Study of Food Products and Beverages Industry

Transcription

1 Methodological Centre for Vocational Education and Training Study of Food Products and Beverages Industry Research report on skill needs Vilnius, 2008

2 STUDY OF FOOD PRODUCTS AND BEVERAGES INDUSTRY Eksperts: Gitana Alenčikien, Violeta Averjanovien, Saulius Baliukynas, Giedr Beleckien, Gintautas Bužinskas, Vaidas Daujotas, Vincentas Dienys, Bronislava Kaminskien, Rūta Karvelyt, Vitalija Motiekait n, Candy Murphy, Raimondas Narkevičius, Almina Pačešiūnien, Vita Povilionyt, Loreta Račelien, Albertas Šlekys, Laima Teliukien, Lina Vaitkut We are sincerely grateful to sector organisations and everyone who helped us in this activity. We hope that the information presented will be helpful while planning employees training and performing other tasks.

3 SUMMARY The sector of manufacture of food products and beverages (FB) is defined according to the activities of the international NACE classification. It consists of the following nine sub-sectors: meat (further referred to as ME), fish (further referred to as FI), fruit and vegetables (further referred to as FV), oils and fats (further referred to as OF); diary products (further referred to as DP), grain (further referred to as GR), animal feeds (further referred to as AF), other food products (further referred to as OFP) and beverages (further referred to as BE). International trends The manufacture of food products and beverages is the biggest sector of manufacture in the European Union. It employs 4 million employees, makes up 1.8 per cent of the EU gross domestic product, has a relatively high number of economic entities and a huge demand for the labour force. The characteristics of the sector, as compared to the other economic sectors, are the following: part-time employment, young employees (aged up to 30) and a substantial share of workers with low qualifications. The growing competition, poor working conditions and stricter legal requirements had an impact upon viability of the sector and sharpened the problems related to the attraction and maintenance of staff. Although short-term and medium-term future prospects of the sector are positive, the possible threats create a need to invest into employee training and self-improvement and focus on product development, innovations and business development in the entire sector, embracing both small and medium-size enterprises. To have the manufacture of food and beverages effectively adapt to changes, managers, qualified workers and professionals, research and development as well as technical staff should be provided with adequate training and support. Training should be oriented towards filling in the current gaps of skills and satisfaction of the emerging demand for them. Regional authorities and national training establishments will play a key role in helping enterprises meet the emerging challenges and ensuring sector development in Europe. Trends of Food products and beverages sector development in Lithuania Enterprises. According to the preliminary data of 2007, there were 1,094 enterprises operating in the sector. Out of that number, 47 per cent of enterprises specialised in manufacture of food products; 23 per cent of companies were involved in production, processing and preserving of meat and meat products and 11 per cent of enterprises manufactured beverages. The remaining enterprises (comprising one fifth of the total) carry out activities in the other six sub-sectors. The sector is predominated by very small (with up to 9 employees) and small (from 10 to 49 employees) enterprises, making up 80 per cent of the total number of the sector enterprises. The biggest concentration of enterprises is in Vilnius and Kaunas counties. Employees. According to the preliminary of 2007, the sector employed 51,700 people. They account for more than 3 per cent of the total number of employees in the overall Lithuanian economy. Employees in the sub-sectors of other food products, meat and diary products made up 70 per cent of the total number of the sector employees. During the period of five years (in ) the number of staff in very small and small enterprises was dropping. 3

4 Performance indicators. During the recent five years, the turnover in the FB sector has gone up. According to the preliminary data of 2007, the biggest turnover was in the sub-sector of dairy products and other food products, followed by the meat and beverages sub-sector. In , the level of productivity rose in all the FB sub-sectors. The biggest growth was seen in the sub-sectors of fruit and vegetables, meat, oils and fat, and beverages. In the five year period, the value-added created by the sector went up my slightly more than 1.5 times. The earnings of employees were increasing in all the FB sub-sectors, yet they remained lower than the national indicator. As compared to the other branches of manufacture, earnings offered to the FB sector staff are among the lowest. With regard to the volume of export, the FB sector is one the leaders among the branches of manufacturing. Generally speaking, the FB sector is sufficiently competitive on the international scale. Technologies. Modern technologies are used by almost 55 per cent of the FB enterprises and 64 per cent of them are planning to use modern technologies in the future. The information technologies to be used by the FB sector in the future include production planning and accounting software and e-trade technologies. Development trends. The sector forecast for 2012 is rather optimistic: the turnover in the majority of sector enterprises will continue to grow (with the exception of oils, fats and grain) but the rate of growth is likely to slow down. One of the reasons for that is insufficient labour force resources. The volume of production should be increased by resorting to some other sources, for example, increasing the labour productivity, which is currently quite low, and applying new technologies. The biggest threat to a successful business development is the shortage of qualified workers or simply workers and the tax system. Demand for employees. The turnover of staff in the FB sector is rather high, accounting for 43 per cent per year. Its rate is the highest in the group of manufacturers and other workers. The main reasons for that are emigration, seasonality of work and new technologies. The groups of employees which are most difficult to find are manufacturers and other workers, whereas professionals are less of an issue. The tension level (the ratio between the number of vacancies and the number of the unemployed) in the sector is less than 1 and therefore is smaller than the relevant national indicator. This means that the quantitative supply of employees in the sector is lightly exceeding the demand for them. Noteworthy, the tension level among different sub-sectors is not the same. Changes in skills. The sector employees mostly lack foreign language and work organisation skills. In addition, professionals require work planning and control as well as computer literacy skills. Qualified employees lack responsibility, duty and willingness to learn, whereas professions need innovation and management skills. Supply of employees. In 2006, the entire manufacturing industry, which includes the FB sector, employed almost three times more qualified workers than professionals (including technicians). According to the preliminary data of 2006, the number of admitted students in the FB sector training programmes and the number of graduates from them reveal different trends. First, the number of students admitted into higher education establishments exceeds the number of students in primary vocational training programmes almost 2.5 times. Second, the number of graduates from higher education establishment is slightly exceeding the 4

5 number of vocational training graduates. This means that the gap between the supply and demand for workers will continue to increase in the future, causing serious problems for business development. Recommendations: Although the level of employment in the FB sector enterprises among the group of workers is four times bigger than in the group of professionals (including technicians), the number of admitted students to the FB sector programmes of higher education exceeds the number of students to the relevant vocational training programmes 2.5 times (data of 2006). As a result of such disproportion, the supply of professionals in the labour market exceeds the demand for them, whereas qualified workers are lacking. Therefore it is recommended to review the plans of admitting students into the state funded higher education and vocational training programmes of the FB sector. The shortage of manufacturers and other workers in the sector is mostly linked to the lack of workers trained by vocational training establishments. The latter is associated with the low level of prestige, in the eyes of society, of vocational training. Therefore it is recommended to advertise and raise awareness about food manufacturing occupations among the youth (organising advertising campaigns in general education schools, in the press, television and showing examples of successful careers pursued by the graduates, etc.). The attractiveness and prestige of the sector occupations should also be increased by the food manufacturing enterprises. They could offer higher remuneration for work and social guarantees to their employees, improve working conditions and motivate staff by offering refresher courses abroad. Certain sector enterprises (particularly those operating in the grain and animal feed sub-sectors) lack food machine operators. Presently, no training is available to offer such occupational qualification. Previously, workers of similar qualification were trained under the Food Industry Equipment Operator and Laboratory Assistant Training Programme. Therefore it is recommended to modify the programme to include training of food machine operators. The sector of the FB manufacture offers a huge variety of occupation posts and competences. Therefore, the annual demand for employees in certain occupation posts is rather high. Therefore it is recommended to organise training based on modules. In the beginning students would attend obligatory training modules offering general competences required by the FB sector and later they could choose additional competences necessary for the occupation of their choice from the range of optional modules. The optional modules could be agreed with the interested sector enterprises which usually employ the graduates. The analysis performed shows that enterprises willing to respond to market changes in a more flexible and speedy manner will speed up the use of modern production technologies. That will also reduce the need for workers with low qualification and increase the demand for higher skilled workers (for instance, operators). Therefore, it is recommended to organise practical training for employees (for example, by appointment of enterprise workers as manufacturing practice supervisors or tasking them to perform other assignments). It the long-run this would ensure smaller discrepancy between the supply and demand for employees of certain qualifications. The new form of organisation of apprenticeship vocational training has been established by law. It means on-the-job training in an enterprise, institution, organisation, farm or with a free-lance trainer. Theoretical training may be carried out in vocational training establishment or another type of school. The experience of other countries shows, that the advantages of apprenticeship include smaller training 5

6 costs and work with modern technologies. Enterprises are recommended to use the opportunity to train the employees according to their own needs and, at the same time, increase the attractiveness of vocational education and training. According to the survey findings, all the sector employees lack foreign language and work organisation skills. n addition, professionals require work planning and control as well as computer literacy skills. Qualified employees lack responsibility, duty and willingness to learn, whereas professions need innovation and management skills. Therefore, to ensure appropriate qualification of employees, training/study programmes should be updated with regard to the identified needs of skills. Structure of the study. The study comprises 6 chapters. Chapter 1 makes a brief overview of the objectives of the study, the concepts used by it and the methodology of the social survey. In addition, it describes the structure of the sector of manufacture of food products and beverages sector. Chapter 2 explains the international trends in the sports sector development. The purpose of Chapter 2 and Chapter 3 is to analyse performance indicators of the sector and make an assessment of the employee demand. The indicators used in Chapter 3 are based on the data developed specifically for the study and publicly available information, whereas the indicators in Chapter 4 include findings of the survey. Chapter 5 analyses the supply of employees and Chapter 6 provides recommendations developed on the basis of information analysis. Their aim is to to reduce discrepancy between the supply and demand of employees in the sports sector. 6

7 TABLE OF CONTENTS 1. RESEARCH METHODOLOGY Introduction Authors of the Study Goal of the Study Methodology Definition of the Sector Sociological Survey of Sector Enterprises INTERNATIONAL TRENDS Introduction Overview of the sector Relationship between food and beverages and other sectors Employment in the Food and Beverage Sector Factors driving developments in the Food and Beverages Sector Impact of these developments on employment and skill needs Summary STATISTICAL CHARACTERISTICS OF THE SECTOR Introduction Briefly about the Sector of Manufacture of Food Products and Beverages Enterprises Employment in the Sector Performance Indicators Development Trends Summary CHARACTERISTICS OF SECTOR BASED ON SURVEY FINDINGS Introduction Performance indicators Employees Forecast of Demand for Employees in the Future Summary SUPPLY OF EMPLOYEES Introduction Education and Job Groups Supply of Employees by Areas and Level of Education Supply of Employees in the FB Sector Supply of Skilled Workers (Manufacturers) for the FB Sector Supply of Professionals, Including Associate Professionals and Technicians, for the FB Sector Summary RECOMMENDATIONS REFERENCES ANNEX ANNEX ANNEX ANNEX

8 1. RESEARCH METHODOLOGY 1.1. Introduction Since 2005, the Methodological Centre for Vocational Education and Training has been performing a project, Development of the National System of Vocational Education and Training Standards. The purpose of the project is to develop the national system of vocational education and training standards which would help increase conformity between training and education on the one hand and global performance needs on the other hand as well as provide better conditions for life-long learning. One of the main activities of the project is to examine six economic sectors with a view to assessing the prospects of their development and the impact on the number of employees and training needs. The project is of national importance and is funded by the European Social Fund Authors of the Study The study was developed by a group of experts representing a variety of Lithuanian bodies and establishments (educational, scientific, statistics, business, etc.). Assistance was provided by experts from Ireland having the relevant expertise in implementing similar type of activities and identification of necessary skills Goal of the Study The main goal of the study is to analyse the trends of development of the manufacture of food products and beverages sector in Lithuania and other countries and, on the basis of that, determine the changes in the number of employees and training needs for the upcoming five years as well as provide concrete recommendations to improve conformity between the supply and demand of the labour force Methodology The sectors are studied using a single methodology developed together with the Irish experts in The study of the manufacture of food products and beverages sector encompasses the following phases: 1. An overview of publicly available information in Lithuania and other countries about the sector and related areas as well as the analysis of official statistics about the sector; 2. A survey of sector enterprises by means of interviews and postal questionnaire surveys; 3. Analysis of all information and identification of change factors in the sector; 4. Projection of employment in the sector; 5. Assessment of the sector training needs in the upcoming five years Definition of the Sector The sector of manufacture of food products and beverages has been defined according to the activities included into the NACE classification. The definition has been modified by the Lithuanian and EU experts.. This made it possible to compare the findings of the study with the international results. By definition, the sector of manufacture of foods products and beverages (further referred to as FB) consists of the following nine sub-sectors (see Fig. 1.1): meat (further referred to as ME), fish (further referred to as FI), fruit and 7

9 vegetables (further referred to as FV), oils and fats (further referred to as OF); diary products (further referred to as DP), grain (further referred to as GR), animal feeds (further referred to as AF), other food products (further referred to as OFP) and beverages (further referred to as BE). Fig Manufacture of Food Products and Beverages according to NACE Classification Manufacture of Foods Products and Beverages Sector (FB) Meat (ME) Production, processing and preserving of meat and meat products (15.1) Fish (FI) Production, processing and preserving of fish and fish products (15.2) Fruit and Vegetables (FV) Production, processing and preserving of fruit and vegetables (15.3) Oils and Fats (OF) Manufacture of vegetable and animal oils and fats (15.4) Dairy products (DP) Manufacture of dairy products (15.5) Grain (GR) Manufacture of grain mill products, starches and starch products (15.6) Animal Feeds (AF) Manufacture of prepared animal feeds (15.7) Other Food Products (OFP) Manufacture of other food products (15.2) Beverages (BE) Manufacture of beverages (15.2) 1.6. Sociological Survey of Sector Enterprises A postal questionnaire survey of enterprising operating in the sector of manufacture of food products and beverages was performed in The sample for survey was compiled on the basis of the data from the Registry of Economic Entities, as well as by looking at the type of the prevailing economic activity (according to the Classification of Economic Activities in the European Communities, NACE) carried out by the enterprise. The total number of enterprises selected was The participants of the postal questionnaire survey were asked to return the filled out questionnaires after several weeks. When the questionnaires were sent out to the respondents, telephone calls were made to remind them about the deadline for sending the questionnaires back. In this way, a sufficient level of response was secured. 8

10 Interviews were made with the respondents from the leading enterprises. The total number of enterprises interviewed was 12. The information received was used to assess training needs in the sector of manufacture of food products and beverages. 9

