Firms warn Europe on China threat to skilled jobs
(Agencies)
Updated: 2005-07-10 10:07

Europe must ditch inflexible labour laws and promote innovation if it wants to avoid losing skilled jobs to China in coming years, company executives said this weekend.

Long a source of cheap unskilled workers for Western firms, China is rapidly turning into a rival to Europe as a production base to manufacture more sophisticated goods, they told a 3-day conference in the southern French city of Aix-en-Provence.

Firms had a simple answer to Europe's quest to cut jobless queues and boost competitivity in the face of such a rival -- ditch the barriers to business which make China look like an attractive alternative location for skilled manufacturing.

"The difference between China and here is flexibility, overall. The national barriers in Europe are a real hassle to deal with," said James Nicol, chief executive of UK-based engineering firm Tomkins Plc .

"In China, nobody is debating the 35-hour working week, they just want to work. They want to work and they want to earn."

Chinese workers were cheaper to hire than their counterparts in the United States, Europe, or even Mexico, said Nicol. But this was not the only factor which would influence firms.

A large pool of available labour, as well as Chinese workers' keenness to learn new skills, meant China was no longer just the destination of choice for companies looking for unskilled labour, company executives said.

"The Chinese government's goal is not just to be the world's factory floor," Michael Morley, deputy chairman of Edelman Public Relations told the conference.

Nicol said Europe still had a capacity to innovate but was hampered by inflexible labour laws which prevented manufacturers based there from responding quickly to change.

"When you are manufacturing you have got to move quickly. In China and the U.S. you can do that," he said.

"If you look at Europe, it has the ability to innovate, but you when you move to the stage of manufacturing, it is the strictures on labour that are causing problems," he added.

Hank McKinnell, chief executive of Pfizer , the world's biggest drugmaker, said Europe had been an innovator in the past but could not afford to rest on its laurels.

"The European pharmaceutical industry in the 1960s was referred to as the medicine chest of the world. (Today) Europe is losing one of the high growth industries of the 21st century."

Rather than fretting about the European Union constitution, which has been rejected by French and Dutch voters, governments had to focus on getting people back to work, he said.

"Europe doesn't need a new constitution, it needs ... incentives to work, to stay at work, to innovate," McKinnell told the conference which began on Friday.

Falling even a step behind in the race to break new ground could spell the demise of a firm.

"You need to be very flexible and rapid to innovate. If you miss one cycle in technology, you will disappear," said Paul Bell, senior vice president of the Europe, Middle East and Africa operations of personal computer maker Dell.

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