Edited by Alan Bogg, Cathryn Costello and A. C.L. Davies
Chapter 4: The legacy of the economic crisis for labour law in Europe
The Greek sovereign debt crisis of 2010, which since then has affected most peripheral economies of the European Union, exposed not only the structural weaknesses of certain European Union (EU) Member States but also the weaknesses of governance of the Euro-zone. The structural problems of the European Monetary Union (EMU) and their impact on the Euro crisis are by now well understood: by joining the EMU, Member States lost both the external constraint of having to maintain a balance of payments and the capacity to respond to problems of inflation and unemployment through changes in the nominal exchange rate or through expansionary or restrictive monetary policies. From a Varieties of Capitalism perspective, the EMU membership led to the generation of structural strains because different types of political economies adopted a common currency: in this context, Portugal, Spain, Italy and Greece were often grouped together, as opposed to a group of northern countries led by Germany and including countries such as the Netherlands, Austria, Denmark and Finland. Perceived characteristics of the former group included labour market rigidities especially related to dismissal protection and collective bargaining. These were interpreted as enabling the development of dysfunctional labour markets and fuelling dualisation trends between outsiders who had insecure jobs or no jobs at all and insiders who enjoyed permanent employment.
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