EAPM Report to WFPMA - April 2008

About Europe

Following the two devastating World Wars of the first half of the 20th century, a number of European leaders in the late 1940s became convinced that the only way to establish a lasting peace was to unite the two chief belligerent nations - France and Germany - both economically and politically. In 1950, the French Foreign Minister Robert Schuman proposed an eventual union of all Europe, the first step of which would be the integration of the coal and steel industries of Western Europe.

The following year the European Coal and Steel Community (ECSC) was set up when six members, Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands, signed the Treaty of Paris. The ECSC was so successful that within a few years the decision was made to integrate other parts of the countries' economies.

In 1957 the Treaties of Rome created the European Economic Community (EEC) and the European Atomic Energy Community (Euratom), and the six member states undertook to eliminate trade barriers among themselves by forming a common market. In 1967 the institutions of all three communities were formally merged into the European Community (EC), creating a single Commission, a single Council of Ministers and the European Parliament. Members of the European Parliament were initially selected by national parliaments, but in 1979 the first direct elections were undertaken and they have been held every five years since.

In 1973 the first enlargement of the EC took place with the addition of Denmark, Ireland and the United Kingdom. The 1980s saw further membership expansion with Greece joining in 1981 and Spain and Portugal in 1986. The 1992 Treaty of Maastricht laid the basis for further forms of cooperation in foreign and defence policy, in judicial and internal affairs and in the creation of an economic and monetary union - including a common currency. This further integration created the European Union (EU).

In 1995 Austria, Finland and Sweden joined the EU, raising the membership total to 15. A new currency, the euro, was launched in world money markets on 1 January 1999; it became the unit of exchange for all of the EU states except the United Kingdom, Sweden and Denmark. In 2002 citizens of the 12 euro-area countries began using the euro banknotes and coins. Ten new countries joined the EU in 2004 - Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia - and in 2007 Bulgaria and Romania joined, bringing the current membership to 27. In order to ensure that the EU could continue to function efficiently with an expanded membership, the Treaty of Nice (in force as of 1 February 2003) set out rules streamlining the size and procedures of EU institutions.

An effort to establish an EU constitution, begun in October 2004, failed to attain unanimous ratification. A new effort, undertaken in June 2007, calls for the creation of an Intergovernmental Conference to form a political agreement, known as the Reform Treaty, which is to serve as a constitution. Unlike the constitution, however, the Reform Treaty would amend existing treaties rather than replace them.

Member states

Twenty seven countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK; note - Canary Islands (Spain), Azores and Madeira (Portugal), French Guiana, Guadeloupe, Martinique, and Reunion (France) are sometimes listed separately even though they are legally a part of Spain, Portugal, and France;

NB : Candidate countries: Croatia, Macedonia, Turkey

A long way to a global constitution

Based on a series of treaties,numerous dates are now part of the European history:

• the Treaty of Paris, which set up the European Coal and Steel Community (ECSC) in 1951;
• the Treaties of Rome, which set up the European Economic Community (EEC) and the European Atomic Energy Community (Euratom) in 1957;
• the Single European Act in 1986 and the Treaty on European Union (Maastricht) in 1992;
• the Treaty of Amsterdam in 1997; and the Treaty of Nice in 2003; note - a new draft Constitutional Treaty, signed on 29 October 2004 in Rome, gave member states two years for ratification either by parliamentary vote or national referendum before it was scheduled to take effect on 1 November 2006;
• defeat in French and Dutch referenda in May-June 2005 dealt a severe setback to the ratification process; in June 2007, the European Council agreed on a clear and concise mandate for an Intergovernmental Conference to form a political agreement and put it into legal form;
• this agreement, known as the Reform Treaty, is to serve as a constitution and was presented to the European Council in October 2007, in order to begin the ratification process.This process is currently being operated, and it seems that this new way to agree on a lighter formula suits countries that rejected the previous one (such as France).

Economic overview

Internally, the EU is attempting to lower trade barriers, adopt a common currency and move toward convergence of living standards. Internationally, the EU aims to bolster Europe's trade position and its political and economic power.

