Austerity-Driven Labour Market Reforms in the South of Europe

Central to the structural adjustment packages that were imposed on Southern European countries in the follow-up to the 2010 public-debt crisis was the introduction of structural reforms in the way labour markets are regulated. The aim of this paper is to understand how the regulation of labour markets in Portugal, Spain, Italy and Greece changed in the period between 2010 and 2013. In particular, we look at changes in (1) the level of security in employment (regulation of dismissals, pay or working hours; and (2), in the degree of security in unemployment (access and generosity of unemployment benefits, and degree of coerciveness used to enforce job-search/availability).

The paper is structured in four parts. It starts with an overview of debates about the role of labour market policy in the crises in Portugal, Spain, Italy and Greece.  The focus here is on the degree to which policy has been seen as a cause of economic imbalances and whether it has delayed economic recovery or protected workers.  Section two describes the impact of the crisis on these four labour markets, charting changes in unemployment, inactivity, precarious contracts and wages. In section three, we review the main labour market policy developments in the period between 2010 and 2013. Building on two indexes that measure the labour market flexibility and unemployment security, we map the different adjustment trajectories in policy in the four nations. Finally, we tie these distinct policy trajectories to different levels of political autonomy and varied abilities to engage social partners.