LINKING LABOUR REGIMES AND TECHNOLOGICAL INNOVATION IN CENTRAL AND EASTERN EUROPE: THE CASE OF AUTOMOTIVE AND SOFTWARE INDUSTRIES

Date of publication: 
09/26/2012

This report studies the link between labour regimes and technological innovation in Central and Eastern Europe, analysing in some detail two key sectors that have gained in importance in the economies of the region: the automotive and software industries. Defining success as a move up-market in terms of production and/or gaining a dominant and stable share in the world markets, both sectors have been successful regionally and, in certain aspects, also globally. Yet, the character and levels of innovation and R&D within them differ. Whereas innovation in automotive sectors – to the extent that it takes place – is imported, much innovation in the software industry is indigenous.
We define a labour regime broadly to include labour availability, quality and provision of skills, labour market flexibility, or industrial relations. We focus on evaluating the role of several institutional and policy areas, especially education and skill provision systems, migration policy, labour market regulation and employment relations. The elements of labour regimes that have the greatest influence on development also vary between sectors. Two sectoral case studies are linked by a focus on three interrelated areas on a) the relevance of the provision and availability of skills and the importance of local labour supply; b) openness to foreign labour as a source of knowledge in some cases and in others of numerical flexibility; and c) the existence and importance of clustering as a source of knowledge-sharing and knowledge-generation. Employment and labour-market flexibility and its links to legal and institutional frameworks are cross-cutting issues that come back in the three overarching themes. Flexibility takes different forms in the two sectors. While it might not be directly related to the innovation process as such, it has contributed to the increased competitiveness of the two sectors and supported a shift up-market in sophistication. Our general finding is that for both types of innovation – ‘imported’, which prevailed in automotive sector and ‘indigenous’ that was shown to exist fairly widely in the software industry – the availability of human capital, its structure and skill-sets have been important in order for the higher-end activities to be localised or nurtured in Central and Eastern Europe. However, the differences in the generation and implementation of innovation and in the nature of the production processes are reflected in significant differences in labour regimes.

 

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