WRITTEN QUESTION No. 552/97 by Ulf HOLM to the Commission. EMU and labour mobility
Date: 1997-02-21
Institutions: European Parliament, HOLM
Subjects: Economic and Monetary Union, exchange rate, free movement of workers, impact study, labour mobility, monetary union













EUR-Lex - 91997E0552 - EN






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91997E0552

WRITTEN QUESTION No. 552/97 by Ulf HOLM to the Commission. EMU and labour mobility  


Official Journal C 319 , 18/10/1997 P. 0111 





WRITTEN QUESTION E-0552/97 by Ulf Holm (V) to the Commission (21 February 1997)Subject: EMU and labour mobilityInternational research findings suggest that a high level of cross-border mobility of labour will be needed in order for monetary union to function satisfactorily. There is little mobility among the EU countries at present, and it is expected to be many decades yet before mobility reaches the level required for monetary union. This means that monetary union will not be appropriate for a very long time, in that it would have an adverse impact on the Member States' economies.Has the Commission had any research of its own performed to ascertain the consequences in this respect?Does the Commission consider that the low level of labour mobility could have any effect on the possibility that monetary union will produce good results?Answer given by Mr de Silguy on behalf of the Commission (14 avril 1997)Cross-border labour mobility is relatively low in the Community, in particular in comparison to mobility within the United States. However, data from the Organization for economic cooperation and development show that in Australia and Canada, which are monetary unions one may compare with a future economic and monetary union (EMU), inter-regional mobility is not considerably higher than in many European countries and is significantly lower than in the United States. The comparison with the United States that is frequently used to show that the Community is not an optimal currency area is thus perhaps not such a convincing argument. The examples of Australia and Canada provide another argument showing that the role of labour mobility may not be as important as may be suggested in the literature.In EMU, Member States will no longer be able to use their exchange rate as an instrument to deal with country-specific economic shocks. However, a fundamental issue is whether the non-availability of the exchange rate instrument in EMU actually is such a big loss. First of all, it may be argued that - given the economic convergence in the Community - the likelihood of shocks just hitting one Member State is rather small. Studies have found that in the Community a large proportion of employment shocks are regional and not country-specific. Furthermore, exchange rate adjustments are not appropriate when dealing with industry specific shocks. Neither are they appropriate in case of long lasting shocks because they would hinder necessary structural adjustments. Finally, studies show that interregional migration even within Member States is not substantial in response to shocks. Therefore, one may argue that the present currency areas in Europe are not substantially superior to a future EMU.