Labour Market Flexibility in the European Union

Abstract

Labour market flexibility attracted considerable attention in Europe during the 1980s, marked especially by the inevitable contribution to the debate produced by the OECD (1986) and efforts by certain governments, notably that of the UK, to put theory into practice. It was not, however, the case that injunctions to flexible behaviour were being uttered for the first time, nor that the evidence of inflexibility was particularly new. Periodically since the Second World War, industrialists and government ministers had turned to problems of ‘irrational’ wage bargaining and restrictive working practices, inadequate occupational mobility, and geographical inertia amongst the labour force. Undue trade union power, lack of investment in vocational education and training, and a distorted housing market were regularly identified, respectively, as key contributors to these three forms of market failure. Likewise, social scientists such as economic historians, labour economists and industrial relations researchers, were certainly not unfamiliar with the enormous divergences between theory and reality when it came to dealing with labour markets.