EU social and labour market policy

EU social and labour market policy - European Social and...

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European Social and Labour Market Policies Dr. Aad van Mourik Academic program director Centre for European Studies Universiteit Maastricht
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Contents A. European social policy Economic Arguments Substance of EU social policy B. European labour market (&competitiveness policy)
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Early thinking on EC Social Policy Ohlin Report 1956: international differences in the general level of wages and social charges are no obstacle to freer international trade, rather they are a prerequisite for it did not consider it necessary or practicable that special measures to harmonize social policies or social conditions should precede or accompany measures to promote greater freedom in internat. trade harmonization only necessary when the level of worker remuneration in one industry is much lower than in that in other industries but it is very difficult to determine substandard conditions in particular cases
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Early thinking on EC Social Policy Ohlin Report 1956 - Continued: concluded that “differences in the general level of wages are much more important in Europe than differences in the inter-industrial wage pattern” …. and ….”hence the extent to which harmonization may be required seems to be smaller than is often thought”.
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Early thinking on EC Social Policy The Spaak report, distinguished General distortions: including differences in wage levels, caused by general economic conditions, which one should not want to modify by decree Specific distortions occur when: a branch of activity supports charges that are higher or lower than the national average the same relative charges do not apply in the other countries of the common market these relative charges are not compensated by other charges
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Early thinking on EC Social Policy Spaak approach to specific distortions: even if specific distortions exist, one should not necessarily eliminate them, because: the CM will spontaneously harmonize really serious distortions will show up during the functioning of the CM and can then be handled not all distortions are relevant for proper functioning of the CM Spaak resulted in case-by-case approach found back in the Treaty
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Terms of trade effects: conclusions Small countries: when no standards are imposed in Rest of the World , unilateral standards are desirable Multilateral standards setting: will hurt importers, but exporters will likely benefit and have a big interest in obtaining common social standards Thus, high wage countries should have no interest in common standards (high-wage producers should have an interest to push for socially non-optimal standards) This conclusion is reinforced if general equilibrium considerations are used: low-wage countries export labour-intensive goods, standards increase the price of labour-intensive goods, and improve the terms of trade of these countries and lower that of importers of labour-intensive goods
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Fears of social dumping Unfair competition from countries with lower social standards
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This note was uploaded on 03/23/2010 for the course ECON D0M09A taught by Professor Vanmourik during the Winter '10 term at Katholieke Universiteit Leuven.

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EU social and labour market policy - European Social and...

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