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#Globalization impact on employment and the EU

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Globalisation Photo by Soo Ann Woon on Unsplash

Find out how much the EU aims to benefit from globalization while tackling its negative effects on employment.

Globalisation creates job opportunities but can also result in job losses. Managing globalization to make the most of it is a priority for the EU as is trying to create a more social Europe that helps redundant workers find new jobs.

Job opportunities in Europe

The number of jobs supported directly or indirectly by EU exports outside the union is continuously growing. It increased from 21.7 million jobs in 2000 to 36 million jobs in 2017. Every billion in exports from the EU supports on average about 13,000 EU jobs.

Job opportunities aren't limited to exporting companies. They also extend to firms supplying goods and services to them.

For example, in Germany exports to non-EU countries support 6.8 million jobs. Thanks to the EU's single market an additional 1.1 million German jobs depend on exports from other EU countries to non-EU countries. In total, 18% of jobs in Germany rely on EU exports.

The share of highly skilled workers in export related jobs is increasing and export-related jobs are on average 12% better paid than other jobs.

Globalization's negative impact on employment

Globalization leads to increased competition between companies, which can result in closures, offshoring and job losses..

The most vulnerable EU sectors are characterised by a predominance of low-skilled jobs: textiles, clothing, footwear and leather, basic metals and fabricated metal products, and manufacturing industries.

Manufacturing is the sector that is the most exposed to offshoring because of competition from low-wages countries.

While offshoring is a central element of the debate on globalisation, data show that the amount of job losses due to offshoring in the EU is steadily decreasing.

Offshoring trends are shifting and it now happens more in eastern European countries than in western member states. Destination countries are in North Africa and Asia.

While the overall results of international trade liberalisation are positive, some sectors are hit hard and the duration of the adjustment period needed by workers to relocate in other sectors can undermine the initial benefits.

The European Globalisation Adjustment Fund 

In order to reduce the negative impact of globalisation and decrease unemployment, the EU created the European Globalization Adjustment Fund in 2006. Its goal is to provide support to redundant workers who lost jobs due to globalisation.

This emergency solidarity fund co-finances up to 60% of labour policies to re-employ workers or create businesses. Funded projects include education and training, career advice, as well as help looking for a job, mentoring and business creation.

In 2009, the fund was extended to cover job losses resulting from major structural changes triggered by the economic and financial crisis.

The fund can be used:

1) when more than 500 workers have been made redundant by a single company and its suppliers, or

2) when a large number of workers lose their jobs in a specific sector in one or more neighbouring regions

Since 2007, the fund has spent €630 million helping about 150,000 dismissed workers and 3,369 young people. For example, the fund spent €3.35 million to help former call centre workers in Italy€6.4 million for redundant supermarket workers in Greece and €2.6 million for 821 former Nokia workers in Finland.

The European Parliament called for a reform to improve the fund in January 2019.

China

Huawei ban spurs new competition for Ericsson and Nokia

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The crackdown on China’s largest technology company has given startups such as Altiostar Networks Inc. and new entrants including Qualcomm Inc. a rare opportunity to grab a slice of the $35 billion the telecom industry spends each year on this crucial part of mobile phone networks.

“This could break up that tech vendor lock-in that’s been around for decades,” said Andre Fuetsch, chief technology officer of network services at AT&T Inc., the third largest U.S. wireless carrier. “It’s about how do you create a much more competitive, innovative ecosystem.”

Technology gets political

Position on including equipment from China’s Huawei in 5G mobile networks, as of 15 July, 2020

Source: Bloomberg

Base stations are the heart of cellular networks, powering millions of antennas that perch on cell towers and city rooftops all over the world. Until recently, these boxes were a proprietary combination of processors and software that had to be purchased all at once. Huawei, Ericsson and Nokia account for three quarters of this market, which is worth as much as $35 billion a year, according to researcher Dell’Oro Group.

Open radio access network, or O-RAN, changes this by creating an open standard for base station design and ensuring all the software and components work well together -- no matter who is supplying the ingredients.

This is a potentially radical shift. When telecom giants such as AT&T and China Mobile Ltd. want to expand their network they usually have to call their existing supplier and order more of the same because a box from Nokia won’t work with one from Ericsson. The new technology lets wireless carriers mix and match more easily.

The initiative also means that new suppliers can succeed by focusing on one or two components, or a single piece of software, rather than spending lots of time and money building a whole base station from the ground up.

O-RAN gear has been used sparingly since an industry alliance was formed to promote the technology in 2018. But when the U.S. toughened its stance against Huawei last year and encouraged other countries to crack down, interest in O-RAN adoption increased. The Chinese tech giant is a low-cost provider. Now it’s unavailable in some markets, carriers are more willing to look at alternative suppliers embracing the more flexible O-RAN approach.

