FINDINGS

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THE CRAFTSMANSHIP SECTOR IN EUROPE abstract:

UNESCO establishes that artisanal products are those elaborated either by hand or with the help of hand or even mechanical tools, provided that the artisan’s manual contribution is the most important component. Meanwhile, the European Union does not provide a single definition of craftmanship. Artisanal enterprises are defined by each member state according to different criteria ranging from size or sector to artistic or technical considerations. This heterogeneity makes it immensely difficult to make exhaustive comparisons of indicators and sector variables. For these reasons, the following study carried out a systematic work of homogenization.

It is necessary to comprehend that the artisanal activities are an integral part of the collective identity and their contribution to the preservation of cultural heritage and to the national wealth is fundamental. It is also worth mentioning that today, in an economy characterized by globalization and technological innovation, the role of craftmanship as wealth generator has been obscured. However, handicraft is still an important source of employment, contributes greatly to the development of populations in rural areas and promotes other wealth generating activities such as tourism. The inadequate identification of these activities in economic statistics has contributed to overshadow the economic impact of handicrafts in Europe.

This research aims to, on the one hand, to define and describe the artisanal sector in Europa and, on the other hand, to make an approximation towards its real weight in the European economy. For this purpose, it is based on a mixed methodology consisting of the use of external sources, semi-structured surveys carried out in most of the countries in the region, questionnaires applied to associations of artisans and a set of focus groups with craftsmen. From the aggregate point of view, an approximation of the units was used, as those corresponding to companies with less than 9 employees belonging to a set of categories linked to the notion of craftsmanship. The survey is made up of three parts: the first part analyzes the structure and evolution of the European artisanal sector, the second one offers an in-depth look at the industry’s outlook for the coming years and, the third one, includes the main conclusions identified in the study.

The statistical analysis shows the heterogeneity of the sector in the different countries of the European Union. While in some nations like Italy and the Czech Republic the sector seems to have great economic relevance due to the presence of many artisanal companies that generate a large number of jobs, other countries such as Malta or Iceland, have a very low presence of artisanal units thus not generating a large number of jobs. The Italian case stands out, mainly due to the more than 500.000 jobs it generates, making it one of the countries where the craftmanship sector has the greatest impact on the national economy. Finally, on the consumption side, the statistics demonstrate, as will be shown below, the strong impact of COVID on the sector in the different nations, with the greatest losses in countries like, again, Italy and Spain.

On the supply side, the sector is mainly composed by productive units in urban areas, primarily due to the ease of access to markets, a greater offer of inputs and closer contact with work networks and promotion of artisans.It is also possible to notice that the capital of the productive units of the sector is mostly of individual or family nature. Statistics show that most of the employment is generated around individual artisans or enterprises with 2 to 5 workers, which demonstrates the high dispersion of employment in the sector and highlights the close relationship between artisan activity and self-employment. A large number of artisans are legally represented as self-employed. Additionally, many artisans state that they have temporary contracts and most of them dedicate only half a day to the artisanal work. Is important to mention that most of the workers in the sector are middle-aged, between 49 and 50 years old, most of whom have been working in the sector for between 1 to 10 years, which shows that it is a sector that has made room for many people in recent years. Finally, the survey demonstrates that most of the artisans have professional or university studies.

There is a high level of rivalry in the sector caused by factors such as oversupply, the growing importation of low-priced products, and the high bargaining power of the clients. This is combined with the scarce projects from the public sector aimed at supporting the artisans in terms of financing, infrastructure, access to technological resources and projection of artisanal production at a national and international level. It is also important to emphasize the competition with industrial products produced under the label “artisans” and those coming from low-costs countries. The situation was aggravated by the pandemic due to the cancellation or paralyzation of the marketing spaces of artisanal products such as fairs, festivals, tourism, or specialized stores.

Under these circumstances the survey analyzes the main keys to success for the sector. Among others, cost control and the price factor, flexibility in the face of customer needs and the offer of a high quality and original product are mentioned, as well as the adaptation to trends in the incorporation of new technologies in projects and to changes in the way of working. Lastly, it is considered essential to improve the positioning of the products in foreign markets.

According to the surveys conducted, one of the main problems for artisans is the low level of institutional support and the scarce relation between the artisans and the public sector. Most of craftsmen consulted consider that they do not have adequate institutional support for the development of their activity. Public policies are seen as negative because they do not favor activity in the sector. Among these policies, those related to labor training and formation are considered essential. Despite these problems, most workers consider themselves satisfied with their work.