11 2. INTERNATIONAL TRENDS 2.1. Introduction The food and beverages industry is the largest manufacturing sector in the EU, employing almost 4 million people. Its contribution to the EU gross domestic product amounts to around 1.8% (European Foundation for the Improvement of Living and Working Conditions, 2004a). The industry is also characterised by a high level of labour intensity and while traditionally it was a relatively stable sector, in recent times the overall share of employment in the EU has dropped quite dramatically. There was an overall decrease in jobs over the period of 11.4%, from 4.4 million to 3.9 million. The sector is faced with an unprecedented number of challenges today, with widespread restructuring in activity occurring across the EU (European Foundation for the Improvement of Living and Working Conditions, 2004b). These developments are primarily driven by the need to enhance competitiveness and address local and global changes affecting the industry. The voice of the consumer and the retailer has increasingly shaped developments in the food sector in recent years, as a result of growing concerns over food safety and a growing demand for higher quality and more diverse foods, driven by increasing incomes across the EU. The low skills base in the sector, coupled with high levels of part-time working and slowness to adapt to the changing demands of consumers are impacting negatively on the sector s performance. Such factors, along with increased competition from developing countries, increasing consumer demands and stricter quality controls threaten the future viability of the sector within Europe. This section sets out the key developments in the European food and beverages sector and related employment, skills and training needs. Firstly, the sector is defined and the overall position of the sector is described. The paper then goes on to assess the relationship between food and beverages and other sectors. It then outlines the current employment situation of food and beverages in Europe before assessing both recent economic developments in the sector and likely future developments. The implications of these developments for future employment, skills and training are then analysed Overview of the sector The food and drink manufacturing industry is very broad but can be defined as the preparation of food and drink products ready for sale and consumption. It involves the sourcing of ingredients, processing, preservation and packaging. It also includes product research and design, taste testing and marketing (European Foundation for the Improvement of Living and Working Conditions, 2004a). The EU-25 traditionally has a positive trade balance with the rest of the world in food products, beverages and tobacco. (Eurostat, 2006a). The sector accounts for 4.9 % of total industrial exports and 3.8% of total imports. This trade surplus is due to strong export performance in a number of subsectors, mainly beverages, bread, sugar, confectionary and other food products and dairy products. The United States is the largest export market for European food products, beverages and tobacco as a whole (21 % share of exports) and a particularly significant market for beverages (42 % of all EU exports) (Eurostat, 2006a). 10

12 Structure of Food and Beverages in Europe Together, food products, beverages and tobacco make up 11.3% of the total value-added of EU industry. Within the sector, the manufacture of bread, sugar, confectionery and other goods is the largest sub-sector in terms of value-added and number of persons employed (see Table 2.1). This sub-sector accounted for over a third (34.9 %) of the total sectoral value added in The second and third largest subsectors were beverages and meat processing which together accounted for a further third of both sectoral value added (individually accounting for 17.7 % and 16.0% respectively) and sectoral employment (individually accounting for 9.7 % and 22.4% respectively). Table 2.1. Manufacture of Food products, beverages and tobacco Value added (EUR mn) Share of Industrial value added (%) Number of persons employed 000s Share of industrial employment Food products, beverages & tobacco , Meat , Fish Dairy Products Bread, sugar, confectionery & other , goods Miscellaneous food products Processing and preserving of fruit and vegetables Manufacture of vegetable and animal oils and fats Manuf. of grain mill products, starches and starch products Manufacture of prepared animal feeds Beverages Tobacco Source: Eurostat, 2006a The food and beverage industry accounts for 14% of total turnover in the EU industry ahead of both the automobile and chemical industries. In 2005, turnover was 836 billion, an increase of 2.6% from Since 2001, turnover in the EU food industry has increased by 30 billion. However, the enlargement of the EU in 2004 is partly responsible for the high level of growth during this period (CIAA, 2006) (see Figure 2.1). 1 Turnover: measured as sales from the food and beverage industry. The figure does not include artisan production and farmgate sales. 11

13 Fig Turnover in the EU Food and Drink Industry, billion, current prices, Source: CIAA, 2006 The sector is characterised by a relatively large number of companies. In 2005, there were 282,000 companies in the European food and beverage industry (CIAA, 2003). Microfirms, small and medium sized ones are most common, accounting for more than 95% of the companies in the industry (see Figure 2.2). However large companies, with more than 250 employees, account for more than 50% of total production in the food and drink industry while only accounting for less than 5% of companies in the industry. Fig Production, employment and share of companies by firm size, Production % No. employees % No. companies % 0 Microcompanies (1-9) Small companies (10-49) Medium companies (50-149) Large companies (+250) Source: CIAA, 2003 France, Germany, Italy, United Kingdom and Spain together account for more than 77% of turnover in the EU-15 food and drink industry, and this pattern is also true for most sub sectors. The new member states account for 7% of total EU food and drink industry turnover, with Poland accounting for almost half of the food industry turnover in the new member states (CIAA, 2006). Many western European companies acquired food and drink companies in the New Member States before their accession in 2004 (Hamann, 2007). 12

14 In a majority of member states, the food and drink industry features in the top 3 manufacturing industries in terms of turnover and ranks first in a total of 10 countries. The food and drink industry thus plays a key role in both industrial activity and employment across the EU (CIAA, 2006). Larger companies are found to a greater extent in the North and West of Europe. The number of food and drink processing entities in the New Member States is thus proportionally much higher than in the EU-15 (Hamann, 2007) (see Table 2.2). Table 2.2. ES EU Food and Drink Production, added value and industry structure, 2001 Production bn¹ Value added bn Employees 000s Number of companies Austria 11² 2 79² 1264² Belgium 24² Denmark 17² 4 87² 450 Finland 8² France 115³ ³ 3604 Germany Greece ² Ireland Italy Luxembourg ² 226 Netherlands 39² 6 147² 855 Portugal 10² 2 104² 1916 Spain ² 3040 Sweden 13³ UK 98² ² 2319 EU Source: European Foundation for the Improvement of Living and Working Conditions, 2004a Note: ¹: current prices; ²: more than one employee; ³: more than three employees; : more than nine employees. Table 2.3 shows the Top 10 Food and Beverage companies within the EU and highlights the scale of turnover accounted for by these companies. Table 2.3. Top 20 Companies in the Food and Beverage Industry in Europe Company HQ Subsector Turnover mn Nestlé CH Multiproducts 52,680 Unilever NL Multiproducts 22,530 Danone FR Dairy, water, biscuits 13,700 Heineken NL Beer 10,005 Cadbury Schweppes UK Soft drinks and confectionery 9,941 Diageo UK Spirits 9,858 InBev BL Beer 8,568 Arla Foods DK Dairy 6,339 Ass. British Food UK Bakery, fats, ingredients 6,288 Danish Crown DK Meat 5,964 Sovion NL Meat and gelatine 5,915 Lactalis FR Dairy 5,670 13

15 Scottish & Newcastle UK Beer 5,552 Carlsberg DK Beer 4,837 Barilla IT Pasta and baked goods 4,675 Südzucker DE Sugar, frozen foods, ingredients 4,575 Ferrero IT Chocolate and confectionery 4,475 Friesland Coberco NL Dairy 4,449 Tate & Lyle UK Sugar and sweeteners 4,240 Kerry Group IE Ingredients 4,129 Source: Hamann, Relationship between food and beverages and other sectors Agriculture and food retailing are the sectors that impact to the greatest extent on the development of the food and beverages sector within Europe. Agriculture The Food and Beverages sector is strongly influenced by factors affecting basic agricultural production and in particular, the impact of growing concerns about food safety. Meat producers and processors in particular have been affected by the spread of disease in recent years. Increased demands from consumers have also put pressure on both food producers and processors to raise their standards and this trend has been supported by both policy and technological changes. The Agriculture sector is itself going through a period of significant changes. These changes include reduction in subsidies for food producers and increasing exposure to international markets, changing weather patterns, increasing demand for western style food from emerging the economies of China, India etc and increasing demand for alternative land use to produce biofuels and new food products. To best meet these developments food producers, manufacturers and retailers need to work together to ensure that quality standards are met, that customer confidence in agricultural products is maintained and that costs and profits are distributed in such a way that ensures the viability of the all of the sectors involved. Food Retail The retail sector in Central and Eastern Europe has developed strongly in recent years. However, Western European countries continue to dominate the sector within Europe. For example, five Western European countries, France, Germany, Italy, Spain and the UK account for two-thirds of all European retail sales (Myers, 2005). The EU-25 s non-specialised in-store retailing sector generated EUR 800 billion of turnover in 2003, EUR 120 billion of value added, while employing 5.6 million persons. It accounted for 32.9 % of the value added created by the retail trade and repair sector and a slightly higher proportion (34.7%) of its workforce. Shortterm statistics show that over the period 1995 to 2005 there was a steady growth in the volume of sales index for EU-25 non-specialised in-store retailing (Eurostat, 2006b). In recent years the emergence of larger hypermarket chains, on an international, national and regional level has substantially increase the power of retailers. A number of leading western European supermarket and 14

16 hypermarket chains, including leading players such as Metro, Carrefour and Tesco are continuously increasing their footprint within the region (CEE, 2003). Retailers now largely determine the type of food available to consumers. Retailers also determine the source of the food on sale in their retail outlets. This trend is likely to continue, with retailers placing increasing pressure on food and beverage manufacturers to meet their demands. Given the large scale of these retailers businesses only food producers that can provide year round, large volumes products, and have relevant IT technologies are increasingly able to do business with these customers. While this has increased profits for large retailers, the benefits for manufacturers in the food and beverage sector may not be as widespread (European Foundation for the Improvement of Living and Working Conditions, 2004c). However counter to this trend is the growing concern on the part of customers about food products being flown around the world rather than being sourced locally along with a renewed interest in locally sourced, straight from the farm products. This is providing new opportunities for local food suppliers who can develop strong relationships with their local retailers or can develop direct distribution routes to consumers Employment in the Food and Beverage Sector This section outlines recent employment trends and working conditions in the sector. Recent Employment Trends In 2005, 3,8 million people were employed in the food and beverage industry in the EU. Over 500,000 people are working in the food and beverage industry Germany and the UK alone (Hamann, 2007). East European countries such as Poland, Hungary, Czech Republic, Slovenia and Slovakia employ over 800,000 in the food and beverage industry. However since 2001 the number of employees in the EU food industry has decreased by 500,000 people. From 2003 to 2004, employment within the sector decreased by 4.9% and by a further 1.5% between 2004 and 2005 (Hamann, 2007). There are large regional differences within the European food industry. Turnover per employee varies considerably as can be seen in Table 2.4. The large Northern European economies have achieved much higher levels of productivity and given growing market pressure other economies in the south and east of Europe will be under increasing pressure to improve productivity through increasing consolidation and rationalization. 15

17 Table 2.4. Turnover, employment and Turnover per Employee in Selected Member States, 2005 Country Turnover Number of employees Turnover/employee ('000EUR) (mn EUR) ( 000) France Germany UK Sweden Greece Poland Hungary Estonia 1, Source: CIAA, 2006 Increasing international competition is likely to further drive down the number of employees in the food and beverage industry in the coming years, particularly in Eastern Europe as Eastern European food and beverage companies attempt to increase productivity through the introduction of new production technologies. (Hamann, 2007). As a result many traditional SMEs are expected to go out of business unless they can become viable niche food producers. Women account for a higher proportion of total employment in the food, beverages (and tobacco) manufacturing sector than the average in the EU-25 industry sector as a whole (41.0 % compared with 28.7 % in 2005) (Eurostat, 2006a). Indeed, women represented at least half the workforce in this sector in the Baltic Member States, Germany, the Czech Republic and Slovakia in There is also a relatively high proportion of part-time workers in the European food, beverages and tobacco manufacturing sector - an average of 11.8 % for the EU-25 compared with the average for industry as a whole of 7.6 % (Eurostat, 2006a). This is most acute in Germany, where almost one quarter (24.6 %) of those employed in the sector worked part-time in 2005 compared with an 11.5 % share across German industry as a whole (Eurostat, 2006a). There is also a slightly higher proportion of young workers (under the age of 30 years) in the food, beverages and tobacco sector in the EU-25 compared with industry as a whole (24.3 % compared to 21.4 % in 2005 (Eurostat, 2006a). This was most apparent in Luxembourg (28.9 % compared with 14.4 %) and Sweden (27.1 % compared with 17.1%), with other notable differences in Lithuania, Poland and the Netherlands. Compared with many other industrial sectors, the proportion of total operating expenditure accounted for by personnel costs in the food, beverages and tobacco sector was relatively low (an EU average of 14.3 % in 2003). This reflects the relatively high level of automation now in the sector (Eurostat, 2006a). Working conditions Working conditions for many food and beverage operatives are difficult. The work can often be repetitive and physically demanding, with long periods of standing required. The work can also be hazardous, with higher than average injury rates burns from ovens, cuts from knives or cleavers are common and repetitive strain injury is also a problem (Bureau of Labor Statistics, 2005). The work can also be stressful, particularly if 16

18 deadlines have to be met and the working environment is noisy, limiting interaction between workers. The working environment often depends on the type of food being manufactured or processed bakeries can be uncomfortably hot, while meat processing plants or dairies can be cold and damp. Meat and fish processing plants require workers to wear protection hats, gloves aprons and shoes (Bureau of Labor Statistics, 2005). Skills, education and training Very little formal education or training prior to being hired is required for many workers in manual labour jobs. However, automation is becoming more common for many activities, leading to the replacement of many unskilled workers. Many skilled workers, such as butchers, bakers and fish and poultry cutters acquire their skills on the job through both formal and informal training programmes. The length of training can vary significantly, with many of the higher skilled workers having to go through an apprenticeship (Bureau of Labor Statistics, 2005). More highly qualified workers such as food technicians and technologists, quality control and product development personnel and marketing staff generally have third and often fourth level qualifications. Demand for these higher level skills is expected to grow fuelled by concerns about food safety, increasing customer demand for prepared foods and increasing competitive pressures which are driving greater innovation within the sector. Few studies have been carried out on qualifications needs of the sector within the EU. However, a good deal of research has been carried out in recent years in the UK on skills levels within the sector. As the food and beverages sector in the UK faces many of the same problems as other countries, the issues identified in the UK can be used as a reference point for the sector throughout Europe. The UK's food and drink industry has been found to have one of the most poorly qualified workforces in the UK (Improve, 2005). About 19 per cent of the sectors workforce has no qualifications, compared to the average of 11 per cent for the total UK workforce. Two-thirds of the sector s workforce in England do not have a qualification higher than Level 2. Just seventeen per cent of the sector s workforce in England is qualified at Level 4 or higher (see Figure 2.4). One third of staff in the processing sector has no qualifications at all. In addition, many UK employers in the sector complain of widespread skills shortages among the more highly skilled occupations which are having the effect of increasing operating costs and slowing down the introduction of new working practices and products within the sector. 17

19 Fig Highest qualifications in the Food and Beverages Sector, England, No qualifications Level 2 Level 3 Source: Improve, Factors driving developments in the Food and Beverages Sector This section looks at the key factors that are driving change in the food and beverages sector in Europe, namely: Economic growth Population growth Competition for Raw materials Power of retailers Globalisation/Regionalisation Research & Development Technological Developments Food safety and regulation Consumer Demands and trends Economic growth The general economic outlook for Europe in the medium-term is promising. This will have a positive effect on the development of the food and beverages sector. GDP for the euro area is forecast to grow by 2.5% in 2007 and 2.15% in 2008 (European Forecasting Network, 2007). In addition, the OECD (Organisation for Economic Co-operation and Development) and the United Nations Agricultural Outlook for anticipates strong growth within the OECD and in emerging economies for the duration of the period under review (OECD, FAO, 2006). However, a number of factors may dampen the overall positive outlook, including increasing oil prices and growing concerns in financial markets about debt risk, as well as growth competition from emerging markets. Latin America and Asia are likely to experience strong growth, with agricultural exports in Argentina and Brazil expected to exceed that of OECD countries. Globally, the food and beverage market will continue to grow, largely due to growth in demand for western style food from the developing countries such as India and China. 18

