Flexibility and all that: understanding the EU labour market

Abstract

The aim of this article is to explore the current European debate over labour market flexibility. First, it considers lessons from economic theory. The classical consensus considering unemployment to be purely voluntary, the Keynesian consensus introducing the concept of demand deficient involuntary unemployment and finally the neoclassical consensus returning us to the classical viewpoint of the dominance of real conditions in the labour market. In order to proceed without confusion the article provides a clear working definition of the natural rate of unemployment and its three main components, voluntary unemployment, structural unemployment and involuntary unemployment. It then proceeds to analyse each of these main components in detail, illustrating the difference between a free market approach and a European Commission approach to reducing each component of unemployment.The article concludes that the future is dependent on all EU citizens as electors of governments and holders of wages to moderate.

European Integration and Market Economy Europe – A New Economic Order

“…The leaders of Europe in that time tried to find a solution for once and all for the instability to secure peace and prove Europe potentials and joined up the technological evolution of the US. History shows us that EU was finally established in 1993 by the Maastricht treaty, before that the 'EU' was called the European Economic Community (EEC) within 1957-1967, then from the European Community (EC) within 1967-1993(Rosamond 2000, Potts, 2008. After the Lisbon Treaty, the EU has been awarded with legal personality (EU, 2007), and this fact is providing full rights in negotiating and establishing partnerships with other international organization among the world.…”