EU’s Policies in The Field of Manufacturing Industry and Their Impact on Employment

Presented By : EssamOmaran Mohamed – Under supervision before the professor name Dr.Chahir Zaki

Democratic Arab Center 

Contents: 

Introduction:

The global financial crisis  of 2008 has brought on an adjustment in the view of the industrialization  segment in numerous nations among both financial experts and decision makers. Producing has recovered its notoriety as in a relatively substantial industry area is no longer considered to make a potential impact on  an obsolete financial structure,  for a post – industrial, ministrations overwhelmed economy, for example, the European Union^([1]).A dynamic assembling part is again thought to be an essential for an inventive and quickly developing economy among all European member states.

Nevertheless, EU Industrial strategy intends to animate development and intensity in the assembling part and the EU economy all in all. This coordinated modern strategy incorporates a full scope of EU needs, for example, exchange, advancement and ingenuity, which affect industrial rivaling. This paper argue that the industrial different sectors and its contribution in the EU’s growth economy from 15.1% currently to 20% of GDP  by 2020 as a main priority for EU Industrial Policy. It also envisages a brief historical look at different industries sectors in EU and its member states and  how a relatively substantial manufacturing sector has redeemed the reputation in the industry field.

At the same vein, this paper envisages the different types of industrial sectors in EU as well as top aims and priorities for EU Industrial Policy. In this context , we will focus on the most significant Industry Policy that affect the turnover , employment and value added which is the Food and Drink Policy. Europe’ food  producing industry is a nearby industry, utilizing 70% of agrarian crude materials delivered in the EU, which produces employments both up and downstream in rustic and urban groups all through the European Union^([2]).

Lastly, this paper envisages that how manufacturing industry pave the way for jobs and growth in Europe. Furthermore,  the manufacturing in the EU utilized 30 million persons specifically and gave twice the same number of occupations in direct way, made products add up to more than 80% of aggregate EU exports and manufacturing industry represented 80% of private Research and Development expenses^([3]). 

Manufacturing is an essential for European Growth and Economic Aspects:

As a consequence of the 2012 Industrial Policy Communication, teams were set up to actualize ‘activity lines’ crosswise over six key need regions including propelled fabricating, key empowering advancements, bio-based items, manageable mechanical approach, clean vehicles and brilliant matrices^([4]).

Furthermore, Europe needs to switch the declining part of industry in Europe for the 21^stcentury. This is the best way to convey practical development, make high-esteem occupations and tackle the societal difficulties that we confront. To accomplish this, an extensive vision is required, concentrating on venture and on development, additionally preparing all the levers accessible at EU level, quite the single business sector, exchange arrangement, SME approach, rivalry strategy, natural and examination approach in support or European organizations’ intensity^([5]).

In other words, With the restored mechanical procedure laid out in this Communication, the Commission looks to switch the declining part of industry in Europe from its present level of around 16%[3] of GDP to as much as 20% by 2020. This ought to be driven by generous recuperation in speculation levels (gross capital development and interest in gear), an extension of the exchange products in the Internal Market (to achieve 25% of GDP in 2020) and a huge increment in the quantity of SMEs sending out to third nations^([6]).

In this context, The political consideration on industry is grounded in the acknowledgment that a solid mechanical base is vital for a rich and monetarily effective Europe. It is crucial to animate monetary recuperation, give great employments and fortify our worldwide aggressiveness. Industry can create the high profitability development expected to restart maintainable development: modern efficiency ascended by 35% since the most noticeably bad times of the emergency in 2009. Also, no one but industry can enhance extensive vitality and asset proficiency even with worldwide asset shortages and give answers for societal difficulties^([7]).

From the European prospective to achieve the above mentioned main points , the European Union representing in its effective Institutions (European Commission, Council and Parliament) associated together in order to plan and set out for the Sustainable Industry in many field to keep the environment as wells as the rights for coming generations. 

EU’s Industry Policy at A Glance:

Industry is the foundation of the European economy. The late monetary emergency has underlined the vital role of the European Commission in supporting industry, through policies and activities that aim to expand the offer of assembling in the economy and realize an European Industrial Renaissance.

Industry is the foundation of the European economy in the  following points and economic aspects:

• delivering 80% of Europe’s fares;
• representing 80% of private examination and advancement;
• giving high talented occupations^([8]).

