NOT MADE FOR WALKING

There's a scene in Michael Moore's "Roger & Me," the 1989 documentary featuring GM factory closings, in which a laid-off worker in depressed Flint, Michigan, can't leave town. All the moving companies and truck rentals are booked for six months, it seems, as a daily trek of job-seekers set out for brighter prospects in California or Texas.

Compare that with Europe. Two weeks ago GM announced a fresh round of layoffs at its struggling German plants. But how many of those unlucky 10,000 workers will be loading moving vans in Bochum and Russelsheim and heading for booming Bavaria, let alone Budapest or Barcelona? Not more than a handful, if that. Like hundreds of thousands before them, nearly all will go home and collect unemployment checks--probably for years. Says Werner Marquis, spokesman for the Bochum unemployment office: "Work isn't something people move for around here."

Or elsewhere in Europe. Like those German workers Marquis says are "securely rooted in their region," the vast majority of the now 18 million jobless Europeans are unlikely to ever look beyond their own backyards for work. No matter that regions such as southern Germany, northern Italy and much of England are close to full employment and practically begging for outside labor. Europeans just won't go to where the jobs are.

More and more, economists see labor immobility as one of Europe's greatest problems. Just last week the German Exporters Association released fresh figures showing German growth sliding from 1.8 percent in 2004 to 1.25 percent next year. In France, former IMF director general Michel Camdessus talked about the "work deficit," referring to the mismatch between jobs and available labor. All too conscious of the fact that the world's most dynamic economies--China and the United States--draw much of their strength from their highly mobile work forces, the incoming president of the European Commission, Jose Manuel Duro Barroso, promises to make labor-market reform a priority. When European leaders gather in Brussels on Nov. 3 to review their progress on Europe's Lisbon Agenda--the EU's ambitious program to boost growth and employment--this will be high on their list.

They will have no shortage of discouraging evidence to consider. Among a spate of new reports on the dismal state of the euro zone is one by the Organization for Economic Co-operation and Development. According to one of its authors, economist Paul van de Noord, mobility not only reduces unemployment in less successful regions but fuels growth elsewhere; movement brings in fresh manpower and transmits knowledge as skilled workers shift from firm to firm and region to region. Exhibit A is the United States.

Think of Silicon Valley, just one of many regions in America that sucks in (and spits out) tens of thousands of new workers every year. The secret of its success is intellectual interchange, fed by continual infusions of new blood. Draw the contrast to Europe: in 2000, only 16.4 percent of its workers had been with their employer for less than a year, compared with 30 percent in the United States. Just 1.4 percent of Europeans moved between regions that year, compared with 5.9 per-cent of Americans. When it comes to moving between EU member countries, only 0.1 percent of the total EU population--or 225,000 people--took advantage of their right to live and work anywhere in the Union.

Why? Ties to what Germans call heimat, for one. Despite half a century of European unification, Europeans seem as bound to their own soil and surroundings as ever. Soon-to-be-unemployed autoworkers in Bochum bristle at the idea of working for Ford or Toyota in Cologne, only about 80 kilometers away--even though the government would pay the moving bill. Sicilians willingly endure 20 percent unemployment rather than move north to Trent or Verona, where only 3 percent are jobless. There is little pressure to change. A crucial part of the problem is the welfare systems that have for decades protected Europeans from too much risk or change, economists say. Only this year, for example, has Germany begun to reform its system of unemployment benefits for life, stipulating sharp cuts beginning next January if workers refuse to accept a job offer in a different region.

Make no mistake: there are obvious exceptions. Europe is growing closer together, and among a younger generation of high achievers, international careers are increasingly de rigueur. "Working in Berlin, living in Paris and having a partner who commutes to London is a normal state of affairs today," says Gert Sturzebecher, head of executive development at German media giant Bertelsmann. But Sturzebecher speaks for a tiny, select group, as the figures show. Even the much-hyped idea of young Europeans growing up as ever more "European," internationalist and multicultural is overblown. "European student mobility is a myth," according to Francine Vaniscotte, of the Institut EPICE, an education think tank outside Paris. To cite but one example: the EU has been trying to boost university-student exchanges with stipends and support programs for 17 years, yet has fallen far short of its goal of a 5 percent participation rate. The number of students taking part in the EU's official Erasmus exchange program--the main way to transfer abroad--is still little more than one in a hundred. Even for young Europeans, it seems, there is no place like home.

