In recent months, European governments have moved to combat the region's debt crisis with what often seem like savage budget cuts at national, local, and township levels.
The cuts, especially in the UK, are likely to have implications for all sectors of the economy and particularly for high-tech equipment manufacturers, as governments -- which have in recent years boosted spending to spark growth -- curb expenditure and hiring.
Almost all 27 EU nations have plans to curb spending and reduce debts to contain a financial crisis that has threatened Europe’s currency union. Deficits measures introduced to deal with the aftermath of the financial crisis include social and military spending cuts as well as tax increases. (See Portugal fears more budget cuts may be required: Minister and Europe budget cutters outpace U.S.)
Some of these cuts will pinch the high-tech sector hard. Defense equipment and component suppliers are likely to feel the impact in cutbacks to future orders. Europe, which has championed efforts to reduce the impact of pollution on the environment, is canceling subsidies, driving up prices, and tamping down on demand. Suppliers of wind and photovoltaic equipment are likely to see reduced demand as a result of subsidy cutbacks in Spain and Greece. (See European Renewables Industry Staggered First by Recession, Now Budget Cuts.)
Jose Maria Barroso, the president of the European Union, summed up the prevailing sentiment when he noted that governments could not abandon current efforts to reduce swelling debt and deficit because there is now "an emergency situation from a financial point of view.” What does this mean for Europe? In its largest economies, Germany, France, and United Kingdom, the belts are being pulled tighter while the smaller countries are implementing severe austerity measures.
In the UK, Chancellor George Osborne plans to pare £81 billion from the budget. This will significantly hurt recruitment and equipment purchase for the police, military, welfare, and healthcare departments. One report said as many as "a million public sector jobs are to disappear, almost all ministries will see drastic budget reductions, and even the Queen will have to become more parsimonious."
Don't get comfy on the other side of the Atlantic either: The Republican victory in the midterm elections could also bring budget cuts in the United States.
In the last week, almost all EU governments have been slashing their budget deficits in order to prop up stock markets, blunt attacks on the euro and the pound and discourage the kind of speculation on sovereign, or national, debt which almost drove Greece to the wall.
The cuts are supposed to reassure the financial markets that European governments take their whacking deficits and gargantuan accumulated debts seriously.
The European Union's 27 governments have a total accumulated debt of nearly 80 per cent of the union's annual economy – about €9.5 trillion. Their projected total budget shortfall this year is 5.6 per cent of GDP – or about €600bn.
Some countries are much naughtier than others. Greece, after three rounds of cuts, has reduced its projected deficit this year to 4 per cent of GDP – but its accumulated deficit is 125 per cent of its annual income.
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European are so used to live with good social benefits. Budget cuts might have negative effect on spending for short term. But for long term, it is good way to go. Obama's think tank member Lawrence Summers proved welfare generosity can actually hurt the economy in his PhD dissertation when he was a student at Harvard. The government might be able to stimulate the economy with extra budget.
I think you're right about the government staying out of the concept as for the layers and layers of red tape. On the other hand, I wonder if it wouldn't be useful to standardize the concept in some way.
I agree, enlightened companies is what is needed in order to come up with good, practical solutions.
Half of the stuff may happen only in dreams but what would life is if not a dream?
“Nothing happens unless first a dream.”- Carl Sandburg (1878-1967) American journalist, film critic, poet, historian, novelist.
Last month, the New York Times published this article alerting Americans planning to travel to Europe and stating that the European countries set at possible terrorist attacks were the UK, France and Germany, which in my opinion, can't be generalized as the whole Europe. I don't appreciate generalizations as a whole. It would be different if we were discussing about possible attacks in such and such countries in Europe. Now, as a journalist, let me tell you that the press has responsibility here, too. If there is an American planning to travel to any Scandinavian country why should he experience unnecessary fear and be terrorized by the idea of dying in the middle of a terrorist attack?
The same week, abc.net.au reported that the targets were likely to be tourist attractions and transport hubs in Germany, France and Britain. Again, far from being Europe as a whole. I am not saying this issue is not important. I am only stating the fact that to be able to speak about a general red alert in Europe more than three nations should be involved. In my opinion, news should be reported in a way that they don't confuse and feed the reader with fear or lead to more general panic than what they should. Someone going on a skiing trip to the Finnish Lapland, high up in the north and in one of the most peaceful places on the planet, shouldn't be afraid of dying during a possible terrorist attack being far away on the other side of the continent having some deserved time off.
Lufthansa also warned American tourism. Thinking about it, Germany, Britain and France are three of the major destinations for Americans. By rolling on a terrorist alert the economy of four major countries (US, UK. FR, GER) in the world is severely affected. What would it happen if these four countries enter in a war? WWIII? What memories the history of these countries bring to your mind? And yet, we shouldn't generalize.
Back to the military budget, those countries which have never been and will never be a target for terrorist attacks could safely reduce their military budget. So, to answer to your question, according to my perspective the need and understanding of the military budget in European countries is and has to be completely different from that of the US.
