The purpose of this chapter is to discuss labour administration’s key functions, structures and institutional capacities within the context of both the current economic crisis and the marked fluctuations in how labour administration has been regarded over past decades. The chapter also discusses how the mandate and institutional capacity of ministries of labour affect their capability to deliver policies and services. The financial crisis, and its continuing painful economic aftermath, revealed both the importance of labour administration and the ambiguity of its position in political and economic life. At the very beginning of the crisis, the importance of labour administration was highlighted in terms of high expectations, but also in terms of increased funds made available to deal with the social consequences of the crisis through enhanced job creation and innovative protective policies. More recently, however, with austerity (sometimes qualified, with great exaggeration, as ‘expansive’) prevailing in Europe and with the public finances at the centre of bitter disputes in the USA, labour ministries administering expensive programmes from the public purse have been among the first victims of budgetary cuts. Under the pressure of high levels of debt, the political priority suddenly shifted from activist pro-employment measures to consolidation of public finance, involving not only tax increases but also spending cuts, even in the spheres of labour and social affairs. While the crisis has certainly shaken confidence in markets and in liberal economic theories, state institutions and labour policies seem to be its ultimate victims.
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