Is Harmonization of Labour Related Laws at the EU Level Possible and Economically Justified

Interdisciplinary Description of Complex Systems 23(6), 600-614, 2025 IS HARMONIZATION OF LABOUR RELATED LAWS AT THE EU LEVEL POSSIBLE AND ECONOMICALLY JUSTIFIED Vatroslav Zovko* University of Zagreb, Faculty of Teacher Education Zagreb, Croatia DOI: 10.7906/indecs.23.6.1 Regular article Received: 3 March 2025. Accepted: 12 September 2025. ABSTRACT European Union formally represents a single market with the aim to enhance economic and social cohesion among EU member states based on social inclusion and equality among all citizens. These principles directly influence the labour market which should support freedom of movement for workers and ensure equal minimal employment standards across the entire EU. One of the major factors that shape the dynamics and competitiveness of the labour market is legislative framework related to labour and employment. According to chapter 2 of the Acquis EU migrant workers must be treated in the same way as national workers, but labour-related legislation is an internal issue that each EU member state can define at their own discretion. The only limiting factor related to implementation of labour related laws at the national level are EU directives that ensure that all member states have equal minimal standards of working conditions and employee rights. This article groups labour related laws into three broad groups of laws and legal acts; legislation that regulates workers’ rights and obligations together with the relationship to an employer, tax legislation that regulates the tax burden imposed on workers and social and healthcare security legislation that refers to laws and legal acts that regulate worker’s contribution for health insurance and retirement plan. For each group, from the economic perspective, a critical review is made of major similarities and differences among EU member states. Furthermore, differences in local legislation are explained through the employers’ perspective. KEY WORDS labour market, labour law, EU legislation CLASSIFICATION JEL: E24, J08, J32, J80, K31 *Corresponding author, : ; -; *Faculty of Teacher Education, Savska 77, HR – 10 000 Zagreb, Croatia Is harmonization of labour related laws at the EU level possible and economically justified INTRODUCTION European Union is constantly evolving trying to find the answers to local and global challenges. One of these challenges is the harmonization of the labour market that should be regulated under the same principles throughout the entire EU. That is also stressed by the acquis, “the body of common rights and obligations that is binding on all the EU member states” [1] that all EU candidate countries should fulfil before becoming full EU members. In the acquis, labour market is addressed through two acquis chapters [1]: • Chapter 2. Freedom of movement for workers – stresses that the workers from the other EU member states must have the same working conditions, social benefits and tax advantages as national workers, • Chapter 19. Social policy and employment – defines minimum standards related to labour law, equality, health and safety at work and anti-discrimination. Despite the acquis rules, throughout the EU legal framework that regulates the labour market including workers’ rights and laws that define the tax burden among different member states varies a lot. That situation has discriminatory elements; employers from different EU member states have different limitations and financial burden regarding present and future employees, the role of the trade unions differs and the level of employee legal protection is inconsistent, making some EU member states more attractive for prospective work force and employers than the others. The harmonization of labour-related laws at the EU level is an ideal that appears difficult to reach. LABOUR RELATED LEGAL FRAMEWORK Labour related legal framework is an extension of the wider economic policy, which has the task “to create conditions for maintaining the existing and creating more and more and better jobs” [2]. In that manner, legal framework that pertains to the regulation of labour market should be viewed beyond laws and legal acts that regulate employment and working conditions. Legal acts that directly influence labour market can be divided into three large groups; legislation that regulates workers’ rights and obligations together with the relationship to an employer, tax legislation that regulates tax burden imposed on workers and social and healthcare security legislation that refers to laws and legal acts that regulate worker’s contribution for health insurance and retirement plan. Although legal framework among different member EU member states is based on the similar principles each state has its own set of rules pertaining for regulating the aforementioned areas. WORKERS’ RIGHTS AND RELATIONSHIP WITH THE EMPLOYER Legislation that regulates workers’ rights and obligations together as well as relationship with an employer is far from harmonised at the EU level. The main reasons for lack of harmonization can be found in the principle of subsidiarity within the European Union, the specifics of the labour markets of each EU member state, and the different socio-economic, and political contexts between the states. The principle of subsidiarity gives the autonomy of different EU member states to create laws at the state level without the intervention of the Union in cases “when an issue can be dealt with effectively by Member States themselves at central, regional or local level” [3]. EU gives just the framework for the local legislation that should be based on The European Pillar of Social Rights European Commission [4] especially in areas related to labour market access, working conditions and social protection and inclusion [1]. In other words, the EU aims to set minimal standards i.e. equal treatment and non-discrimination, safety and health issues of workers and issues like working hours, maternity and parental leave, temporary contracts, etc. These minimal standards are addressed through EU directives like 601 V. Zovko Council Directive 91/533/EEC that defines the obligation of the employer to inform employee about all the aspects and conditions of their employment relationship [5, 6] or Directive (EU) 2019/1152 on transparent and predictable working conditions in the European Union [7]. Specific aspects of the labour market also directly influence legislation as there are significant differences among different member states. There are several examples that can be mentioned: • Differences in size of the informal (shadow or grey) economy as percentage of GDP. The informal economy refers to economic activities that contribute to calculated GDP but are unregistered [8]. Informal economy represents 14% GDP on average in the EU, but countryspecific differences are substantial, between 10% and 30% of GDP [9]. • Youth unemployment rate that varies from 6,9% in Germany up to 25.8% in Spain [10]. Yout (...truncated)