Introduction
The increasing level of competition among companies worldwide as well as the rise of various economic issues led to the development of the labor policies. This aspect is significantly controlled by the political framework of individual nations. The European Union however, is a different case. As EU is comprised of various member states, its central administration then implemented a legislation wherein all workers of the European Union members have the right to move freely and find employment anywhere within the union. By means of this legislation, EU nations will be able to improve their respective working sector as well as attract multiple foreign investments. While this may be beneficial, certain concerns appear to make the implementation of this policy challenging. In particular, though each member state implements the free movement of labor within the union, employment legislations have been inconsistent. As a result, workers from different EU borders encounter varying levels of employment difficulties. This paper will then focus on describing inconsistencies on wage policies from some of the members of EU. How the inconsistencies affect the workers and the EU as a whole will also be determined. Finally, ways on how this policy aspect can be standardized will be formulated.
Movement of Labor
Through the free movement of labor policy in EU, factors that hinder efficient production in the working sector can be dismantled. Hence, the primary goal of introducing free worker mobility is to provide equal opportunities among the member states of the European Union. With the implementation of the free mobility of the workers, it is expected that this policy will be integrate the resources and opportunities each EU member state has to offer. This also incorporates the free labor movement principle wherein all member states must willingly welcome and accept all citizens within the union. Furthermore, the imposition of free worker mobility in EU is also related to the goal of enhancing internal labor mobility rather than external labor migration (Jileva, 2002).
Initially, labor mobility within the European Union was only applicable to migration from Italy to Germany and France during the 1980s. During this time, both differences in unemployment rates and wages were relatively low. Moreover, language and cultural differences served as major mobility barriers. However, this less complicated set up changed due to three major transitions. One of which is the rise of significant impacts of the liberalization of service provision on internal labor migration. Another factor was the European Union’s growing cautiousness on the common migration policy. Lastly, citizens from Central and Eastern Europe began to enter the UE member states when the Iron Curtain fell. The result of which was the development and implementation of stricter immigration policies (Menz 2003).
However, this again went through significant changes during the late 1990s. Within the European Union, shortages in labor became a major problem. The EU population was then characterized by low birth rates and high levels of aged groups. In some regions, mass unemployment was a major problem. According to Menz (2003), the business communities of Germany and Austria were the ones who raised this growing labor issue. Both communities also asserted that the need for workers is significant to all member states particularly in making the nations appealing for foreign investments and in maintaining healthy international competition. This then led to the implementation of free worker mobility among EU member states, which basically encouraged internal labor migration.
Inconsistencies
A report has indicated that the mobility of the workers within the European Union led to various positive effects. One of the positive effects of worker mobility in EU is the reduction of labor market shortages. Moreover, the economic performance within the European Union has also improved as well through this policy. Member states including Sweden, UK and Ireland have not enforced labor restriction after May 2004; as a result, these countries were able to obtain significant economic growth, rise of employment and decrease in unemployment. Nonetheless, evidences had also been gathered emphasizing the downsides of this policy. For instance, it has been reported that the mobility of the EU workers increased the levels of bogus self-employed and undeclared work. Moreover, the flow of workers within EU in general had been limited (EUROPA 2006).
Though the implementation of free mobility among EU workers may have addressed the needs of the member states, issues still arise. Specifically, inconsistencies in the laws and policies relevant to labor movement have been identified. These inconsistencies apparently prevent the optimization of the benefits of worker mobility among EU member states. One example is the presence of various difficulties in order to access residence and jobs within neighboring EU nations. Labor markets of the EU member states appear to have difference in terms of recognizing worker qualifications and credentials (Vandamme 2000).
The lack of directives that control the assessment of the workers’ academic qualifications makes it difficult for others to apply for cross-border jobs. Moreover, as no standards are followed for the workers qualification assessment, the opportunities for promotion, wage increases and other benefits tend to vary as well. Differences are also observed in terms of the regulation of social securities in work-related travel cases, the transmission of pension rights and in the provision of free services. Social issues such as fiscal differences and access to housing are some other relevant inconsistencies that affect the efficacy of worker mobility in the European Union (Vandamme 2000).
One of the main inconsistencies in the movement of labor in the EU is the enforcement of wage policies. In particular the regulation of the minimum wages within the union tends to vary. Based for the findings of one research, majority of the EU member states have an established national minimum wage supported by the law. A few EU nations on the other hand, implement statutory minimum wages on a few selected occupations only. Still, in some other member states, collective agreements serve as the primary mechanism for the regulation of minimum wages. In general, the differences in minimum wage policy among the member states may be categorized as either supported by law or not. Countries with statutory minimum wages can be classified further into two. One group is comprised of EU members whose national minimum wage is established by national intersectoral agreement or by law. The other group is made of countries whose minimum wage rates are collectively agreed upon by the social partners within a particular sectoral level (European Foundation 2006a).