In any case, the late monetary emergency has prompted a further decrease in assembling to 15.1% of GDP and somewhere in the range of 3.5 million occupations have been lost in those areas since 2008. The European Commission means to achieve a modern renaissance in Europe. This requires a guarantee at both EU and national level to bolster mechanical aggressiveness. All together for EU industry to flourish, we should keep on modernizing Europe’s mechanical base: manufacturing, development, mining, crude materials, tourism, inventive commercial enterprises, and related business services. To do this, the Commission sets strategy needs and executes activities important to accomplish these targets^([9]).

The EU Industrial policy  plans to fortify development and intensity in the assembling part and the EU economy in general. This coordinated modern strategy incorporates a full scope of EU needs, for example, exchange, advancement and vitality, which affect mechanical intensity.

Moreover,the EU manufacturing policy aims to achieve the following priorities:      

(1)        Fostering competitiveness;

(2)        Empowering advancement by supporting activities identified with (2)development and examination;

(3)        Advancing organizations that deliver in a supportable and socially mindful way;

(4)        Attempting to guarantee that venture and industry has entry to assets, including money, talented work, vitality, and crude materials;

(5)        A well-working inward market;

(6)        Advancing a business well disposed environment;

(7)        Supporting the internationalization of EU endeavor and modern products and administrations;

(8)        Giving backing to the assurance of protected innovation rights^([10]).

Different Types of EU’s Industrial Fields:

Industrial Policy adds to aggressiveness by setting up fitting structure conditions, (for example, brilliant enactment). In such manner, the DG has created area particular activity arranges and brilliant enactment that backings key modern segments including:Chemicals; Automotive; Tourism; Textiles, Defense,Fashion and high end industries, Creative industries, Raw materials, Metals, Minerals and forest-based industries, Mechanical engineering industries, Electrical  engineering industries, Food, healthcare, Biotechnology, Aeronautic and Maritime industries^([11]).

This paper envisages the most important Industrial Policy which is Food and Drink Industry whereas it absorbs the largest number of workforce among EU member states. The paper also envisages a glance at this industry and its significant as well as impact on EU’s growth and labor market .

Food and drink industry:

The food  and drink industry is the EU’s greatest assembling area as far as employments and worth included. It is likewise an advantage in exchange with non-EU nations.  EU nourishment enactment is profoundly orchestrated and the division advantages essentially from the open doors offered to it by the Single Market. In the meantime be that as it may, the division confronts challenges in worldwide and European markets. The European Commission attempts to enhance the aggressiveness of the division and the working of the Single Market. It likewise endeavors to make new exchange open doors for nourishment and beverage items.

Source: Eurostat 2012 (SBS), UN COMTRADE, OECD

These figures envisage and explain the contribution of Food and Drink in the EU economy .It obviously contributes over one trillion euro to the economy ,on the other side it explicitly absorbing more 4.2 million people into the labor market as workforce.

Furthermore, it also participate by 86.2 billion euro as exports to third countries. The number of companies that are operating the food and drink industry about 286,000 companies. Finally, this field represents the more sharing in global exports market by 16.10% of total EU exports compared with the other industries types.

In other words ,the value added of this industry and turnover and employment is the most significant comparing with the other industries. Nevertheless ,this sector is characterized by these facts:The business stays steady, flexible and powerful, indeed, even in times of financial downturn.

It is one of the not very many assembling divisions to produce over its 2008 yield level.The turnover of the EU food and beverage industry surpasses €1 trillion. The area createsa quality included of €206 billion^([12]).

The Manufacturing Policies enhance the EU’s Economics:

The European Commission has issued an authority “Industrial Policy” went for boosting the rivaling and yield of its manufacturing  part. The Commission says that Europe must expand the offer of industry to 20 percent of GDP by 2020, up from 16 percent today. The reason: a more grounded manufacturing  segment will empower “development and monetary recuperation,” says the EC’s “Mechanical Policy,” issued on October 10 in Brussels. Industrial  yield has dropped by 10 percent in the course of recent years, and the industrialization part has lost more than 3 million employments. European customer and business certainty is low, the managing an account segment is not making credits to assembling organizations and speculation has not grabbed^([13]).

