Analysts say Europe has been completely behind the competition for economic growth as working hours ..

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[Photo source = Yonhap News]

Analysts say Europe has been completely behind the competition for economic growth as working hours are shorter and labor productivity lags behind the United States. As a result, the economy stagnated as Europe failed to create a global technology company compared to the United States in the era of artificial intelligence (AI).

The Wall Street Journal (WSJ) reported on the 1st (local time) that Europe’s economic growth fell into a trap of stagnation as a result of a comparative analysis between European and American companies.

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First of all, the number of unlisted unicorn companies with a corporate value of more than $1 billion was 690 in the United States (total corporate value of $2.53 trillion) as of January, while only 107 in the European Union (EU) were $33.38 billion. Unicorns are a representative indicator of capitalist innovation, and the number of unicorns in the EU was only two-thirds of that of China, which is 162 ($702.46 billion).

Among listed companies less than 50 years ago, the number of companies with a corporate value of more than $10 billion was 241 in the United States (a total value of $29.57 trillion), but only 14 in the EU (a total value of $433.63 billion).

Europe is struggling not only with the number of unicorn companies, but also with these companies going public or leading the industry.

The WSJ cited Europe’s falling labor culture as the reason. Compared to the United States, working hours and labor productivity are decreasing at the same time, which is reducing the competitiveness of companies.

In the late 1990s, the hourly productivity of EU workers was around 95% of that of US workers, but has now fallen below 80%.

European workers also work shorter hours than in the United States, further limiting economic growth. The average weekly working hours for U.S. workers in 2023 was 34.6 hours, compared to 30.2 hours for EU workers, a 4.4 hour difference. Considering that the average weekly working hours difference between US and EU workers was 3.5 hours in 1995, the difference in weekly working hours between the two sides increased by about one hour in 28 years.

Experts believe this situation will be difficult to change for the time being. Because the EU values stability, job security, and quality of life, workers tend to be reluctant to take long working hours or bold risks. As a result, investors are concerned about the Donald Trump administration, but the U.S. has no choice but to continue to outpace Europe, the WSJ reported.

Due to falling productivity, the EU’s economy is $15.5 trillion in 2023, about two-thirds of the US $22 trillion. In recent years, the economic growth rate has been one-third that of the United States in the EU.

Another weakness of the EU was that more than 30 countries have different laws, languages, and cultures, making it difficult to expand. Accordingly, regulations are also evaluated to be stricter in the EU. Because of this, government spending per capita is similar in Europe and the United States, but private capital inflows are much lower.