Because of the great differences in per capita income among member states (from $7,000 to $69,000) and historic national animosities, the EU faces difficulties in devising and enforcing common policies.  For example, since 2003 Germany and France have flouted the member states' treaty obligation to prevent their national budgets from running more than a 3% deficit. In 2004 and 2007 the EU admitted 10 and two countries, respectively, that are, in general, less advanced technologically and economically than the other 15.

Eleven established EU member states introduced the euro as their common currency on 1 January 1999 (Greece did so two years later), but the UK, Sweden and Denmark chose not to participate. Of the 12 most recent member states, only Slovenia (1 January 2007) and Cyprus and Malta (1 January 2008) have adopted the euro; the remaining nine are legally required to adopt the currency upon meeting the EU's fiscal and monetary convergence criteria.

Transnational issues

As a political union, the EU has no border disputes with neighboring countries, but Estonia has no land boundary agreements with Russia, Slovenia disputes its land and maritime boundaries with Croatia, and Spain has territorial and maritime disputes with Morocco and with the UK over Gibraltar.

The EU has set up a Schengen area - consisting of 22 EU member states that have signed the convention implementing the Schengen agreements or ‘acquis’ (1985 and 1990) on the free movement of persons and the harmonisation of border controls in Europe

These agreements became incorporated into EU law with the implementation of the 1997 Treaty of Amsterdam on 1 May 1999; in addition, non-EU states Iceland and Norway (as part of the Nordic Union) have been included in the Schengen area since 1996 (full members in 2001), bringing the total current membership to 24.

The UK (since 2000) and Ireland (since 2002) take part in only some aspects of the Schengen area, especially with respect to police and criminal matters; nine of the 12 new member states that joined the EU in 2004 joined Schengen on 21 December 2007.

Of the three remaining EU states, Cyprus is expected to join by 2009, while Romania and Bulgaria continue to enhance their border security systems.

The hit parade of growth (estimation for 2007)

Euro area GDP up by 0.4% and EU27 GDP up by 0.5%

(which means +2.2% and +2.5% respectively compared with the fourth quarter of 2006)

Euro area (EA13)1 GDP grew by 0.4% and EU271 GDP by 0.5% in the fourth quarter of 2007 compared with the previous quarter, according to second estimates from Eurostat, the Statistical Office of the European Communities. In the third quarter of 2007 growth rates were +0.7% in the euro area and +0.8% in the EU27.

In comparison with the same quarter of the previous year, seasonally adjusted GDP grew in the fourth quarter of 2007 by 2.2% in the euro area and by 2.5% in the EU27, after +2.7% and +2.9% respectively in the previous quarter.

In the fourth quarter of 2007 and among the Member States for which seasonally adjusted GDP data are available, Slovakia (+3.3%) recorded the highest growth rate compared with the previous quarter, followed by Poland (+2.0%) and the Czech Republic (+1.7%).

Private consumption static, growth in investment and exports

In the fourth quarter of 2007, household final consumption expenditure decreased by 0.1% in the euro area and increased by 0.1% in the EU27 (after +0.5% and +0.6% in the previous quarter).  Investment increased by 0.8% in the euro area and by 1.2% in the EU27 (after +1.1% and +1.4%). Exports rose by 0.6% in the euro area and by 0.9% in the EU27 (after +2.0% in both zones). Imports decreased by 0.3% in the euro area and by 0.1% in the EU27 (after +2.5% and +3.0%). (US GDP up by 0.1%, Japanese GDP up by 0.9% )

Among the main partners of the EU, GDP grew by 0.1% in the US in the fourth quarter of 2007 (after +1.2% in the previous quarter). In Japan GDP increased by 0.9% in the fourth quarter of 2007 (+0.3% in the previous quarter).  Compared with the fourth quarter of 2006, GDP rose by 2.5% in the US (+2.8% in the previous quarter) and by 1.8% in Japan (+1.9% in the previous quarter).  In 2007 GDP grew by 2.6% in the euro area and by 2.9% in the EU27. Over the whole year 2007, GDP grew by 2.6% in the euro area and by 2.9% in the EU27, compared to +2.8% and +3.1% respectively for 2006.  For comparison,  over the whole year 2007, GDP grew by 2.2% in the US (+2.9% in 2006) and by 2.1% in Japan (+2.4% in 2006).

