Reducing High Unemployment and Defending Social Equality in Hard Times: The Difficult Strategy of Social Democracy in France and Italy

The persistent high unemployment rates pose serious social problems in several Western countries and they require difficult decisions by political leaders. Given the discredit of past social democratic policies, centre-left governments are increasingly opting for supply-side policies that reduce the cost of labour, increase labour market flexibility, and introduce greater wage moderation. Though the new policies may favour job creation, they may also widen social inequalities. This paper aims to contribute to the current scholarship on the insider-outsider labour market divide and the debate on the transformations of social democracy after the Third Way by investigating several recent macro-economic and unemployment policies introduced in Italy and France.

The paper identifies in both countries a distinct preference for liberal-oriented policies supported by employers’ associations and international organizations, decreasing political concern for social solidarity, and greater attention to economic competitiveness. However, France and Italy are following two different trajectories. While the French social democracy attempts to preserve some degree of social solidarity, the Italian social democratic governments are engaged in introducing a radical model of labour market flexibility. The new employment reforms implemented in France and Italy are widening labour market segmentation and social inequalities. Their likely outcome is a further shrinking of the popular support for social democratic parties and an increasing attraction of labour market ‘outsiders’ (e.g. precarious workers, young people, less-qualified workers) to populist or extreme right-wing movements.