20 Population Growth Europe s population is expected to peak in 2022 (European Commission, 2003), but the situation varies greatly from country to country. Italy s population for instance, is expected to start falling early in this decade, while Ireland s will continue to increase until the middle of this century (European Commission, 2003). Overall, however, changes in population structures throughout Europe are likely to lead to increasing demand for products from Europe s food and beverage sector. Demographic and social changes will also have an influence on the kinds of food demanded and produced. These include increase in the number of women working, smaller families, growth in single person households and increasing aging of the European population (European Commission, 2003). The food and beverage sector needs to respond positively to population trends, particularly the overall ageing of the population and the increasing diversification in family structures. For example, an aging population will create a growing demand for easier to open packaging and a preference for soft foods among those with dentition problems. In addition, the population of Europe s biggest export market, the US, is also set to age, with an overall decline expected. Competition for Raw Materials Increasing competition for raw materials from other sectors will having a growing impact on the food and beverages sector in the future. Such competition will push up the price of the food industry s raw materials and place new pressures on food companies to remain competitive and profitable. In the US up to 30 per cent of the land mass that was being used to produce food is now being diverted into the production of corn and maize for biofuels. Such trends are pushing up feed prices for farmers. Increasing demand for meat and dairy products from China and India is further driving up raw material prices for food manufacturing companies in Europe. Wheat prices this year in Europe have increased by 70% as supplies available for food manufacturing decline. A key issue for the future will be the extent to which food producers can pass on such cost increases to retailers and ultimately to the consumer. If such costs can not be pushed on, many food and beverage producers will be under increasing pressure to remain competitive despite significant opportunities in new markets. This is likely to lead to increasing consolidation within the sector and subsequent job losses. Power of Retailers Despite the presence of food manufacturing giants, it is food retailers who will increasingly control the food chain with their ability to exert enormous influence over both consumers and suppliers. In 2003, the world s top 30 grocery retailers accounted for about one-third of retail sales worldwide and for about two-thirds in Europe, with the leading 10 European retailers representing 40% of total retail sales (European Foundation for the Improvement of Living and Working Conditions, 2004a). Table 2.5 shows the top 10 grocery retailers worldwide, with Wal Mart the biggest player by far. But Europe s own retail giants, such as Carrefour, Ahold and Tesco, are also prominent. This trend suggests that food retailing in Europe will be characterised by fewer, bigger players, more international in their structure, with US retailers seeking to increase their 19

21 presence significantly. Some analysts predict that global food retailing will be dominated by as few as four to five players in the near future (Cap Gemini Ernst and Young, 2002 in European Foundation for the Improvement of Living and Working Conditions, 2004a). Table 2.5. Top 10 Grocery Retailers worldwide, 2003 Company Country of Origin Net sales bn Grocery sales bn Wal Mart US Carrefour France Ahold Netherlands Kroger USA Tesco UK Aldi Germany Rewe Germany Metro Germany ITM France Schwarz Group Germany Source: M+M Planet Retail, 2003, European Foundation, 2004a Given the dominant position of these organisations they have an enormous influence over consumers and can also dictate to farmers and food and beverage manufacturers. Globalisation/Regionalisation Increasing international integration of markets in recent years has meant that agricultural and food products are increasingly traded across national borders. Within Europe, the accession of new Member States in Eastern Europe is bringing both easier access to agricultural supplies as well as new consumers (European Foundation for the Improvement of Living and Working Conditions, 2004a). While oil prices have been rapidly rising over the last two to three years, over the past 30 years, energy has been relatively cheap and has fuelled the creation of an increasingly global food chain. Relatively low oil costs made it possible to provide all-year round foods, allows vegetables and fruits to be flown in from Africa, and shoppers to drive to out of town supermarkets (European Foundation for the Improvement of Living and Working Conditions, 2004a). However, the organisation of the food system appears to be reverting to the older system of prioritisation of local produce as a result of rising energy costs. The global food chain has also resulted in increased competition within the sector, driven primarily by food retailers, who have enormous influence over both consumers and suppliers (European Foundation for the Improvement of Living and Working Conditions, 2004a). Concentration in retailing has also been growing. As outlined above, In 2003, the world s top 30 grocery retailers accounted for about one-third of retail sales worldwide and for about two-thirds in Europe, with the leading 10 European retailers representing 40% of total retail sales. 20

22 Research and Development Investments in innovations will be crucial to maintaining the EU food and drink industry s international competitiveness, although, until recently, spending on R&D in the food and beverage sector was minimal. In the EU, total industry spending on R&D reached 165 billion in The food industry only accounted for 10 billion compared to the energy industry 21 billion and the manufacture of transport equipment at 38 billion (Hamann, 2007). R&D spending varies between countries, with the Netherlands and Finland among the highest spenders in the EU, with a R&D intensity of 0.50% on average. Generally, countries in the South of Europe spend less on R&D, when compared with their Northern counterparts, due to the more fragmented nature of the sector in Southern states, along with a stronger preference for fresh and low-processed food in the latter countries. The R&D spending in the New Member States is very low compared to the EU-15 (Hamann, 2007). Only around 1% to 1.5% of the food industry s total investments are on R&D. A survey carried out in 2006 among European, American, Australian and Japanese food companies showed that European food companies spent proportionally less on R&D than their competitors in the other countries (Hamann, 2007). Food companies expenditure on R&D as a percentage of turnover is: Japan 1.21 Australia 0.40 USA 0.35 EU Expenditure on R&D also varies within the food and beverage sector. Food companies with above average R&D spending are those producing ingredients or healthy (functional) food (see Table 2.6). Table 2.6. R&D spending in selected Top-20 EU food and drink companies Company R&D spending R&D in % Sub-sector mn of turnover Vilmorin Clause, FR Vegetable seeds and biotech Danisco, DK Ingredients and sugar Kerry, IE Ingredients and dairy Numico, NL Nutritional food Raisio, FI Functional food and other goods CSM, NL Ingredients and other foods Barilla, IT Pasta and baked goods Source: CIAA, 2006 Looking to the future, survey data from 2005 shows that 48% of EU food and drink companies are not planning to expand their R&D expenditures, and 4% are considering to close down R&D activities (Hamann, 2007). These developments will further push R&D activities into the large companies, who on the other hand, are planning to increase R&D expenditures. From 2003 to 2005 large companies expenditures on R&D increased by 10 billion and in 2005 the aggregated R&D spending of top-20 EU food and drink companies reached 1.8 billion. 21

23 A range of incentives for food and beverage companies and other stakeholders to invest in R&D are available at EU and national level. For example, EU Structural Funds, research programmes such as the Cooperation Programme, as well as national governments funding streams have been made available to small, medium and large companies to fund new and innovative technologies, sustainable production methods and new approaches to logistics within the food and beverages sector. Technological Developments The key technological developments driving the sector are: Biotechnology Biotechnology, including diagnostics, genetics and breeding technologies, environmental impact assessment and risk analysis, has grown rapidly in recent years and has had a great impact on the food and beverage sector. While this technology obviously has great potential to produce more and better food products at lower costs, including genetically modified crops and animals, there are real fears about the effects of the technology on animal and human health and on the environment. The food industry needs to develop the competence to both harness and regulate this new technology. It also needs to ensure better communication between the scientific community and consumers. Developments in Information and communications technology (ICT) Developments in new technology are having enormous effects on the food industry. They have completely changed the way farmers, food processors and retailers and customers interact. Increasingly it is only food producers that have an ICT capability that retailers will work with. IT also allows firms in the sector to capture a growing range of market information and intelligence. Niche and specialist suppliers are increasingly selling their products direct to customers on the internet. Information technology has also changed the way quality control is ensured within the sector. Increasingly modelling of changing consumer attitudes and purchasing behaviour will be used to help firms to responsive rapidly to changing demand. Production and processing technologies and systems Improved production and processing technologies (including ingredient technology; food microstructure, flavour and quality; minimal processing technologies; pathogen control systems, including risk analysis methodologies; food irradiation; high pressure technology and robotics) are increasing the ability of the sector to meet customer demands for guaranteed food safety, assured freshness and quality. The rate at which these technologies are introduced and the extent to which they are diffused throughout the sector will play a key role in determining the future competitiveness of the European food and beverages sector. Food safety and Regulation Safety and environmental concerns have increasingly shaped the farming and food system in Europe and have led to EU Directives on food safety. Crises over BSE, foot and mouth disease, dioxin-contaminated animal feed, as well as the GM food debate, have put the spotlight on food safety and the impact of food and farming on the environment as never before. The Belgian dioxin scandal, in particular, prompted the 22

24 European Commission to adopt a White Paper on food safety covering all aspects of food products from farm to table. The White Paper led to a landmark General Food Law Regulation in 2002, which set out the general principles of food law, and provided the legal basis for the creation of the European Food Safety Authority (EFSA). From the food and drink manufacturing industry s perspective, food safety is crucial in building consumer confidence in its products. Above all, the industry needs transparent, predictable, efficient and responsive decision-making procedures to encourage innovation (CIAA, 2001, in European Foundation for the Improvement of Living and Working Conditions, 2004a). Consumer Demands and Trends Arguably the most important driver of change is trends in consumer demand. The factors that influence consumer demand for food and drink products are complex: demographic and socio-economic change; busier lifestyles; health, nutrition and safety concerns; environmental and ethical concerns; migration and demand for ethnic foods. The growing recognition of the value of a well-balanced diet in order to stay healthy has perhaps been central to calls for healthy foods, with many food producers cashing in, producing and promoting health or functional foods intended to give specific medical or physiological benefits, e.g. spreads that reduce cholesterol or pro-biotic yoghurt drinks. A 2002 status report on nutrition in Europe recognised that good nutrition can help to reduce the prevalence of many common diseases, such as cardiovascular disease, cancer, diabetes and obesity (European Commission, 2002). Dietary habits and intakes depend on individual choices (cultural influences, food preferences) as well as socio-economic and environmental factors (affordability and availability of food products, quality and safety of products, etc). The EC Treaty, the White Paper on food safety, Community action programmes in public health, all illustrate the European Union s responsibility for, and commitment to, improving nutrition and health. However, there is growing frustration among health professionals when it comes to what people are eating. For instance, the UK s Food and health action plan (Department of Health, 2003, in European Foundation for the Improvement of Living and Working Conditions, 2004a) found that: advice on healthy eating is consistent and well established based on sound evidence; few people currently follow Government advice for a healthy diet; most people eat more saturated fat, salt and sugar and less fruit and vegetables than experts recommend; the diet of people on low incomes is an area of particular concern. If diet-related diseases continue to grow, health professionals may be successful in persuading policymakers that the traditional health education approach is insufficient. Among the ideas that are gaining currency are linking social insurance contributions to body mass index in Austria and a tax on fatty foods in the UK (European Foundation for the Improvement of Living and Working Conditions, 2004a). 23

25 On the other side of the equation is the reduction in the available of time available to Europeans to prepare a healthy meal, resulting in a greater demand for convenience foods. The Kerry Group estimates that as much as 15% of all food consumed daily in the US is now eaten in the car, a phenomenon known as dashboard dining (Feeney, 2002, in European Foundation for the Improvement of Living and Working Conditions, 2004a). The increase in the consumption of convenience foods has also resulted from food producers targeting snack foods at teens and tweens. While some European countries may be slower to follow these trends, nevertheless, greater time pressure on many people s lives is increasing the demand for convenience foods and ready meals, snacking and snatched meals, and eating out (European Foundation for the Improvement of Living and Working Conditions, 2004a). As a result of growing concerns about rising obesity levels and genetically modified foods, the diet food industry and the organics sub-sector are expected to show particularly strong growth. The diet-related food and drink market is expected to grow by 3.1% in Europe and 3.6% in the US between 2006 and 2012 (justfood, 2006). In global terms, the United States of America, United Kingdom and Germany are going to be the key geographical areas of growth for the organic food market. Germany s organic food market will accelerate with the highest annual growth rate of 12% for the five-year period (China CCM, 2007). In addition, the beverages subsector is also expected to show strong growth in Europe, particularly for soft drinks and bottled water, although demand for both beer and coffee within Western Europe is likely to decrease (Canadean, 2007). While the food and beverage sector is likely to continue to grow in the medium term, due to increased demand driven by higher levels of disposable incomes of consumers, the industry needs to take into account a number of challenges that lie ahead, namely, rising oil prices, greater uncertainty in global markets, the diversifying needs of consumers and the relinquishing influence manufacturers have over the goods they produce. A better understanding of these issues by company-owners and managers is required for the sector to continue to be successful. For the European food and beverages industry to thrive in the future it needs to become increasingly innovative, market-led and consumer-orientated. It also needs to ensure that the image of the sector is positive and that Europeans companies are seen as dynamic, attractive to existing and potential employees and valued by the wider public. In particular the sector needs high achieving and innovative senior management and technical staff to drive the kind of positive change required to ensure international competitiveness and a positive customer outlook. Table 2.7 outlines the strengths and weaknesses of the sector, as well as the opportunities and threats it faces. Table 2.7. SWOT Analysis of the Food and Beverages Sector Strengths Food and beverages is a traditionally strong sector in the EU New developments in technology Growth in niche markets such as natural foods and convenience foods to meet consumer demands Positive working relationship with agricultural sector Developed quality/assurance systems Weaknesses Weak investment in R&D compared to competitors Increasing food scares (BSE, Avian flu) Difficulties in recruitment and retention of high calibre staff Low level of investment in staff development Lack of strategic management and development skills 24

26 Opportunities New technological innovations Expected growth in productivity Consumer demands and quality controls likely to encourage higher standards Opportunities for growth as incomes rise in Central and Eastern European countries Further development of specialised, niche markets Increasing globalisation Threats Strength of retail sector WTO Agreements likely to lead to increased exposure to international competition Potential decline in demand for some products within the domestic market Rising oil prices likely to reduce profit margins Increasing competition for land to grow bio fuels and other food products resulting in increasing grainbased food prices The European Monitoring Centre on Change (2006) indicates the role that the various stakeholders involved in the sector need to play (see Table 2.8) if the European food and beverages sector is to develop and compete effectively with manufacturers from newly emerging markets, including Brazil and China. It highlights how European manufacturers need to work in partnership, with clearly defined roles and responsibilities if they are to be successful. Table 2.8. Roles and Responsibilities of Relevant Stakeholders for the Development of the Food and Beverage Sector Player Multinational companies Action take the lead in the innovation process self-regulate on the issue of labelling through the creation of platforms, bringing together different actors SMEs exploit expert potential of niche products address succession crises self regulate on the issue of labelling through the creation of platforms, bringing together different actors Trade unions support and encourage innovation culture in companies Regional authorities support SMEs in realising export potential encourage networking among SMEs and between big players and SMEs facilitate access to ERDF and ESF organise information events addressing the succession issue in SMEs Governments encourage innovative culture and entrepreneurial spirit through the educational system Source: European Monitoring Centre on Change, 2006 explore further present eating habits taking into account lifestyle changes improve teaching about nutrition, food preparation and a healthy lifestyle in schools 2.6. Impact of these developments on employment and skill needs In this section of the report we highlight how the developments outlined above will impact on employment and related skill and training needs in the future. Employment Employment in the food and beverage sector in Europe is likely to continue to fall largely as a result of increasing productivity. This will result in particular in a drop in employment opportunities for unskilled and semi-skilled workers. (c.f. Simpson and Stalker, 2004). 25

