eWork and Regional Development: eWork Relocation

One-off relocation as rationalisation

In this type of relocation, replacing existing jobs by relocated ones is the aim of the decision-makers from the start. Job relocation is thus a rationalisation measure to cut staff levels at the original location so that jobs are lost in the place of origin.

Such relocations do not have to be permanent. As costs are the main motive for the initial relocation and are the main attraction of the target region, the process is very sensitive to further changes in cost ratios, for example as a result of technological advance. If the service subsequently becomes less labour-intensive, it may no longer be an advantage to have it carried out in regions with low wage costs. In other cases, the character of the regional labour market may change (eg due to increasing wage pressures), making it less attractive than it was previously or the company could simply become aware of another location elsewhere in the world where costs are even lower. In both cases, however, jobs could move again.

Wage differentials between regions and countries are the main driver in this type of relocation, for example within EU countries or between EU countries and the central and eastern European or Asian economies.

(Source: Flecker and Kirschenhofer, 2002)

Examples (names and distinguishing details have been changed to ensure anonymity)

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