Labour market reform in Italy and Spain

When it comes to European labour-market reforms, one size apparently needn’t fit all.

That’s the conclusion of a SAMPOL researcher who analyzed the responses of two Southern European states to pressures from financial markets and European Union institutions.

Associate professor at the Department of Comparative Politics, Georg Picot, revealed his findings in his article “All of one kind? Labour market reforms under austerity in Italy and Spain.” The article is co-authored with Arianna Tassinari of the University of Warwick, UK, and has just been published online by the Socio-Economic Review. 

European governments’ reactions to economic crisis
Picot and Tassinari are hardly the first scholars to explore European governments’ reactions to the 2008 sovereign-debt crisis. Academics have famously disagreed over how to characterize European efforts to regain economic competitiveness. Most academics have argued that the recent belt-tightening pressures have set countries on a path toward liberalization. Others describe the recent reforms as “dualization” (whereby full-time employees retain protections while marginal workers lose out) or “recalibration” (whereby imbalances in welfare and labour-market models are repaired).  

Diversity in labour-market reforms
But Picot and Tassinari say all of these arguments are being painted with too broad a brush. European labour-market reforms, they say, exhibit not uniformity but diversity.  The two reached this conclusion after examining the 2012 labour-market reforms in Italy and Spain. Applying an existing theoretical framework called “varieties of liberalization,” they discerned two very different state responses to austerity pressures.

Specifically, they found that while Spain reduced worker protections using a standard “deregulatory liberalization” approach, Italy was able to actually improve unemployment benefits for workers at the margins of its labour market. According to Picot, “given that the starting point for both countries was very similar, as well as the pressures they were subjected to, the differences in the reforms are surprising.”

Though not the core of their study, they attribute these differences in part to the divergent influence of centre-left parties within the two countries.  

Picot and Tassinari draw from their study two key conclusions: first, that even under intense austerity pressure, different trajectories of labour-market reform are possible. Second, they conclude that, despite pressures from international markets and European Union institutions, domestic politics remain important in shaping policies. 

Comparative political economy
Socio-Economic Review (SER), where the article is published, is the leading journal in the field of comparative political economy. It publishes work on the relationship between politics, society, institutions and the economy. The Journal Citation Reports list the journal in three disciplines: political science, sociology and economics. With a 5-year impact factor of 2.82 (measuring how often a journal is cited with respect to how many articles it publishes), it belongs to the top 25 journals in political science.