In terms of demand, statistics show that the sector is closely linked to the leisure sector or to the purchase of clothing or furniture. Most of the purchase of handicrafts is made by middle-aged people (between 35 and 60 years old). The sanitary crisis has had a negative impact on demand in the sector, with a marked drop in sales. Although the lifting of confinements and restrictions improved the sector’s performance, a large number of artisans still recorded declines in sales and income.

For distribution, most companies opt for direct distribution through sales at fairs and markets or through online sales. Likewise, the sector is increasingly present in distribution platforms or in marketplaces created to give projection and outlet to artisanal activities. In this aspect the artisans must face factors such as the lack of training in new technologies, poorly developed communication networks and connectivity limitations, factors that may explain the incipient sales through the online channel.

At the management level, a strong heterogeneity is evident. The more traditional artisans tend to be associated and participate actively, while the younger ones carry out their activities somewhat distant from these collaborative expressions. On the other hand, the innovation of European artisans focuses on the optimization of processes, the use of clean energies, the consolidation of the ICTs or the expansion of sales channels through the web. Regarding the use of digital media for product development, the perceptions of the artisans are ambiguous.

There is an evident difference between traditional artisans and those who use technology to explore new forms of production.

The research identifies a series of threats to handicrafts today. On the one hand, it mentions the effects of COVID and its economic repercussions as the main threat. This situation drives rivalry between the artisans and those who trade with similar items of industrial origin, putting pressure in sales prices and reducing the sector’s profitability. Moreover, to this must be added the significant growth in costs, especially the increase in the price of energy. Despite the above the sector has a significant growth opportunity though exports, since it offers design, good quality and price, and an advance level of technology and innovation. Additionally, there is a trend towards the reconditioning of the productive processes. The sector is moving towards an increasingly flexible or hybrid activity, where artisanal, design and commercialization techniques, supported by new technologies, coexist.

Projections foresee a slow growth in the post-pandemic sector, growth that has been slowed by the outbreak of the war in Ukraine, and mainly by rising energy prices and falling household purchasing power. However, this Will not completely stop the growth, but the slow growth rate may lead to the closure of many companies and, as a consequence, to an increase in the level of unemployment.

The study reaches several conclusions, which are divided into the following areas: sectoral structure, conjuncture and forecasts and trends. Regarding the conclusions on the structure of the artisanal sector in Europe, it can be said that the sector is mainly made up of individual or small productive units, essentially located in urban centers and with a strong family nature. This has consequences for the organization of production and for the exploitation of sales channels and also makes it advisable to develop a broader and more diverse associative and cooperative activity. The individualism of the sector conditions the dynamics of the associations and their efficiency since the complexity of such a fragmented and dispersed sector makes it difficult to develop support strategies and limits the capacity of the administrations to design coherent public policies. To this must be added the high percentage of workers with temporary contracts or under internships. This adds a factor of instability which weakens the implementation of consistent long-term actions. Very characteristic of the structure of the sector in Europe is the generational dimension. The majority of the artisans are middle-aged, but with a working age of between 1 and 10 years. In other words, a considerable number of artisans have entered the activity at a mature stage of their working careers. This is partly due to factors such as the difficulties in accessing paid employment after the age of 45 or problems in reconciling work and family responsibilities. With regard to the sector’s target market, it can be observed that the potential clientele is made up of middle-aged and urban people. Moreover, private and industrial clients can be identified, mainly linked to the service sector and associated with tourism. This is perhaps the most dynamic segment and the one with the greatest potential for development in terms of both volume and demand. It is worth mentioning the growing virtualization of sales and the decrease in the marketing of products at fairs and flea markets. This is a sign of the sector’s adaptation capability to change. Although the pandemic has had very negative consequences for the sector’s economy, the intensification of the online channel is one of the few positive consequences. Finally, the European artisanal sector has a strong focus on national markets, and secondly, on the European markets. The scope of action in non-European international markets is almost non-existent.

