (from 7.5% to 14.1%), and Spain (12.9% to 18.6%).
In these countries the increase of outsourcing of inputs to production sites
outside the EU may have been among the factors driving the decrease of the
embodied employment per million euro worth of foreign EU exports between
2000 and 2007. However, overall, for the whole of the EU this does not seem to
have played a major role in terms of the relationship between exports and
employment. The EU-wide average vertical specialisation index increased only
moderately from 13.6% in 2000 to 15% in 2007.
Figure 8: Hummel’s vertical specialisation index (%): Embodied extraEU imports in extra-EU exports (2000-2007)
25
23
20
18
15
13
2000
2007
10
8
5
3
0
kd
ie
se
rg
if
g
b
hu
7
2
U
E
ks
lu
ln
ti
e
d
tl
Source: Own elaboration and EUKLEMS project 2009
16
zc
e
b
t
m
rf
ta
e
e
is
gb
t
p
se
lp
ro
vl
References
Crin, R. (2009), "Offshoring, multinationals and labour market: Review of
empirical literature", Journal of Economic Surveys, 23 (2), pp. 197-249
EUROSTAT (2011), Creating consolidated and aggregated EU27 Supply, Use
and Input-Output Tables, adding environmental extensions (air emissions) and
conducting Leontief-type modelling to approximate carbon and other 'footprints'
of EU27 consumption for 2000 to 2006, Luxembourg: Eurostat. Available at:
Eurostat's Technical Documentation
EUKLEMS Growth and Productivity Accounts (2009). EU Framework Programme
6; website: www.euklems.net
Hummels, D., J. Ishii & K.M. Yi., (2001). "The nature of growth of vertical
specialization in world trade". Journal of International Economics, 54, pp, 7596.
Miller, R. E. and Blair, P.D., (2009). Input-Output Analysis. Cambridge:
Cambridge University Press.
17
ANNEX 1
Empirical approach: Input-output based methodology
Export-driven intra-EU trade is hardly addressed within an inter-industry
context. DG TRADE and JRC-IPTS are pioneering in measuring the direct and
indirect number of jobs generated by EU exports to the rest of the world
(including those originated through subsequent intra-EU trade). Up until
recently the necessary data was missing. A full set of annual supply-use tables
(SUT) and input-output tables (IOT) covering a series of years and all EU
Member States, with a distinction between exports and imports to and from
other EU countries, is required for such an analysis. This work builds on the
construction of a time series of the needed data for the period 2000-2007,
which was made possible by the joint collaboration between Eurostat and the
JRC-IPTS (Eurostat, 2011). This new dataset of national SUTs and IOTs and the
methodology used for the consolidation of national SUTs into a single
consolidated supra-regional EU27 SUT take into account the necessary
corrections for properly treating the so-called trade asymmetries (valuation
differences), and the double-counting of re-exports. This is crucial to prevent
errors in the calculation of the intra-EU impact of foreign trade and in turn to
fully and accurately capture the employment effects of EU exports15.
The methodology
The analysis follows a standard methodology based on Symmetric Input-Output
Tables (SIOTs) developed by the Joint Research Centre's - IPTS (one EU-wide
and one for each EU27 Member States) to identify and quantify all upstream
jobs associated with the production of extra-EU exports. The aim is to capture
not only the jobs associated with the production of the exported goods and
services but all employment in upstream sectors that are embodied in sales to
foreign markets.
Following a standard methodology used in the input-output analysis literature,
the calculations of the export-related employment are based on three
components: i) a vector of employment requirements by unit of output (or
labour intensity of output) (B), ii) a matrix of domestic intermediate coefficients
(Ad), iii) and a vector of domestic extra-EU exports (EX).
Z = B' * (I - Ad) * EX,
-1
Where (I - Ad) is the domestic Leontief inverse matrix and Z is the resulting
export-related employment and ' denotes transposition.
-1
The data
Matrix B (59 X 1) - the elements of the matrix were computed as ratios of
employment to output per sector. The output data come from the annual time
series (2000-2007) of IPTS' SIOTs for the EU27 and the Member States; the
employment data are extracted from the publicly available EUKLEMS database
(using the number of engaged persons per sector). Employment figures account
not only for workers with salaries/wages but also self-employed workers.
Earlier preliminary results, which were based on the sum of the unconsolidated MS data, led to the underestimation of the
EU-wide number of jobs associated to external trade.
15
18
Matrix Ad (59 X 59) - was computed on the basis of the domestic intermediate
consumptions taken from the IPTS' SIOTs at basic prices of the EU27 and the
Member States for the period 2000-2007 (domestic). The elements of this
matrix are technical coefficients computed as the number of units of domestic
intermediates purchased to produce one unit of output.
