THE STATE OF THE EUROPEAN UNION
26
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