Angel Alonso Dominguez (University of Oviedo). Cátia Antunes (ICS, University of Lisbon) ... Miguel Glatzer (La Salle University). (WORK IN PROGRESS) ...
Austerity-Driven Labour Market Reforms in the South of Europe (WORK IN PROGRESS)
Amilcar Moreira (ICS, University of Lisbon) Angel Alonso Dominguez (University of Oviedo) Cátia Antunes (ICS, University of Lisbon) Maria Karamessini (Panteion University) Michele Raitano (University of Rome La Sapienza) Miguel Glatzer (La Salle University)
Austerity-Driven Labour Market Reforms in the South of Europe • The sovereign debt crisis prompted a period of institutional change in the South of Europe • Besides measures cutting public expenditure, Southern European countries were required to change to how they regulate the functioning of the labour market • Structure of the Presentation ▫ Introduction ▫ Labour market institutions in flux (2010 to 2013) ▫ Redefining Security in Employment and Unemployment in Southern Europe ▫ A process of policy convergence? ▫ Understanding country-specific trajectories: some tentative hypothesis ▫ Conclusion
Labour market institutions in flux (2010 to 2013) • Labour market policy reforms introduced were comprehensive, covering in one way or the other all key areas of labour market policy • Notice that Unemployment benefits is the area where reforms are least common • EPL and Collective Bargaining were the areas where adjustments were more common
Redefining Security in Employment and Unemployment in Southern Europe • All 4 countries strengthen the ability of employers to fire workers • Portugal and Greece made significant reductions in the protection against individual dismissal • Spain and Italy increase the ability of employers to conduct collective dismissals
Redefining Security in Employment and Unemployment in Southern Europe • Cuts in unemployment protection are much less pronounced • The exception is Portugal where there were cuts to both the duration and generosity of unemployment benefits • Italy managed to slightly increase the generosity of UB • Most significant cuts are in Ireland (another interventioned country) and France
A process of policy convergence? • Measures of variance suggest that reforms introduced during this period in Southern Europe are part of a process of convergence within the Eurozone
A process of policy convergence? • Underneath this (broad) process of convergence are very differentiated trajectories both as to the nature and strength of adjustments • Portugal is the only country with substantial cuts in employment protection and unemployment protection • The most substantial adjustments are made in Portugal and Spain • What explains this crosscountry differences?
Understanding country-specific trajectories: some tentative hypothesis • Do interventioned countries display stronger cuts in labour market security than those that are not interventioned? (the ‘degree of coercion’ hypothesis) • NO. Spain imposed stronger reductions in security than Greece even if not under an intervention.
Understanding country-specific trajectories: some tentative hypothesis • Do countries where crisis is a by-product of problems in the financial sector introduce smaller cuts in labour market security? (the ‘financial crisis vs. structural growth’ hypothesis) • NO. Spain (and Ireland), where the crisis is fundamentally related with the failure of the financial sector, imposed stronger reductions in security than Greece.
Understanding country-specific trajectories: some tentative hypothesis • Do countries that give more security to workers at the start of the period display stronger cuts in labour market security? (the ‘starting point’ hypothesis) • Yes(?) Portugal, which offers more generous unemployment's benefits makes the stronger cuts in this area • No(?) Spain, which has a more flexible labour market than Italy, made a much stronger adjustment in this domain.`
Conclusion • Recapitulating ▫ The sovereign debt crisis prompted a period of institutional change in the South of Europe. Labour market policy reforms introduced were comprehensive, covering in one way or the other all key areas of labour market policy ▫ Reforms signify a clear reduction in the level of protection of workers but, with the exception of Portugal, the level of security in unemployment remained largely untouched ▫ Whilst reforms are part of a process of convergence within the Eurozone, there are important cross-country variations both in terms of the direction and intensity of change ▫ Three tentative hypothesis (degree of coercion, financial crisis vs. structural growth, starting point) but none of them seems to be able to explain the pattern of crosscountry variation identified This suggests that we need to take a more in-depth at the role of politics, the role of social partners. We might also need to look into the literature on IMF interventions in other zones of the globe to identify mechanisms that best explain the processes of change in Southern Europe.
