Archive:Exports - direct and indirect effects on employment and labour income

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Data from May 2012. Most recent data: Further Eurostat information, Database.

Between 2000 and 2007 more than two thirds of the embodied employment in European exports was due to manufactured products, while financial and real estate services showed the largest embodied labour income per person employed in exports activities, both in the European Union (EU-27) and in the euro area (EA). At the end of the period (2007), the embodied labour income per person directly or indirectly employed in exports activities was 12 % higher in EA than in EU-27.

During 2000-2007, the labour intensity of exports has dropped in both, EU-27 and EA, however to lesser extend in the EA.

Table 1: Embodied employment in exports by products (thousands of persons) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Figure 1: Annual average rate over the period 2000-2007 of embodied employment in exports by products
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 2: Embodied labour income in exports - EU27 by products (Million EUR) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 3: Embodied labour income in exports - Euro area by products (Million EUR) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 4: Embodied labour income per person employed in export activities-EU27 by product (thousand EUR at current prices) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 5: Embodied labour income per person employed in exports activities - euro area by product (thousand EUR at current prices) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 6: Embodied labour income per person employed in exports activities (thousand EUR) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Figure 2: Embodied labour income per person employed in exports activities (Thousand EUR per person) 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 7: Embodied employment (persons employed per 1 million EUR of exports), 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Table 8: Embodied labour income and embodied value added in exports (Thousand EUR per 1 million EUR of exports); share of embodied income in embodied value added - constant prices of 2000
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Figure 3: Embodied employment and labour income in exports in euro area, 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Figure 4: Embodied employment and labour income in exports in EU-27, 2000-2007
Source: Leontief-type calculations based on Eurostat data (naio_17_agg_60)

Main statistical findings

European exports 2000-2007: direct and indirect effects on employment and labour income in the EU-27 and euro area

Embodied employment in exports

During the period 2000 to 2007 the production of exported manufactured products accounted annually on average for 68 % of the embodied employment in EU-27 exports.

This annual average share rises to 71 % if the EA countries are considered. Trade, hotels, restaurants and transport services amounted to nearly 20 % of the embodied employment and financial and real-estate services to around 9 % for the EU-27; the proportions were 18 % and 7 %, respectively, for the EA countries. In 2007, manufactured products exported by the EU-27 employed directly and indirectly nearly 17 million persons, while trade, hotels, restaurants and transport services accounted for 5.6 million persons employed. The EA required fewer persons for the production of its manufactured exports (around 16 million persons) and the exports of trade, hotels, restaurants and transport services (4.8 million persons).

The total number of persons employed by firms engaged in exporting activities (directly and indirectly) in the EA grew by an annual average rate of 2.6 % from 2000 to 2007 while for the EU-27 the figure was only 1.6 %. Financial and real-estate services contributed most to the increase in embodied employment in exports in both the EA and the EU-27 (6.4 % and 6.0 % of annual average growth 2000-2007, respectively). They were followed by trade, hotels, restaurants and transport services with annual average growth rates of 4.8 % in the EA and 3.7 % in the EU-27. During the same period, there were significant reductions in embodied employment in exported agricultural products (-2.1 %) and other services including activities of households (-1.1 %) for the EU-27; for the EA, these figures were still slightly positive, +0.6 % and +0.3 %, respectively.

An overall growth of the per person income

The embodied labour income in exports of both the EU-27 and the EA increased more rapidly than the number of persons needed to produce them.

The annual average growth rates of the embodied labour income in the exports of the EU-27 and the EA amounted to 2.3 % and 5.2 %, respectively, during the period 2000-2007. It is relevant to note that these annual average growth rates are higher than for the number of persons directly and indirectly employed for the production of exports (2.6 % for the EA and 1.6 % for the EU-27), thus implicating an overall growth of the per person income.

Financial and real-estate services exports contributed most to the increase in embodied labour income in both the EA and the EU-27 (9.1 % and 6.3 % of annual average growth, respectively), being followed by trade, hotels, restaurants and transport services with annual average growth rates of 7.2 % in the EA and 3.7 % in the EU-27. There is a reduction of embodied labour income in exports of agricultural products (-0.7 %) for the EU-27 but for the EA, a significant respective positive annual average growth rate 2000-2007 of 4.3 % is observed. It is also noteworthy that the exports of other services had an annual growth in the EA of 2.8 %, still positive but low. In the EU-27, it was merely a +0.3 % annual increase between 2000 and 2007.