27 As was shown earlier, many of those working in the food and beverages sector are unskilled or semi-skilled, traditionally requiring little training to carry out their work effectively and efficiently. However in the future additional training will be needed to ensure that such employees have the skills to comply with new regulations, work with new technology and produce the type of goods that meet the increasingly diverse needs of consumers. Given the wide range of complex factors impacting on the competitiveness of the European food and beverages sector it is particularly important that European companies have the technical, professional and management skills to allow such companies to anticipate and adapt to changing demand and market pressures, and to drive innovation. Skill Needs A recent study on the food processing sector in Ireland by Price Waterhouse Cooper (PWC) indicates what the key skills needed in the sector in the future will be. (Table 2.9) Table 2.9. Future skill needs in the European food manufacturing sector Skill Sets Key Skills Trends in quantity and quality R&D/ New product development (NPD) and Quality control skills Processing skills Sales and marketing skills Support skills Food technology/science skills NPD commercialisation skills Product research skills Lab Technician skills New packaging design skills Quality control/auditing skills HACCP skills Sensory analysis/product tasting skills Product management skills Production supervisory skills People management skills Operative skills (Existing technology, new processing and craft workers) Quality control skills Food safety skills Food hygiene skills World class manufacturing skills Total quality management skills Basic numeracy/literacy skills Production management skills Marketing skills Sales skills Branding skills Market research skills Market development skills Customer interface skills Language skills Negotiation skills Category management skills Strategic account management skills General management skills Finance skills Human resourcel skills Business planning skills IT skills Engineering skills of skill needs Increasing numbers will be required due to growing demand for new product innovation with a growing demand for advanced technical competencies and a strong commercial focus Reduced numbers but need for increasing efficiency and for greater competency in food quality and safety and in supervisory and production and people management skills. Reducing numbers as retailers consolidate but need for stronger customer focus and technical appreciation of foodstuffs among sales and marketing staff Reducing numbers due to rationalisation with a growing demand for people and change management skills 26

28 Source: PWC, 2002 Training skills Change management skills Procurement skills Regulatory skills The PWC study also summarised the key skills gaps in that exist the food and beverages industry. (Table 2.10.) Table Key skills gaps in the food and beverages sector R&D/NPD/Quality Control Skills Processing Skills Skill Sets Sales and Marketing Skills Key Skill Needs Skills needed to commercialise NPDs Product Research/NPD Skills Operative Skills (existing technology) Operative Skills (new tech/process) Operative Skills (craft workers) Production Supervisory Skills Operative Skills (existing technology) Operative Skills (new tech/process) Production Supervisory Skills Operative Skills (craft workers) Marketing Skills Language Skills Negotiation Skills Category Management Skills Product Research/NPD Skills Support Skills Training Skills IT Skills (particularly those underpinning supply chain management and logistics processes) Source: PWC, 2002 An Australian study also highlights the extent to which the key drivers of change will impact on skills within each of the key sub-sectors. (Table 2.11) Table Impact of drivers of Change on skills in Key subsectors in the Food Drivers Food Meat Seafood Worker attraction and retention HIGH HIGH HIGH Consumer and Customer demands MEDIUM MEDIUM HIGH Competitiveness and productivity HIGH HIGH FAIR demands Business compliance HIGH HIGH HIGH Innovation HIGH MEDIUM MEDIUM Globalisation HIGH HIGH HIGH Source: Australian Agrifood Industry Skills Council, 2005 The Australian Report also highlights the relationship between the different drivers of change and how a virtuous circle of positive development can be achieved. 27

29 Fig Relationship between drivers of change within the food and beverage sector-creating a virtuous circle Skills Quality training & recognition; E-learning; Attraction & retention strategies; Flexible training strategies; Reviewed training funding model; Recognition of skills; Aging workforce. Business Compliance Environmental Management; OHS; Insurance Licensing; Food safety. People Business Management Consumer expectations; HR; Small business management; Investment in R&D; Leadership; Production costs; Globalisation; Product marketing; Supply chain; Networking; Innovation. Industry Image Pathways; Attraction & retention; Industry promotion Skills passports (Portability & multiskilling); Working conditions; Sharing best practice. Source: Australian Agrifood Industry Skills Council, 2005 A key way of addressing these interrelated issues is through the development of a strong partnership approach between the industry and the educational sector to support the development of advanced process and product development R&D and management skills and to ensure that innovations are widely known and disseminated across the sector. Skill Shortages Research carried out on the food and beverage sector in the UK in recent years indicates the extent of skills gaps in the sector. As can be seen from Table 2.12 below, the skills that are seen to be deficient also tend to be those that are central to performance of the job. For example, 52 per cent of establishments with skill 28

30 gaps amongst skilled trade occupations cite technical and practical skills as lacking and 54 per cent of establishments with skill gaps amongst managers cite management skills as lacking (Improve, 2004). Table Extent of Skills Gaps reported by Food and Beverage Manufacturers (%) Managers Admin Staff Skilled trades Sales Machine operatives Elementary operatives Customer Handling Skills Communication Skills Problem Solving Skills Team Working Skills Technical and Practical Skills Management Skills General IT user skills Numeracy Skills Literacy Skills IT professional skills Foreign Language skills Personal attributes 1 1 * * - 3 No particular skills difficulties Source: Improve, 2004 These findings indicate that sector-wide training for unskilled, semi-skilled workers, technical and professional staff as well as managers, is needed to ensure that the sector remains viable. In addition, the sector as a whole needs to become more employee-friendly, with efforts made to improve working conditions, training opportunities and career paths, in order to increase the attractiveness of the sector to potential employees. A recent survey carried out among employers in the food and beverage sector in the UK indicated that skills shortages among skilled operatives and professionals (Improve, 2005), are largely a result of unfavourable working conditions. Further research carried out in Northern Ireland identified such conditions as: Unsociable hours; Need to work holidays; Can t be a clock-watcher- you can t leave work to complete the next day; Doesn t suit people with young children or older dependents; Boredom in some routine work; Seen as a white coat industry; and Often a cold and wet place to work with a bad smell, also heavy handling issues. (Market Research Northern Ireland, 2006) Training Needs The dominance of SMEs in the food and beverage sector in Europe has resulted in reluctance on the part of many firms to invest in training and skills development. Such firms view investment in training as more likely 29

31 to reap benefits in the long term rather than the short term and as likely to result in demands for higher wages. Given the demand to keep prices and thus costs low, maintaining the status quo is often seen therefore as the easier option. The National Employer Survey in England identified some of the reasons manufacturers failed to put in place adequate training for their staff. As can be seen in Table 2.13 factors related to the expense of training, including lack of cover and funding for training. However, the primary reason cited, lack of time for training indicates a lack of awareness about the need for, and the benefits of, training staff, in terms of future business development, quality improvement and efficiency. Table Barriers to developing/maintaining a proficient team of staff Multiple response % Lack of time for training 58 Lack of cover for training 50 Lack of funding for training 49 Lack of suitable courses in the area 26 Unwillingness of staff to undertake training 25 Lack of suitable courses generally 22 High staff turnover 17 Other 2 Source: Improve, 2004 Nevertheless, improved working conditions, better pay and more structured career paths are required in the future if the industry is to remain competitive and innovative. Training is therefore required both to react to changing demands (e.g. new regulations) and to support a proactive and strategic response to changing market and technological requirements and potential business opportunities. The European Monitoring Centre on Change (2006) suggests that support should be organised close to manufacturers, i.e. at regional level. Regional authorities are best aware of the strengths and competitive advantages of companies in their region. They can help bringing players together. Cooperation and networking among business, for example through the establishment of consortia among SMEs in need of financial support and advice for exporting, would help share the burden. Economic development agencies have a role to play here as well. Regional authorities should also facilitate access to European Structural Funds (ERDF and ESF) and other funding opportunities Summary The food and beverage sector is the largest manufacturing sector in Europe and remains highly important as a source of employment and output as well as being a source of well being for its citizens. However, increased competition, poor working conditions and more stringent regulations have had an impact on the viability of the sector and have led to difficulties in the recruitment and retention of staff. While prospects for the sector in the short to medium term are good, a number of threats highlight the need for investment in the training and development of staff as well as for increased support for product development and innovation, and for business development, across the sector from large multinationals to SMEs. 30

32 To effectively meet these challenges the European food and beverages sector needs to recognise that the environment within which it will increasingly operate will be characterised by: A greater degree of market liberalisation Higher levels of food regulation Greater intensity of competition More consolidation across all sectors Market-led rather than production-driven Increasing sophistication of both trade buyers and consumers High levels of technology More demanding and greater fragmentation among consumers (PWC, 2002) To respond effectively to these changes managerial staff, skilled operatives and professionals, R&D and technical staff are all in need of adequate training and support. The role played by regional authorities and national training bodies in helping companies to respond to these pressures will be vital for the development of the sector as a whole throughout Europe. 31

33 3. STATISTICAL CHARACTERISTICS OF THE SECTOR 3.1. Introduction This chapter provides a short overview of the sector of manufacture of food products and beverages. It covers the main aspects related to the FB sector enterprises, employment and performance indicators. The analysis was performed on the basis of statistical data specially developed for the study. In addition, the analysis used some secondary data, including studies, surveys and other publicly available information about the FB sector and the Lithuanian economic development. Admittedly, in certain cases (due to little statistics) conclusions and summaries are provided only on sector level Briefly about the Sector of Manufacture of Food Products and Beverages The sector of manufacture of food products and beverages is different from the other sectors of manufacturing because of the huge direct impact of consumers upon its production. Moreover, food products are difficult (if ever possible) to patent; new products stay in the market for a short period of time (until analogous products are offered) and therefore their value added is small as compared to the other products of manufacturing. The sector is subject to regulation by the Lithuanian Agricultural and Food Products Market Regulation Agency. The sector is closely linked to the sector of agriculture, hunting, forestry and fishing, which is the supplier of raw material, and the retail trade sector. On the basis of the information available, internal and external factors affecting the future development of the FB sector include the following: Internal factors: renewal and investment; experience in searching for new markets, niches and partners; increasing competition among exporters and decreasing dependency on one market; labour force structural and qualitative changes; old technologies and poor work organisation; insufficient pace of creation and implementation of innovations; insufficiently effective activities of small and medium-sized businesses; change in household consumption patterns; External factors: presence of a favourable market; market globalisation; foreign direct investment promoting knowledge and developing export channels; transfer of production to the countries with smaller labour costs; unfavourable market trends in energy resources. The SWOT analysis of the Lithuanian sector of manufacture of food products and beverages is provided in Annex 1. 32

34 3.3. Enterprises Distribution of enterprises by sub-sectors and size. According to preliminary data of 2007, the Lithuanian sector of manufacture of food products and beverages had 1,094 enterprises. Out of that number, 47 per cent of enterprises specialised in the production of food products, 23 per cent focused on production, processing and preservation of meat and meat products, whereas 11 per cent were involved in the production of beverages. The remaining enterprises (constituting one fifth of the total number) carried out activities in the other six sub-sectors. The sector was predominated by very small (having up to 9 employees) and small (from 10 to 49 employees) enterprises, making up 80 per cent of the total number of the sector enterprises. The same trend was observed on the European scale. The Lithuanian structure of the FB sector and the number of enterprises operating in it is presented in Table 3.1. Table 3.1. Structure of the Sector of Manufacture of Food Products and Beverages, 2007 Activities under NACE Enterprises by Number of Employees Up to 9 From 10 to 49 From 50 to 249 Production, processing and preserving of meat and meat products (15.1) Production, processing and preserving of fish and fish products (15.2) Production, processing and preserving of fruit, berries and vegetables (15.3) Manufacture of vegetable and animal oils and fats (15.4) Manufacture of dairy products (15.5) Manufacture of grain mill products, starches and starch products (15.6) Manufacture of prepared animal feeds (15.7) Manufacture of other food products (15.8) Manufacture of beverages (15.9) Total From 250 Total Change in the number of enterprises in the sector of manufacture of food products and beverages. From 2003 to 2007, the number of enterprises in the sector of manufacture of food products and beverages decreased by almost one third. Such reduction is observed in almost all the sub-sectors (see Table 3.2). Table 3.2. Change in Number of Enterprises in the Sector of Manufacture of Food Products and Beverages Sub-sector Number of Enterprises Forecast for 2007 Meat (15.1) Fish (15.2) Fruit and vegetables (15.3) Oils and fats (15.4) Diary products (15.5) Grain (15.6) Feeds (15.7) Other products (15.8) Beverages (15.9) Total

35 During the period under review, the sub-sectors of meat, other products and diary products experienced the fastest reduction in the number of very small (up to 9 employees) and small (from 10 to 49 employees) enterprises. The number of big enterprises (250 and more employees) decreased in the sub-sectors of dairy products and animal feeds. In contrast, the number of these enterprises went up in the sub-sectors of meat, fish and other products. Geographical distribution of enterprises in Lithuania. Approximately 40 per cent of the overall number of sector enterprises operate Kaunas and Vilnius counties. The same share of enterprises is in Klaipeda, Panevezys and Siauliai counties. The distribution of the sector companies in other counties range from 3 to 6 per cent (Fig. 3.1). Fig Geographical Distribution of Enterprises operating in the Sector of Manufacture of Food Products and Beverages by Counties in % 24% 20% 17% 15% 12% 13% 12% 10% 5% 3% 6% 5% 4% 4% 0% Alytus Kaunas Klaipeda Marijampole Panevezys Siauliai Taurage Telsiai Utena Vilnius 3.4. Employment in the Sector Distribution of employees by sub-sectors. According to the preliminary of 2007, the sector employed 51,700 people. They account for more than 3 per cent of the total number of employees in the overall Lithuanian economy. With regard to the number of employees, the FB sector is one of the richest among the branches of manufacturing (constituting more than 19 per cent of all the employed in manufacturing). While looking at the number of staff in sub-sectors, the lion s share is among manufacturers of other food products (constituting about 35 per cent of all the sector employees). Admittedly, the manufacture of other food products has the highest number of employees in the other EU member states. During the period of five years ( ), the number of workers in the FB sector was fluctuating. From 2003 to 2005, their number dropped and from 2005 to 2007 it was increasing yet did not reached the level of 2003 (see Table 3.3). The situation in the EU is as follows: in 2003 and 2004 the number of staff decreased by 4.9 per cent and in 2005, by 1.5 per cent. During the reporting period, the number of employees in very small and small enterprises dropped in Lithuania. The number of the employed was going up in large enterprises operating in the sub-sectors of meat, fish, grain and other food products, whereas large companies working in the subsectors of dairy products, animal feeds and beverages experienced a loss of staff. Noteworthy, the number of employees in large meat sub-sector enterprises doubled during the period under review (Fig. 3.2). 34

