2016 could be the first year that European office employment levels surpass the previous peak of 2008, according to Colliers International’s latest research ‘EMEA Offices: Is Flexibility the Future?’.
The report shows that office-based employment levels in the EU have grown by 5 million, representing a 4.3 per cent increase over the last 10 years and surpassing the previous peak of 2008. This may seem low, but taking into account the significant impacts of outsourcing and offshoring, the global financial crisis from 2008 to 2012, and the impact of austerity on both the public and private sectors, the outlook for office employment in the EU is actually a positive one.
The research shows the extent to which outsourcing of services has had a positive impact on certain areas of the EU, including South-Eastern Europe, Central Europe, Central and Eastern Europe and the Baltics, which all reported growth of between six and 15 per cent, albeit off a low base. The report also highlights that the UK & Ireland have seen significant growth in office-based employment in the last 10 years, reporting a 9.8 per cent increase between 2005 and 2015.
This growth has been driven by the ability of these liberal economies to react to change, re-balance and attract private sector investment. It also reflects their more flexible approach to employment, with both contractual and self-employment increasing post global financial crisis in order to help spark an increase in employment. There has also been positive growth in the Nordics for similar reasons, with the tech sector playing a major part in the transformation of these markets.
However, the report clearly shows that there are winners and losers in the EU when it comes to employment growth. Germany has recovered but has been held back by a lack of capacity in the labour force. Whilst, France is in a similar muted growth position, but has been held back further by an inability to increase flexibility into employment. On the other hand, in Western Europe growth has been far more muted, showing only a 1.8 per cent increase in office-based employment. And in Southern Europe, there has been negative office-based jobs growth since 2005, with a decrease of 4.6 per cent.
Specifically, Spain and Italy have been hamstrung by restrictive and inflexible labour laws and both of these major economies, alongside smaller economies of Portugal and Greece have unwanted youth unemployment rates above 40 per cent. The good news however is that, due to regulatory reforms making it easier for firms to operate more flexibly, a turnaround for these Southern European counties is in the offing.
With the ups & downs in developments of economic growth, the concern, it seems, is an erosion of the quality of traditional employment. Following the dip in full-time jobs between 2009 – 2014 and the slack pick up by part-time jobs and temporary contracts, it is anticipated that now, as Europe continues its recovery, that full-time and contractual/part-time employment will grow. Although it won’t come as a surprise to see contractual full-time employment prevail as not only companies seek to maintain flexibility in order to be able to respond to change, but also, on the one hand self-employment of ages over 45 is an increasing trend and on the other, the evolving Millennial workforce likes changes moving jobs within 2-3 year time frame.
When it comes to the office market, while private-sector, office based jobs growth will drive a continual need for dedicated office space, the nature of many office-based jobs points to an increasingly flexible use of space. As a large number of markets look ready for some major space-saving in the foreseeable future, they are turning to share-desking in order to lower space requirements of approximately 10 sqm per workspace. If this space ratio becomes the norm, then almost all markets will be impacted creating on the one hand increased flexibility, while on the other tenants will still be paying for redundant space or space that they wouldn’t be able to immediately sub-let.
Download the report here.