Abstract
This paper investigates the employment challenges facing the fast-expanding IT services sector in Europe and contributes to debates about what policy reforms are required to nurture the so-called knowledge economy. The IT services sector is highly internationalised and strongly concentrated in all the four countries examined - Austria, France, Germany, and the UK. Nevertheless, policy reform is unlikely to follow a universal route, since the development of IT services has been strongly shaped by its interaction with each country's specific national employment model. The article investigates three employment challenges, namely the country system of skill formation, forms of collective employee and employer representation, and patterns of worker mobility and use of non-standard employment contracts. While important, national employment models do not determine the character of the sector and the paper identifies several points of tension and contradiction that raise questions about the future sustainability of knowledge economy sectors.
Highlights
The successful experience of the USA in so-called ‘knowledge economy’ sectors has led scholars and policy bodies to argue that, due in part to overly strict employment protection legislation, the European social model developed for the industrial society may be inappropriate for the knowledge economy
In a future scenario of international competition in the high value-added markets of service provision, and dynamism in knowledge economy sectors, what is required, studies suggest, is a raft of more flexible labour market policies that can establish the right mix of incentives for flexible career paths, investment in skills and risk taking by employers
While policy reform and a strengthened commitment to investment in the types of skill and capital required for high-tech services sectors are undoubtedly needed in many European countries, it is open to question whether a one-best-way approach to labour market policy reform is appropriate
Summary
The successful experience of the USA in so-called ‘knowledge economy’ sectors has led scholars and policy bodies to argue that, due in part to overly strict employment protection legislation, the European social model developed for the industrial society may be inappropriate for the knowledge economy. While the sector shares certain common characteristics across countries, associated with strong growth, internationalisation, industry concentration and strategies of outsourcing and offshoring, within each country the associated employment challenges are refracted differently, owing to the specific roles and organisation of social actors (including trade unions, sector bodies, etc.) and features of the national employment model. The literature on varieties of capitalism/business systems has integrated the employmentrelated issues of education, skill formation and training (Hall and Soskice, 2001; Whitley, 1999) to explain the way firms in key sectors develop competences in the context of particular national institutions. Since the IT sector is dominated by a small number of US multinationals in all four countries studied, our data collection included interviews with representatives from these organisations and we consider their responses and strategies in the context of a changing host country employment model. In 2007, the top three firms in Europe were all US-owned (see Table 1)
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