A single European labour market will have positive economic effects and create new jobs. In this respect, the Single Market Act as proposed by commissioner Barnier is an important step towards an competitive social market economy. Also in this context, a new trade agreement between EU and USA will be important as well. In this trade agreement, eliminating tariffs, but also removing trade restrictions on product and labour markets are important. Nevertheless, removing restrictions in labour market will be the hardest job. We all know that in Europe, with unemployment sky high, the perspectives for a single labour market are narrowing. And also in the Netherlands which always has been a supporter of the EU, free trade and single market, anti-Europe and anti-trade politicians get more and more appeal.
In the Netherlands, one of the serious problems is unemployment. Unemployment is expected to rise from 4.5% of the labour force in 2011 to almost 7% in 2013. Although this is not a high from European perspective, the movement is in the wrong direction and is compounded by a shrinking labour supply in 2013. In addition, youth unemployment is double as a high and reaching a level of 15% percent.
Nevertheless, the only way out of this crisis are reforms and a Single European Market as it gives prospects for economic growth and jobs in time, where they are needed so badly. However, as a consequences of this single labour market the competition for low educated people will be intensified. In this respect transitional measures for changing social security are necessary, but it is important that they are limited to seven years as is allowed by the Accession Treaty. Therefore, a single European labour market should be combined by social security and labour market reforms. In the Netherlands in 2003 the Balkenende II cabinet, consisting of Liberals and Christian Democrats, reformed with respect to early retirement schemes, unemployment benefits and disability benefits. However, many economists in the Netherlands agree on the need for further labour market reform. Reforms in the past led to a two-tier system with ultra-secure permanent workers and vulnerable temporary workers – mostly youth people. Importantly, unions, employers and the government reached an agreement on a package how to reform the labour market. An important measure in this package is that dismissal procedures should be limited for permanent workers in 2016. Some economists state that this is not enough and too late, but in my view it should be recognized as an important step. Nevertheless, it is important to work out these rules in due course as can be used as a guideline for a future labour market.Author : Raymond Gradus