Recent examples of re-shoring have stirred the debate in Europe as the phenomenon is perceived as a potential source of renewed job creation. At a hearing organized by the Employment and Social Affairs Committee of the European Parliament, Head of the ILO Research Department Raymond Torres discussed the increasing trend towards re-shoring to Europe, the practice whereby businesses bring back manufacturing and/or services from abroad to locations in or near their home country.
“Whilst the available evidence on re-shoring is scarce, there are indeed several possible indicators of this trend”, Mr Torres said.
Companies reconsider their offshoring decisions for a number of reasons. As Mr Torres explained, “poor performance of foreign firms, the lack of infrastructure, supply chain risks and rising salary and transport costs can all cause companies to pursue the re-shoring of their activities”. In addition, the increasing demand for customized products, requiring qualified and skilled workers, and the presence of a large and stable middle class in their home country may also urge some companies to bring back their activities.
He concluded by underlining that a strong and stable social climate and sustainable demand are crucial if Europe wishes to maintain its position as an attractive place for job-creating investments. An innovative business environment, new technology and forms of renewable energy could also attract investments in the EU. By contrast, attempts to improve competitiveness through a weakening of labour standards may be counterproductive.
