GOLDEN GROWTH
Figure 4.3: In the EU12, most jobs created were in services and construction (employment growth, by size of firms and sector, 2002–07)
Note: Data for 2008 are not included as sector classification changed from 2007 to 2008. The period of time considered varies by country: Estonia and Lithuania (2004–07), Latvia and Poland (2003–07), and the Slovak Republic (2002–05). Source: World Bank staff calculations, based on Eurostat.
reflecting two opposite forces: growth in some parts due to delocalization of labor-intensive tasks from advanced to emerging Europe to leverage the lower labor costs of the skilled workforce; and decline in the EU entrants’ larger enterprises, especially the Baltic economies, as they restructured their industries from the legacy of the Soviet system. In advanced Europe, the southern countries outperformed the rest in job creation, with an average yearly growth of 1.9 percent in 2002–08 (compared with 1.5 percent and 1.1 percent in Continental and Northern Europe, respectively). The sector distribution of employment creation followed a path similar to emerging Europe’s. Manufacturing declined overall, emphasizing the shift toward services (figure 4.4). The type of companies generating service jobs varied. In Southern Europe, microenterprises (mostly family-owned firms with fewer than 10 employees) and small and medium enterprises generated most jobs. Construction contributed to employment in the south, accounting for a large share of the growth: in Spain alone, it accounted for one out of five jobs in 2007. Yet a simple comparison of growth rates misses the fact that jobs do not all contribute equally to growth. Decomposing job creation by sector and size brings out two main trends: · Some jobs are more stable than others. Domestic, consumer-driven retail services16 accounted for the largest share of the difference in job-growth rates across countries. More than half the growth in the EU15 South (1.8 percent of 2.9 percent) was concentrated in these sectors, which are cyclical and credit-dependent: in Southern Europe alone more than 1.4 million jobs created in 2000–08 (about half the total) disappeared by end-2010. Similarly, jobs created in microfirms (those with fewer than 10 employees)
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