ADJUSTMENT TO GLOBALISATION: A STUDY OF THE FOOTWEAR INDUSTRY IN EUROPE



Footwear is often perceived as a standard labour intensive manufactured product in
which comparative advantage has decisively shifted from OECD countries to low-wage
developing countries. In Europe as a whole there has been a substantial contraction of
the sector over the past 30 years with a considerable loss of jobs. However, this decline
is not uniform across EU countries. Italy, for example, has been able to maintain
employment in footwear roughly at 1970 levels throughout the subsequent period.

What is apparent is that developments in the footwear sector have varied across EU
countries. It would seem that Germany, for example, has been characterised by a
substantial shift to production in overseas locations and the outsourcing of parts of the
production process. Countries such as Italy, for example, have not shifted production
overseas in this manner and have instead maintained domestic output and employment
levels. An important feature of this has been the shift to ever-higher export intensities at
the same time as import penetration has increased. Thus, one might conclude that
globalisation, as well as creating additional competitive pressures in the domestic
market, provides increased opportunities for sales overseas. An important part of the
response to low-wage competition in countries which have maintained domestic output
and employment would appear to be success in reorienting sales towards foreign
markets. A key element in the relative success of the industry in countries such as Italy
has been the move towards more flexible modes of production and the development of
industrial districts. The role that policy can make in facilitating this adjustment is
something which requires further attention.

Finally, this study highlights that even within a fairly standard sector such as footwear,
unskilled or manual labour appears to be far from homogeneous. Within this group of
workers there are significant differences in wages paid to certain types of workers. One
interesting finding, which needs to be further substantiated, is that those manual workers
with the highest level of skills and the highest wages tend to experience longer periods
of unemployment than the least skilled footwear workers. This would suggest some
attention be given to the need to target retraining schemes amongst unemployed manual
workers and that within the group of unskilled workers there may be particular market
imperfections which reduce the flexibility of certain types of manual workers and so
raise the costs of adjustment for these workers to new economic conditions.

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