Matrix EX (59 X 1) - corresponds to the column "exports extra EU fob" from
the same IPTS' series of SIOTs at basic prices of the EU27 and the Member
States for the period 2000-2007.
ANNEX 2
Methodology for the computation of international fragmentation of
production
To measure trade fragmentation, we use the same IPTS' series of SIOTs at
basic prices of the EU27 and the Member States for the period 2000-2007, as
briefly explained in Annex 1. The foreign content of exports - the share of a
country’s exports directly or indirectly based on the use of imported
intermediates is an indicator of the extent to which an economy is integrated in
international production networks. It is calculated as:
Foreign content of exports = u ' * Am * (I-Ad) * X/X
Where,
a. X is a 59x1 vector of sectoral extra-EU exports. These are internallyproduced exports, so data are taken from the matrix of domestic transactions;
-1
k
b. X is the country’s total domestic exports (sum of intra- and extra-EU
exports, excluded re-exports);
k
c. I is a 59x59 identity matrix (with ones on the diagonal and zeros elsewhere);
d. u is a 59x1 vector of all ones, in case of total trade fragmentation, or ones
for all sectors except services, in case of goods trade fragmentation;
e. Am is a 59x59 matrix of input-output coefficients for the country’s import
transactions while Ad is a 59x59 matrix of input-output coefficients for the
country’s domestic transactions. The Am and Ad matrices of input-output
coefficients comes from the IPTS' time series of SIOTs mentioned in Annex 1.
19
ANNEX 3 – Summary Table
16
Member States
Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
EU27
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Embodied employments
in Extra-EU exports
(1,000 employees)
2000
384
344
276
59
514
236
56
22,000
299
1,639
3,580
231
344
196
1,719
118
96
19
20
572
683
178
946
280
113
808
372
2,241
2007
336
356
207
28
303
256
57
25,020
290
1,824
3,804
128
237
253
1,927
89
134
38
22
637
760
175
441
108
93
839
430
2,423
Employment shares (%)
2000
9.3
8.4
9.7
19.4
10.4
8.5
9.7
10.5
13.0
6.7
9.1
5.9
8.9
11.9
7.5
12.5
6.9
7.3
13.2
7.1
4.9
3.5
8.7
13.8
12.5
4.9
8.7
8.0
2007
7.8
8.1
6.4
8.2
5.8
8.8
8.7
11.2
11.6
7.1
9.6
3.0
6.1
12.2
7.7
8.0
8.8
11.3
13.1
7.4
5.0
3.2
4.7
5.0
9.0
4.1
9.5
8.1
Extra-EU exports
shares over total
exports (%)
2000
37.0
24.8
46.1
57.9
33.7
40.6
27.6
100.0
47.4
40.4
46.4
49.0
26.8
32.9
39.9
40.9
30.8
15.0
40.9
24.7
29.5
21.6
37.8
45.4
36.4
30.8
44.7
46.6
2007
27.6
23.7
23.6
28.5
15.9
40.8
26.9
100.0
47.1
45.6
38.8
42.1
24.4
44.4
38.4
33.2
35.4
25.7
36.0
27.0
21.7
21.5
27.1
14.2
32.3
29.9
40.7
49.0
Total exports shares
over GDP (%)
2000
38.7
61.2
26.7
38.7
44.4
32.7
74.2
12.1
41.5
20.5
28.0
15.8
67.3
93.0
24.4
40.9
36.5
103.5
57.4
40.5
20.0
19.9
27.4
49.3
52.4
24.2
44.0
28.5
2007
44.7
59.3
39.7
32.4
54.7
43.7
54.3
13.1
43.9
18.0
38.7
14.7
41.3
59.1
26.9
32.5
33.8
116.6
51.0
42.0
28.6
16.6
21.8
55.4
38.8
23.2
37.5
19.9
Extra-EU exports
shares over GDP (%)
2000
14.3
15.2
12.3
22.4
15.0
13.3
20.5
12.1
19.7
8.3
13.0
7.7
18.0
30.6
9.7
16.7
11.2
15.5
23.5
10.0
5.9
4.3
10.4
22.3
19.1
7.5
19.7
13.3
2007
12.3
14.0
9.4
9.2
8.7
17.8
14.6
13.1
20.7
8.2
15.0
6.2
10.1
26.2
10.3
10.8
12.0
29.9
18.4
11.3
6.2
3.6
5.9
7.9
12.5
6.9
15.3
9.7
The figures for the EU27 are larger than the sum of the 27 Member States results since, unlike individual country figures, they also take into account the indirect jobs
generated by one Member state's final exports in other Members States that provided intermediate inputs to such exports. These export–related "Single Market" employment
effects are not captured by the calculations at the level of each Member State, as explained in the main text.
16