EurWORK European Observatory of Working Life

European single market

Definition

The European single market refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. The Single Market aims to bring down barriers and simplify existing rules to enable everyone in the EU to make the most of the opportunities offered to them by having direct access to 27 countries and 450 million people.

Background and status

The objective of a European single market, proposed by the 1992 Single European Market Programme, had serious implications for employment and industrial relations in the EU. In particular, the single market posed a threat in the form of competition between enterprises in different Member States faced with different direct and indirect labour costs and different systems of social and labour regulation (‘social regime competition’, giving rise to a risk of ‘social dumping’). The result was a fierce and protracted battle between the European social partners over the political and legal strategies to be adopted with respect to the single market.

Since the introduction of the single market, some potential EU accession candidates (Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia) have signed agreements with the EU allowing limited participation in selected sectors. Turkey has access to the single market only for some goods, under the EU–Turkey Customs Union.

Trade union strategy and aims

The trade unions recognised the dangers posed by social dumping in the European single market but also acknowledged the advantages to be reaped by enterprises free to compete without national hindrance. Their aim was to achieve a balance between the costs of the social protection necessary to offset the risk of social dumping and the losses to enterprises entailed by the required regulation. The strategy, therefore, was one of political regulation at European level to secure the fair distribution of the benefits of the single market, which would require attention to questions of labour and social standards and the creation of implementation mechanisms.

Employer organisation strategy and aims

The employer organisations perceived the aim of the social dimension of the single market as being to achieve the maximum productive and competitive efficiency. For firms in the EU, the principal competitive challenge came from outside – mainly the USA and Japan. Enterprises in those countries benefited from significantly lower social and labour standards, a competitive advantage that hindered enterprises in Europe. Employer organisations therefore argued that the European single market should aim to reduce this competitive advantage by eliminating burdensome social and labour regulation.

Commentary

The debate continues on whether competition over labour and social costs should be encouraged in the European single market, whether social dumping constitutes a real threat, and which legal and regulatory strategies should be adopted.

Related dictionary terms

HarmonisationSingle European Act

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