European Union member states including the Scandinavian countries, Italy, Germany and Austria are those countries that have not established statutory minimum wages. Majority of the wage rate implemented in these nations are based on collective agreements established by sectoral levels. This wage practice covers about seventy-percent of Norway and Germany, and almost a hundred percent in Italy and Austria. As German minimum wage policy do not cover the entire working sector with collectively agreed wage rates, some parts of the country employ statutory minimum wages. This has been applied in line with the implementation of the EU Directive related to the posting of workers. Sectors that are covered by this type of policy include Germany’s construction, roofing, painting and wrecking/demolition industries (European Foundation 2006a).
From this general classification in wage policies observed in the European Union, distinct characteristics between the statutory and non-statutory wages can be drawn. For instance, countries that employ statutory minimum wages tend to apply this policy on a national level. On the contrary, some member states with non-statutory minimum wages may only apply such practice in selected sectors. The provisions within these minimum wage policies also tend to vary based on the workers’ age and qualifications.
In UK and Czech Republic for example, the full adult wage rate applies to workers twenty-two years old and above; two further wage rates are also established for younger workers. In Belgium, full adult wage rates are applicable to private sector employees twenty-one years old and above while five lower rates are established for workers aged sixteen to twenty. The full adult rate in Netherlands applies to workers twenty-three years and older with eight lower rates for younger workers aged fifteen to twenty-two (European Foundation 2006a).
In terms of the workers’ occupations and qualifications, differences in minimum wage rates are also implemented in countries including Latvia, Poland, Greece, Malta, Spain, Ireland, France, UK, Czech Republic and Cyprus. The adjustments of these wage policies may be based on the workers’ work experience or disabilities. In Poland, irregardless of the workers’ age, reduced rates are applied to employees who have not served the company for more than two years; the country however, is not very particular on minimum wage adjustments based on certain working conditions. In Greece, the length of service and the marital status of the workers are the primary determinants of the minimum wage rates. Higher minimum wage rates on the other hand, are given to high-risks jobs in Latvia. French minimum wage adjustments are applicable to workers in catering and hotel industries as well as in some specific occupations. Employees that are more than eighteen years of age are given reduced rates during their first two years of employment. Minimum wage rates are also applied to employees undergoing a particular course or training (European Foundation 2006a).
Analysis and Effects
Based from the given wage policy examples applied in various EU member states, the distinct features of these policies become evident. The implementation of worker mobility however, is affected by these differences. The negative implications of these differences can be emphasized to the case of Norway. As Norway employs both statutory and non-statutory minimum wages depending of the working sector, reports made by the Labor Inspectorate that this may have contributed to the significant differences in wages and working conditions of the foreign workers posted in Norway and local Norwegian employees. Nonetheless, it is noteworthy that the country and its government are striving to develop means for Norway’s monitoring wage developments (European Foundation 2006b). Though this may be a single case only, it should be considered that the implementation of the movement of labor is applicable to all member states of the European Union; if other working sectors of these nations are not supported with any forms of legalities, it is then likely that similar problems such as the ones observed in Norway are also occurring.
As statutory and non-statutory policies are different from each other, certain advantages that are inherent in the application of statutory minimum wages may not be obtained by posted workers in non-statutory sectors. For example, EU governments stated that statutory wage policies can serve as important instruments for the workers’ social protection. Specifically, with legal and standard minimum wage rates, gender gaps in the provision of wages are prevented. Considering that some work sectors are dominated by women, the application of a national minimum wage will then protect female employees from unfair wages. As mobility of workers is applied in EU, problems on the discrimination of foreign workers by wage adjustments will also be avoided. The establishment of a national minimum wage also protects employees in low-paying work sectors such as those in the retail, agriculture, hotels/restaurants, personal service and clothing/textile industries from poverty.
In the United Kingdom for instance, the minimum wage is a valued mean for maintaining fairness and efficiency, especially among employers. Rather than focusing on wage competition, operators on statutory sectors focus more on the production of quality products and services. By means of establishing national minimum wages, staff turnover and absences from work are significantly reduced. Fewer expenses in-work benefits brought about by statutory minimum wage policies also contribute to the reduction of taxes. If workers will be employed on non-statutory sectors in other EU nations, it is likely that they will not obtain these important working advantages. Aside from the increased likelihood of discriminatory problems, unsatisfactory working conditions may also be encountered if this will be the case.
As members of the European Union employ different policies on minimum wages in terms of age, younger workers will be greatly affected. Similarly, legal minimum wages that are only applied in selected working sectors will also put foreign EU workers at a disadvantage, especially those with low-paying skills. The provision of wages in other countries in the European Union is also based on the workers’ credentials, background and experience. The result of these conditional factors is the increased selectiveness of the laborers in migrating to neighboring EU states in searching for job opportunities.
