Mutual recognition, unemployment and the welfare state

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This paper aims to explain the advantages of using the principle of mutual recognition, instead of equal treatement, in the Union’s labour markets.

Mutual recognition, unemployment and the welfare state

Abstract

Mutual recognition has irreversibly entered the European Union markets since the 1979 European Court of Justice ruling on the Cassis de Dijon. Since then, it has prompted an innovative and effective convergence process on the commodity, service, capital sectors: the latter derives from the elimination of barriers to entry, from the competition of different standards and country-systems, with consequent enhancing of the goods’ quality and quantity, cost reduction, knowledge enlargement. Mutual recognition helps the Union finding its original spirit, namely making competition an harmonious instrument for economic, social and civil development, where efficiency and equity grow together.

Apparently the principle of mutual recognition seems able to promote the four fundamental freedoms foreseen by the Treaty of Rome. However it is far from being adopted in the labour market and in this sector the European Union endorses an opposite principle, named “equal treatment”, while labelling the mutual recognition as a form of “social dumping”.

Given that the labour market problems cannot be discussed without a joint consideration of social protection policies, one has also to add that European Welfare States generally utilise host rather than home country rules, contrary to the principle of mutual recognition. However, there are no deep, logical reasons for using opposite principles in one of the four fundamental European freedoms. Quite the reverse, on a logical ground, it is unlikely that, in spite of different standards and legislations, European Member States are able to be equivalent in protecting health, environment and the cultural heritage, but not workers’ rights.

This paper analyses the facts concerning the advantages of mutual recognition in three out of the four European freedoms and looks into the disadvantages of using an opposite principle in Union’s labour markets and Welfare States. Some possible extensions of the principle of mutual recognition in these fields are proposed: using a simple theoretical game theory model, the positive implications on labour mobility and on the fight against the European classical unemployment will be shown. The last section of the paper illustrates some policy-conclusions.

Read the complete

Bruges European Economic Policy briefing, on the College of Europe’s web site.  

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