Regarding the analysis of the situation in which the sector finds itself, the study brings the following conclusions. First, it recognizes the impact of the crisis derived from the COVID-19 pandemic. On the one hand, the collapse of activity in offices and public administration was detrimental for the sector, but, on the other hand, the behavior of demand from individuals as a result of the boom of teleworking brought certain benefits to the sector. But the real impact was reflected in the market, which declined considerably in 2020, and showed signs of weakness in 2021 and 2022. Growth in the latter year has been moderate as a result of the problems of the logistic chains and the consequent inflation. Likewise, there has been a deceleration in the pace of activity in many sectors, not only in the handicraft sector. However, tourism activities this year seem to be very favorable, mainly in summer. The decrease in business volume and the increase in costs presented a marked deterioration in the profitability ratios for the last two years. 2022 presents a small improvement conditioned by the unfavorable expectations regarding the future of the economy. Finally, it is worth highlighting the effects of the war in Ukraine on the handicraft sector in all the countries close to the region and in the European sphere in general. Not only have the domestic markets of the Eastern countries been paralyzed, but also the supply of raw materials and other supplies have been greatly affected, thus having an impact in prices of raw materials and generating higher production costs.

Finally, the study sheds light on the various forecasts and trends in the sector for the future. After the pandemic, as already mentioned, there was a reactivation of fairs and flea markets and a growing demand from the commercial establishments, which benefited the sector. Likewise, the reestablishment of tourist flows has contributed to an improvement in the commercial and financial situation of artisans. Also, foreign demand has become a factor that has allowed a greater slack for artisan units. According to the study, alliances between artisans and related industries such as tourism, food or catering will be essential in the short and medium term. On the other hand, it is mentioned how the delay of the normalization of the situation, or the slow economic recovery could lead to the closure of craft units and a decrease in the number of workers. However, this situation will not affect everyone equally, but will mainly affect the self-employed oriented to traditional production and those who show a lower capacity to adapt to the management of technological tools, which allow the expansion of the market through social networks and online sales platforms. Therefore, it is essential that the artisans take advantage of the European economic stimulus programs and of the actions aimed at technological transformation. On the other hand, the manufacturers’ increasing focus on foreign markets continues, in the form of exports, mainly within Europe. In order to boost the international projection, the activity of the associations and a major involvement of the public administration is primordial.

Another challenge facing the sector is related to the changes of perception surrounding the use of the ICTs in the productive process and administrative management. The use of these could be beneficial for a significant reduction in costs, which would generate an increase in profitability and greater flexibility in financial management. As mentioned several times before, an increase in the concentration of supply is foreseen in those artisans oriented to the development of innovative products as opposed to those based on traditional techniques and products. Besides the technological innovations, the flexibilization of workspaces or the creation of collaboration areas are trends that will continue to be registered in the sector. Therefore, the use of shared workspaces or the organization of joint workshops will become increasingly popular as a way to reduce costs, to share management and to establish areas for the exchange of experience and information. This type of space tends to be more common in urban areas, not only because of the communication possibilities, but also because of the availability of different types of services and better connectivity.

To conclude, based on the results obtained and the context in which the sector operates, the study makes some recommendations. First, it considers the importance of technological tools and recommends the artisans to make a firm commitment to the development of these tools, not only at a productive level, but also those that allow for better integration of the artisans with their clients. Second, it is recommended that associations create spaces for convergence between traditional artisans and new artisans to generate synergies and promote intergenerational transfer. Likewise, it considers essential that the activity of the sector is projected towards international markets, not only in the European Union, but also beyond Europe. In line with the above, it is essential to strengthen the institutional structures of the sector within the European framework. It is essential that the public administrations make a firm commitment with the development of the artisanal sector, not only due to his economic weight, but also for the cultural and social connotations which characterize it. Furthermore, governments must address the fiscal and legal treatment of artisan status, which will provide workers with job stability and pension rights. This is one way of creating certain conditions for the sector to gain muscle in a changing and increasingly competitive environment. Finally, it is essential that the sector, through the associations, develop a systematic collection and analysis of information on handicraft activities. This will allow the sector to gain visibility with the administrations and will create a framework for citizens and potential costumers to have a clear understanding of what crafts represent. To this end, it is necessary to create common communication strategies at national and European level.

Undoubtedly, the study provides a comprehensive look at the craft sector in Europe which has been ignored by economic statistics so far. This type of analysis allows us to seek and find management and development strategies for a fundamental sector not only within the culture of the countries, but also, as has been demonstrated, within their economies.