The European Union: A Very Short Introduction (Very Short Introductions) by John Pinder & Simon Usherwood

Author:John Pinder & Simon Usherwood [Pinder, John]
Language: eng
Format: azw3, mobi, epub
Publisher: Oxford University Press, USA
Published: 2013-07-24T16:00:00+00:00

Flexibility or regulation in labour markets

Britain has emphasized deregulation and flexibility in its approach to the EU, on the grounds that it will make the European economy more competitive and increase employment. While labour markets are not the only sector of the economy in which deregulation is advocated, they are seen as among the most important.

While this British approach has been called ‘Anglo-Saxon’ because of similarities with American economic philosophy, an alternative became known as the ‘Rhineland’ approach, with Germany the leading example. There the emphasis in labour markets has been on solidarity and social protection rather than flexibility. Much of the regulation to achieve this has been negotiated between employers and unions, called in Germany the ‘social partners’. This has reflected a culture of consensus in civil society in reaction against the ways of the preceding totalitarian dictatorship; and it has built on long-standing traditions of solidarity, such as the acceptance of responsibility in the private sector for the high standards of technical training. The results have included the outstanding economic success of the post-war decades and the continuing strength of German exports. But although the burden of integrating the eastern Länder into the German economy is one cause of the less successful performance in the 1990s, Germany is also criticized for reluctance to introduce more flexibility into the labour market and to reform industrial and financial organization and the tax system, in response to current developments in the global economy.

The Rhine also flows through the Netherlands; and the Dutch too have a highly consensual economic and political system. Faced with critical economic problems in the 1980s, they began a process of reform which led to what is called the ‘Polder model’, introducing market-oriented reforms into what remains a consensual system; and they achieved lower unemployment, higher efficiency, and a good all-round economic performance. Scandinavians have much in common with this approach.

Box 4 Employment policy

The Amsterdam Treaty introduced a new section on employment in response to concern about the high level of unemployment in the EU. Its main purpose is to encourage cooperation among the member states with respect to their employment policies.

The member states provide annual reports on their employment policies to the Council and Commission, which draw up a report for the European Council. Guidelines are then issued to the states to be taken into account in their employment policies; and the Council can make recommendations to governments. The Council, in co-decision with the Parliament, may decide to spend money from the budget to encourage exchanges of information and best practices, provide comparative analysis and advice, promote innovative approaches, and fund pilot projects.

This has raised the profile of employment policy in the Union but it remains to be seen how much effect it has on governments’ policies.

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