Structural Change, Productivity and Employment in the New EU Member States
AbstractThis paper provides an overview of longer-term structural developments in the new EU Member States from Central and Eastern Europe (NMS). It analyses structural changes in the NMS' economies and patterns of productivity catching-up both at macro level and within the individual industries. With the transformational recession of the early 1990s left behind, the majority of the NMS embarked on a path of rapid economic growth during the past decade. They have experienced an impressive productivity catching-up, both at the macroeconomic level and in the manufacturing industry in particular. Yet in most NMS the growth of labour productivity went hand in hand with declining employment, and even with considerable job losses in the manufacturing industry. The structural changes observed during the past decade brought the NMS' economies nearer to the economic structure observed in the EU-15, but the shifts of labour among individual sectors or industries themselves did not have any marked impact on aggregate productivity growth. Similar to the EU-15, the recent productivity catching-up observed in the NMS resulted overwhelmingly from across-the-board productivity improvements in individual sectors of the economy while employment shifts among sectors had only a negligible effect on aggregate productivity growth. Notwithstanding fast productivity catching-up, the estimated productivity levels indicate that NMS are in this respect still lagging considerably behind the EU 15 economies, implying a huge catching-up potential. The estimated elasticity of employment to production growth is low in all NMS; the recently observed and expected rates of economic growth will in all likelihood not be sufficient for the creation of additional jobs. The required further productivity convergence with the EU-15 may thus be in conflict with the urgently needed employment growth in the NMS; net job creation occurred in just a few services sectors and could not offset the job losses in agriculture and industry. Countries covered Czech Republic, Hungary, Poland, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Bulgaria, Romania Topics Labour and Migration; International Trade and Competitiveness; Industry
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Bibliographic InfoPaper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Research Reports with number 313.
Length: 33 pages including 7 Tables and 11 Figures
Date of creation: Jan 2005
Date of revision:
Publication status: Published as wiiw Research Report
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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