Globalization Benefits for West Europe
The fear of globalization is not only haunting developing nations but also continents like Europe. However with the study of the European labor market the picture of Europe against the backdrop of globalization is quite encouraging. Globalization means increased trade and the burning issues like outsourcing and offshoring instead of job cuts can increase more jobs in the advanced economies such as in West Europe. The European Economic Advisory Group, which comprises of academics from Europe and the Ifo institute in Munich which organizes this group argued in favor of globalization and said that even if globalization means decline in the demand of particular skills but at the same time this phenomenon can clear the rigidities in labor market which destroy jobs. The result of the study by the group indicates that the positive outcomes of globalization far outnumber the negative aspects of globalization.
Even though the group’s statistical data is unfinished it does indicate that globalization will definitely result in long term increase in employment. The report also said that given the results of the study globalization instead of being a curse to employment in Western Europe can in fact be a blessing for the continent. However the thing to worry about according to the study of EEAG is that the gains secured from globalization are most likely to be unevenly distributed in the region. Individuals with higher skills and riches stand to benefit from globalization and individuals with lower skills can turn losers and will have to face tough competition foreign labors as well as immigrants. If nations profit from trade it will also have its side effects in the form of growing inequality.
The European Economic Advisory Group urged to the governments that they should not have policies which strive to maintain equality in employment and wages against the background of competition from abroad. The group also suggested that the government on the contrary should see that the profits gained from globalization are distributed fairly in their nations and the other responsibility which the governments must perform is to see that the sections of society which will otherwise lose in the wake of globalization get their share of the profits secured from globalization. The group was highly critical and even attacked German leadership’s policies that gave higher minimum wages which according to the group would tempt people to opt for unemployment. The higher benefits gained from unemployment will make unemployment attractive to people, the group also added. Instead of such policies the group recommends lessening the impact that would result for individuals who will be doing jobs which are no longer viable in rich nations.
The EEAG also recommends that leaderships should concentrate more on retraining schemes, and compensation for individuals who would be accepting new employment that offer lower wages, as well as support severance compensation for displaced employees. However some past economic studies have found that there is a definite link between loss of employment and globalization and the group argues that such results were incomplete.
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