Indeed, while the EU pays lip service to the importance of labor mobility, many of its members work in countless ways against it. Twelve years after the historic Treaty of Maastricht, which knocked down remaining trade and commercial barriers and paved the way for the modern EU, most members of the Union continue to preserve formidable restrictions on the free flow of people. Europe remains a mosaic of 25 different systems of education standards, professional qualifications, labor laws, health-insurance networks, welfare and pensions--not to mention a hodgepodge of often Kafkaesque bureaucracies.

Red tape might be minimal if you work for a big multinational or are part of an official student exchange. But what if you're an entrepreneur, or self-employed, or a day laborer--not to mention a lawyer, doctor, engineer, accountant or architect? One of the biggest obstacles to a dynamic Europe today, says Michael Cashman, a British European Parliament deputy, is "the trend not to recognize each other's professional qualifications." In Germany, it's illegal for someone to open a barbershop without a German Master Craftsman's diploma--or at least employing one--which requires five years of local training. (Italian barbiere for German Frauleins? Verboten.) In France, the British owner of a ski chalet in the French Alpine resort of Megeve was arrested on the slopes last year for skiing with his guests without a French ski instructor's certificate, even though he had a British license. In Greece, it can easily take two to three years just to get non-Greek qualifications recognized, says Tony Venables of the European Citizens' Advisory Service in Brussels, an NGO that tracks thousands of mobility and discrimination complaints. And all that time one is prohibited from working. Imagine this happening after moving from Michigan to Florida.

Spain and Italy are among the worst offenders. Italian banks often refuse to let foreigners without an Italian employment contract open an account, even if they're from another EU state. Perhaps the most blatant case of illegal discrimination has been against the 1,000 or so foreign lecturers at 30 Italian public universities who for years have been relegated to a lower status than their Italian colleagues solely on the basis of nationality. Earlier this year the Commission proposed fining Italy 300,000 euros a day--but the case lingers on after 18 years of litigation between Italy and the EU. The situation is nearly as bad in France and Germany--ironically, the leading drivers of so-called European integration.

What to do? The European Commission is pursuing hundreds of complaints against member governments, many of which will go to the European Court. As part of its Lisbon initiative, Brussels last year established SOLVIT, a Europewide service to help EU citizens with mobility issues and red tape, and introduced an EU-wide health insurance card for temporary workers. But these are piecemeal solutions. The larger challenge is to make clear the correlation between high-growth countries like the U.K., Ireland and Sweden--which make it very easy for migrants to live and work--and protectionist, red-tape laggards who also happen to have low growth. As it turns out, says Ann Mettler, director of the Lisbon Council, a pro-reform NGO in Brussels, "those countries that are economically more successful are also the better Europeans. Germany and France pretend to be the great integrators, but they do the exact opposite."

The stakes will grow higher with time. The EU Commission's own Group of Policy Advisors warns that Europe, more than any other region, faces issues of aging and population decline that put a premium on labor reform. Without vastly more mobility, including better recruiting of immigrant workers from outside the Union, economic growth will even further stagnate. Starting in 2006, for instance, France will see more workers leaving the work force than entering it. If workers won't travel, where are employees to come from?

Thus mobility goes to the core of European identity. Europeans may fear an immigrant invasion, which explains much of their resistance to Turkey's ambition to join the EU as well as their decision to slap restrictions on the more-mobile labor forces of the EU's 10 new East European members. But they are also missing one of the great civilizational side effects of union--the Silicon Valley effect of people of all professions, nationalities and backgrounds coming together to exchange ideas and learn from each other. Is the EU really European, or merely a macrame of loosely linked countries? Until one can move freely and easily from Bochum to Barcelona--and more people actually do--the EU will never live up to its name, let alone its economic promise.

With Tracy McNicoll in Paris, Marie Valla and William Underhill in London and Jacopo Barigazzi in Milan

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