by Jan Stráský, Economist, OECD Economics Department
Labour market freedom in the European Union is growing (Figure 1), but it stays too low to supply adequate adjustment in the face of diverging labour market developments. This case represents non-policy variables, including ethnic and linguistic differences, but in addition policy obstacles. In particular, problems in the recognition of professional qualifications are a leading hurdle.
Time is taken by developments in foreign language competence and need long term policies. Funded language classes targeted at cross border workers are a valuable tool, and ought to be supplied. Much more significant will be to enhance foreign language ability for example, at an earlier period by greatly enlarging the Erasmus student exchange programme that now helps only about 5% of European graduates.
Policy impediments have been reduced by a more extensive use of electronic processes, such as the planned electronic passports for services as well as the European Professional Card. Yet, more is wanted. The European Professional Card must be extended to other qualifications, including engineers. States ought to be limited in their own capability to invoke “public interest” to discriminate against foreign providers of professional services that were controlled. Regulatory impediments arising from other organisational demands and diverging legal form ought to be dealt with. Most reforms in services between 2012 and 2014 took place in states under financial assistance, while their recommendations were not acted on by other states.
The differences in management across the EU change also the variety of recognitions of professional qualifications and stay high. Some states have given a lot of recognitions, while others didn’t, despite being parties to the same reciprocal acknowledgement directives (Figure 2, panel A). Furthermore, states with the bottom barriers to entry into professions may face the greatest barriers to supplying services abroad. For example, when engineering isn’t a profession that is regulated, the barriers to entry are low for foreigners and nationals . States that control engineering through licensing, nevertheless, frequently create insurmountable barriers to engineers from states that are unregulated.
Although in the EU as a whole only some 5% of applications for recognition of qualifications eventually get rejected, there are significant differences in rejection rates across the member states (Figure 2, panel B). Too heterogeneous processes and slow can still make up a barrier to labour mobility, even if conclusions are positive. The EU should track best practice and developments and develop the chance of partial acknowledgement rather than rejection, complemented by added instruction that is shortened. More daring changes to the present procedure would call for making more extensive use of the European framework for comparison of national qualifications and widening the range of automatic acknowledgement to other professions.
OECD (2016), Economic Survey of the European Union 2016, OECD Publishing, Paris.
Stráský, Jan (2016), “Precedence for finishing the European Union’s single market”, OECD Economics Department Working Paper no. 1315.