eWork and Regional Development: Background

Labour markets and regional development

Labour markets are at the very heart of the prosperity of regions, being, simultaneously, both determinants and outcomes of the process of regional development. Characteristics such as employment, participation and wage rates, human capital (qualifications, skills and competencies), etc., are important determinants of the wealth and welfare of a region. However, labour market structures tend to show significant regional differences which seem to be much greater than those between EU Member States (European Commission, 1999).

Some of this can be explained by core-periphery disparities and the reasons why certain economic functions tend to concentrate instead of spreading evenly across regions. (See knowledge and regional development). This is because core regions have built in and often unassailable ‘agglomeration effects’ which can lead to a core-periphery differentiation of certain types of jobs, for example as shown in the diagram (Hurst et al., 2000, and Fassmann and Meusberger, 1997).

Core-periphery differentiation of job type

core-periphery differentiation of job type

(Source: Fassmann, Meusberger, 1997)

When jobs and workers are differentiated according to sector, type of qualification and employing organisations, evidence tends to show that it is management functions, such as those embodied in company headquarters, and associated business services, which are located centrally. This is because of the specific locational requirements these functions have, most important of which is a high density of options for contact (especially face-to-face contact) with various kinds of decision makers as a means to deal with a management environment which is characterised by uncertainty, risk and the need to adapt quickly and adequately to changes in market structure and regulatory frameworks.

Apart from such functional specialisation, regional labour markets also differ significantly according to wage levels, productivity and unemployment (Moucque, 2000). Despite this, however, the geographical mobility of workers in Europe is low, which reflects some of the ‘imperfections’ of the EU labour market in terms of information (which ICT can help to solve), European-wide acceptance of qualifications, and regulation. Many of these barriers rest on different political, legal and cultural traditions, some of which can make it difficult to employ or contract individuals or companies to undertake eWork across national borders.

There are, however, examples of regions that have formerly been disadvantaged by their peripherality, but have managed to redress some of their economic problems using strategies which include applying ICT. Such regions tend to show the following features, although there are still many exceptions (Kotkin, 2000, Warf, 1995):

no large scale traditional industrial activities
not too distant from the centres of commerce and research
good or at least fair access to nodes of international transport networks such as airports
high quality of life (eg scenic landscape setting) and good infrastructure
proactive political support
relatively low labour costs
some degree of integration in the global traffic networks (including basic telecommunications infrastructure and efficient regulatory systems), especially for regions outside of the EU.

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