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Industry and globalisation

Employment and Global Value Chains (GVCs)

 

Measuring the impact of foreign demand on domestic labour markets

Last updated: January 2024

Growing economic integration worldwide and the spread of global value chains (GVCs) increases the sensitivity of employment in one country or region to changes in demand in other countries or regions. However, traditional statistics do not reveal the full nature of global interdependencies - notably how consumption in one country may drive production and, therefore, sustain employment in economies further up the value chain. OECD’s Inter-Country Input-Output (ICIO) Database, developed primarily to produce indicators of Trade in Value Added (TiVA), also allows indicators to be developed that can provide insights into the origins of demand driving a country’s employment. Estimates of employment sustained by foreign final demand (or by exporting activities) can reveal the extent to which a country’s workforce depends on its integration into the global economy.

Trade in employment (TiM) indicators

 

The Trade in employment (TiM) Database presents indicators of employment by industry, consistent with output and value added in the TiVA database, for all OECD, European Union and G20 countries. All 45 TiVA industries are covered for the time-period 1995-2020.

 

The results presented here are based on the 2023 edition of the ICIO Database.

In 2020, for example, between 30% and 60% of business sector employment in most European countries was sustained by consumers in foreign markets (though predominantly within Europe – a consequence of regional economic integration). For some smaller European countries, this share reached over 70%. In Japan and the United States, shares are lower, reflecting their relatively large size and lower dependency on exports / imports. In spite of this, estimates suggest that in 2020 the number of jobs sustained by foreign demand reached over 11 million in the United States and almost 8 million in Japan.

 

Employment in business sector sustained by foreign final demand, by region of demand, 2020

As a percentage of total business sector employment

 

Employment sustained by foreign final demand

Source: OECD, Trade in Employment Database (TiM), 2023.

Note: OECD and EU27 averages include intra-regional flows; these figures should be considered as weighted averages of their member countries.

Business sector is defined as Non-agriculture business sector excluding Real estate; it corresponds to ISIC Revision 4 Divisions 05 to 39, 41 to 43, 45 to 56, 58 to 63, 64 to 66 and 69 to 82.

Related links

Other editions of TiM

Contact

Any suggestions or queries can be sent to stan.contact@oecd.org mentioning Trade in Employment (or TiM) in the title of your message.

 

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