36 Table 3.3. Change in the Number of Employees in the Sector of Manufacture of Food Products and Beverages Sub-sector Number of Employees Forecast Meat (15.1) Fish (15.2) Fruit and vegetables (15.3) Oils and fats (15.4) Diary products (15.5) Grain (15.6) Feeds (15.7) Other products (15.8) Beverages (15.9) Total Fig Change in the Number of Employees by Size of Enterprise in the Most Numerous FB Sub-Sectors ME DP up to 9 employees employees employees 250 employees and more OFP BE up to 9 employees employees employees 250 employees and more 35

37 Supply and demand for employees 2 (unemployed and vacant posts). From 2003 to 2006, the number of the registered employed in Lithuania went down. The supply of labour was decreasing in all the sub-sectors of manufacture of food products and beverages. The preliminary data of 2007 show the same trend. Registered vacancies in the FB sectors account for 4 per cent of the total demand of labour in Lithuania. The biggest share of demand is for vacant posts created by the ME and OFP sub-sectors. In , the demand for labour decreased. The biggest reduction was seen in the FI and FV sub-sectors and the biggest growth was registered in the GR and AF sub-sectors. Fig Number of Unemployed and Vacant Posts in the Sub-sectors of Meat and Other Food Products ME forecast Number of unemployed OFP forecast Number of vacancies According to the preliminary data of 2007, the tension level (the ratio between the number of vacancies and the number of the unemployed) in the sector of manufacture of food products and beverages was less than 1 and therefore smaller than the relevant national indicator (standing at accordingly 0.8 and 0.9). This means that the quantitative supply of employees in the sector is lightly exceeding the demand for them. Noteworthy, the tension level among different sub-sectors is not the same. For example, supply is in conformity with demand in the beverages sub-sector, whereas in the sub-sector of animal feeds, the level of supply is smaller than demand and in the sub-sectors of meat, diary products, fish and others the level of supply surpasses demand. (See Fig. 3.4). 2 Source: data of the Lithuanian Labour Exchange specially developed for the study 36

38 Fig Tension Level (Ratio between Occupation Posts and Number of Unemployed) in Sub-Sectors of Meat, Animal Feed, Other Food Products and Beverages forecast Nationally ME AF OFP BE Analysis of the tension level trends by groups of occupation posts shows supply exceeding demand in the groups of professionals, associate professionals, technicians, manufacturers and other workers, yet with regard to separate occupation posts, the trend is quite the reverse. For example, in the group of manufacturers, the demand for plant and machine operators and supervisors of equipment surpasses supply three times, whereas in the group of professionals, the number of vacancies among IT specialists and quality assurance specialists exceeds the number of the registered unemployed 6 and 4 times accordingly. The demand for administrative staff exceeds the supply for them. The biggest shortage is of the employees of personnel division. Work permits issued to foreigners in Lithuania 3. According to the data we have, the number of work permits issued to foreigners in Lithuania is constantly increasing. From 2005 to 2007, the number grew 3.5 times. This trend is characteristic of all the national economic sectors, including the sector of manufacture of food products and beverages. According to the preliminary data of 2007, work permits issued to foreigners for employment in the FB sector was 316, i.e. two times more than in the year Out of that number, qualified workers accounted for as much as 90 per cent, which is 10 per cent more than in Performance Indicators Turnover. According to official data, the turnover in the FB sector has gone up in the recent five years (see Table 3.4). According to the preliminary data of 2007, the biggest turnover was in the sub-sector of dairy products and other food products, followed by the meat and beverages sub-sector. Admittedly, from 2003 to 2004 the sector turnover was shrinking to go up again since During the period under review, the biggest growth in turnover was experienced in the sub-sectors of fruit and vegetables, meat, fish and beverages. The FB sub-sectors differ in terms of growth/reduction in turnover experienced by them. In , the turnover of enterprises operating in the sub-sectors of meat, fruit and vegetables was constantly 3 Source: data of the Lithuanian Labour Exchange specially developed for the study 37

39 increasing. The annual growth of turnover in the sub-sectors of grain and fats and oils is replaced by the reduction of it. Since 2005, the majority of the sector enterprises have been enjoying the turnover growth. Table 3.4. Change of Turnover in the Sector of Manufacture of Food Products and Beverages (thous. LTL) Sub-sector Turnover forecast Meat (15.1) Fish (15.2) Fruit and vegetables (15.3) Oils and fats (15.4) Diary products (15.5) Grain (15.6) Feeds (15.7) Other products (15.8) Beverages (15.9) Total Productivity (Turnover/Number of Employees). Table 3.5 shows that during the period of , the level of productivity grew in all the FB sub-sectors. The biggest growth was observed in the sub-sectors of fruit and vegetables, meat, oils and fats, and beverages. Table 3.5. Productivity (Turnover/Number of Employees) Change in the Sector of Manufacture of Food Products and Beverage (thous. LTL) Sub-sector Productivity (Turnover/Number of Employees) Change (thous. LTL) forecast Meat (15.1) Fish (15.2) Fruit and vegetables (15.3) Oils and fats (15.4) Diary products (15.5) Grain (15.6) Feeds (15.7) Other products (15.8) Beverages (15.9) Earnings. The biggest average monthly gross 4 earnings were offered in the sub-sectors of diary products, animal feeds, beverages, and fruit and vegetables (Fig. 3.5). Although earnings were going up in all the subsectors, they still remained lower than the national average. As compared to the other branches of manufacture, earnings offered to the FB sector staff are among the lowest. According to preliminary data, 4 pre-tax earnings. 38

40 smaller earnings are only in the groups of manufacture of textile and textile products, manufacture of leather and leather products and manufacture of wood and wood products. Fig Change in Average Gross Monthly Earnings in Sub-Sectors of Beverages, Animal Feeds, Dairy Products and Fruit and Vegetables 2500 FV DP AF BE forecast Coun try Created gross value added (further referred to as the GVA). According to the data we have, the value-added created by the sector went up my slightly more than 1.5 times during the five year period. According to the preliminary data of 2007, it accounted for 3.7 per cent of the national GVA. Although with regard to the GVA, the sector of manufacture of food products and beverages is the leading branch of manufacturing, yet its production rate (value-added per hour of actual work), albeit exceeding the national average, is lagging behind many other branches. Export and import. On the national level, the foreign trade balance was negative and from 2003 to 2006 it increased 1.8 times. Although the volume of import in the FB sector was increasing faster than that of export, the foreign trade balance remained positive for several years in succession. With regard to the volume of export, the FB sector is one the leaders among the branches of manufacturing. Generally speaking, the FB sector is sufficiently competitive on the international scale Development Trends Changes in the number of employees operating in the FB sector, the number of staff employed by them, the rate of productivity, turnover, earnings, the share of GVA and future forecasts are provided in Annex 2. The forecasts were made by using regressive and autoregressive models, examining the overall trends of development of the Lithuanian economy and historical statistics. The findings obtained give ground for optimistic forecasts, i.e. that he turnover in the majority of sector enterprises will continue to grow (with the exception of oils, fats and grain) but the rate of growth is likely to slow down. One of the reasons for that is insufficient labour force resources. The volume of production should be increased by resorting to some other sources, for example, increasing the labour productivity, which is currently quite low, and applying new technologies. The average monthly gross earnings should be growing, offering more attractive employment conditions in the sector enterprises. 39

41 3.7. Summary The sector of manufacture of food products and beverages is different from the other sectors of manufacturing because of the huge direct impact of consumers upon its production. New products stay in the market for a short period of time (until analogous products are offered) and therefore their value added is small as compared to the other products of manufacturing. In the future, the sector of manufacture of food products and beverages will be subject to the following internal factors: renewal and investment; experience in searching for new markets, niches and partners; increasing competition among exporters and decreasing dependency on one market; labour force structural and qualitative changes; old technologies and poor work organisation; insufficient pace of creation and implementation of innovations; insufficiently effective activities of small and medium-sized businesses; and change in household consumption patterns. The sector development will depend on the following external factors: presence of a favourable market; market globalisation; foreign direct investment promoting knowledge and developing export channels; transfer of production to the countries with smaller labour costs; unfavourable market trends in energy resources. According to preliminary data of 2007, the Lithuanian sector of manufacture of food products and beverages had 1,094 enterprises. Out of that number, 47 per cent of enterprises specialised in the production of food products, 23 per cent focused on production, processing and preservation of meat and meat products, whereas 11 per cent were involved in the production of beverages. The remaining enterprises (constituting one fifth of the total number) carried out activities in the other six sub-sectors. The sector was predominated by very small (having up to 9 employees) and small (from 10 to 49 employees) enterprises, making up 80 per cent of the total number of the sector enterprises. From 2003 to 2007, the number of enterprises in the sector of manufacture of food products and beverages decreased by almost one third. Approximately 40 per cent of the overall number of sector enterprises operate Kaunas and Vilnius counties. The same share of enterprises is in Klaipeda, Panevezys and Siauliai counties. According to the preliminary of 2007, the sector employed 51,700 people. They account for more than 3 per cent of the total number of employees in the overall Lithuanian economy. Employees in the sub-sectors of other food products, meat and diary products made up 70 per cent of the total number of the sector employees. During the period of five years (in ) the number of staff in very small and small enterprises was dropping. The number of the employed was going up in large enterprises operating in the sub-sectors of meat, fish, grain and other food products, whereas large companies working in the sub-sectors of dairy products, animal feeds and beverages experienced a loss of staff. In , the supply of labour was decreasing in all the sub-sectors of the sector of manufacture of food products and beverages. According to the preliminary data of 2007, work permits issued to foreigners for employment in the FB sector was 316, i.e. two times more than in the year Out of that number, qualified workers accounted for as much as 90 per cent, which is 10 per cent more than in

42 According to official data, the turnover in the FB sector has gone up in the recent five years. According to the preliminary data of 2007, the biggest turnover was in the sub-sector of dairy products and other food products, followed by the meat and beverages sub-sector. During the period of , the level of productivity grew in all the FB sub-sectors. The biggest growth was observed in the sub-sectors of fruit and vegetables, meat, oils and fats, and beverages. During the recent five years earnings have been going up in all the sub-sectors, yet they still remained lower than the national average. As compared to the other branches of manufacture, earnings offered to the FB sector staff are among the lowest. The value-added created by the sector went up my slightly more than 1.5 times during the five year period. With regard to the volume of export, the FB sector is one the leaders among the branches of manufacturing. Generally speaking, the FB sector is sufficiently competitive on the international scale. 41

43 4. CHARACTERISTICS OF SECTOR BASED ON SURVEY FINDINGS 4.1. Introduction This chapter will describe the sector of manufacture of food products and beverages on the basis of the social survey findings. In addition, it will analyse the trends of the FB enterprise activities and demand for staff in the sector. The sample for the postal questionnaire survey was selected on the basis of the data taken from the Registry of Economic Entities, as well as by looking at the type of the prevailing economic activity (according to the statistical classification NACE) and the enterprise size. A postal questionnaire survey was performed. All the participants of the postal questionnaire survey were asked to return the filled out questionnaires after several weeks. When the questionnaires were sent out to the respondents, telephone calls were made to remind them about the deadline for sending the questionnaires back. In this way, a sufficient level of response was secured. The level of response was 25 per cent. The presumption was made that the biggest impact on the sector is made by medium-sized and large companies. The data about the distribution of the response level by sub-sectors and the enterprise size are presented in Table Table 4.1. Distribution of Response Level by Sub-sectors and Size of Enterprise Enterprises by Number of Employees Number of enterprises which were sent a questionnaire FB sector Response level % Up to % From 10 to % From 50 to % 250 and more 42 56% Total % Interviews were conducted with the leading enterprises. The total number of the FB sector enterprises interviewed was Performance indicators Characteristics of enterprises. According to the social survey findings, the sector is predominated by independent enterprises (accounting for 95 per cent of the total). The majority of the sector enterprises are those of Lithuanian capital (making up 94 per cent). The share of foreign capital companies is bigger in the beverages sub-sector, where they, along with join venture companies, account for 20 per cent of the subsector enterprises. The lion s share of the sector enterprises started their operation before 2001, including more than one third of enterprises which began their activities between 1991 and 1995 and another third of companies which became operative between 1996 and One fifth of enterprises have started their operations since 2001 (Fig. 4.1). 42

44 Fig Start of Enterprise Operation in the Sector of Manufacture of Food Products and Beverages According to Respondents (per cent) before 1990 from 1991 to 1995 from 1996 to 2000 since 2001 Turnover change. According to two thirds of the respondents, turnover was increasing in 2005, 2006 and The majority of them (65 per cent) predict that a similar trend will remain in Less optimistic about the future growth in turnover are enterprises operating in the sub-sectors of diary products and animal feeds. Provision of new products/services. According to the respondents, new products/services were offered by 80 per cent of the sector enterprises in the last two years. Admittedly, fewer new products and services were provided by the sub-sectors of diary products and grain (accounting for 40 and 30 per cent respectively). Competition. The majority of the respondents mentioned high competition in the market. Only one respondent said that competition in local market was medium. All of them agreed that the international competition was huge. Export. During the interview, the respondents were asked to specify the approximate amount of share constituting by the export of products/services per year. The findings reveal that enterprises export about per cent of their production. Business impediments. According to the respondents, the biggest business impediments in the FB sector is high competition, the shortage of qualified workers or simply workers and the tax system. Smaller business obstacles are legal regulation, lack of staff competences, ecological requirements. Use of information technologies (further referred to as the IT). The data about the information technologies currently used or planned to be used in the future are provided in Fig The majority of companies in all the sub-sectors are using e-banking and accounting software and an electronic system of manufacturing planning. Fewer enterprises also take electronic orders by internet. The prevailing information technologies to be used in the FB sector in the future include the electronic system of manufacturing planning and accounting system as well as technologies of taking orders by internet. Less demand is for the customer relationship management. 43