During the period 2000-2007, the production of exported manufactured goods accounted for 68 % of the total embodied labour income in producing EU-27 exports, against 74 % in the EA countries. Trade, hotels, restaurants and transport services amounted to 18 % and financial and real-estate services to 11 % for the EU-27, these figures being 16 % and 8 %, respectively, for the EA countries.

In 2007, EU-27 manufactured exports generated directly and indirectly nearly EUR 453 billion, the figure for trade, hotels, restaurants and transport services being EUR 134 billion. The EA recorded higher values for manufactured exports (EUR 491 billion) and agricultural products (nearly EUR 7 billion).

Embodied labour income in financial and real-estate services

Persons directly or indirectly employed in exports of financial and real-estate services earned most in both the EU-27 and EA

In 2007, each employee contributing to exported financial activities and real-estate services was paid on average EUR 32 560, in the EU-27, while it was EUR 33 410 in the EA.

Exports of agricultural products and some services such as trade, hotels, restaurants, construction and transport showed lower embodied labour income per person employed in exports activities, both in the EA and the EU-27. Exports of agricultural products generated significantly less labour income per person employed than the other sectors of the economy. In 2007, just over EUR 8000 was paid on average to employees working for the production of exported agriculture products in the EU-27 (Table 4). However, the figure was nearly EUR 12000 in the EA countries (Table 5). The difference between the two economic areas with regard to the embodied labour income per person is much larger for agriculture products than for financial and real-estate services.

In the EU-27, manufactured exported products are the second largest generator of labour income per person in the EA. In 2007, employees working for firms engaged in the exports of manufactured products were paid on average EUR 31 180, while in the EU-27 the average income was just under EUR 27000. By contrast, export services other than finance, real estate, trade, hotels, restaurants, transport, construction and trade were the second most important generator of labour income per person in the EU-27 (EUR 28060).

Embodied labour income per person employed in exports activities

Embodied labour income per person employed in exports activities was 12 % higher in the EA than in the EU-27

In 2007, every one million EUR of EA exports, expressed in constant prices of the year 2000, created employment for 15.3 persons (Table 7). Each of these employees was remunerated on average EUR 29370. The equivalent figure for the EU-27 exports was 18.5 persons employed, which were remunerated on average EUR 26 290 per person. Consequently, the EA countries remunerated the embodied labour income per person employed in exports activities 12 % more than the EU-27 did in 2007. This difference has been continuously growing since 2003 (see Table 6).

During the period 2000-2007, the embodied labour income per person employed in exports activities has increased continuously in the EA at an annual average rate of 2.4 %, while in the EU-27 there were two downturns in 2003 and from 2005 onwards (Figure 2) that resulted in an annual average growth rate of only 0.7 %.

Labour intensity of exports in the EA and EU-27

The EA and the EU-27 reduced the labour intensity of their exports in terms of persons employed.

The EU-27 employed 21 persons per one million EUR of exports in 2000, falling to 18.5 in 2007; in the EA, the equivalent decline was from 16.9 to 15.3 persons employed. In 2007, the exports of the EA involved 10 % fewer persons per one million EUR (in constant prices of 2000) than in 2000, which means an annual average fall of 1.5 %. The EU-27 employed in 2007 about 12 % fewer persons than in 2000 per one million EUR of exports, resulting in a higher annual average fall (-1.8 %).

Labour intensity of exports in terms of embodied labour income

The labour intensity of exports in terms of embodied labour income per one million EUR of EA exports grew by 0.9 % on annual average while that of the EU-27 decreased by 1.2 % during the period 2000-2007.

In 2007, per one million EUR of EA exports (constant prices of the year 2000), the enterprises directly and indirectly involved in it had to pay around EUR 448 000 of annual labour income which means an annual average growth rate of 0.9 % from the year 2000. On the other hand, the embodied labour income in EU-27 exports fell from 527 660 in 2000 to 485 290 in 2007, which meant a decrease of the labour intensity of exports by 8 % during the same period and an annual average fall of 1.2 %.

During this period, the labour income share of the gross value added has remained stable in the EA countries while it has decreased from around 62 % to 50 % in the EU-27.

The decline of labour intensity of EU-27 exports

The decline of labour intensity of EU-27 exports during 2000-2007 was followed by a similar decline of the embodied labour income.

