The Crisis Imperative and Welfare State Rescaling in Greece and Portugal

This paper compares the crisis and harsh austerity measures in Portugal and Greece, two small EU-member states that have come under bailout plans. It examines the ways in which the troika’s prescriptions regarding these welfare states differed, charts the implementation, delay and renegotiation of these prescriptions, and explains these outcomes by analysing the distinctive socio-political dynamics of reform in the two countries. By examining both budgetary cuts and structural reform, the paper also assesses the degree of welfare state “rescaling” undertaken since the crisis.

The first section of the paper compares the Portuguese and Greek welfare states in three policy domains, social security, health and labor market policy, on the eve of the crisis. The second section analyses the major causal factors and conditions that forced each of the two countries to seek a bailout (in the case of Portugal the third since the transition to democracy) and charts the unfolding of the crisis. The aim is to develop a comparative understanding of the fundamental problems faced by each economy. The third section examines the distinct socio-political dynamics of the reforms in the two countries. It looks at the evolution of the formal positions as well as the less visible interests and internal conflicts of major socio-political actors (the “troika”, political parties, trade unions, social movements and others). The aim is to develop an explanatory framework for the interplay of external and internal factors in welfare state “rescaling” under conditions of economic crisis.