The ultimate effect of these differences in wage policies implemented among EU member states is the disruption of the labor movement’s efficiency. Specifically, this will cause imbalance in terms of the flow of workers within the union. Naturally, countries with more favorable wage policies, specifically those that are established on statutory frameworks, will have a greater influx of laborers from other EU member states. This will significantly affect the productivity level and economic growth of other member states employing other types of wage policies. Countries with statutory wage policies on the other hand will have a highly diverse and dynamic working sector, thereby increasing opportunities for progress and growth. In addition, this working status will also make other EU nations more appealing to foreign investors than others.
However, it is likely that the domestic worker pool of member states with statutory wage policies will encounter strict employment competition against foreign workers from other neighboring states. The employment rate of these countries will then be affected negatively. EU member states that have no statutory wage policies on the other hand, may encounter the problem on labor shortages. Naturally, as more and more workers are going out of the country in search for better work opportunities, the pool for skilled employees will be reduced. In turn, major business industries will be affected. From these analytical perspectives, it becomes clear that with no standard wage policy that will support EU’s movement of labor, the objectives of this policy to reduce labor shortages and maintain general economic stability will not be achieved effectively. The successful application of this policy may just be experienced only by a few nations in the European Union.
Recommendation for Policy Standardization
Apparently, the most effective option to resolve the inconsistency described in the wage policies implemented in the EU member states would be standardization. If a standard policy will be developed for the provision of wages for local and foreign EU workers, balance in worker flow will be acquired. Significant differences in the number of employees entering and going out of the EU nation will then be prevented. Moreover, problems on unemployment and labor shortages in other regions will be addressed. The main problem of standardizing wage policies however, will be the fact that the economic status of some EU nations is far off from wealthier countries. It is then difficult to set a wage rate that will be based only on minimal factors.
For this purpose, it is then imperative that EU nations appoint representatives who will take charge of developing a statutory-based wage policy that will be appropriate for general application. A department will then be formed so as to discuss the provisions that will be contained in the standard policy. Standards should include factors such as the wage rates that will be provided for workers based on their qualifications or occupation. In terms of age, uniform wage rates will be developed based on the workers’ ages. The level or duration of work experience that will determine the provision of minimum wage rates should be standardized as well. These standardizations on the other hand, should be developed based on each country’s economic, political and business status; in this way, transition will not be as difficult for less progressive EU member states.
As economic factors tend to change over time, the assigned department should actively monitor any economic developments that will require wage policy changes. The continuous evaluation of the standard wage policy in the EU will facilitate the identification of the significant issues brought about by the movement of labor. Unfair provision of wages and discriminatory acts are some of the relevant issues that can be addressed by a standard wage policy.
The immediate identification and resolution of these issues will then prevent employment rifts between EU nations. Most importantly, the designation of a department for EU wage policy development as well as the development of standard wage legislation will allow the use of legal principles in handling such matters. The application of legalities will not only ensure order in the implementation of worker mobility but will also make EU nation appealing to foreign investors who are after stable and legal employment policies.
Conclusion
The movement of labor in the European Union pertains to the policy which allows workers from other EU regions to freely seek job opportunities in other EU nations. This has been implemented in order to address problems such as labor shortages and economic crisis. The mobility of the workers has also been implemented in order to enhance the internal labor migration within the union. While reports had indicated that this has resulted to the achievement of the said objectives, certain inconsistencies appear to hinder the full optimization of the labor movement policy. In this essay the inconsistent wage rate legislations has been cited as a major issue. As described using the wage policies employed by the different members of the European Union, it is clear that significant differences can be drawn.
With the lack of a universal wage policy that EU nations can apply, imbalance in the flow of workers will affect other member states, particularly those with non-statutory wage policies. The objective of the worker mobility will not be achieved as well as this wage inconsistency can result to labor shortages, stunted economic growth and high unemployment rates in some regions. It is then essential that standard wage policies based on multiple significant economic and political factors are developed by a designated EU department. This will then ensure that the benefits of the movement of labor are obtained by all EU member states.
References:
‘Free movement of workers since the 2004 enlargement had a positive impact – Commission report finds’, 2006, EUROPA, February 8, viewed 6 April 2006<http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/06/130&format=HTML&aged=0&language=EN&guiLanguage=en>.
European Foundation, 2006a, ‘Minimum wages in Europe’, viewed 6 April 2006 from http://www.eiro.eurofound.eu.int/2005/07/study/tn0507101s.html
European Foundation, 2006b, ‘Norway trying to cope with the free movement of workers from the new member states’, viewed 6 April 2006 <http://www.eiro.eurofound.ie/2005/06/inbrief/no0506101n.html>.
Jileva, E 2002, ‘Visa and free movement of labour: the uneven imposition of the EU acquis on the accession states’, Journal of Ethnic and Migration Studies, vol. 28, no.4, pp. 683-700.
Menz, G 2002, “Patterns in EU Labour Immigration Policy: National Initiatives and European Responses’, Journal of Ethnic and Migration Studies, vol. 28, no. 4 pp. 723+.
Vandamme, F 2000, ‘Labour Mobility within the European Union: Findings, Stakes and Prospects’, International Labour Review, vol. 139, no. 4, p. 437.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment