Labour Market Regulation and Foreign Direct Investment: Regional and Industrial Policy Research Paper Number 22

The effects of EU social dimension measures on foreign investment are limited to date. Few measures have been implemented and in most cases, they only affect a small proportion of mobile investment. More concern has been expressed about potential areas of future EU action - such as atypical employment or national level information and consultation. Furthermore, the UK opt-out has not altered FDI patterns greatly. Overall, it seems that differences in national regulatory frameworks have either not been significantly changed by current EU measures or firms are more interested in these differences than the application of EU policies. However, questions remain though about the extent to which social dimension regulation at the EU level is preventing 'social dumping' occurring in labour standards at the individual plant and company level.