And unemployment continues to run rampant. For example, according to the May 2013 numbers from Eurostat, a quarter of Spain’s general population (27%) and, astonishingly, more than half of its under-25 workforce (56%) remained unemployed. Spain’s youth unemployment was topped only by that of Greece, at 62%. At the same time, 55% of European finance executives said their companies have shifted more toward part-time, temporary or contract workers and consultants, largely because of economic jitters. They expected their full-time domestic workforces to grow by only 1.4%, on average.
It’s no surprise, then, that the ability to attract and maintain qualified employees came in second only to profitability among the top internal concerns of European finance executives. At this same time a year ago, only 28% of respondents selected hiring as one of their top three concerns; in our latest survey, it captured the attention of 41% of European respondents. Meanwhile, other internal issues, including concerns with maintaining margins, have subsided modestly from year-ago levels.
Returning to Growth
Striking a more positive note, European companies now appear to be thinking more about their competition and less about the state of the global economy, echoing a trend we found among U.S. respondents. Nearly half of the European respondents selected “price pressure from competitors” as a top-three concern, which is 16 points higher than one year ago. Over the same time period, European concerns about global financial instability subsided.
As their thoughts return to growth, European companies will surely be keeping a closer eye on their immediate neighbors. Even Germany, whose export-driven economy remained buoyant while other EU members were dragged down by the euro crisis and the sovereign debt crisis, may have to rely more on domestic demand to fuel future growth. With China and Russia (among other emerging economies) slowing, the Continent’s largest economy is projected to grow at only 1.4% this year. That’s the same rate at which the recession-scarred United Kingdom is likely to expand, according to IMF estimates.
Overall, economies on the European continent are more reliant on each other than is the case in other regions, our survey shows. Last quarter, only 27% of European respondents said their primary outlet for foreign sales lay outside their own region. This is the smallest percentage among the regions covered by the Global Business Outlook Survey; extraregional sales are the primary target for 35% of African respondents, and for slightly more than 40% of respondents in either Latin America or Asia (excluding Japan).
Crawling out of its longest-ever recession, the euro zone is positioning itself for a gradual rebound, rather than a great leap forward. At least for the next year, our survey suggests, finance executives there hope they will be able to count on their economic partners close to home to make the difficult journey together.