No longer ‘fit for purpose’? Consolidation and catch-up in Irish labour market policy

This chapter discusses recent change to Irish labour market policy which, it argues, has been guided by the idea that Ireland’s policy regime prior to the 2008 crisis was no longer ‘fit for purpose’ being overly focused on a passive benefit system and a similarly passive approach to activation. The chapter maps three key changes related to consolidation and catch-up. First, retrenchment is further eroding the already weak social insurance underpinnings of the system. Second, existing activation programmes which focused heavily on direct job creation have been somewhat curtailed; new more market oriented programmes have been introduced and compulsion has been stregthened. Third, major institutional re-design is leading to greater integration of the benefit system with employment services and a turn towards privatisation and marketisation. By assessing these changes against recent labour market dynamics the chapter also considers how they are contributing to a more precarious labour market regime post-crisis.

Dualising the Swedish model: insiders and outsiders and labour market policy reform in Sweden: an overview

For many decades it seemed that the Swedish model was immune to change. Welfare scholars saw in Sweden a paragon of an equal society based on a generous welfare state that had withstood the pressures of globalisation. While it is true that some welfare institutions are still intact, that is no longer the case in labour market policy. This cannot be explained by fiscal austerity imposed by the EU; rather it was the economic crisis in the early 1990s that first set reforms in motion. This chapter traces labour market reforms in Sweden over the past two decades. The pattern suggested here is one in which labour market outsiders have borne the brunt of reforms. This can be seen in the manner in which labour market flexibility was introduced, the fact that many of the unemployed now stand outside the social insurance system, in the declining value of social assistance benefits and perhaps most strikingly in the radical cuts to spending on active labour market policy.

The Italian labour market policy reforms and the economic crisis: coming towards the end of Italian exceptionalism?

The Italian labour market has been put under very strong pressure since the onset of the financial and economic crisis. After the 2011 sovereign debt crisis a new wave of reforms started in relation to labour market policies. Although it is not possible to detect a single trajectory of change in Italian labour market policies, we can observe an overall tendency toward a peculiar version of ‘welfare readjustment’, a pattern of reform in which governments curtail such policies as income or job protection for insiders, while adopting new social policies. This ‘readjustment process’ has been realised through the adoption of some provisions that favour ‘outsiders’ and, at the same time, the drastic retrenchment of labour rights for workers on open-ended contracts. As a result, the boundaries between ‘insiders’ and ‘outsiders’ now appear more blurred than they were before the outbreak of the Great Recession.

Income support policies and labour market reforms under austerity in Greece

This chapter reviews the changes in labour market policies under conditions of harsh austerity and mass unemployment in Greece in 2010-2015. Three policy areas are covered: income support to the unemployed, active labour market policies, and employment protection legislation. We find that labour market policies in Greece have failed to rise to the challenge of harsh austerity and mass unemployment. A legacy of backwardness, neglect, and general lack of sophistication proved difficult if not impossible to overturn under the emergency conditions prevailing since 2010. Moreover, as regards the less controversial aspects of the structural reforms demanded by the country’s creditors under the bailout agreements (for instance, supporting job creation, upgrading the Public Employment Service, and improving the absorption, as well as the effectiveness of EU funding), the domestic actors’ preferred approach of passively adjusting to European funding opportunities, rather than genuinely puzzling for solutions, left no room for a more constructive engagement. The adverse effects of the resulting handicap are there for all to see.

Labour market policies in the era of European pervasive austerity: a review

This chapter introduces the questions that the book addresses. It explains the rationale and motivation of the book with reference to the existing literature on welfare state change and the political economy thereof, as well as within the context of recent policy developments. It then justifies the empirical approach and explains in more detail the rationale behind the selection of national case studies.

Slovenian labour market policies under austerity: narrowing the gap between the well- and the less well‑protected in the labour market?

The economic crisis stimulated several reforms of the Slovenian labour market. In this chapter we present the major labour market policy changes, with emphasis on the period after 2010. These changes are also presented in relation to the retrenchment/expansion of policies, the adoption of activation and flexicurity, and their consequences for the living standards of the most vulnerable groups. The objective of labour market changes seems to be to increase flexibility and to implement activation (and social investment) more fully, as well as to improve the position of the most vulnerable groups on the labour market. Despite that, retrenchment has also been evident. The changes in labour regulations in 2014 reduced the employment protection legislation index for regular contracts, and the cuts in unemployment benefits, along with the changes in the social security system, have affected the unemployed, who remain among the groups most at risk of poverty.

Slovakia: perpetual austerity and growing emphasis on activation

This chapter provides an overview of labour market policies in Slovakia since the early 1990’s. Particular attention is given to the 2004 EU enlargement and the onset of EU fiscal stringency since 2010. Unemployment and underfunded labour market policies have been a problem well before EU institutions gained the right to evaluate national budgets and sanction member states. The difficult post-socialist transition, the fiscal discipline needed to introduce the euro and a mandatory private pension system, as well as the excessive deficit procedure between 2010-2014, allowed for limited fiscal space for labour market policies. Punitive measures and underfunded labour offices have become endemic to the system. Alongside budgetary constraints, the incumbent’s partisan leaning also plays a moderate role. Social-democratic governments have emphasised stronger employment protection and higher minimum wages, while right-of-centre parties have supported weaker employment protection, and some of them have proposed an abolition of the minimum wage.

The German exception: welfare protectionism instead of retrenchment

This paper assesses the existence and the extent of austerity–oriented policies in Germany in the aftermath of the 2008–9 recession. In contrast to the intensive phase of labour market and welfare state reforms in the early 2000s aimed at 'welfare readjustment', we do not see austerity policies in Germany, rather a continuation of the path that was adopted earlier. This can be explained by the economic conditions which were, and still are, much more favourable than in many other EU Member States. Most recently, we can identify a partial reregulation of the labour market, most notably the introduction of a national minimum wage, a potential increase in the regulation of non‐standard contracts and a reintroduction of early retirement for labour market insiders. These policies can be classified as 'welfare protectionism'.

French employment market policies: dualisation and destabilisation

In this chapter explores whether the direction of labour market reforms in France has changed since 2010 by comparison with the previous two decades. It looks into broad labour market policy areas, namely, income support for the unemployed, active labour market policies and employment protection legislation before and after 2009 and asks the following questions. What form has retrenchment taken under the recent fiscal pressures and how has it been distributed across these policy domains? Has the emphasis of active labour market policy instruments changed? How have policy changes affected insiders and outsiders in the labour market? It is shown that during economic crisis and the subsequent fiscal austerity period there were no paradigmatic changes in French labour market policies, which continued to develop along a path pursued since the early 2000s. Successive governments, both centre-right and centre-left, have implemented flexicurity à la française, with a focus on flexibility at the expense of security. External flexibility – firms’ ability to hire and dismiss workers – has been developed for both core workers and more precarious forms of employment (temporary work). Furthermore, new measures also introduced important changes in the field of internal flexibility (working-time organisation, wages).

Conclusions

This chapter draws together the empirical material of the preceding chapters and some additional quantitative evidence on labour market policies and reforms to answer the questions of the book: has labour market policy retrenchment or expansion taken place and if so, in what form? Has there has been a shift in the logic of activation policies? How have retrenchment and expansion of protection been distributed across the well-protected and the less well-protected labour market populations? Looking at the big European picture, do we see a convergence or a divergence in labour market and unemployment policy trends and outputs? Do the patterns of change vary across member states and, if so, how? The chapter also explores the evolution of labour market insecurity and examines whether there seems to be convergence or divergence in that respect. Finally, the chapter also discusses any emerging questions for future research.