The impact of intra-EU Labour mobility on national labour markets

Abstract

Labour mobility in a regional bloc has been hailed for bringing about several desirable effects. It makes labour markets more flexible and economies more responsive to technological changes. Growth is enhanced because it enables employers to choose from a wider variety of productive workers, increasing the probability of skill matches. A balancing of job allocation occurs since any existing shortage in the supply of labour is compensated for by excesses in other parts of the region. In the early stages of EU enlargement, labour mobility was regarded as an increased opportunity to find work and balance labour market shortages and excesses. As the Union took on relatively less wealthy countries such as Greece, Portugal and Spain in the 1980s and the CEECs (Central and Eastern European Countries) in 2004, the perception of labour mobility changed. The CEECs may be small in terms of output produced and capital stock held but their labour force is considerable. It makes up one third of the whole EU labour force and is considered cheap since average wages are one fourth of the EU levels at purchasing power parity. Accession of the eight CEECs in the EU was expected to bring about undesirable effects, such as higher levels of social security spending in the receiving countries, accompanied by instability in the labour market in the form of job displacement, wage losses and the movement of plants from Western to Eastern Europe. This thesis will study the experiences of the three countries which chose to let the new member states exercise their right of free movement within their borders. By making use of case studies on Sweden, the UK and Ireland I will evaluate the impact of migrants on these nations' labour markets and analyse if these fears were unfounded.