Now All Roads Lead to Bulgaria – or to Your Local Estate Agency

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Whilst Greece, Ireland, Italy and Portugal remain in the clutches of a seemingly incessant downturn the rest of Europe appears to be bathing in the warm, hopeful glow of a recessionary aftermath - or can Europe really be divided so simply into winners and losers? The Secretary-General of The Federation of European Employers (FedEE) writes....

It is the fate of the poor statistician to drown in a lake the average depth of which is barely up to his waistline. Trying to make sense of the European economy is like swimming around in a lake with averages having very little real meaning.

At first sight, the European Union looks relatively healthy - with GDP growth over the year to Q4 2011 up 0.9% and employment levels stable. However, this overall picture is deeply misleading. EU economic growth is being bolstered by a small number of successful large countries such as Germany (+2.0%) and France (+1.4%) whilst Italy (-0.4%) totters close to recession and both Portugal (-2.8%) and Greece (-7.5%) are wallowing in the slough of despond.

Different sectors within the EU economy also reveal a highly contrasting picture with employment over the year to Q4 2011 down in construction (-3.2%), agriculture, forestry and fishing (-1.3%) and the arts, entertainment and the media (-0.7%). Curiously, the bursting of the real estate bubble dragged the world into recession in 2007 and now realtors are getting their jobs back. Employment in the EU’s real estate sector is up 2.7% and hard on their heals are professional support services (+2.1%).

So, if you are in work is your spending power increasing in line with GDP growth? Once again the overall picture tells very little about the way people are actually experiencing the recessionary aftermath. Wages and salaries across the EU are rising at an average rate of 2.6% - which means that real earnings have declined by 0.4% over the past year. But average wages and salaries fell over the year to Q4 in Greece (-7.0% est), Ireland (-1.9%) and Portugal (-1.7%) and real earnings fell in Slovenia (-2.5%), the Netherlands (-2.0%), the Czech Republic (-1.7%), Cyprus (-1.4%) and the UK (-1.4%).

The real winners have been employees in Bulgaria where real earnings have increased by 10.5% over the last year. Other countries with large increases in employee spending power are Romania (+5.9%), Estonia (+ 2.9%) and Norway (+2.5%).

So if you are a real estate agent in Bulgaria you probably see the world very differently from a construction worker in the neighboring country of Greece – and if the Bulgarian realtor does well then their rising income will not be eaten into by the country’s flat-tax system. Whereas, austerity measures and mounting debts have left Greek workers with a highly punitive tax burden.

For further information contact Alison Merrett on UK (0044) (0) 207 520 9264 or the Secretary-General, Robin Chater directly on UK (0044) (0)770 2300054. Alternatively email Robin on robin(dot)chater(at)fedee(dot)com

For a biographical sketch of Robin Chater see: http://www.fedee.com/about-fedee/

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