László Andor speach at European Policy Centre: Single European Labour Market must be part of the EU’s recovery strategy

Final conference of the “Single European Labour Market” project

European Policy Centre, Brussels, 29-5-2013 — /europawire.eu/ —

Ladies and Gentlemen,

It is a pleasure to open today’s conference and discuss the final report of the Single European Labour Market project.

The paper provides a good overview of the main patterns of labour mobility in Europe throughout the crisis years, and explains clearly the benefits of people’s ability to move across borders.

It also makes a number of interesting policy recommendations, which – I am sure – have the potential to trigger a good discussion.

The European Commission is a strong supporter of greater labour mobility. The notion of a genuine European labour market is one of the cornerstones of our 2012 Employment Package, which set out a medium-term agenda for how the EU and the individual Member States should support a job-rich recovery from the on-going crisis.

We have been also promoting and safeguarding labour mobility as one of the rights that is at the heart of the European project.

One month ago, the Commission proposed a Directive tackling various remaining barriers that make it more difficult for workers to really exercise their freedom of movement, for example the lack of information points on mobile workers’ rights, or problems with achieving redress in cases of discrimination.

We hope that the Member States and the Parliament will be able to agree on these practical proposals soon.

The Commission is also leading the work in upgrading the EURES network into a genuine recruitment, matching and placement service for Europe.

We have been testing this type of service through the targeted mobility scheme for young people, known as ‘Your First EURES Job’.

We are looking into ways to further expand this tool, because it could help tens of thousands young people, and it could help the European economy as a whole.

Quite naturally, mobility is an important element also in some intergovernmental initiatives which have been developing over the recent years and months, such as the cooperation project aiming to bring well-qualified Spanish unemployed to fill job vacancies in Germany.

We have long argued in favour of improved matching between jobseekers and vacancies, within and beyond national borders, and I suspect that most of you in this room share this objective.

So let me try to make the beginning of today’s conference slightly more interesting by making two points that very much relate to the idea of a single European labour market, but are perhaps a bit more provocative.

Firstly, I would argue that if we agree that labour mobility brings economic benefits, in particular to the receiving countries, we should also be able to accept that some migrants look for work in other Member States because they are poor.

It is well known that in some cases migration is driven mainly by pull factors, in others by push factors.

We know that in today’s context of great economic divergence in Europe, the push factors are gaining in strength.

It has been suggested in some places, even in your final report, that specific EU financial instruments could be created to help cover the short-term costs associated with the housing and integration of labour migrants in the receiving countries.

I tend to be sceptical about these suggestions, both because these migrants are creating GDP and liable to pay taxes where they work, but also because promotion of labour mobility falls within the scope of the well-established European Social Fund.

The necessary public investment to support the settling-in of labour migrants can be therefore already today co-financed by the EU.

More generally, it is useful to recall that – as the Single European Labour Market research project also reminds us – the vast majority of people moving between EU Member States do so in order to work. Empirical evidence shows that migrant workers from other Member States are more likely to be net contributors, rather than net recipients, of welfare systems.

The issue of so-called benefit tourism tends to be grossly exaggerated, sometimes for domestic political reasons, but no Member State has been able to give us evidence that it is a significant phenomenon in terms of volume.

The EU already has some very sensible rules in place to prevent abuses of social security systems, such as the habitual residence test for those who are not active in the labour market and want to access social security benefits.

So just like we are used to giving a chance to a foreign investor coming to our country, a foreign service provider or a foreign product in the shop, we should give a chance to a foreigner trying to find work.

We may have become used to migrants taking work for which they are overqualified, but if there is low-qualified work to do, there is no good reason why we should look down at a low-qualified person from another Member State coming to do it.

Secondly, I am afraid that the growing socio-economic divergence which we are witnessing in Europe today is sometimes leading us to forget that labour mobility is first and foremost a right.

Throughout the history of European integration, free movement has been a right – one of the four freedoms of movement on which the EU’s Single Market is based.

Today, however, many people are emigrating from the euro zone periphery not out of preference but out of despair.

Labour mobility tends to be viewed less as a right and more as a necessity.

This is particularly visible in the debate on the deepening of the Economic and Monetary Union, where stronger labour mobility is seen by some economists almost as an inevitable requirement which the logic of a currency union imposes.

Some people even tend to associate the social dimension of the monetary union with the maximisation of labour flexibility and mobility.

This ignores the fact that the monetary union is not supposed to be an end in itself, but a means of creating prosperity, employment and social progress.

Not everybody can move, and not everybody wants to move. The reason why most EU countries signed up to the euro was not to increase labour mobility but to strengthen an integration project which was supposed to benefit all.

If we relied on labour mobility as the dominant channel of economic adjustment within an incomplete monetary union, we would be getting dangerously close to forced mobility. Not legally forced, but economically forced.

Yes, it is absolutely right to work on spreading opportunities for transnational mobility of people who face grim economic prospects within their countries and can put their skills to a more productive use elsewhere. The Commission is leading these efforts.

But we should not foster any illusions that transnational labour mobility could be a solution to the problem of Europe’s incomplete monetary union, even if it could be substantially expanded above today’s 3-4% of the working age population.

Europe has a currency union of 17 Member States, with another 8 (soon 9) committed to adopting the euro in the future. Such currency union will not be sustainable unless its Members take collective action to restore a reasonable economic future for each of them.

After all, the EMU remains fundamentally a union of national democracies.

Within nation states, labour mobility has always gone hand in hand with fiscal transfers.

People of productive age move from low-productivity areas to high-productivity areas, or from the peripheries to the centres, if you like.

But provision of public services in the periphery is essential to keep a country together, otherwise peripheral areas would ultimately need to launch their own currencies and the whole economy would work less efficiently.

Sustained outmigration of working-age population of course leads to rising dependency ratios and undermines the attractiveness of an area.

There are two basic options that a state (or a union) has in such situations: either provide compensatory fiscal transfers to keep the periphery going and able to buy at least some products from the centre; or try to invest in developing the periphery’s comparative advantages so that it re-gains an economic future.

In Europe, we have traditionally pursued the second option, and cohesion policy has been an important counterpart in the development of the Single Market.

Today, as we face growing economic divergence in the monetary union, the theoretical options are either to let the union dis-integrate, or to go for a combination of labour mobility and fiscal support to those areas that are struggling.

This is why, for example, support to greater transnational mobility of the young unemployed in the ‘peripheral’ countries must go hand in hand with the implementation of Youth Guarantees for everyone – those who want to move and those who want to stay. This is the only way we can maintain a prosperous union.

The notion of fiscal transfers is unpopular in some parts of Europe.

But we can get encouragement from the recent European Council proposal for a €6 billion Youth Employment Initiative in support of the Youth Guarantee.

This shows that Member States understand that they need to promptly take collective action to tackle a social crisis in the union, even if only some areas are affected.

Labour mobility is an important part of the solution, but it’s only a part of it.

Thank you for your attention.