Working Paper 3/2007 - Relocation: challenges for European trade unions

Throughout Europe increasing fears have arisen over the temptation among employers to relocate jobs to low-wage countries. Sluggish economic growth and continued high unemployment in much of the EU15, and low employment and income levels in the new member states (NMS), exacerbate these fears. Companies seek to take advantage of newly emerged opportunities to exploit large differentials in wages and working conditions. Workers and unions in the EU15 fear that this will lead to a massive exodus of well-paid jobs from high-wage countries, to a weakening of labour’s bargaining position and thus to a downward spiral of wages and working conditions. Meanwhile the NMS see foreign investment as the key modernisation and job-creation factor (although the employment effects of FDI are sometimes ambiguous). This discussion paper provides a contribution to the ongoing debate in this area and a critical evaluation of the extent to which the fears and media attention are justified by the available facts. It is hoped that it will serve as a useful starting point for policy development within the labour movement.