Globalisation's impact on employment and the EU

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

Globalisation Photo by Soo Ann Woon on Unsplash
Globalisation (photo by Soo Ann Woon)

Globalisation creates job opportunities but can also result in job losses. Managing globalisation 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 38 million jobs in 2019. One in five jobs in the EU depends on exports.

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 7.7 million jobs. Thanks to the EU's single market an additional 1.2 million German jobs depend on exports from other EU countries to non-EU countries. In total, 20% 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.

Globalisation's negative impact on employment

Globalisation 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.

The Covid-19 pandemic has demonstrated the need to move the production of critical sectors and products, such as medication, back to Europe.

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 Globalisation 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 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.

In April 2021 MEPs agreed to update rules so that the fund can be used to help more European workers.

The fund can be used:

1) when more than 200 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

3) to apply for a one-time investment of €22,000 to start your own business or for employee take-overs

4) to benefit from special measures such as a childcare allowance for child carers to access when taking part in training or looking for a job

Since 2007, the fund has spent €687.7 million helping about 170,000 dismissed workers. For example, the fund spent €1.2 million to help 303 dismissed workers in Spain and €1.9m for 559 workers in Belgium.