EurWORK European Observatory of Working Life

European labour market

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.

The demographic profile of the European labour market has changed significantly in recent years. The proportion of the labour force that is female has increased over the last decade, with the gender gap between men and women falling from 17.1 percentage points in 2000 to 14.2 percentage points in 2007. Migration now shapes the European labour market, and the accession of the new Member States in 2004 and in 2007 has utilised the right to free movement of workers to encourage changes in the national and ethnic profile of the European labour market. Demographic changes associated with an aging labour force have also necessitated new labour market incentives to encourage older workers to remain in the labour force for longer.

In relation to the nature of labour market regulation in the EU, this too has been the subject of change. In its original form it may best be understood by contrasting it with another form of transnational labour regulation: the International Labour Organization (ILO). Established in 1919, the ILO declared as one of its principles that ‘labour should not be regarded merely as a commodity or article of commerce’ (Article 427 of the Treaty of Versailles, 1919, which contained the first ILO Constitution). In contrast, labour – and even more so, social matters – were relatively marginal to the original objectives of the European Economic Community. In terms of their content, the development of labour market regulation during almost five decades of existence of the EU has been spasmodic, episodic and unsystematic, ranging from norms guaranteeing free movement of workers in a Community-wide labour market, to norms providing rights and protection far beyond existing Member State provisions (as in equality between women and men). However, the mechanisms of enforcement through EC law extend far beyond the possibilities available to the ILO. These qualities of content and procedures of adoption and enforcement of norms are important to an understanding of the specificity of EC labour market regulation.

Despite the limitations of its original common labour market objective, EU regulation of the labour market did develop beyond the confines of free movement of workers. A major driving force was the interaction of Member States, both individually and collectively, with EU institutions. The policies of Member States exerting pressure on the institutions, in particular on the Commission, have been a major determinant of EC regulation of labour. EU regulation of the labour market has also been used specifically to shape the demographic profile of the labour market, in the form of the Lisbon strategy and the strategy for growth and jobs.

At the same time there are other factors that may affect the continuing progress of the construction of the European labour market. Particular account should be taken of the rulings of the European Court of Justice in the Viking and in the Laval case and their potential impact on the structure of the European labour market.

See also: European Court of Justice; free movement of workers; Laval case; Lisbon strategy; mobility of workers; Single European Market; social competences; Viking case.

Please note: the European industrial relations dictionary is updated annually. If errors are brought to our attention, we will try to correct them.
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