“Increased geopolitical uncertainty is helping them to get an invite to the table they would not normally have had,” Dell’Oro Group analyst Stefan Pongratz said. “Multiple vendors, not just in Europe but across the world, are basically reassessing their exposure to Huawei.”

How Huawei landed at the centre of global tech tussle: QuickTake

Open standard base stations will generate sales of about $5 billion in the next five years, more than originally predicted, according to Dell’Oro.

Ericsson questions the performance and cost-efficiency of current O-RAN offerings. But the telecom companies, who decide where the money is spent, aren’t being shy about telling incumbent providers to get on board or risk being left behind.

“We’ve been candid with them: This is the architecture that the operator community is pursuing,” said Adam Koeppe, who oversees technology strategy, architecture and planning at Verizon Communications Inc., the biggest U.S. wireless carrier.

The list of companies vying to fill the gap left by Huawei is a mixture of some of the oldest names in technology and newcomers. Qualcomm, Intel Corp.Hewlett Packard EnterpriseDell Technologies Inc.Cisco Systems Inc.Fujitsu Ltd. and NEC Corp. are offering various parts of the new base station technology. Startups such as Altiostar, Airspan Networks and Mavenir Systems are trying to carve out niches, too.

O-RAN proponents point to the success of Rakuten Inc., a Japanese e-commerce provider that has used the technology to break into mobile phone services. The company began 4G wireless service in April and is upgrading to 5G now, using O-RAN suppliers including NEC, Qualcomm, Intel, Altiostar and Airspan. Rakuten said using this more open approach has cut capital expenditure by 40% and reduced operating costs 30%.

Dish Network Corp. is building a 5G wireless network in the U.S. with help from Altiostar. New projects like this are great, but the real opportunity is with operators that are shifting their existing networks to O-RAN, according to Thierry Maupilé, Altiostar’s executive vice president of strategy and product management. The Tewksbury, Massachusetts-based company has raised more than $300 million from investors such as Rakuten, Qualcomm and Cisco.

Why 5G mobile is arriving with a subplot of espionage: QuickTake

O-RAN is part of a broader push to make all kinds of computer networks more flexible and easy to control. By standardizing hardware and using more software in centralized data centers, companies can run networks more cheaply, while fixing and upgrading them more easily. 5G will need this flexibility to work well.

For AT&T, the new approach has already started to help. The company has introduced Samsung equipment based on O-RAN in areas where it had previously been limited to Ericsson gear, AT&T’s Fuetsch said.

Nokia expects to have a full range of O-RAN offerings available in 2021. Some of the final standards aren’t yet set and they need to be completed and tested which will take time, according to Sandro Tavares, global head of marketing.

“O-RAN is supported by more than 20 major operators around the world, so it is pretty clear that there is a strong push for it to happen,” he said. “This is a big move for our industry, and it is clear for the main players that we should not be cutting corners in this process.”

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coronavirus

Ireland tightens Dublin COVID-19 restrictions as cases surge

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The Irish government on Friday (18 September) announced strict new COVID-19 restrictions for the capital Dublin, banning indoor restaurant dining and advising against all non-essential travel, after a surge in cases in recent days. Ireland, which was one of the slowest countries in Europe to emerge from lockdown, has seen average daily case numbers roughly double in the past two weeks and significant increases in those being treated for the virus in hospitals, writes Conor Humphries.

“Here in the capital, despite people’s best efforts over recent weeks, we are in a very dangerous place,” Prime Minister Micheal Martin said in a televised address to the country, announcing the restrictions.

“Without further urgent and decisive action, there is a very real threat that Dublin could return to the worst days of this crisis.” The measures, which include a ban on indoor events, will last for three weeks, he said. Ireland had the 17th highest COVID-19 infection rate out of 31 European countries monitored by the European Centre for Disease Control on Friday, with 57.4 cases per 100,000 people in the past 14 days.

The government reported three deaths from the virus on Friday, bringing the total toll to 1,792. Countries across Europe, including Britain, Greece and Denmark, on Friday announced new restrictions to curb surging coronavirus infections in some of their largest cities. Ireland on Thursday tightened its COVID-19 travel restrictions by imposing quarantines on travellers from major holiday markets Italy and Greece.

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Belarus

Belarus warns EU against inviting Lukashenko's rival to meeting

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The foreign ministry in Belarus said on Saturday (19 September) that it saw the possible participation of opposition politician Sviatlana Tsikhanouskaya in an EU ministerial meeting as an interference in domestic affairs, the Belta state news agency reported, writes Maria Tsvetkova.

Tsikhanouskaya has led the biggest challenge to President Alexander Lukashenko’s 26-year rule in Belarus.

The foreign ministry said it had informed European diplomats about its view.

Russian state news agencies reported earlier that Tsikhanouskaya is expected to take part in a meeting of European foreign ministers next week.

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