Liam FitzGerald’s Post

This piece here at Dutch publication #InnovationOrigins might appear to signal something economically virtuous happening within the Eurozone countries - that the southern countries are gaining ground in the competitiveness of their labor markets with diminishing unit labor costs. It is indeed true that closing gaps in competitiveness is overall positive for the Eurozone as a whole. But what I understand here is also an unwelcome underlying trend: Northern European countries are losing their traditional virtuous loop between controlled labor costs and the technology and innovation intensive dynamics of their labor markets. In other words, it is becoming less advantageous to invest in the sectors of higher intensity of cutting edge technology and innovative implementations through the economy, with businesses witnessing narrow margins and lower returns on investments. Southern countries have an advantage here due to the simple fact that they start on a very lower status, with obvious increased room to grow. Southern Europe is closing the gap with the North in labor cost competitiveness. https://lnkd.in/ds7XrSj9

Poland has achieved the EU's lowest labour market slack, indicating that most of its workforce is fully utilized (Notes from Poland https://lnkd.in/dFBn-NmF) However, with an aging population and low labour reserves, there are future challenges. If Poland's workforce shrinks, GDP could drop by up to 8% by 2035. This case shows the crucial link between healthy economies, workforce availability, and the investments needed to tackle new global challenges. That's why Countries must foster growth-oriented policies to ensure their economies can meet these demands and support innovation and development. #GiGroupHolding #GiGroup #Poland #Workforce #CandidateShortage

Great to see the report Carsten Brzeski and I wrote on changing eurozone labour cost competitiveness quoted on page 2 in the Financial Times today. We argue that he end of wage moderation and deteriorating productivity growth in northern European countries, along with structural reforms in southern ones, have allowed competitiveness convergence in the eurozone. Read all about it here: https://lnkd.in/ezHMmWig. A Dutch version, which featured on the front page of the Financieele Dagblad two weeks ago, can be read here: https://lnkd.in/eckBQu8z.

“The next worry concerns a single country: Germany. It has barely grown since 2019. More recently, its exports fell by 4.4% in June on a nominal basis, compared with a year earlier, and surveys indicate that worse is to come. Industrial companies that have failed to modernise now face a bigger challenge from China, as low-cost electric vehicles (EVs) pour out of its factories. Germany’s long-term prospects are also concerning: other than Lithuania, no country in the OECD is set to lose more workers to retirement, relative to new entrants into the labour force. The country is big enough that its economic woes will also drag on Europe’s growth.”

We can't talk about a country's development by considering only individual components – the economy is a system of interconnected elements.   🇨🇿 In the coming decades, the Czech Republic will face a shortage of workers, according to Minister of Labor and Deputy Prime Minister Marian Jurečka. He referred to a "bottleneck" that will impact economic growth. The Czech public is discussing increasing migration or raising the retirement age as potential solutions. Another approach is to increase the employment rate of currently inactive individuals. Politicians are also openly discussing the need to accept more economic migrants. Radek Vlk EWL Czech Republic https://lnkd.in/dvmUKx6V   Poland's economy faces similar challenges. Recently, the number of people retiring has increased by as much as 20% year over year. We can't expect the number of workers to match those leaving the workforce.   It's crucial to develop comprehensive strategies to address these demographic and economic challenges to ensure sustainable growth. EWL Group #sustainableMigration #globalMobility Chart source: https://lnkd.in/d_hxA5sw    

Germany was the only G7 economy to shrink last year and is set to be the group’s slowest-growing economy this year. What can Europe’s largest economy do to revive its economic prospects? In a Country Focus article, we set out the reforms needed to overcome Germany’s most serious economic challenges: an aging population, too little public investment, and too much red tape: https://bit.ly/49eHmv5

Germany was the only G7 economy to shrink last year and is set to be the group’s slowest-growing economy this year. What can Europe’s largest economy do to revive its economic prospects? In a Country Focus article, we set out the reforms needed to overcome Germany’s most serious economic challenges: an aging population, too little public investment, and too much red tape: https://lnkd.in/diZe3Wxs

Germany is struggling. It was the only G7 economy to shrink last year and is set to be the group’s slowest-growing #economy again this year, according to our latest projections. Some pundits say Germany’s #economic model is irreparably broken. They argue strong growth in previous decades was based on importing cheap #Russian gas, which in turn powered #Germany’s highly #competitive export #industries. With this cheap #gas no longer available, the German #manufacturing model doesn’t #work anymore, or so the story goes.

"The day after" yesterday!- - The Portuguese Government has presented yesterday several measures to boost the Portuguese economy, including the NHR 2.0 (Non-Habitual Resident) program; - NHR 2.0 aims to attract international talent and investment with enhanced tax benefits, making Portugal a prime destination for skilled professionals and investors; - While the specific details of NHR 2.0 are still being regulated, this initiative demonstrates the government's intention to position Portugal as a top destination for talent and wealth. Other key measures include: - Increased support for SMEs with financial incentives and reduced bureaucracy. - Investment in renewable energy projects. - Policies to drive digital transformation and innovation. - Improvements in infrastructure and connectivity. - Relaxation of the participation exemption (from 10% to 5%) and reduction of the CIT rate in 2% p.y to reach a 15% rate in 2027; These initiatives highlight Portugal's commitment to fostering a dynamic and resilient economy, recognizing the need of attracting talent and capital from abroad. In light of the recent UK general election and the potential abolishment of the non-dom regime, Portugal has a significant opportunity to re-position as a country welcoming foreing talent and investment! (Just a side note to mention the lack of reference in the program on adressing regional asymmetries, which in my view are the key drivers to boost a modern and sophisticated economy.)