Labor Mobility in the Euro Area: Cure or Curse?

Written by | Monday, April 18th, 2016
European Values

Anna auf dem Brinke and Paul-Jasper Dittrich (Notre Europe – Jacques Delors Institute)

Although the Eurozone is facing internal problems in the form of instability and imbalances, these problems can be solved using the policy of free movement of labor. Within the monetary union, mobility can, however, be in this context both a cure and a curse. People who move from the regions with high unemployment to the areas with many vacancies balance the situation in a way. On the other hand, if young and more educated people migrate in the same manner, this process may, on the contrary, increase the imbalances across the Eurozone.

As a result of the economic crisis, unemployment in some EU countries has significantly increased. While in 2008, it was relatively even throughout the Union, by 2014, the rate ranged from 4 percent in Germany to 27 percent in Greece, Portugal and Spain. In 1999-2009, the migration of workers within the European Union doubled but then began to decline again. It turned out that the rate of migration actually had a therapeutic impact on the imbalances within the Eurozone rather than a negative one. Unfortunately, in spite of this, it was too low to mitigate the effects of the economic crisis, which was only exacerbated by the specific problems of individual Member States.

There are three political strategies to ensure a higher degree and efficiency of workers’ mobility. First, more flexible working conditions should be introduced and there should be more investment in infrastructure, which will in turn facilitate people to live and work in different countries. Second, the national labor markets should be gradually transformed into a common European market. Third, new institutions need to be established and additional permanent mechanisms set up so that they will mitigate the negative impacts of any future sharp increases in unemployment.

It turned out that the free movement of labor is necessary but not sufficient to alleviate imbalances within the Eurozone. Increasing the rate of labor mobility is potentially a good step towards reducing unemployment and ensuring the stability of the Eurozone. Furthermore, it was found that sound political actions and other means are needed to integrate in the labor markets not only European workers but also refugees fleeing from third countries affected by various crises. Enabling them to settle down and succeed in the mobile labor market should be one of the EU’s main priorities.

(The study can be downloaded here:http://www.delorsinstitute.eu/011-22541-Labour-mobility-in-the-euro-area-cure-or-curse.html)

Article Categories:
THINK-TANK

Leave a Comment

Your email address will not be published. Required fields are marked *

Menu Title