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2 May 2018

New study shows austerity has made the labour market less secure in many EU countries

On 24 April, the European Trade Union Institute (ETUI) held in Brussels a book launch event aimed at presenting the main outcome of a research project on changes to labour market during a period of fiscal retrenchment from 2009 in 11 EU Member States.

“Flexicurity still seems to be guiding labour market reforms across the European Union.  Activation policies are mainly focused on negative incentive measures. They have largely failed to reverse the increase in labour market insecurity and to tackle disparities across and within labour market regimes”, argued Dr. Sotiria Theodoropoulou, the editor of Labour market policies in the era of pervasive austerity, recently published by Policy Press (University of Bristol).

The researcher, who is heading the ETUI’s European economic, employment and social policies unit, has developed a “reform effort” indicator based on data from the European Commission.  The comparative table she presented at the book launch event shows that most of the 11 countries examined have developed activation policies from 2010 onwards to a particularly high degree of intensity. Dr. Theodoropoulou’s table also emphasizes the decline in public spending on labour market policy measures since 2015 in several countries. This is a worrying trend as she has observed that the share of long-term unemployment in total unemployment has increased in the period 2010-2015 in all these countries, except UK and Germany.

In general, unemployed people have been put under pressure and had to provide evidence that they have been actively searching to integrate the labour market, for instance, in order to guarantee payment of their benefits.  

When it comes to the in-active population, employment protection became lighter for both those employed under permanent and temporary contracts while the rules governing the use of temporary work agencies were relaxed.

It appears that in most of the countries in the study, the policies aimed at making employment more flexible, and activating, by any means, the unemployed workforce resulted in an overall undermining of the safety net of social protection.

Another contributor, Patrik Vesan, who is Associate Professor of Political Science at the University of Aosta Valley, examined the sharp deregulatory measures of the labour market undertaken during the crisis in Italy. He observed that even though these reforms aimed at liberalising the open-ended employment relationships contributed - modestly – to narrowing the gap between insiders and outsiders, social investment has remained low and unbalanced.

Fiona Dukelow, Lecturer in Social Policy at the University of Cork, has analysed the labour market reforms launched by successive Irish governments in the aftermath of the financial crisis. Policies to tackle unemployment, that had peaked at over 15% in 2011-2012, were mainly guided by activation programmes with a strong emphasis on negative incentives for the unemployed. These have proven to be very detrimental for lone parents and for long-term and youth unemployed.

More information:

Theodoropoulou, S. (ed.), Labour market policies in the era of pervasive austerity. A European perspective, Policy Press, 2018 

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