Neven Mimica the outsourced companies. But the biggest difference with the US resulted from the inflexibility of France's labour market, as unemployed workers in France had much greater difficulties in finding a new job than did their US counterparts. Only 60% of unemployed French workers had found a new job within a year, whereas the more vibrant labour market in the US enabled 70% of unemployed workers there to find a new job within three months. It would be misleading to argue that firms base their production decision solely on wage costs, as is often implied in media articles. What counts is labour productivity, which is reflected in wages. More qualified and more efficient workers receive higher wages but create more added value than less productive, less well-paid workers. Productivity in CSEE countries has risen sharply. In the new EU member countries the productivity/wage level is by now similar to or above the EU average(see table 2). This implies that the real issue at stake for the EU countries is not absolute wage rates, but rather labour productivity. McKinsey Global Institute found only a small impact of outsourcing but a strong decline in competitiveness. There is clear evidence that the general level of competitiveness of the economy of the source country determines the level of outsourcing activities of companies on its soil. The lower the home economy's competitiveness, the higher the outsourcing investments of the home companies will be. Similarly, the inward investment into a source country by investors abroad is a clear indication how these perceive the competitiveness level of the country in question. Foreign investment in France and Germany fell sharply in 2004, reinforcing concerns that inflexible labour practices, weak domestic demand and an expensive domestic currency might be driving investors elsewhere. OECD figures indicated that inward investment in France almost halved from $43 billion in 2003 to$24 billion in 2004, while in Germany foreign investment decreased from$66 billion in 2003 to$27 billion in 2004. However, the weakness of the continental European economy did not affect the UK and the US. The US remained the biggest foreign investor as US companies almost doubled their overseas spending in 2004, with foreign direct investment outflows jumping to$252 billion from$141 billion in 2003. Foreign direct inflows into the clearly competitive UK market more than trebled in 2004, reaching$78 billion. At the same time, the UK is one of the countries in the world that accounts for the most direct investment abroad, thereby showing that a competitive economy can manage both to be a large recipient of investment and a big investor overseas. 158