45 Fig Distribution of Responses by the Respondents about IT in Use and to be Used 0% 10% 20% 30% 40% 50% 60% 70% Electronic manufacturing planning and accounting system CRM E-banking E-trade E-sales Other Using Planning to use Use of modern technologies. Modern technologies are used by almost 55 per cent of the FB enterprises, and 64 per cent of them are planning to use modern technologies in the future. On the basis of this information it could be inferred that modern technologies will be used in the future. The most widespread technologies used in the FB sector include modern dispensing and packing machines and automation of technological processes. The modern technologies which are planned to be used in the future include modern dispensing and packaging machines, modern technological equipment and automation technologies of technological processes. The data about the modern technologies which are currently used and planned to be applied in the future are presented in Fig The respondents were asked to assess the impact of modern technologies on the number of employees (managers, professionals/technicians, manufacturers and other staff) in their enterprises. The majority of the respondents (from 57 to 88 per cent) said that the number of managers, specialists/technicians and other workers will remain the same. There was a difference in the opinion about the number of manufacturers. 45 per cent of the respondents said their number will not change and 41 per cent believed that their number will decrease. Several respondents thought that the number of manufacturers may increase. Fig Distribution of Answers given by Respondents about Modern Technologies used or planned to be used 0% 10% 20% 30% 40% Modern technological equipment Modern laboratory equipment Automation of technological process Modern dispensing and packaging machines Advanced technologies (e.g. membrane filters) Environmental technologies Effective waste management technologies Modern waste disposal technologies Other Using Planning to use 44

46 4.3. Employees Employees. According to statistical data specially developed for the study, the sector of manufacture of food products and beverages employed around 51,700 employees. The social survey reveals, that the share of part-time workers in the overall structure of employees in the FB sector makes up approximately 3 per cent and the share of women is 58 per cent. The age structure in the sector is as follows: 15 per cent of employees are up to 30 years of age, 33 per cent are years old, 34 per cent are years old and 18 per cent are aged 50 and above. There is no record showing the difference in the age structure of employees by the size of enterprise and sectors. As compared to the trends in Europe (for more details see Chapter 2.4), the Lithuanian sector enterprises have fewer young (aged up to 30) and part-time employees. According to the findings of the social survey, the highest number of employees in the Lithuanian FB sector is among the groups of manufacturers and other workers. The distribution of employees by groups of occupation posts is shown in Fig Fig Distribution of Employees by Groups of Occupation Posts 5% 6% 9% 2% 49% 29% management administration professionals associate professionals and technicians manufacturers other workers 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Skills of employees. The participants of the postal questionnaire survey were asked to assess the conformity of competence which their staff had to the requirements set for the occupation post as well as mention the skills which their employees lacked most of all. The majority of the respondents said that the competence of their staff meet the requirements set for the occupation post. Admittedly, the competence of top managers, administration and professionals are more in line with the requirements set for their job than that of technicians, manufacturers and other workers. According to the respondents, all the sector employees lack foreign language and work organisation skills. In addition, professionals require work planning and control as well as computer literacy skills. They also often mentioned the lack of quality management and manufacturing management skills. The respondents said that qualified employees lack responsibility, duty and willingness to learn, whereas professions need innovation and management skills. Training of employees. 20 per cent of the respondents from the sector of manufacture of food products and beverages said they had a written employee training plan. In , about 40 per cent of the sector enterprises allocated a share of their working capital to employee training. Three thirds of them spend 1 per cent of their turnover on training and one fourth of companies allocated more than 1 per cent of their working capital on employee training. Two thirds of the respondents said that they mostly provide on-the-job training 45

47 and slightly less than one third (29 per cent) send their staff for training in public and private training establishments. Turnover of staff. The turnover of staff in the FB sector is rather high, accounting for 43 per cent per year. The interviews showed that the main reasons for it are emigration, new technologies, working conditions (seasonality of work) and personal features (non-compliance with work discipline). Table 4.4 shows that in 2007, the biggest turnover of staff was in the groups of manufacturers and other workers and two times smaller associate professionals and technicians. The smallest turnover was observed among managers. Table 4.4. Turnover of Staff in the Sector of Manufacture of Food Products and Beverages by Groups of Occupation Posts Groups of Occupation Posts Top management 9% Change Administration 14% Professionals 15% Associate professionals and technicians 25% Manufacturers 51% Other workers 51% Shortage of employees. The findings of the postal questionnaire survey and interviews showed that different sub-sectors had difficulties in finding different groups of employees. For example, ME, FI, GR, AF and OFP sub-sectors struggled to find manufacturers, the FV sub-sector had problems of finding professionals and the DP sub-sector mostly lacked associate professionals and technicians (see table 4.5). On the overall sector level, the groups of employees which are most difficult to find are manufacturers and other workers, whereas professionals are less of an issue. Asked to mention the main difficulties in searching for the right employees, the respondents mentioned the shortage of labour force and lack of qualification. They also mentioned personal character features of employees (for example, unwillingness to work, alcoholism or dishonesty). Table 4.5. The Most Difficult to Find Employees by Occupation, 2007 ME FP FV Manufacturers (1) Meat cutters Butchers Professionals (2) Food technologists Other workers (3) Drivers Manufacturers (1) Producers and food products Plant and machine operators Professionals (2) Food technologists Other workers (3) Drivers Professionals (1) Food technologists Quality assurance specialists Manufacturers (2) Fruit and vegetable processors Other workers (3) Welders DP GR AF Associate professionals and technicians (1) Mechanics Other workers (2) Drivers Manufacturers (1) Production foremen Plant and machine operators Other workers (2) Metal workers Manufacturers (1) Plant and machine operators Professionals (1) Food technologists 46

48 Manufacturers (3) Production foremen Plant and machine operators Professionals (3) Food technologists Other workers (1) Drivers BE Other workers (1) Drivers Construction workers Manufacturers (2) Plant and machine operators Beverage producers Professionals (3) Beverage technologists OFP Manufacturers (1) Confectioners Bakers Cooks Professionals (2) Food technologists Marketing, supply and sales professionals Other workers (3) Drivers Metal workers 4.4. Forecast of Demand for Employees in the Future The forecast of the future demand for employees in the FB sector has been made by looking at the sector development and the turnover of staff. While examining the change of employees in the sector, the following two reasons were considered: a number of employees who leave their occupation posts also leave the labour market (e.g. due to retirement). The presumption was made that the average annual number of such employees is one tenth of the employees aged 55 or above. According to the Population Employment Survey, the manufacturing, which includes the sector of manufacture of food products and beverages, ad 10.1 per cent of such employees in Therefore, it could be inferred that 1 per cent of employees in each of the occupation groups irreversibly leave the labour market; other employees stay in the labour market. Therefore, they have only two options: either get employed in another company and remain in the sector or move to another economic sector. The latter number of employees is estimated on the basis of two presumptions: (1) the share of employees leaving the sector is directly proportionate to the intensity of staff turnover; (2) if workers from a certain group of occupation change their employment on average every year, the probability that they will leave the sector when moving to another job stands at 50 per cent. The forecast of future demand for employees, developed on the basis of the analysis of social survey findings, is provided in Table 4.6. Table 4.6. Demand for Employees in FB Sector Groups of Occupations Number of Employees in 2006 Development in 5 Years Time Annual Change Leaving Sector in 5 Years Time Need for New Employees in 5 Years Time Need for New Employees in 1 Year Time Top management % Administration % Professionals % Associate professionals and % Source: data of the Statistics Department specially prepared for the study. 47

49 technicians Manufacturers % Other workers % Total Summary The sector of manufacture of food products and beverages is predominated by independent enterprises (accounting for 95 per cent of the total). The majority of the sector enterprises are those of Lithuanian capital (making up 94 per cent). The share of foreign capital companies is bigger in the beverages sub-sector, where they, along with join venture companies, account for 20 per cent of the sub-sector enterprises. new products/services were offered by 80 per cent of the sector enterprises in the last two years. Admittedly, fewer new products and services were provided by the sub-sectors of diary products and grain. The local and international competition is huge. The biggest business impediments in the FB sector is high competition, the shortage of qualified workers or simply workers and the tax system. The majority of companies in all the sub-sectors are using e-banking and accounting software and an electronic system of manufacturing planning. Fewer enterprises also take electronic orders by internet. The prevailing information technologies to be used in the FB sector in the future include the electronic system of manufacturing planning and accounting system as well as technologies of taking orders by internet. Modern technologies are used by almost 55 per cent of the FB enterprises, and 64 per cent of them are planning to use modern technologies in the future. Modern technologies will also be used in the future. The majority of the respondents believe that the use of modern technologies will not affect the number of managers, specialists/technicians and other workers. The sector employs around 51,700 employees. The share of part-time workers in the overall structure of employees in the FB sector makes up approximately 3 per cent and the share of women is 58 per cent. The sector employees lack foreign language and work organisation skills. In addition, professionals require work planning and control as well as computer literacy skills. The turnover of staff in the FB sector is rather high, accounting for 43 per cent per year. The biggest turnover of staff is in the groups of manufacturers and other workers. 48

50 5. SUPPLY OF EMPLOYEES 5.1. Introduction This chapter will provide a short overview of education, groups of occupation posts as well as the trends of employee supply in the sector of manufacture of food products and beverages. The supply of employees is understood as the outcome of education, i.e. the type of qualifications and the number of employees trained. The main data include information about the entrance level, number of graduates, the level of education obtained and the type of qualification acquired. The analysis was performed on the basis of statistical data specially developed for the study, publicly available information about study/training programmes and surveys of vocational schools about the number of graduates employed Education and Job Groups The best way to describe training achievements is to look at qualification 6 acquired. Seeking to obtain a certain qualification, it is essential to have obtained a basic level of education 7. The levels of education in Lithuania are determined by the structure of the system of education. It consists of primary, basic, secondary, post-secondary (the latter is practically no longer applied) and higher education. Pursuant to the Law Vocational Education and Training (new version) 8, qualification is based on competence 9, which include knowledge, skills and values. Qualification and separate competences are laid down in certain documents provided for in the Law on Vocational Education and Training and the Law on Higher Education of the Republic of Lithuania 10. Qualification is the outcome of formal education 11 or other educational attainment. According to their content, training/study programmes are grouped into different areas of education ( Classification of the Lithuanian Education ). Vocational education and training may be primary and continuing. The purpose of primary vocational education and training is to obtain qualification and the purpose of continuing training is to upgrade the existing qualification or obtain a new one. The study examines one part of the continuous vocational education and training: training of the unemployed. Presently, primary vocational training and education is carried out pursuant to the following four-stage programmes: Stage I. The training programmes of this stage only admit persons without basic education. The training duration is two to three years if basic education is pursued. After completing the training programmes, the graduates are given a qualification certificate. Stage II: The training programmes of this stage admit persons with basic education, seeking to acquire vocational qualification. The training duration is two years. After completing the training programmes, the graduates are given a diploma of vocational training and education. 6 Qualification: ability and right to engage in a certain professional activity, as recognised according to a procedure prescribed in law or in legislative acts of the Government or its authorised institution. Republic of Lithuania Law on Education. 7 Education level: competence, knowledge, skills, abilities and values, demonstrating a particular level of personal development, attainment thereof is recognised according to a procedure prescribed by the Government or its authorised institution. Republic of Lithuania Law on Education. 8 A new version of the law was adopted in 2007 and is effective of 1 January Competence: ability to perform a certain activity on the basis of the entirety of acquired knowledge, skills, abilities and values. Republic of Lithuania Law on Education. 10 Republic of Lithuania Law on Education (new version effective as of 28 June 2003), Article 39, Paragraph Formal education: education implemented according to the programmes approved and registered in accordance with a procedure prescribed by legal acts, the completion of which results in the attainment of a primary, basic, secondary, post-secondary or higher education level and/or a qualification. Republic of Lithuania Law on Education. 49

51 Stage III: The training programmes of this stage admit persons with basic education, seeking to acquire vocational qualification and general secondary education. The training duration is three years. After completing the training programmes, the graduates are given a diploma of vocational education and training. Stage IV: The training programmes of this stage admit person with secondary education. The training duration is from one to two years. After completing the training programmes, the graduates are given a diploma of vocational education and training. University studies of higher education are more oriented towards academic activities, whereas non-university studies focus on applied activities. With regard to employment activity, the main variable is an occupation post, i.e. the collection of functions for the performance of which remuneration is paid. The performance of such functions requires a certain level of education and a number of relevant skills. In that way, the occupation post may be expressed in terms of education and skills. Occupation posts are usually grouped using the ISCO 12 or SOC 13 classifications. Both of them are compatible. The ISCO served as the basis for the Classification of Lithuanian Professions (a profession is linked to the hour of actual work). The latter is used for collecting a variety of statistical data. The study analyses the supply of employees by comparing the data on education and occupation posts according to the diagram presented below (Fig. 5.1). Fig Employee supply assessment scheme Education stages Initial vocational education and training Higher education (university and non-university) job groups Plant and machine operators and assemblers Service workers and shop and market sales workers Skilled agricultural and fishery workers Craft and related trades workers Professionals Technicians and asociate professionals Clerks Education and training of the unemployeed 12 International standard classification of occupations 13 Standard occupational classification 50

52 5.3. Supply of Employees by Areas and Level of Education Analysis of employment changes by the groups of occupation posts shows that in , the biggest reduction was in the group of qualified workers of marketable agriculture and fishery and the biggest growth was in the group of legislators, senior public officials, managers of enterprises and organisations. The share of professionals (including servants) in the employment structure of 2006 constituted less than 30 per cent and the share of workers made up approximately 60 per cent (See Table 5.1). Table 5.1. Employment Distribution by Job Groups Change from 2004 to 2006 Job groups 2006 m. 19% Legislators, senior officials and managers 9% 7% Professionals 17% 5% Technicians and associate professionals 9% 4% Clerks 4% 13% Service workers and shop and market sales workers 13% -27% Skilled agricultural and fishery workers 9% 12% Craft and related trades workers 19% 9% Plant and machine operators and assemblers 10% 29,5% 50,8% - increase; - decrease 4% Elementary occupations 11% 10.7% -8% Armed forces (hired workers) 0% According to the data we have, in 2006, vocational training schools admitted 19,913 students, which is 3 per cent less than in The same year saw a slight increase in the demand for BA studies: 47,240 students entered higher education establishments, i.e. 2 per cent more than in Among those who chose vocational education and training, the most popular disciplines were business and administration as well as engineering and engineering professions. Among those who preferred university education, the most popular choice was of Business and administration. In fact, the same trends were prevailing during the previous year. Detailed data about the distribution of admitted students by areas of education are presented in Fig The distribution of graduates by areas of education coincides with the admission structure, i.e. the predominant number of graduates is from the area of business and administration, and the number of vocational training graduates is more than two times smaller than the volume of graduates from higher educational establishments. Admittedly, in 2006, as compared to 2005, the number of graduates was 11 per cent smaller. During that period, the number of university graduates increased by 12 per cent. The data show that although the level of employment in the group of workers is two times bigger than in the group of professionals (including servants), yet number of admitted students to programmes of higher education exceeds the number of students to the relevant vocational training programmes two times. This has an impact upon the proportioned maintained among the graduates of vocational training and higher 51

