THE STATE OF THE EUROPEAN UNION

THE STATE OF THE EUROPEAN UNION

also because there are fewer people paying in.

This pressure is combined with the financial

pressure coming from an ageing society as well

as the preference for a lean state as rooted in

neoliberal discourse.

The dynamics of the labour market

For a long time, a large proportion of the work-

ing-age population in Europe have had no

chance of finding a job to finance a standard of

living that would correspond to the productive

capacities of the national economy in question

or, in statistical terms: that would not be too far

below the national average. They are unem-

ployed or earn so little throughout the year on

average that their income will only permit a

level of consumption that is not in line with na-

tional prosperity. Additionally, it often means

accepting working and contractual conditions

that render it impossible to plan for the long-

term and which make it far more complicated

to forge lasting personal relationships.

The key reason for this is the low scarcity

price of manpower, especially (but by no means

only) low skilled manpower. On the one hand,

the demand for labour is not enough to employ

all jobseekers on an “appropriate” wage. On

the other hand, jobseekers often undercut one

another and therefore depress their market

price,

i.e.

their wage. Fuelled by the fear of re-

maining unemployed, they accept poorly-paid

job offers and in doing so set the standard to

which other jobseekers have to adjust. Howev-

er, the competition for jobs does not offer a suf-

ficient explanation for the social polarisation

that has taken hold in Europe. Additionally, the

segmentation of the labour markets must be

taken into account. Oversupply, which puts

pressure on wages, characterises only part of

the labour market. There are also various mech-

anisms at play that prevent wages from being

pushed downwards. Workers with certain qual-

ifications are just as rare as they were in the past

and can therefore command a high market

price. Across a range of labour market seg-

ments, well organised workers can secure higher

than market-clearing wage. This is supported by

employers’ efforts to avoid excessive turnover

among their staff and to keep together a “tried

and tested team” as company-owned capital

(“core workforce”). Legal regulations also offer

protection to part of the workforce against com-

petition from rampant undercutting.

The pay gap between the protected and un-

protected segments of the labour market that

has been on the rise at least in the richer EU

countries in recent decades represents a state of

polarisation in and of itself. But it also deepens

and consolidates the polarisation with its effect

on prices on the goods and services markets.

Low labour costs tend to lead to lower prices,

which benefit the people buying the corre-

sponding goods and services. People with se-

cure incomes benefit from the fall in wages in

the unprotected segment. Products in the pro-

tected sectors, e.g. dentistry, either remain ex-

pensive or even go up in price. Workers affected

by the decrease in wages tend to be able to af-

ford less of them. Moreover, economic struc-

tures have emerged which correspond to the

wage differentials. If wages went up significant-

ly, some economic activities would be driven out

by imports or else there would be much reduced

demand for them (e.g. private cleaning servic-

es). Once established, these structures tend to

assert themselves; with decreed or brokered

wage increases threatening to expand that pool

of surplus labour that formed the starting point

for this whole polarisation process seen in re-

cent decades. After all, implicit exploitation of