the Labour Market Survey Report - Council of European ...

c) The approach taken in this study is therefore to investigate future demand by exploring scenarios
of the development of employment levels from the most recent figures available from official
statistics. This will be done making certain very broad assumptions about the development of
overall economic activity, but will also explore several scenarios, in recognition that a single
projection produces unmerited implicit confidence in a particular future that is not supported
by any evidence. There is a considerable body of knowledge surrounding scenario analysis.
Often forecasting analyses draw on two or three scenarios. This study uses four scenarios, since
two scenarios can misleadingly give the impression that the future will definitely lie somewhere
between the two, and three scenarios generally produce the instinctive response of selecting
the “middle” course, which is thereby given undue credibility as a “compromise”. With four
scenarios, the reader recognizes that there could be more and thus none of the scenarios will
actually come to pass, and the absence of “one in the middle” strengthens the recognition of
many possibilities (technically, these are employment growth possibilities, rather than “real”
scenarios).
d) The scenario developments adopted for this study are shown in Figure 19. As can be seen,
there is an initial dip in the development reflecting the recent fall in confidence in the relevant
economies generally and IT activity in particular, including a series of lay-offs of high tech
staff*. The four scenarios involve annual employment growth rates of 2%, 5% 10% and 15%
respectively, superimposed on a “trough” characteristic represented by a ‘sinusoidal’ waveform.
This has been chosen as a relatively good way of achieving a smooth dip, and fulfils the following
constraints:
• There is an initial peak (to enable a smooth “point of inflection” transition to a fall)
• The trough “hits its lowest point” around the end of 2002
• The “trough” component disappears once the curve has returned to the initial peak level
(since this cyclical component is too “short” - for a “real business cycle” - for it to produce
further influence once a real pick-up has been achieved)
As can be seen from Figure 19, the combination of the steady growth and the trough component
produces troughs of different intensity and lowest-point-timing depending on the underlying
growth rate.
The choice of the four employment growth rates (while essentially arbitrary) is broadly consistent
– in terms of a range – with the growth rates experienced over recent years: taking the four
countries examined in depth and the total of all Member States, the figures are as follows:
Average annual employment growth
over five years
Percentage increase in the latest year for
which there is data
Germany 9.5% 17.8%
Ireland (unavailable) 11.2%
Sweden 15.6% (over 3 years) 34.7%
United Kingdom 12.9% 2.5%
EU as a whole 11.6% 10.5%
* The latest informed commentaries continue to confirm serious concern for the IT sector
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| C E P I S I.T. PRACTITIONER SKILLS IN EUROPE | Section 5