Mutual Recognition, Unemployment and the Welfare State

Apparently the principle of mutual recognition seems able to promote the four fundamental freedoms foreseen by the Treaty of Rome. However — unlike what happens in the commodity, service and capital markets — not only is it far from being adopted in the labour market, but the European Union endorses in this sector an opposite principle, named ‘equal treatment’, while labelling the mutual recognition as a form of ‘social dumping’. Given that labour market problems cannot be discussed without a joint consideration of social protection policies, one has also to add that European welfare states generally utilize host rather than home-country rules, contrary to the principle of mutual recognition. However, there are no deep, logical reasons for using opposite principles in one of the four fundamental European freedoms. Quite the reverse; on logical grounds it is unlikely that, in spite of different standards and legislations, European Member States are able to be equivalent in protecting health, environment and the cultural heritage, but not workers’ rights. Thus, Nicolaïdis (2000) seems correct in saying that: Formally, mutual recognition can be defined as … a transfer of regulatory authority from the host State (or jurisdiction) where a transaction takes place, to the home State (or jurisdiction) from which a product, a person, a service or a firm originate. This in turn embodies the general principle that if a professional can operate, a product be sold or a service provided lawfully in one jurisdiction, they can operate, be sold or provided freely in any other participating jurisdiction, without having to comply with the regulations of these other jurisdictions.1