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Social competition in the EU: Myths and realities

Jun 5, 2013 | News

(05 June 2013) – A study published by Notre Europe-Jacques Delors Institute provides an analysis of various labour standards in the 27 EU member states in order to see whether the cross-country differences leave enough space for engaging in “social dumping”.

Overall, the analysis reveals some intriguing developments and shows that, generally speaking, there is little space for regime competition between the European “core” and the “new” member states. For example, in terms of productivity-adjusted total labour cost, some of the new member states have not only lost their status of the cheap labour destination, but have also become more expensive than the European core.

Unexpectedly, three member states not belonging to the Central and Easter European club, namely the UK, Ireland and to some extent Luxembourg, seem to consistently outperform all the other countries in terms of real labour cost both in direct and indirect terms. In this sense, these countries could be considered as the most realistic suspects of “social dumping”.

It does not automatically follow that these member states do engage in social dumping though; it only implies that their economic model is the most efficient in terms of labour cost. After all, as discussed in the Study, disloyal and genuine welfare-enhancing competition might be sometimes difficult to disentangle, which makes the argument of “social dumping” difficult to prove.

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Download the study