IMPROVING THE EU JOB MARKET

To:     The Right Honourable European Commission President Hon. Jean-Claude Juncker

From: Athinarayanan Sanjeevraja

Date: November 30, 2018

RE:     To Improve the EU Job Market

Suggestion:

Hon. President, let me start by paying my respects to you and through you to. European Commission tweeted on November 24, 2018 that “share your ideas on improving the EU job market”. Well. The world of work is changing, European government, employers and indeed employees need to adapt to a new reality if we are to reverse the unemployment trend, create jobs and effectively managing skills. If I am not mistaken, fundamental structural changes including globalisation, demographic evolution and sectoral shifts are transforming labour markets and increasingly volatile economic cycles are resulting in job creation and destruction on an unprecedented scale. Germany, the Netherlands, Scandinavia and the UK have reformed their labour markets to increase flexibility and proved more resilient in the economic crisis and started to recover more quickly. But Greece and Portugal persisted in over protecting permanent contracts have stifled job creation and confront persistently high unemployment. Despite European regulations, unjustified restrictions on the use of agency work still exist in many European countries. Moreover, increasing mismatch between demand and available skills is a symptom of the shifts in economic activity from traditional sectors such as construction and farming to new service industries.

Hon. President, the types of jobs available are changing and we need to equip workers to do the jobs available. This is not confined to Europe. I just wanted to highlight that in the US 2 million clerical jobs have been lost since 2007 and meanwhile the demand for business services has grown substantially. Here in Europe we are lagging behind in business service sector development but the future trend is clear and we need to equip workers to take advantage of it. Growth in both household and business services which require complex personalised interactions is set and production jobs will continue to be lost to technology. The role such as put employment services in matching skills with jobs will only be growing. The EU states governments will also need to modernise their social protection legislation and make it fit for this new reality of work where employees are likely change jobs and employment status on a regular basis. They will need to reduce non-wage labour costs that discourage job creation and also ensure greater transferability and portability of workers’ rights so that they can be confident that their accrued benefits and rights are protected and will carry with them. Having gender/ethnic quotas for will undermine company’s competitive choice in hiring. This will only make this problem worse for some and introduce it to others. 

Hon. President, lack of demand is clearly the most serious problem currently but I’m suggesting that there are other constraints which European companies face even when they are willing to hire. And it is important at times to look not just at the macro issues, but at the experience of individual firms. As an Analyst, I knew some of the micro issues such as lack of skills are huge concerns for many. Lack of skills indeed a big problem. That’s serious if the overwhelming majority of the university graduates are not seen to be competent enough to be given jobs.  For instance, soft skills such as getting to work on time, able to communicate in other than a series of grunts and work ethic getting the job done properly. To which list, I might add that if we work in contact with customers, politeness, courtesy and getting people’s names right.

Hon. President, economic migration is becoming increasingly important for the EU’s ability to deal with the shrinking labour force and expected skills shortages. Labour force is shrinking because of an ageing population. Technology will impact on labour is forecast.

Hon. President, we have to consider the distinction between a contract between a high cost company and a low cost provider in East Europe, as a hidden way of getting an employee on the cheap. For instance, a tech start up in France employs a coding outfit in Poland to get the back end up. Some coders come to France for a few months to help finish the product. What labour law should apply? Should the Polish workers get paid France wages? Of course, if employees work in France, employees must be paid as French. When Germany introduced their minimum wage legislation, it also included posted workers the companies also had to register their employees with the German authorities and if requested make available documentation in German, providing that the worker was being paid the German minimum wage while working in Germany. In my humble opinion, national rule should apply for the labour market.

Hon. President, a posted worker is an employee who is sent by his employer to carry out a service of another EU member state on a temporary basis. For instance, a service provider may win a contract in another country and send his employees there to carry out the contract. Posted workers are different from EU mobile workers in that they remain in the host member state temporarily and do not integrate in its labour market. On the contrary, EU mobile citizens who go to another member state to seek work and are employed there are entitled to equal treatment with nationals in access to the employment, working conditions and all other social and tax conditions. Why the UK is voted to leave the EU in the first place? Competitive is virtually a synonym for wage depression in modern economic parlance.     

Hon. President, we should not overlook the human factor, individual or collective. Migration of individual workers is reasonably well accepted in most of the EU member states but the growing number of posted workers with lower taxes and working conditions than those of host countries is seen as cheating particularly by those within the EU member states. The UK is already chosen to leave the EU due to this perceived unfairness. If another EU member states to leave the EU, the remaining EU member states finding the burden too heavy to bear might decide to reconfigure.

Hon. President, I just want to make a fair point when arguing for the EU freedom of movement including posting workers to other EU member states. Freedom of movement is one of the fundamental freedoms of the treaty of Rome. The most objectionable aspects of the freedom of movement legislation allegedly safeguarding the rights of posted workers in Western Europe. It is really mind-boggling complexity whose true ambition is not to safeguard higher local wages. This would deter such foreign postings in the first place. This clearly reveals the demagogical nature of the freedom of movement legislation. This would only affects the very few percentage of workers in Western Europe but panders to the ghosts of the domestic and political establishment and to the most retrograde elements of Western European electorate while infringing the rights of the Eastern European workers and their employers. The main loosers from this are Western European users of service who will now be effectively prevented from hiring high quality Eastern European firms and workers for the sake of protecting inefficient, incompetent and lazy locals in several sectors. I highly regret to inform that the European Council and the European Commission would never have gone along with this travesty of justice.

Hon. President, I acknowledge that the difference in minimum wages between the EU member states is rapidly narrowing. At the same time the manner in which this legislation is implemented is geared to prevent posting of workers by creating insurmountable administrative burdens. I most humbly prayed to the European Council and the European Commission to think otherwise we clearly have not tried to negotiate its complexities. Differences in labour standards across Europe are minute compared to the differences ion quality of workers and willingness to work especially in traditional sectors such as construction and farming. This legislation targets those who want and can work to protect the rights of those who do not have the will or capability to do so. In this sense, it is immoral and demagogical and undermines the principles of the EU. It is difficult to support this legislation on the basis that one could find a way around it by setting up a firm and employing the employees directly in a Western European country. This only helps to underline the purely demagogical nature of the measure but not to justify Hon. President.   

Hon. President, The EU and its institution must do better when it comes to the EU growth and employment if the EU member states are to compete successfully with the rest of the world. For instance, Nordic countries, Germany, Austria, and Luxembourg have proved to have very stable labour markets. We are experiencing the higher economic growth and employment but there are some of the member states that are lagging far behind. As for Mediterranean and CEE countries have to implement deeper reform in order to successfully deal with the future crisis. We need to put more attention to make the EU employment more attractive for the unemployed to improve the labour supply and demand for long-term. In my opinion, we need to create social models in labour market policies will give the best results. Moreover, appropriate use of EURES in order to increase the spreading the information about the jobs across the EU member states. Free mobility is also important to improve overall economic welfare, economic integration, the labour mobility and society. Last but not least, the EU member states labour market policies and employment related migration regulations influence native opinions.   

      

Thank you very much for your attention Hon. President.

Respectfully yours

Athinarayanan Sanjeevraja.

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Athinarayanan Advisory Authority.