THE END OF HISTORY MEANS YOU DON'T REALLY HAVE A CHOICE:

Eastward job flow puts Europe on notice (Eric Pfanner, July 20, 2004, International Herald Tribune)

Though it has lost three-quarters of a million manufacturing positions since 1997, many of them to Eastern Europe, Britain has been better than most of its neighbors at replenishing its overall jobs pool. In the case of Leeds, microtargeted initiatives have helped the region create 10,000 information technology jobs alone since the mid-1990s.

Fran and Geoff Elliott of Leeds have seen the process work first-hand. A year and a half a ago, Geoff lost his job as marketing manager at a press photography agency as the area suffered from economic slowing. Last July, as Geoff was looking for work, Fran was laid off from her job as public affairs manager at Norwich Union life insurance. With the jobs went a combined annual income of £90,000, or $169,000, enough to sustain a comfortable life, and two horses for weekend rides in Yorkshire.

"It was one of those moments when you wonder what on earth you're doing," Fran Elliott said.

Instead of floundering, they decided to start up their own photo agency and digital photo library business, aided by a network of local and national support initiatives. The two took advantage of a £60,000 small-business loan guarantee from Britain's department of trade and industry. Perhaps more important, they were also able to tap funding from West Yorkshire Ventures, a Leeds-based program designed to even out local employment levels by fostering entrepreneurship and job creation to offset the outflow of manufacturing jobs. It paid for a strategic marketing consultant, invested £3,500 in direct funding for their Web site and helps keep a student employee on the payroll. The company, Pic-Biz, opened for business in February, and works with corporate public relations departments, among other clients.

"We've got an awful lot of risk, but, at the end of the day, an awful lot of support, too," Fran Elliott said.

Such entrepreneurial spirit and job creation schemes are still sorely absent in much of Europe. The 10 relatively low-wage and low-tax countries that entered the EU on May 1 were already luring Western companies, and they may well yet offer even sterner competition for jobs and investment.

A likely solution, analysts say, is that more continental countries will shift towards the British model and edge away from the "social-market" economies that have ensured a half-century of labor tranquillity.

"Most politicians in Germany, France and Italy do not realize how quickly these processes can happen," said Sylvester Eijffinger, a professor of financial economics at Tilburg University in the Netherlands and a research fellow at the Center for Economic Policy Research. "They don't see how powerful this effect could be."

Lawmakers in the core economies of the euro zone have been unable to persuade voters to embrace radical overhauls of labor markets and fiscal policies that analysts say would raise competitiveness, and so have wound up dealing with the threat mostly by tinkering. In some cases, they are banding together to try to prevent undesirable aspects of competition: France and Germany, for instance, are calling on Brussels to put a floor under European corporate tax rates in an effort to stop what they call "tax dumping" in the new EU member states that has attracted businesses like a magnet.

But some smaller countries among the 15 pre-existing EU members are breaking ranks, in the first signs of the kind of chain reaction Eijffinger cites. Some, such as the Netherlands, are pushing for reductions in their own corporate tax levels to compete with the aggressively low rates of the new EU countries. Others are trying to loosen restrictions on hiring and firing workers, in an effort to lower labor costs. In some cases, policy makers and business leaders are forming regional alliances that aim to help businesses take advantage of the best features of "old" and "new" European economies in borderless proximity for the first time.

How's that whole choosing leisure over work deal coming along?

Posted by Orrin Judd at July 20, 2004 7:37 AM