In the 2000s, questions were open on whether the EU eastern enlargement would contribute to upwards or downwards convergence in labour standards, or even to divergence.
Over two decades later, it is possible not only to attempt an answer, but also to identify the industrial relations processes that mediate economic integration between widely different countries. This paper does so by tracing how the East–West free movement of capital, labour, services and goods after enlargement has influenced labour standards within a shipbuilding company operating in Norway and Romania—two countries situated at the opposite poles of the extended European Single Market regarding labour costs and industrial relations systems.
It compares how these mobility flows have impacted staffing practices, industrial relations, wages and working conditions in the respective yard subsidiaries, and identifies changes at three levels: market-driven reallocation of capital and labour, institutional changes and industrial relations responses.
As a result, two outcomes are observed. First, a process of convergence, whereby the two-way mobility of production factors has contributed to levelling up of pay, facilitated by re-regulation of wage setting institutions to counteract their erosion. Second, a process of fragmentation, driven by the outsourcing of work and by international labour and services mobility, which has deepened within-country inequalities and shifted insecurity and risk onto the growing shares of subcontracted cross-border workers. In the case of European shipbuilding, the single market has thus brought upward convergence of wages between countries and increased divergence of industrial relations, working conditions and economic risks within them.