Europe does not have any desire to take after the United States by having its manufacturing area decrease to the point where it represents just 12 percent of GDP Just as the United States government has declined to considerably think about having as an industrial policy.Europe likewise has a sectioned market and needs to receive more regular gauges and regulations.The new modern approach will coordinate European speculation and techniques in six “need activity lines”: propelled fabricating innovations; empowering advances, for example, nanotechnologies, propelled materials, modern biotechnology,nanotechnologies, and propelled producing frameworks; bio-based items; supportable industrial, development and crude materials; clean vehicles; and intelligent networks^([14]).

Nevertheless,For smart networks, the EC needs 80 percent of European families to have a shrewd meter introduced by 2020.This will set the structure for a speculation over that time of 60 billion euro in creating smart networks, “ascending to around 480 billion euro by 2035,”says the strategy record. “The EU must convey the benchmarks expected to guarantee the interoperability of keen networks crosswise over outskirts, and additionally a typical least arrangement of guidelines for meters and progressed metering infrastructure”.

What is the Agenda over the  European Employment:

A plan to put Europe headed for full recruitment:The plan for new abilities and occupation is a leader activity of the EU’s Europe 2020 methodology for development and intends to individuals of all ages pick up the skills they require for the employments without bounds. In this context ,Joblessness in the EU remains at around 10 %, thanks to some degree to the late financial crisis that has left a huge number of Europeans without occupations.To abbreviate the quantity of individuals out of labor, the EU and its Member States have obliged themselves to accomplishing a 75 % jobs rate for men and ladies between the ages of 20 and 64 by 2020. As a matter of fact,the European Commission is likewise dedicated to building up an online device that can be gotten to by occupations seekers, specialists and businesses. The ‘EU abilities display’ will incorporate upgraded estimates of aptitudes supply and work market-place needs^([15]).

In this sense , the European Union set out plans by 2020 favor the youth.The Youth Employment Initiative is one of the key EU money related favorable circumstances for strengthen the utilization of Youth Guarantee orchestrates. Furthermore,  Under the Youth Guarantee,the European countries ought to set up regulations to guarantee that youngsters up to the age of 25 get a decent quality offer of job.The Youth Employment Initiative is corresponding to different activities attempted at EU member states level, incorporating those with European Social Fund (ESF) backing.The aggregate spending plan of the YEI(Youth Employment Initiative) is €6.4 billion for the period 2014-20. The YEI is executed as per ESF( European Social Fund) rules^([16]).

At the same vein,of the aggregate spending plan, €3.2 billion originates from a devoted Youth Employment spending plan line supplemented by €3.2 billion a huge presented by the ESF.Finally,The employment guidelines, proposed by the European Commission and affirmed by the Council, present regular needs and focuses for the national job policies. After all,By March 2015, the European Union represented in Commission  received a proposition for another bundle of incorporated guidelines to bolster the accomplishment of intelligent , manageable and comprehensive development, and the points of the European Semester of economic strategy coordination^([17]).

Manufacturing Industries Policies and its Impact on the Employment:

Industries are exceptionally tradable and worldwide rivalry has turned out to be progressively furious. At the same vein ,for  with high wage levels, for example, the EU this suggests it turns out to be progressively troublesome for European countries to be rivaled effectively in worldwide markets exclusively on the premise of costs – regardless of the fact that the higher wages are identified with higher work efficiency^([18]). In related to the new economic ileum readings,”firms in high-wage countries will locate production in a low-wage country if the differences in production costs outweigh the potential agglomeration externalities at home” (Mayer, 2004).

Employment developments within the manufacturing sector, EU-27, 1995 -2009

Source: WIOD, wiiw calculations

The table explains that the  value added value deflators for the electrical machines industry of Finland, France, Sweden, Japan, South Korea and the USA redeemed by separate German shrinking in every yearIndustry classification based on NACE Rev. 1.1^([19]) . In this context , it is easy to say that manufactures like low-tech from 1995 to 2009 the number of jobs decreased by 4.2% its real number has been decreased 3,462,000 vocational vacancies. The last column shows the changes that had been took placed in each sector and its deflator and value added,such as metals sector increased in .52% from the base year to the measured year, electrical equipments also increased from 7.8 to 9.2% with value added 1.37 % and so on. In other words, the impact of manufacturing on the EU’s exportation will effect on employment in all EU member states ,where as EU included worth in EU fabricating exportation  is around 85%, tantamount with the local substance of Japanese or US producing exportation  to the international markets.

