Neoliberal Reform and Labor Markets: Politicization in Central and Eastern Europe

Unlike the expectations of the neoliberalization thesis, labor market institutions in Central and Eastern Europe have diverged significantly across states while assuming important features that are protective of employment in ways that makes their economies markedly distinct from existing liberal market regimes. This paper compares the dynamics of labor market reform and politicization across four cases: Bulgaria, Czech Republic, Romania, and Slovakia. In all four cases, early labor market reforms instituted relatively protective employment regimes. However, in Slovakia and Romania, neoliberal parties moved against the existing settlement to radically liberalize employment and collective bargaining laws. I show how this led to distinct patterns of politicization and the rise of a pendulum politics of labor market reform in which there are dramatic swings from protection and liberalization as left and right parties take control of government.