Unemployment

Euro area unemployment is stable at 7.1%, and EU27 went down to 6.7%

The euro area1 (EA15) seasonally-adjusted unemployment rate2 stood at 7.1% in February 2008, unchanged compared with January 3. It was 7.6% in February 2007. The EU271 unemployment rate was 6.7% in February 2008, compared with 6.8% on January 3. It was 7.4% in February 2007.

Eurostat estimates that 15.970 million men and women in the EU27, of which 10.909 million in the euro area were unemployed in February 2008. Compared with January 2008, the number of people unemployed decreased by 130,000 and 59,000 respectively. Compared with February 2007, unemployment was down by 1.5 million in the EU27 and by 0.7 million in the euro area.

These figures are published by Eurostat, the Statistical Office of the European Communities.

Among the Member States, the lowest unemployment rate was registered in the Netherlands (2.7%) and the highest in Slovakia (9.9%).

Over the last year, 22 Member States recorded a fall in their unemployment rate, four an increase and one remained stable. The largest falls were observed in Poland (10.8% to 8.0%), Bulgaria (7.7% to 6.0%) and Slovakia (11.5% to 9.9%), and the highest increase in Spain (8.1% to 9.0%).

The unemployment rate for males fell from 6.7% to 6.3% between February 2007 and February 2008 in the euro area and from 6.8% to 6.2% in the EU27. The female unemployment rate declined from 8.7% to 8.0% in the euro area and from 8.1% to 7.3% in the EU27.

In February 2008, the youth unemployment rate (under-25s) was 14.4% in the euro area and 14.6% in the EU27. In February 2007 it was 15.0% and 15.8% respectively. The lowest rates were observed in the Netherlands (5.1%) and Austria (7.7%), and the highest in Greece and Italy (both 21.8% in the fourth quarter 2007).  For comparison, in February 2008, the unemployment rate was 4.8% in the USA and 3.9% in Japan.

Labour costs

Euro area labour costs rose by 2.7% and EU27 up by 3.5%.

Total hourly labour costs in the euro area1 (EA13) rose by 2.7% in nominal terms in the year up to the fourth quarter of 2007, compared with 2.5% for the previous quarter2. In the EU271, the annual rise was 3.5% up to the fourth quarter of 2007, compared with 3.7% for the previous quarter2.

The two main components of labour costs are wages and salaries and non-wage costs. In the euro area, wages and salaries grew by 2.9% in the year up to the fourth quarter of 2007, and non-wage costs by 2.2%, compared with 2.6% and 2.3% respectively for the third quarter of 2007. In the EU27, wages and salaries rose by 3.7% and the non-wage component by 2.9%. For the previous quarter the corresponding rates were 3.9% and 3.2%.

A breakdown by economic activity shows that in the euro area hourly labour costs rose at an annual rate of 2.8% in industry, 3.7% in construction and 2.5% in services up to the fourth quarter of 2007. In the EU27, labour costs grew by 3.7% in industry, 5.3% in construction and 3.2% in services.

Among the Member States for which data are available for the fourth quarter of 2007 the smallest annual increases in hourly labour costs were observed in Luxembourg (1.0%) and Germany (1.5%). The highest annual rises were registered in Latvia (30.1%), Romania (21.6%), Estonia (20.7%) and Lithuania (20.5%).

Annual growth in the wages and salaries component ranged from 2.0% in Germany to 30.6% in Latvia. The range for non-wage costs was from -0.5% in Slovenia to 28.5% in Latvia.

