In this edition of U-talk, Andre from Augsburg in Germany asked:
“What is the European Union doing to prevent more European companies from moving to Asia or other cheap labour regions, taking away the jobs that people in Europe need right now to sustain their families?”
The question was answered by Viviane de Beaufort, Professor and Co-Director of the European Centre for Law and Economics.
She said: “What exactly does one mean by outsourcing? Because people have a lot of preconceived notions about outsourcing, especially in France and in Southern Europe.
“When Lafarge – a French company specialising in building materials – sets up a plant to produce cement in order to build blocks of flats in India, we’re not talking about outsourcing. It’s a question of developing activities, of growth. It does not deprive France or Europe of anything.
“On the contrary, when Renault decides – in order to cut costs – to outsource part of its activities to Eastern Europe, indeed there is a risk of outsourcing which can lead to a drop in production, a drop in turnover and taxes, and it also has an impact on jobs.
“So how to prevent a company facing fiercer and fiercer globalised competition to outsource? What does Europe do on that matter?
“Well, Europe does very little in fact because it is not allowed to act. The policies related to industry, to higher education, to Research and Development are all decided at national level, not at European level.
“The real question is what are the sectors which will be successful in the future? It’s not worth trying to keep low-cost sectors because we are not able to compete with our main competitors.
“Europe has huge assets: political stability, legal framework, standards, education. And we must take advantage of that. We must compete in the bio-technology sector, in the high technology and high added value sector and give up the rest.
“Obviously it can be tough especially when changes have not been anticipated – and it is the governments’ responsibility to plan those changes – and the European dimension has to be taken into account, because it will be easier that way.”
If you would also like to ask a question on U-talk, click on the participate button.