Office-based employment on the rise
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% increase over the last ten 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 southeastern Europe, central Europe, central and eastern Europe and the Baltics, which all reported growth of between 6 and 15%, albeit off a low base. The report also highlights that the UK and Ireland have seen significant growth in office-based employment in the last ten years, reporting a 9.8% 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% increase in office-based employment.
And in southern Europe, there has been negative officebased jobs growth since 2005, with a decrease of 4.6%.
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 youth unemployment rates above 40%. 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.
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.