What is the biggest challenge for a common European labour market?

On average 3.3 per cent of EU citizens reside in an EU country other than that of their citizenship.

The free movement of workers is a fundamental right guaranteed by the Treaty on the Functioning of the European Union (EU). Therefore, EU citizens are entitled to: 

  • look for a job in another EU country; 
  • work there without needing a work permit; 
  • reside there for that purpose; 
  • stay there even after employment has finished; 
  • and enjoy equal treatment with nationals in access to employment, working conditions and all other social and tax advantages. 

Despite these possibilities, only a small proportion of EU citizens take advantage of their right to reside and work in another EU Member State. 

At least, this share is slowly increasing. In 2000, a mere 1 per cent resided in an EU country other than that of their citizenship. This share made up 2.4 per cent in 2010 and increased further to 3.3 per cent by 2020.  

However, if you look at the countries, there are significant differences. Romanians and Croatians leave their country of origin in the highest proportions, while the contrary is true for German, Swedish and French citizens (see chart above from Eurostat, the statistical office of the European Union).

The share of 3.3 per cent of EU mobile citizens is, however, “still a modest figure in the light of substantial economic differences among European countries,” Ekaterina Sprenger, Deputy Editor-in-Chief at the ZBW Leibniz Information Centre for Economics, writes in the paper “What makes us move, what makes us stay: The role of culture in intra-EU mobility“.

Sprenger took data from 28 member states of the European Union over the period 1998-2018 to find out what determines the forces driving intra-EU mobility.

Her results: 

  • Economic incentivesgeographical proximity, a common border, and the size of the migrant network have a significant and positive effect on intra-EU mobility flows.
  • Cultural distance between countries does not seem to prevent Europeans from moving to another member state.
  • One of the biggest obstacles: language. Sprenger: “The coefficient of linguistic distance is negative and highly significant in all samples and specifications.” And: “Thus, migration flows between two countries are smaller theless related their languages are, ceteris paribus.”

Central insight for me: A common labour market is of little help if there are still language barriers.

And digitization is of little help here, either. Sprenger again:

“Even though the COVID-19 pandemic is likely to accelerate the ongoing digital transformation of the European economy and promote teleworking and the use of digital technology, making the physical distance less important, the language barrier will likely remain a challenge for the European labour market.”

What can be done about it? I guess we all have to study and improve in English, the current lingua franca. And politicians should provide the appropriate incentives since “policies aimed at promoting instruction of foreign languages could encourage international labour mobility”, Sprenger writes.

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