53 education. Hence the discrepancy between the supply and demand of employees may grow in the future, causing serious problems for business development. Fig Distribution of Admitted Students by Areas of Education in Personal abilities Teacher training Art Humanities Social and behavioural science Journalism and information Business and administration Law Natural science Physics Maths and statistics Computer science Engineering Production and manufacturing Architecture and construction Agriculture and forestry Veterinary Health Social services Personal services Transport services Environmental protection Security services Vocational Higher education 5.4. Supply of Employees in the FB Sector While implementing a training/study programme, the future employees are usually trained for a certain group of activities, rather than one concrete occupation posts. The activities of different economic sectors often overlap. Certain competences necessary for the FB sector can be obtained in, for instance, the area of, for instance, agriculture, catering, and trade in food products. As a result, it is quite difficult to name the programmes aimed at training the employees for a particular sector, because graduates of different study programmes may find employment in a variety of economic sectors. Therefore, while looking at the supply of employees, all the programmes were taking into consideration, the graduates from which could be employed in the FB sector. On the basis of the information provided about study programmes (programmes) in the Open Information, Counselling and Guidance System (AIKOS), they are divided into the following two groups: Group 1. It comprises the programmes that focus of competences required by the FB sector. The study presumes that the majority of the graduates from this group of programmes find employment in the FB sector enterprises. Group 2. The majority of its programmes are aimed at developing competences required by the other sectors. The majority of the graduates should find employment in other sectors and only a small share of them gets employed in the FB sector. For example, food preparation employees are trained in public catering enterprises and gastronomy workshops of retail trade networks. However, they can also apply their competences in food manufacturing enterprises. 52

54 Supply of Skilled Workers (Manufacturers) for the FB Sector Upon the selection of primary vocation training programmes for the FB sector in the aforementioned way, information was collected from all the vocational schools offering such programmes about the number of graduates from them in 2007 and their level of employment. Findings of the survey are presented in Table 5.2. The data about employment are aggregate. Schools had no information about the type of economic sectors which employed the graduates. Table 5.2. Primary Vocational Education Programmes in Manufacture of Food Products and Beverages Sector and the Number of Graduates from them (According to the Survey of Schools)* Primary vocational training Graduates in 2007 programme Supply of workers in the FB Total Got sector Employed Food industry worker Group I Group II Food products production worker 14 8 Dairy operator Meat processor Butcher Baker and confectioner Confectioner 4 3 Food preparation worker Cook and confectioner *Short descriptions of the programmes are provided in Annex The registry of study and training programmes also includes the following: baker of bread and pastry training, beekeeping business employee training and pisciculture business employee training. They are not mentioned in Table 5.2, because they were not conducted in The employees for the sector of manufacture of food products and beverages are also trained by the labour market training programmes, included in the Registry of Study and Training Programmes. Data about these programmes are listed in Table 5.3. Moreover, a number of non-formal training programmes offer competences required by the FB sector. For instance, the list of the labour market non-training programmes ( includes several programmes of the kind. Unfortunately, data about the number of graduates from continuing vocational training programmes are not systemically collected and therefore the quantitative assessment of the supply was not performed. Table 5.3. Formal Labour Market Vocational Training Programmes in the Sector of Manufacture of Food Products and Beverages Formal Labour Market Training Programme for Programme Duration in Weeks Number of Licensed Bodies Brewers 13 2 Bakers Grain mill processing managers 1 1 Confectioners 40 ir Meat cutters 16 8 Meat processing enterprise workers 14 4 Milk laboratory assistants 12 2 Fish and sea products primary processors 11 ir

55 Supply of Professionals, Including Associate Professionals and Technicians, for the FB Sector There are relatively few higher education non-university and university studies training specialists for the FB sector. All of them are listed in Table 5.4. The majority of programmes are clearly oriented towards the FB sector, although their qualification descriptions sometimes mention some other economic sectors, including, for example, trade and agriculture. Table 5.4. Higher Education Study Programmes for Training MG Sector Employees Non-university studies University BA studies MA studies Study programme Graduates in 2006 Supply of Professionals in FBS** Foodstuffs technology and equipment 35 Foodstuffs technology Food industry business management 43 Food technology and engineering Engineering of food storage 55 and processing of agricultural 27 products Food science Foodstuffs technology 23 * Short descriptions of the qualifications listed is provided in Annex 4 **The supply was calculated assuming that 70 per cent of graduates get employed In 2006, the total number of graduates of the programmes mentioned in table 5.4 was 236, including 200 persons who finished the first stage of studies. Since very few higher education schools keep record of a follow-up career of their graduates, the presumption is that the average number of students who get employed is approximately 70 per cent Graduates of master studies are not included into the supply because: (1) the majority of master students are employed and (2) prior to getting into master studies students have to complete their stage 1 study programmes and the latter are already included into the supply. With that in mind, the supply of professionals for the FB sector in 2006 was approximately 140 people Summary The forecast of the future demand for employees in the FB sector has been made by looking at the sector development and the turnover of staff (for more details see Chapter 4.4). The survey presumes that the need for employees, occurring as a result of sector development and employees leaving the labour market due their age or other reasons, should be compensated by the system of primary vocational training. The supply and demand for employees in the FB sector is shown in Table 5.5. The supply and demand has been calculated on the basis of the data provided in tables 5.4 and

56 Table 5.5. Demand for Employees and Supply of Primary Vocational Training and Higher Education in the Sports Sector by Groups of Occupation Posts with the Shortage of Staff Identified* Groups of Occupation Posts Demand for New Staff during the 1 st year Professionals Associate professionals and technicians Need for Initial Training ** Annual Supply (2006 data) Assessment of the Balance between Supply and Demand Appr. 140 Positive Manufacturers Appr. 125 negative * The supply and demand for other workers is not separately examined because workers belonging to this group (e.g. drivers) work in a variety of economic sectors and do not characterise the FB sector ** Newly employed staff to replace those who leave the labour market and compensate the need for employees created by the sector development According to the data of the social survey (see Table 4.6), in 2007, the number of qualified workers (manufacturers) in the food and beverages manufacturing sector surpassed the number of professionals (including technicians) four times. However, data from the year 2006 show the reverse trends with regard to the number of admitted students to the FB sector programmes and the number of graduates from them. First, the number of admitted students to the programmes of higher education exceeds the number of students to the relevant vocational training programmes 2.5 times. Second, the number of graduates from higher education schools exceeds, albeit insignificantly, the number of graduates from vocational training schools (see tables 5.2., 5.4.) Hence the discrepancy between the supply and demand of employees may grow in the future, causing serious problems for business development. The survey shows that primary vocational training will be able to provide only a small share (300 people) of qualified workers (manufacturers) required by the sector. Continuing vocational training is required to train as many as 3,000 manufacturers. Partly this demand is met by training the unemployed. However, the social survey reveals that (see chapter 4.2) enterprises take efforts to satisfy the demand themselves by offering on-the-job training for the people employed. 55

57 6. RECOMMENDATIONS To improve conformity between demand and supply of employees in manufacture of food products and beverages sector Although the level of employment in the FB sector enterprises among the group of workers is four times bigger than in the group of professionals (including technicians), the number of admitted students to the FB sector programmes of higher education exceeds the number of students to the relevant vocational training programmes 2.5 times (data of 2006). As a result of such disproportion, the supply of professionals in the labour market exceeds the demand for them, whereas qualified workers are lacking. Therefore it is recommended to review the plans of admitting students into the state funded higher education and vocational training programmes of the FB sector. The shortage of manufacturers and other workers in the sector is mostly linked to the lack of workers trained by vocational training establishments. The latter is associated with the low level of prestige, in the eyes of society, of vocational training. Therefore it is recommended to advertise and raise awareness about food manufacturing occupations among the youth (organising advertising campaigns in general education schools, in the press, television and showing examples of successful careers pursued by the graduates, etc.). The attractiveness and prestige of the sector occupations should also be increased by the food manufacturing enterprises. They could offer higher remuneration for work and social guarantees to their employees, improve working conditions and motivate staff by offering refresher courses abroad. Certain sector enterprises (particularly those operating in the grain and animal feed sub-sectors) lack food machine operators. Presently, no training is available to offer such occupational qualification. Previously, workers of similar qualification were trained under the Food Industry Equipment Operator and Laboratory Assistant Training Programme. Therefore it is recommended to modify the programme to include training of food machine operators. The sector of the FB manufacture offers a huge variety of occupation posts and competences. Therefore, the annual demand for employees in certain occupation posts is rather high. Therefore it is recommended to organise training based on modules. In the beginning students would attend obligatory training modules offering general competences required by the FB sector and later they could choose additional competences necessary for the occupation of their choice from the range of optional modules. The optional modules could be agreed with the interested sector enterprises which usually employ the graduates. The analysis performed shows that enterprises willing to respond to market changes in a more flexible and speedy manner will speed up the use of modern production technologies. That will also reduce the need for workers with low qualification and increase the demand for higher skilled workers (for instance, operators). Therefore, it is recommended to organise practical training for employees (for example, by appointment of enterprise workers as manufacturing practice supervisors or tasking them to perform other assignments). It the long-run this would ensure smaller discrepancy between the supply and demand for employees of certain qualifications. The new form of organisation of apprenticeship vocational training has been established by law. It means on-the-job training in an enterprise, institution, organisation, farm or with a free-lance trainer. Theoretical training may be carried out in vocational training establishment or another type of school. 56

58 The experience of other countries shows, that the advantages of apprenticeship include smaller training costs and work with modern technologies. Enterprises are recommended to use the opportunity to train the employees according to their own needs and, at the same time, increase the attractiveness of vocational education and training. According to the survey findings, all the sector employees lack foreign language and work organisation skills. n addition, professionals require work planning and control as well as computer literacy skills. Qualified employees lack responsibility, duty and willingness to learn, whereas professions need innovation and management skills. Therefore, to ensure appropriate qualification of employees, training/study programmes should be updated with regard to the identified needs of skills. 57

59 REFERENCES Australian Agrifood Skills Council, Industry Skills Report. Available at Bureau of Labor Statistics, Food Manufacturing. Available at Canadean, 2007 Global BevCon Trends Available at CEE, CEE food retail flourishes. Available at cee-food-retail. ChinaCCM, World Organic Food and Beverages Report. Available at Confederation of the Food and Drink Industries of the EU (CIAA), Data and Trends of the European Food and Drink Industry. Confederation of the Food and Drink Federations in the EU: Brussels. Confederation of the Food and Drink Industries of the EU (CIAA), Data and Trends of the European Food and Drink Industry. Confederation of the Food and Drink Federations in the EU: Brussels. European Commission, 2002 European Commission, Status report on the European Commission s work in the field of nutrition in Europe. Available at European Commission, The social situation in the European Union Directorate-General for Employment and Social Affairs: Brussels. European Forecasting Network, Economic Outlook for the Euro Area in 2007 and 2008: Spring Available at European Foundation for the Improvement of Living and Working Conditions, 2004a. The future of the food and drink sector. Available at European Foundation for the Improvement of Living and Working Conditions, 2004b. Europe s food sector at a crossroads. Available at European Foundation for the Improvement of Living and Working Conditions, 2004c The future landscape for Europe s food policy. Available at European Monitoring Centre on Change, EMCC Anticipatory Workshop - Feeding Europe: The future of the European food and beverage industry: Summary. Available at Eurostat, 2006a. European Business: 2006 Edition. Office for Official Publications of the European Communities. Eurostat, 2006b. European Business: Facts and Figures. Luxembourg: Office for Official Publications of the European Communities. Gen Consulting, Skills Needs in the Scottish Food and Drink Manufacturing Sector. Improve: York. Hamann, K Food sector specificities relevant for innovation, company growth and access to financing. Available at Improve The Food and Drink Manufacturing Workforce in England at a glance. Improve: York. Improve, Key Findings from the National Employers Survey, Sector Skills Development Agency: South Yorkshire. just-food, Global market review of diet trends and weight management - forecasts to Available at: Market Research Northern Ireland, Skills Needs in the Northern Irish Food and Drink Manufacturing Industry. Improve: York. Myers, H European Food Retailers: Paths for Growth. European Retail Digest, no.38, pp OECD, FAO, OECD-FAO Agricultural Outlook Available at Price Waterhouse Cooper, The Demand and supply of Skills in the Food Processing Sector. Dublin: Enterprise Ireland/FAS. Simpson, J. and M. Stalker, Shetland s food & drink sector: Workforce Development Plan and PESTLE Analysis. DEVA Personal Development Associates: Kilmarnock.

60 ANNEX 1 Lietuvos maisto produktų ir g rimų gamybos sektoriaus SSGG analiz Stipryb s Senos maisto produktų (ypač pieno, m sos, duonos) gamybos tradicijos. Palankios sąlygos pl toti maisto produktų ir g rimų gamybą. Daug šios srities specialistų. Pakankamas gamybinis potencialas. Skiriama vis daugiau l šų kofinansuoti inovacinę veiklą ir mokslinius tyrimus. Kai kurios maisto ūkio šakos pakankamai integruotos į ES struktūras. Spartus naujų produktų kūrimas ir diegimas. Įmon s atitinka griežtus reikalavimus gamybos procesui ir produkcijos saugai ir kokybei. Silpnyb s Sektorius per daug orientuotas į vietinę rinką. Žemas darbo produktyvumas. Daug įmonių orientuotų į žemos prid tin s vert s produktų gamybą. Maž ja technologinį išsilavinimą turinčių specialistų. Galimyb s ES dotacijos žem s ūkiui. Geros užsienio prekybos galimyb s NVS ir ES šalyse. Palanki mokesčių sistema maisto produktų eksportui į trečiąsias šalis. Augančios gyventojų pajamos. Europos socialinių fondų parama. Gr sm s Vietinių žaliavų stygius ir jų brangimas. Prekybos liberalizacija. Darbo j gos emigracija. Lietuvos nepasirengimas įsisavinti ES paramą. Nepakankamas investicinis aktyvumas. Dažni pokyčiai teisin je aplinkoje, įstatymin je baz je. Augantys vartotojų reikalavimai. Didelis konkurencinis spaudimas. Aukštos kvalifikacijos darbo j gos stoka..

