Given the degree of local labour market variation, as seen in Chapter 5, and the absence of other available adjustment tools (whether at the national or the EU level, as seen in Chapters 6 and 7), member states have remarkably little capacity to influence their local labour markets. As a result, much of the burden of economic adjustment has been pushed down to lower levels of the economy. In particular, European policymakers hope that an integrated market can clear itself, without local political interference, and that mobile workers and capital can fill the void created by the absence of other instruments for economic management.

European labour markets are still exposed to any number of different economic shocks and crises. Over the past decade, local labour markets have needed to respond to a global financial crisis (2008–10), a dramatic fall in the price of oil (2014), a refugee crisis (2015) and the COVID-19 pandemic (2020–21). In the face of such crises, how can a member state buoy its labour market when its monetary policy is set in Frankfurt, its regulatory and fiscal policies are largely set in Brussels, and there is little fiscal capacity at the EU level? What can a poor state do?

Let's imagine that the poor state is Greece, and that it is hit harder by a shock than any other member state. (This is not purely a hypothetical example.) Because Greece is a part of the eurozone, it cannot devalue its currency or impose capital controls (unless granted permission by EU officials). Its fiscal hands have been tied (both by the troika, but also by more general EU restrictions, as described in Chapter 6), and the Greek economy is no longer able to compete with its European brethren.

Under these circumstances, the path to Greece's recovery will be strewn with the unemployed. In order for Greece to become competitive again (vis-à-vis other eurozone members), its prices/wages need to fall precipitously. Because wages are notoriously sticky, Greece will need to suffer significant unemployment before Greek wages will begin to move downwards. When the Greek unemployment level rises high enough, and lasts long enough, two concurrent developments will slowly deliver Greece's subsequent recovery: falling wages and increased workaways.