These figures come from Eurostat, the Statistical Office of the European Communities

Population and age pyramid

The evolution of the EU’s population is part of a wider trend, as all parts of the world will witness demographic ageing over the next century. Nevertheless, while the population of neighbouring regions in Europe, Africa and the Middle East will start to age, they will continue to grow, as will the population of the United States.

Despite its somewhat faster growth in recent years, the EU’s population is developing at a relatively slow pace when compared with other world regions (10). Between 1960 and 2005 the world’s population more than doubled, rising from 3 024 million inhabitants to 6 465 million. During the same period, the population of the EU-25 rose by only 22.6 % to 461 million inhabitants, which was equivalent to 7.1 % of the world total.

The fastest expansion in world population during the last 45 years was reported in the developing world, in particular, Africa, Latin America and parts of Asia. The number of inhabitants in each of India (1 103 million) and China (1 316million) was over a billion people, and together these two countries represented more than one third (37.4 %) of the world's population in 2005.

According to United Nations’ forecasts, the pace at which the world’s population will increase in the coming decades is expected to slow in many regions. The proportion of the world’s population living in more developed regions including the EU-25, Japan, the Russian Federation and the United States will fall between 2000 and 2050 from 19.6 % to 13.6 %. Less developed regions of the world, including Africa and Latin America are expected to account for the majority of the world’s population growth in the next 45 years.

Global population by EU country:

%age of male/female population by age:

EAPM News

Board rotations

In June 2007, during the Vienna EAPM Conference, The EAPM Secretariat has switched from Germany to France, and the EAPM Presidency from Ireland to Austria. Both Vice-president and treasurer remain the same.

The composition of the board is currently the following :

President : Rudolf THURNER (Austria)

Vice-President : Pieter HAEN (Netherlands)

Secretary General : Pierre-Yves POULAIN (France)

Treasurer : Martin ZUBER (Switzerland)

New joiners and applications

EAPM received a new application in 2007 from the “HR Management Club” of Romania. After a presentation to the Executive committee and the Delegates assembly Romania has begun a two years probation period.  At the end of this period, the ExCo will examine the situation to see if they are mature enough to become a full member.  The same procedure applied to Russia, which association is ending its probation period in 2008.

Some other countries, such as Serbia, are being  ‘coached’ by another member to ensure a certain level of maturity before they can apply formally, while other eastern countries are in touch with the EAPM as well, even though they don’t seem to match membership criteria such as size and length of existence.

The Executive Committee has also admitted  the HR Section of the EU Commission as a corresponding member, and been approached by another association in Belgium.

Events

The 23rd EAPM conference was held in Vienna from 20-22 June 2007 with the theme “A United Europe – A United Labour Market?”  Speakers from more than 17 different European countries addressed  three main areas: ‘Labour market’, ‘Administration and economy’ and ‘Employment at 50+’.   Whereas EAPM was hoping for a high number of participants from all over Europe, the numbers were quite disappointing, despite the quality of the debates.  Focus is now on the next conference that will take place in June 2009 in the Netherlands, in The Hague.

Ongoing projects

In October 2006 the EAPM launched a project on ‘Professionalisation of HRM in Europe’. EAPM and the Boston Consulting Group partnered for this project and BCG interviewed more than 100 HR and non-HR VPs and senior HR managers. A web survey was conducted in 27 countries which delivered more than 1,350 answers.  The study has been presented at the national conferences of most of the EAPM’s member associations and of course at the EAPM congress in Vienna. The project is the first of its kind and as a result the EAPM has substantially strengthened its reputation as “the HR professional body in Europe”.

This survey was duplicated worldwide with other continental federations belonging to WFPMA and these results were presented at the World HR Congress in London this month.

It is planned to follow up the European study in some way towards the end of 2008.

EAPM has also rebuilt its website. After discussing opportunities of using collaborative tools to better connect its local members, 2008 efforts should enhance online activities with permanent updated content and newletters. 

On top of that, EAPM is moving forward in its relations with EC institutions and key people, in order to be recognised as the unique voice of the HR function in the existing and future Europe.

The Executive Committee will next meet in Moscow in January 2009.