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On lecture we discussed the situation of European Union in comparison with the USA and China in
facts and potentials through the function of Y =F (L(labour),K(capital),A(technology
development),E(environment),INT (integration)). China reached the best result and on the other side
European Union was the last one in this comparison. We discussed that EU could significantly improve
its position only in areas of technology development and in integration.
One of the reasons why the EU is behind its rivals is the heterogeneousness of European countries in
many fields. Very good example is an unemployment rate in various countries which is connected to
living standard of these countries. The most pressing problem in area of unemployment the Europe is
facing now is youth unemployment.
That is why it is necessary to find out the way for better integration. A possible concept to reach this
target is improvement of labour mobility. From literature we know that according to neoclassical
models, wage and unemployment differentials are the driving forces for labour mobility. The
liberalisation of labour mobility among regions will release a relocation of production factors among
regions marked by disparities in labour market conditions. Labour will move from low wage regions to
high wage areas. The relocation of production factors leads to declining disparities in factor
remuneration. According to traditional neoclassical approaches, there will be migration equilibrium if
wage disparities for workers with the same qualification have vanished between two regions A and B.
Thus integration will support the convergence of wage levels between regions if labour markets are
liberalised and border impediments decline.
Improved labour mobility is needed, because of increasing numbers of young unemployed people
gives rise to the so-called lost generation, that eventually will not be able to provide their life but also
they will gradually lose work habits, which this generation will not be able to pass to the followers.
This also endangers the future ability of European Union to compete with powerful economies in the
world.
6. Which is your personal critical comment on the article or on actors actions as
described in the article?
As was mentioned in article, to earmark money alone will not be enough. It will be necessary to make
an intelligent reform. Personally I agree with spreading the idea of Germanys model of dual system
of education as well as with the idea of better labour mobility. In my opinion, by opening up
opportunities beyond home countries, the European employment market offers young people
opportunities to find the right job. But the barriers to working abroad are still very high - especially for
18 to 25 years old. It is not always easy to move to a faraway country with a different language and
culture. And this is something that no amount of money from Brussels is likely to change.
7. What should be done so as to improve the situation presented in the article?
Here, Germany's highly regarded dual education and training system, in which apprentices continue
their education while gaining hands-on experience, could serve as a model. There are several ways
the money can be spent to fight youth unemployment. For example, it can be used to subsidize
employee wages or social-security costs. Start-up entrepreneurs could be supported with credits and
consultation. Or the money could be invested in better vocational training, an area in which some
countries are weak.