Understanding free movement and migration in the European Union
Regulated economies and migration
In ‘liberal market economies’ (LMEs) like the UK, there is significant flexibility around wages and employment rights, and training and education tends to produce people with general skills. In LMEs, workers typically bargain for wages individually.
By contrast, ‘coordinated market economies’ (CMEs) are characterised by coordinated wage bargaining (typically between employers and trades unions) and policies that aim to provide industry-specific skills (this may be through apprenticeship schemes or more specialised education for industries). This means that wages are often set by industry rather than by individual —meaning that employers can’t pay migrants less than they pay native workers.
Because employers in LMEs often pay migrant workers less than they pay native workers, LMEs tend to have stronger demand for migrant workers and thus are often associated with higher levels of migration — particularly for lower waged work.