Labour market in Europe

The term ‘European labour market’ is used to describe the demographic profile of the labour force as well as the systems of regulation, at EU level, concerned primarily with the free movement of workers but additionally with other forms of regulation that shape Europe’s labour market. The project of creating a European labour market is quite different from the objectives associated with national labour market regulation, where employment protection and industrial relations are the chief concerns. The aim to establish a free movement of workers provided the major context of regulation of the European labour market since the foundation of the European Economic Community in 1957.

Labour market and employment policy has evolved  from a marginal to core area of EU policy.  Initially confined to individual measures to tackle unemployment, the European Employment Strategy (EES) now aims at comprehensive employment promotion with its landmark flexicurity model. The basic tenet, enhancing workers’ employability instead of trying to protect employment relationships, provides adequate responses to the faster pace of structural change. For its implementation the EES builds heavily on the Open Method of Coordination. This is an acceptable, compromise-oriented approach to reconcile subsidiarity and centralisation. However, the EES has delivered a rather mixed performance. Distinct employment gains in the EU contrast with still strong segmentation of the labour markets in individual member states.

Active labour market policies (ALMPs) are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects designed to combat widespread unemployment in the developed world during the interwar period.

In the complex regulatory environment governing EU labour markets companies could benefit from a European Labour Contract.The heterogeneity of national labour law, labour markets and social systems within the EU poses a problem for companies operating there. These companies employ an increasing number of people whose activities involve switching their place of work fairly frequently across national borders. Different sets of regulations on labour market and social policy make job moves like this extremely expensive, both for the companies concerned and for employees. Alongside the 27 national rulebooks, it might therefore be useful to establish a 28th regime applying Europe-wide as an optional reference framework for multinational undertakings.



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