Labour Market Integration In An Enlarged European Union

Abstract :

The European economic integration process was both necessary and beneficial for all the actors involved, reshaping for long run the global economic and political landscape. One of the most complex and pressing challenge for the European Union is to maintain an appropriate level of economic, social and territorial cohesion between its Members. In an increasingly interdependent world where it is difficult to maintain the status of global economic actor, the European Union needs, more than ever, a high level of convergence both between states and regions and within them. As the process of European economic integration has entered a new stage, the variables on which the prosperity-generating process is currently dependent are different. The Member States of the European Union need solidarity, a vital principle of integration that has been increasingly challenged in recent years. Sustainability, vital to any public policy, means economic efficiency, social responsibility and ecological resilience. Real convergence, complementary, but much more complex than the nominal one, depends on many macro and microeconomic variables. In this paper, we have tried to study economic convergence in the European Union, by taking into consideration two labour market determinants: labour productivity and labour costs. In this respect, we have compared the evolution of productivity and also calculating the ratio between these two determinants. Our study suggests that the labour productivity surpassed the costs between 2000 and 2018 at aggregate level. However, the analysis of New Member States and Old Member States clusters illustrates divergent trends in the labour market. Our results show that in the upcoming years, the labour costs will increase with a higher pace than productivity, which could also hamper the integration of the labour markets between the Member States.