The  most observers additionally finds that EU fabricating exportation are more advanced and complex than exports from numerous different economies such as China and USA and that EU industrialization is described by a developing offer of high-filly labor^([20]).The financial global crisis in  2008 has conveyed Europe to a stagnation. In the principal quarter of 2014 genuine GDP in the 28 nations of the EU has developed by 0.3% just contrasted with the past quarter. In this sense , The enormous manufacturing decay enrolled amid the most recent years has had profound occupations impacts prompting an excess of skeletal unemployment;in the primary quarter of 2014, 16.3 million individuals had been out of labor for 12 months, double the number in 2007.

In the same meaning ,The manufacturing decrease enrolled in Europe in the course of the most recent years has added to reconfigure occupations  skeletal with various effects on laborers and EU member states^([21]).Generally speaking, the financial global crisis  of 2008 has strongly affected livelihood flow underscoring an example of polarization of the employment structure (Eurofound, 2013),the two general classes that most experienced the effect of the stagnate work demand and supply were constructions and industrial which lost 10% of the following crisis recruitment.On the other side, the service field utilizes more than 70% of the EU working force and notwithstanding the global crisis its effects keep on developing.

Wholly, The industrial  segment which was at that point encountering a negative procedure of skeletal change in the course of the most recent decade (-0.8%) has enlisted a sharp withdrawal of vocation within the financial  crisis  achieving -2.6% every year in 2008-2013^([22]).Due to the distinctive aptitude organization of the manpower between industries fields, a reshaping of livelihood structures has developed prompting expertise polarization. Nevertheless,he developing vocation design enlisted by administration and consultancy exercises in administrations is switched by information transfers and distributed manufactures that were more influenced by the financial crisis.

Source: Eurostat,LFS

This graph envisages that the gender workforce cavity kept on shutting throughout the decade with an expanding investment of fames in the work market; by the end of 2007 ladies represented 46% of aggregate vocation in the EU 27 (Eurofound, 2013). It also explains that the normal yearly rate of development was for ladies of 2.05% contrasted with 1.59% of men between the period of 2003-2008. 

Conclusion:

To conclude,The main difficult matters that may face some European nations is to make more occupations. In other words,The real rate of the unemployment among the European member states is highly raised by 10 percent in particularly the optimum currency area compared with the United States 4.5 percent.be that as it may, there have likewise been impressive contrasts inside Continental Europe, whereas the unemployment rate was differed from EU country to another,such as Spain where registered 4.5 % comparing with Portugal enrolled 16 percent. As a matter of fact,The financial global crisis  has hit Europe severely. In the most recent six years, more than 5 million occupations were lost in the Europe continent, while the US economy has enlisted a gorgeous net formation of right approximately 1 million new occupations.

In this course ,Competitiveness is workforce’s closest companion and represents top need to the European Union and its member states. Most of recent literatures envisage that The main significant quandary in related to employment in Europe and its impact on competitiveness not only due to the decision in the field of social policy  but due to the  absence of competitiveness in the workforce  market.Daring choices are expected toreinforce European labor market competitiveness ,keeping in mind, the end goal to make more occupations^([23]).

What Europe Needs?

To answer this question in simple words we should present the main challenges and the new strategy that should be followed in order to enhance the labor market and create million green jobs. Firstly,Nonessential solidity in labor law, unreasonably high non-wage work costs, aptitudes crisscrosses, counter-gainful taxation wedges and unemployment traps must be managed^([24]). Secondly,the EU ought to take part in more strong and reliable activities with a specific end goal to augment job creation, recruitment partaking , and labor profitability.

But as it turned out ,During June 2014, there had been  25 million persons out of labor market individuals among European member states. This envisage that there were 9 million exceeding about the year ended in 2008 ,the year of the crisis. In the most recent 5 years, 6 million employments have been lost their jobs in the EU. The EU has separated itself from its goal to accomplish a 75% vocation rate by 2020^([25]). 

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• Under supervision before the professor name Dr.Chahir Zaki