In the same way, even within Europe the need and understanding is and has to be different if we consider the countries in question, UK, FR and GER,and, for instance, the Scandinavian and northern countries which have a completely different background in history, past and present .
This time next week I will be writing in France. Hopefully, I will be able to report something clear from the very center of the matter.
Did I ever tell you the proposal was practical(given current Govt Rules and Regulations )??
Thats the problem with Dreamers.We first dream up a world we would like to live in and then wonder whether or not if its practical!!!
In my opinion,The Govt.should stay out of this concept completely(looking at their past track records of just adding unneccesary layers and layers of red tape to the whole process).
Companies have to come up with some form of arrangement themselves and the most enlightened companies(who treat their employees more like Valuable assets) rather than commodities which can be used,abused and thrown aside at will;Will Benefit enormously with lower rates of Employee attrition and higher Employee satisfaction and of course that also results in Better work output.
Yes,Yes I know half of this stuff happens only in Dreams...But then we can always dream on,Can't we?
Here you have had another idea which could help, indeed, in the proposal of shared, part-time positions: "If these professionals go to their employer and tell them that please hire someone else on a part-time basis (and reduce my salary and hours) it would be an absolute gamechanger for sure." Now, how can this be achieved? Would there be a need for a certain kind of campaign offering certain benefits to the employees willing to submit to the idea of a shared, part-time position? Should the idea be proposed by the government to the companies and then to the employees?
The example you gave of the two women sharing a position in a company in the San Francisco Bay Area comes to show that this initiative can be possible given the right circumstances, which could help not only unemployment but also to keep the budget of the companies and the whole situation in Europe, as you also have pointed it out.
I wonder how the idea could be jumpstarted in order to reach the right mindsets who would be able to make a change.
Exactly! And let me emphasize here what you said "So maybe what is really needed during these economic times is a willingness to take a different perspective that would come up with new solutions for the shortfall rather than the usual knee jerk response of cutting costs by cutting jobs and departments altogether."
If there would be such a company willing to jump out of the box and try something revolutionary which could, for benefit of all, help not only the economy of the company but also lowering the unemployment rate in the country, who knows how many beneficiaries there could be? New solutions and a new way of thinking is that could possibly help some European countries which are fighting to keep their economy as stable as possible, fighting cuts and all what comes along. What could it be done as a solution instead of cutting jobs and at the same time keeping the same companie's budget? Would employees be willing to reduce work hours in order to give space to a shared position gaining in free time to use for their own projects, families or leisure activities which are always postponed due to the lack of time and energy after long working hours? Could the CEOs see a benefit out of this, too?
I agree with you 100% that companies are motivated solely by their own interests. The reason why some are willing to split jobs is because they get the skills, experience, and talents of people who otherwise may be forced to leave because they need a lighter workload. Also they are likely to get more out of 2 people doing one full-time job than one doing it -- for no more money -- because the two will have more energy and so be more productive. In truth, not every hour of an employee's weekly 40 is spent as productively as possible; there is some down time that must be figured into that. But if two are working 20 hours, there would be far less downtime. Plus the employees would feel loyal to a company that is willing to work with their schedule, and company loyalty also translates into better productivity as a result of improved morale. So there are compelling reasons for a company to consider such an option. Do I really believe that means it's going to happen, then? Honestly, no. Not because it doesn't make sense from a business point of view -- it does -- but because few managers are really capable of breaking out of traditional patterns in thinking about job definitions. If a job as always been classified as done by one person for 40 hours a week, it will likely stay defined as such.
I also agree with you that accumulating more debt is certainly not going to solve the problem. Definitely, if someone has, say $50,000 in credit card debt, that individual has to do whatever is possible to diminish the debt, including making lifestyle changes to spend less. However, sometimes people cut in one area while not really cutting the fat out.
For example, I know a family that is actually well off because they received their house as a gift and so have no mortgage. However, they still have property taxes to pay and send their two young children to very high priced schools and very high priced camps. So the wife -- who doesn't work -- decided to save money by not ordering hot lunch for her son at school. While it seems like a smart move because she would save $500 a year, she still does have to provide his lunch from home, so it is not a complete savings. Also I really don't get it because on any day the kids are off from school, she takes them out for pizza, and she goes out to lunch regularly, as does her husband. Dinner continues to come from takeout,. And she continues to have her groceries delivered at a cost of at least $5, though she lives 2 blocks away from the store, and to have weekly manicures. Did I mention she doesn't work?
Any way, the point of all this is that people point to the need to make budget cuts sometimes to justify cuts that make very little difference in the overall picture. That is analogous to the queen's decision to cut the holiday party (which only takes place every other year) to save the 50,000 pounds that come out of her income. Her income is several million pounds ayear.
The new government rules and regulations may prove to be a double-edged sword: achieving some positive goals but costing organizations a great amount of money and work and, perhaps, lost sales as well.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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