4.1 INTRODUCTION In this chapter we analyse recent trends in the European labour market and identify the most important employment issues currently facing European policy-makers. As labour markets evolve new policy issues emerge, whilst some issues which previously concerned policymakers have either been successfully addressed or become less important. Moreover changes in the way in which the employment relationship develops will effect the effectiveness and efficiency with which previous legislation achieves its objectives. Of particular concern in this chapter is the extent to which national labour market behaviour in Europe is converging or diverging, and its implications for the application of the principle of subsidiarity. In this chapter we provide a broad summary of labour market behaviour in the EU25, though often data availability leads to a concentration on the previous 15 Member States. Vaughan-Whitehead (2003) provides a more detailed review of labour market developments in the new Member States and their implications for the future development of Social Europe. In the following section we analyse the patterns of employment found in European labour markets. We identify the impact that both the continuing process of de-industrialisation and the growth of the knowledge-based economy have had on employment patterns. The recent growth of atypical, contingent or flexible employment is quantified, as is the changing age and gender profile of employees. In section 4.3 we explore the wage-fixing processes at work in EU labour markets and identify the pattern of wage differentials. We identify the relatively low wages of temporary workers and...
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