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Europe – Public sector restructuring initiatives on the rise

25 January 2011

The latest quarterly edition of the European Restructuring Monitor (ERM) published by the European Foundation for the Improvement of Living and Working Conditions (Eurofound) shows that while the European Union (EU) technically emerged from the recession eighteen months ago, growth continues to be sluggish, hesitant and unequally spread, Restructuring measures appear increasingly to be affecting public sector employment as a result of widespread public spending restrictions and cuts.

Unemployment in the European Union has been stable at 9.6% over the last six months but labour market performance, continues to vary widely across EU member states. Some countries are experiencing robust growth, notably Sweden, Poland and Germany, while others have stagnant or contracting economies, even when not technically in recession, such as Greece, Ireland and Spain.

Over the last quarter (1 October to 31 December 2010), the ERM reported 304 cases of restructuring of which 172 were cases of restructuring involving job loss. 

Total announced job losses were approximately 88,0000 in the quarter as against announced job creation of just over +47,000. The public administration sector reported by far the largest number of announced job losses (-23,000) followed by health and social work (-6,126), construction (-6,045) auto manufacturing (-6,018) and financial intermediation (-5,282 jobs). As in the previous quarter, the second-ranking sector was computer and related activities with +7,121 job gains, just ahead of the retail sector recording another +6,306 new jobs. Fewer, albeit significant, job gains were also announced in other business activities (+4,375 jobs) and financial intermediation (+3,050).

The largest case of restructuring-related job losses in the ERM relates to the announcement in November of an early retirement scheme and redundancy package designed to cut -5,000 jobs at Ireland's Health Service Executive (HSE) by the end of 2010, followed by Birmingham city council reducing its workforce by one third over the next four years, and car manufacturer Renault which plans to shed -3,000 jobs in France over the next three years.

One of the largest cases of job creation was announced in Ireland where British supermarket chain Iceland aims to create over +2,000 new jobs over the next four years. The merger between French company Atos Origin and Siemens IT Solutions and Services will lead to a large recruitment drive aimed at filling between +7,000 and +8,000 new positions globally of which +1,600 will be in France. Also, BNL-BNP Paribas, one of the main banking groups operating in Italy, plans to recruit +1,500 people by the end of 2012. 


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