Europe is 'heading for third world status'
By Christopher Hope, Business Correspondent (Filed: 05/09/2005)
Europe risks becoming a "second- or third-world region" within a generation because strict labour laws are preventing companies from restructuring properly, according to the author of a Government-sponsored report out today.
The study "i2010 - Responding to the Challenge" criticises large European countries, particularly France, Germany, Spain and Italy, for not having the courage to reform archaic labour laws.
David Lewin, who co-wrote the study, said that after decades of productivity growth, European countries were falling behind the United States because of a lack of investment in information and communication technology (ICT).
Mr Lewin warned that without more investment in ICT then "Europe will lose the technology and fall behind and become a second- or third-world country within decades".
Companies in Europe had to pursue a policy of "creative destruction" to change the way they do business and learn from the "hire and fire" culture of the US to compete with emerging Asian companies.
Mr Lewin added: "It is all down to employment law. In the US if you are made redundant three or four times that is normal, but in Europe there is a stigma."
The call comes as one of the biggest delegations of British chairmen and chief executives today arrive in China, accompanied by Prime Minister Tony Blair.
The 40-strong group will attend seminars in Beijing later today and tomorrow, followed by sessions in Delhi, India, on Wednesday and Thursday.
Contracts worth around £2billion are due to be signed by British firms and China and India, the Prime Minister's spokesman said yesterday. They include a contract for Airbus planes.
The bosses of some of Britain's biggest companies are attending including Lord Levene, chairman of Lloyd's of London, Terry Hill, chairman of Arup, Mike Salomon, executive director of BHP Billiton and Gerry Murphy, chief executive of Kingfisher. Other attendees include Mervyn Davies, chief executive of Standard Chartered and Martin Sorrell, chief executive of WPP.
The trip comes after the furore about Chinese textiles breaching quotas agreed by the European Commission. Sir Digby Jones, the CBI's director-general, said: "The UK has nothing to fear from free two-way trade and investment and everything to gain. We do not export enough to China or India - only 1pc of our exports at present - this must improve."
telegraph.co.uk |