It is interesting to see (Figures 3 and 4) how the embodied labour income in exports associated with the embodied employment in exports in the EA grew between 2000 and 2003 and then remained more or less stable during the period 2003-2007. Notice, however, that the number of persons needed for the production of exported goods and services was decreasing continuously during the whole period. Consequently, there has been a reduction in the number of persons employed in relation to the EA exports but the fall of the embodied labour income of those employees has been less pronounced. Figure 4 shows the opposite for the EU-27. The reductions in the labour intensity of EU-27 exports during 2000-2007 have been accompanied by similar reductions in the labour income.

Data sources and availability

This statistical article employs various data sets resulting from the European System of National and Regional Accounts (ESA95) transmission program. Under this regulation, EU Member States transmit to Eurostat Supply and Use Tables (SUT, annually) and Input-Output Tables (IOT, 5 yearly) up to 36 months after the end of the reference period.

This article defines four indicators:

Similarly the embodied value-added in exports is defined as the value-added generated by the firms directly engaged in exporting activities (direct effects) including also the value-added generated by upstream industries (indirect effects).

Eurostat, in association with the European Commission’s Joint Research Centre at the Institute for Prospective and Technological Studies in Seville, has since 2011 compiled European consolidated tables: Supply, Use and Input-Output tables at basic prices. The input-output Tables at European level forms the basis for analysis and models in macroeconomics.

As a standard input-output technique, the European Input-Output Tables were used for the calculation of the results of applying the Leontief quantity model to employment and labour income (compensation of employees). Firstly, a domestic input coefficient matrix (A) was calculated for each homogenous branch of activity showing the direct input requirements for the production of one unit of output. Subsequently, the Leontief inverse matrix (the inverse of I — A, being I, the identity matrix) was computed to obtain the so called matrix of output multipliers. Next, the Leontief inverse matrix was post-multiplied by a column vector of exports to calculate the total output embodied in those exports. Finally, output coefficients of employment and labour income premultiplied the above embodied output values to obtain the employment and labour income embodied in exports.

A Supply table shows the supply of goods and services by product and type of supplier at basic prices, while the Use table shows the use of goods and services by product and type of use at purchaser prices. The Member States tables form the point of departure for a sequence of adjustments leading to a consolidated data set for the aggregated EU-27 and the EA. The data is based on the CPA2002 and NACE Rev 1.1 classification. Due to confidentiality reasons, the SUTs at basic prices are published only for the aggregated EU-27 and the EA. For more technical details, the reader may download a technical report published at Eurostat.

The aggregated SUTs were transformed into symmetric product-by-product Input-Output Tables (IOTs) using the so-called industry technology assumption (see Model B, Eurostat Manual of Supply, Use and Input-Output Tables, p.349). The time period covered ranges from 2000 to 2007. The tables come with two breakdowns: 60*60 and 6*6 product groups. The calculations were done using the latter breakdown.

Implementation of the new classification NACE Rev 2 and CPA 2008 in the National Accounts domain started in September 2011. In the area of SUTs, the first year compiled in the new classification will be the year 2008. Eurostat will compile for each Member State SUTs at basic prices using the NACE Rev 2 classification and will produce European tables by end of 2012.

The reader should know that whenever the text refers to EA exports, they include deliveries to non-EU countries and to EU countries that do not have the euro currency.

Finally, for the sake of clarification, the services denoted as ‘other services including activity of households’ include divisions 71 to 74 and sections L to P of the NACE rev1.1 classification.

Context

Between 2000 and 2007 more than two thirds of the embodied employment in European exports was due to manufactured products, while financial and real estate services showed the largest embodied labour income per person employed in exports activities1, both in the European Union (EU-27) and in the euro area. At the end of the period (2007), the embodied labour income per person directly or indirectly employed in exports activities was 12 % higher in EA than in EU-27.

During 2000-2007, the labour intensity of exports has dropped in both, EU-27 and EA, however to lesser extend in the EA.

Further Eurostat information

Publications

CO₂ emissions induced by EU's final use of products are estimated to be 9 tonnes per capita - Statistics in focus 22/2011
European exports 2000-2007: direct and indirect effects on employment and labour income in the EU-27 and euro area - Statistics in focus 36/2012

Database

ESA95 Supply Use Input and Output tables, see:

Supply, use and Input-output tables (naio)

Supply, use and Input-output tables - EU aggregates (naio_agg)

Tables at current prices - 60 branches (NACE Rev. 2) (naio_agg_60_r2) (SUIO tables: see Excel files)

Other information

Regulation 2223/1996 of 25 June 1996 on the European system of national and regional accounts in the Community