Labour market policy reforms in Southern Europe: too much of the wrong medicine?

This chapter reconstructs the trajectory of policy change in labour market policy across Southern Europe over the last three decades. Focusing on the cases of Italy, Greece, Portugal and Spain, it concludes that three decades of excessive, mistimed and mismanaged liberalization of labour market policies have aggravated many of the structural problems affecting Southern European economies, further depressing their growth and innovation performance. As well as engendering widespread employment insecurity and aggravating labour market segmentation and social protection gaps, the loosening of labour market protections incentivized the pursuit by domestic employers of a “low road” to competitiveness while at the same time depressing wages and thus domestic consumption - historically the main driver of economic growth in Southern Europe.