Eastern Europe’s KM conundrum

By Jonathan B. Spira

On May 1, the European Union will expand eastward, shifting from a tight-knit, club-like association of 15 countries, centered around France and Germany, to an assemblage of 25 countries representing 455 million people whose outlook on many issues, including wealth and business, varies greatly.

To say that all 25 countries have concerns about what happens after May 1 is an understatement. Many of the existing countries' citizenry, already facing economic stagnation, are worried about unemployment, immigration and national identity.

Citizens in the new member countries are concerned about economic inequities that will still exist among member countries, such as the fact that wealthier countries may not permit citizens from new member countries to work within their borders for the first few years. The European Union has always had disparities of wealth and resources; to correct them, it has over a period of decades transferred wealth from richer countries, such as Germany and Luxembourg, to poorer ones, such as Greece, Portugal and Ireland. But never before has the EU seen the likes of the economic malaise found in the east, from rural Poland to the Baltic countryside within its borders.

As the European Union expands its borders in a quest for prosperity and power, hundreds of thousands of people may find themselves not invited to the party, their situation having been a result of decades of Communist-ruled state control and command economies. During the industrial age, output, rather than outcome, was a key measure of success. Today, economies are increasingly based on knowledge. Although finding a better way of doing things has always been a virtual guarantee of long-term growth and success; what is different in the information age is that a growing portion of production is now in the form of intangibles. This is sometimes referred to as the weightless economy, which consists of three elements:

• information and communications technologies such as the Internet;

• intellectual property, ranging from patents and trademarks to consulting and professional services; and

• information stores such as libraries and online databases, both online and off.

In contrast to the more established states in the European Union, where a weightless economy has taken hold, the economies in the newer states are not nearly as far along. The percentage of knowledge workers in the general population in the European Union has been estimated to be between 30% and 50% (that depends on whom one counts as a knowledge worker, which is a subject beyond the scope of this text). In the new states, the percentage of knowledge workers is between 5% and 10%.

The concept of a global information economy is frequently discussed, but the need for a highly educated work force is an unavoidable consequence of such a dream.

For many companies, the trend has been to think globally, and the fact that 10 countries are now joined with the European Union creates an opportunity for many companies to build new markets and create jobs in new member countries.

May 1 brings three questions to the forefront:

• How can information economy companies find and educate new employees in the new member states?

• How will those new knowledge workers collaborate with their colleagues?

• How will the companies collaborate with their customers and suppliers?

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Jonathan B. Spira is CEO and chief analyst at Basex , e-mail jspira@basex.com