61 ANNEX 2 Lentel. MG sektoriaus kaita praeityje ir prognoz s ateičiai ME ZU VD 2003 m m. Pokytis (kartais) Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) Įmonių skaičius (0.69) 246 = (0.75) 55 (0.82) (0.97) 35 = Darbuotojų skaičius (1.04) 9945 (0.996) (1.15) 7,014 (1.48) (1.23) 943 (1.10) Apyvarta (tūkst. litų) (1.81) (1.35) (1.50) (1.68) (2.18) (1.83) Produktyvumas (apyvarta/darbuotojų sk.) (1.74) 194 (1.35) (1.30) (1.13) (1.77) 200 (1.65) Vidutinis m nesinis bruto darbo užmokestis (1.56) (1.65) (1.56) 2542 (1.65) (1.56) (1.65) Dalis nuo BPV (%) 0.52% 0.72% (1.37) 0.76% (1.06) 0.30% 0.34% (1.14) 0.45% (1.32) 0.04% 0.06% (1.65) 0.08% (1.30) - padid jimas; - sumaž jimas; = - toks pats RA PI GR 2003 m m. Pokytis (kartais) Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) Įmonių skaičius 13 8 (0.62) 8 (0.62) (0.59) 32 = (0.5) 48 = Darbuotojų skaičius (0.55) 89 (0.55) (0.8) 9486 = (0.74) 1269 =) Apyvarta (tūkst. litų) (0.96) (0.60) (1.09) (1.17) (1.06) (0.46) Produktyvumas (apyvarta/darbuotojų sk.) (1.73) 209 (1.09) (1.36) 216 (1.17) (1.44) 78 (0.46) Vidutinis m nesinis bruto darbo užmokestis (1.56) 2516 (2.58) (1.56) 2744 (1.65) (1.56) 2660 (1.65) Dalis nuo BPV (%) 0.03% 0.02% (0.71) 0.01% (0.34) 1.41% 1.14% (0.8) 1.02% (0.9) 0.17% 0.14% (0.8) 0.04% (0.33) - padid jimas; - sumaž jimas; = - toks pats

62 PA KP GE 2003 m m. Pokytis (kartais) Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) 2003 m m. Pokytis Prognoz 2012 m. Pokytis (kartais) Įmonių skaičius (0.69) 19 (1.06) (0.73) 508 (0.99) (0.83) 114 (0.99) Darbuotojų skaičius (0.85) 1661 (1.02) (0.99) (1.02) 5,758 5,258 (0.9) 2,959 (0.56) Apyvarta (tūkst. litų) (1.06) (1.33) (1.08) (1.46) (1.47) (1.87) Produktyvumas (apyvarta/darbuotojų sk.) (1.24) 480 (1.31) (1.09) 130 (1.42) (1.61) 734 (3.33) Vidutinis m nesinis bruto darbo užmokestis (1.56) 2673 (1.65) (1.56) 2621 (1.65) (1.56) (1.65) Dalis nuo BPV (%) 0.37% 0.30% (0.81) 0.31% (1.04) 0.55% 0.44% (0.79) 0.53% (1.21) 0.52% 0.58% (1.12) 0.86% (1.47) - padid jimas; - sumaž jimas; = - toks pats 61

63 ANNEX 3 Lentel MG sektoriaus darbininkų (operatorių) įgyjamų kompetencijų ir geb jimų aprašai pagal profesinio mokymo programas Vir jo ir konditerio Kep jo ir konditerio Konditerio Maisto ruošimo darbuotojo Kompetencijos ir geb jimai Pasirinkti darbui tinkamus įrankius, inventorių ir technologinius įrenginius. Saugiai dirbti su įvairiais maisto ruošimo įrengimais. Įvertinti verslo aplinką. Tinkamai organizuoti darbo vietą. Atlikti darbus pagal sanitarijos ir higienos reikalavimus. Parinkti žaliavas ir medžiagas maisto produkto gamybai. Nustatyti žaliavų kokybę. Naudotis informacin mis technologijomis. Gaminti kulinarijos ir konditerijos pusgaminius. Parinkti ir taikyti šiluminio paruošimo būdus. Gaminti karštus patiekalus ir kulinarijos gaminius. Gaminti ir patiekti šaltuosius, saldžiuosius patiekalus, užkandžius ir g rimus. Įvertinti paruoštų patiekalų ir kulinarijos gaminių kokybę. Gaminti mielinių ir nemielinių tešlų gaminius. Įvertinti konditerijos gaminių kokybę. Organizuoti maisto ruošimo įmon s veiklą. Parinkti, priimti ir laikyti maisto produktus. Atlikti nesud tingą pirminį maisto produktų paruošimą. Nustatyti maisto produktų kokybę jusliniu būdu. Nustatyti maisto produktų reikmes. Ruošti duonos pusgaminius. Ruošti nesud tingus konditerijos gaminių pusgaminius. Ruošti plikinius, raugus, įmaišus. Ruošti nesud tingų duonos ir pyrago gaminių tešlas, formuoti ir kepti gaminius. įvertinti duonos ir pyrago gaminių kokybę jusliniu būdu. Gaminti mielin s tešlos gaminius. Gaminti nesud tingus tešlų su purikliais ir be puriklių gaminius. Įvertinti konditerijos gaminių kokybę jusliniu būdu. Gaminti nesud tingus kreminių gaminių puošimo pusgaminius. Gaminti nesud tingus kreminius gaminius. Suprasti kompozicijos pagrindus. Parinkti, priimti ir laikyti maisto produktus. Atlikti pirminį maisto produktų parošimą. Nustatyti maisto produktų kokybę. Paskaičiuoti maisto produktų reikmes. Ruošti konditerijos pusgaminius. Parinkti ir taikyti šiluminio paruošimo būdus. Įvertinti paruoštų konditerijos gaminių kokybę. Gaminti mielinių tešlų gaminius. gaminti nemielin s tešlos gaminius. Įvertinti konditerijos gaminių kokybę. Apipavidalinti konditerijos gaminius. Suprasti konditerijos gamybos įmon s veiklą. Tvarkyti konditerijos įmonių gamybos proceso apskaitą. Įvertinti darbo rinką. Paruošti plikinius, raugus, įmaišalus. Paruošti įvairias duonos ir pyrago gaminių tešlas, formuoti ir kepti, apipavidalinti ir pakuoti. Pasirinkti darbui tinkamus įrankius, inventorių ir technologinius įrenginius. Saugiai dirbti su įvairiais maisto ruošimo įrengimais. Įvertinti verslo aplinką. Tinkamai organizuoti darbo vietą. Atlikti darbus pagal sanitarijos ir higienos reikalavimus. Parinkti žaliavas ir medžiagas maisto produkto gamybai. Nustatyti žaliavų kokybę. Naudotis informacin mis technologijomis. Gaminti kulinarijos ir konditerijos pusgaminius. Parinkti ir taikyti šiluminio paruošimo būdus. Gaminti karštus patiekalus ir kulinarijos gaminius. Gaminti ir patiekti šaltuosius, saldžiuosius patiekalus, užkandžius ir g rimus. Įvertinti paruoštų patiekalų ir kulinarijos gaminių kokybę. Gaminti mielinių ir nemielinių tešlų gaminius. Įvertinti konditerijos gaminių kokybę. Organizuoti maisto ruošimo įmon s veiklą Profesin veikla, kuria gali verstis pažym jimo savininkas Darbo vietos maitinimo įmon je organizavimas; maisto produktų ir žaliavų parinkimas ir pirminis paruošimas; maisto gaminių ruošimas; maisto ruošimo įrangos ir inventoriaus naudojimas ir priežiūra Maisto produktų parinkimas ir pirminis paruošimas; pusgaminių paruošimas; ruginių ir kvietinių tešlų ruošimas, paruošimas formavimui, formavimas ir kepimas; nesud tingų konditerijos gaminių ruošimas iš mielinių ir kitų konditerijos tešlų; masin s gamybos kreminių konditerijos gaminių formavimas ir puošyba. Maisto produktų parinkimas; konditerijos gaminių ir pusgaminių ruošimas; darbo organizavimas konditerijos gamybos įmon se; duonos gaminių ruošimas. Maisto produktų gamybos mašinų, įrenginių bei įrengimų valdymas ir priežiūra; maisto produktų gamybos proceso organizavimas; maisto produktų gamybos valdymas.

64 Kompetencijos ir geb jimai Profesin veikla, kuria gali verstis pažym jimo savininkas Maisto produktų gamybos darbuotojo Maisto pramon s darbuotojo M sininko M sos perdirb jo. Įvertinti verslo aplinką. Išmanyti maisto pramon s įmon s veiklą. Saugiai dirbti. Organizuoti nenutrūkstamą darbo procesą įmon je ir jos padaliniuose. Bendrauti ir bendradarbiauti. Vykdyti materialinių vertybių apskaitą ir įvertinti ūkin s veiklos rezultatus. Tvarkyti pirkimo, pardavimo ir kitą dokumentaciją. Parinkti ir paruošti žaliavą maisto produktų gamybai. Paskaičiuoti maisto produktų reikmes. Atlikti maisto produktų gamybos technologines operacijas. Įvertinti maisto produktų kokybę. Naudotis informacin mis technologijomis. Parinkti tinkamas žaliavas ir medžiagas maisto produktų gamybai. Atlikti žaliavos paruošimo technologines operacijas, naudojantis įrengimais bei inventoriumi. Nustatyti žaliavos kokybę. Mok ti saugiai dirbti Apskaičiuoti reikiamą žaliavos kiekį. Ruošti pusgaminius. Nustatyti pusgaminio kokybę. Saugiai dirbti technologiniais įrengimais ir įrankiais. Kokybiškai atlikti maisto produktų gamybos technologinius procesus. Įvertinti maisto produktų kokybę gauto technologinio proceso tarpiniu ir galutiniu etapu. Suprasti maisto pramon s įmon s veiklą. Suprasti darbo rinkos keliamus reikalavimus. Tinkamai pasiruošti darbo vietą. Pasirinkti darbui tinkamus įrankius, inventorių ir technologinius įrenginius. Tinkamai paruošti darbo vietą. Saugiai dirbti technologiniais įrengimais ir įrankiais. Parinkti tinkamas žaliavas ir medžiagas m sos produktų gamybai. Įvertinti verslo aplinką. Atlikti žaliavų paruošimo technologines operacijas. įvertinti žaliavų kokybę. Sudalinti skerdiena ir ruošti m sos pusgaminius. Įvertinti pusgaminių kokybę. Kokybiškai atlikti m sos produktų gamybos technologinius procesus. Įvertinti m sos produktų kokybę, technologinio proceso tarpiniame ir galutiniame etapuose. Mok ti vesti apskaitą. Naudotis informacin mis technologijomis. Parinkti tinkamas žaliavas m sos gaminių gamybai. Atlikti žaliavos paruošimo technologines operacijas naudojantis įrengimais bei įrankiais. Nustatyti žaliavos kokybę. Mok ti saugiai dirbti. Paruošti stambiagabalius ir smulkiagabalius m sos pusgaminius. Nustatyti pusgaminio kokybę. Kokybiškai atlikti m sos gaminių gamybos technologinius procesus. Saugiai dirbti technologiniais įrengimais ir įrankiais. Įvertinti m sos gaminių kokybę. Išmanyti m sos perdirbimo įmon s veiklą ir gamybos apimtis. Žinoti darbo rinkos keliamus reikalavimus. Tinkamai paruošti darbo vietą Maisto produktų gamybos mašinų, įrenginių bei įrengimų valdymas ir priežiūra; maisto produktų gamybos proceso organizavimas; maisto produktų gamybos valdymas. Maisto produktų pirminis paruošimas; šaltų ir karštų patiekalų, desertų, g rimų, nesud tingų konditerinių gaminių gaminimas; darbo vietos organizavimas Žaliavos paruošimas m sos produktų gamybai; m sos pusgaminių ruošimas; m sos produktų gaminimas; darbo vietos organizavimas m sos pramon s įmon je. Žaliavos paruošimas m sos gaminių gamybai; m sos pusgaminių ruošimas; m sos gaminių gaminimas; darbo organizavimas m sos perdirbimo įmon je 63

65 Kompetencijos ir geb jimai Profesin veikla, kuria gali verstis pažym jimo savininkas Pienininko Saugiai dirbti. Išmanyti apie karvių š rimą, laikymą ir prižiūr jimą kokybiško pieno gavyboje. Atlikti pirminį pieno apdorojimą. Nustatyti superkamo pieno kiekį ir paimti pieno bandinį. Tvarkyti superkamo pieno apskaitą. Apdoroti kompiuteriu pieno apskaitos dokumentus. Eksploatuoti pagrindinius pieno pramon s įrenginius. Išmanyti pieno produktų gamybos technologines operacijas. Nustatyti pieno produktų kokybę. Įvertinti verslo aplinką. Bendrauti ir bendradarbiauti. Pieno gavyba; pieno supirkimas; pieno produktų gamybos technologija. 64

66 ANNEX 4 Lentel. Maisto produktų ir g rimų gamybos specialistų rengimo programos Programa Suteikiama kvalifikacija Kvalifikacijos aprašas Neuniversitetinių studijų programos (trukm 3-4 metai) Maisto pramon s technologija ir įrenginiai Technologas ir chemijos inžinerijos profesinis bakalauras Baigusieji programą dirba technologu maisto pramon s įmon se, perdirbančiose žem s ūkio produkciją. Technologas vertina maisto pramon s žaliavų, medžiagų ir produkcijos kokybę, įvertina žaliavų ir maisto priedų funkcines technologines savybes ir naudojimo efektyvumą, parenka kokybiškas žaliavas ir maisto priedus maisto produktų gamybai, analizuoja ir planuoja technologinį procesą, valdo ir kontroliuoja turimus materialinius išteklius, projektuoja technologin s įrangos parinkimą ir išd stymą pagal technologinių operacijų srautą, diegia prevencinę maisto saugos sistemą. Maisto produktų technologija Technologas ir chemijos inžinerijos profesinis bakalauras Baigusieji programą dirba maisto produktų gamybos ir prekybos įmon se, maitinimo įmon se, žvejybiniuose ir gamybiniuose laivuose. Jis organizuoja ir vadovauja maisto produktų gamybos technologiniams procesams, vertina produkcijos kokybę, sudaro gamybinių procesų apskaitos pirminę ir suvestinę dokumentaciją, analizuoja ir vertina ekonominius rodiklius, įformina gatavos produkcijos kokybę patvirtinančius ir produkcijos išsiuntimo dokumentus lietuvių ir užsienio kalbomis, bendrauja su užsienio partneriais būsimos veiklos srityje Maisto pramon s verslo vadyba Vadybos ir verslo administravimo profesinis bakalauras Baigusieji programą gali dirbti vadybininku ar padalinio vadovu maisto pramon s gamybos arba prekybos įmon se bei kurti savo įmonę, susijusią su maisto produktų gamyba/prekyba. Universitetinių studijų programos (trukm : bakalauras metai; magistras 2 metai) Maisto technologijos ir inžinerijos Žem s ūkio produktų laikymo ir perdirbimo inžinerija Chemijos inžinerijos bakalauras Mechanikos inžinerijos bakalauras Baigusieji programą dirba įvairiose maisto pramon s ir viešojo maitinimo įmon se įvairaus lygio gamybos vadovais, inžinieriais, laboratorijų ir kitų skyrių vadovais, gali dirbti maisto įmonių vadybininkais, valstybinių institucijų, susijusių su maisto gamyba ir kontrole, tarnautojais. Baigusieji programą dirba žem s ūkio ir maisto produktų perdirbimo įmonių inžinerin se technologin se tarnybose, įmonių kokyb s valdymo sistemose. Maisto mokslas Chemijos inžinerijos magistras Baigusieji dirba maisto pramon s ir viešojo maitinimo, maisto kontrol s ir maisto tyrimų įmon se, valstybinių institucijų, susijusių su maisto gamyba ir kontrole tarnautojais. Maisto produktų technologija Chemijos inžinerijos magistras Baigusieji programą dirbą maisto pramon s ir viešojo maitinimo, maisto kontrol s ir maisto tyrimų bei projektavimo įmon se, valstybinių institucijų, susijusių su maisto gamyba ir kontrole, tarnautojais. Maisto produktų technologija Mechanikos inžinerijos magistras Absolventai dirba mokymo ir mokslo įstaigose, projektavimo biuruose, konsultacin se tarnybose, kokyb s inspekcijoje