European labour market policies in (the) crisis

Working Paper 2012.12 by Jochen Clasen, Daniel Clegg and Jon Kvist published by european trade union institute

Introduction

Before the onset of the global economic crisis in 2008, the new millennium had been characterised by the gradual emergence of a new consensus around labour market policy reform in Europe.

While in earlier decades labour market policy debates often opposed supporters and opponents of all forms of public intervention in labour markets, by the 2000s there was increasingly widespread coalescence around a more nuanced ‘recalibration’ agenda, in which the central aim was reworking the precise mix of labour market policies and institutions to best reconcile economic competitiveness and social solidarity and to share the risks and opportunities of modern labour markets more equitably than in the past.

The ‘flexicurity’ debate emphasised protecting individuals through good unemployment benefits and active labour market policies (ALMP) rather than protecting jobs through the strict regulation of employment (Viebrock and Clasen, 2009), while reforms to unemployment benefit systems and ALMPs themselves increasingly sought to extend these measures to those most distant from the labour market (Clasen and Clegg, 2011).

In general, ensuring that labour market policies and institutions combated, rather than reinforced, segmentation in the labour market became the overriding concern of policy debates and reforms in many European countries.

This focus on combating labour market segmentation, rather than expanding or cutting labour market policies per se, developed in a period of relatively buoyant economic and employment performance in many countries, at least by post-oil crisis standards. Since 2008, however, this still fragile consensus around the goals of labour market policy reform has been confronted to an entirely novel set of economic circumstances, as a result of sharp drops in output, spikes in unemployment and, as a second-order effect, soaring public deficits.

Comparing labour market policy responses to the economic crisis in six European countries, this paper explores how the economic and political challenges of the ‘Great Recession’ have impacted on the labour market policy reform agenda in Europe.

Have recalibration agendas in labour market policy survived, or even been reinforced by, the economic crisis? Or has the crisis on the contrary revived reform logics and debates that seemed to have been surpassed earlier in the decade?

Is the economic crisis, in other words, also provoking a crisis for European labour market policy reform?

The first section of the paper briefly outlines a number of analytically distinct patterns of possible labour market policy response to the crisis, and their underlying political and economic logics.

Section 2 then provides sketches of the main labour market policy developments in 6 European countries since the onset of the economic crisis, which are then summarised and compared with reference to the analytical framework in section 3.

A brief conclusion draws out the implications of the analysis for the future of labour market policy in Europe.

Full report (PDF 32pp)

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