Policy-­Making in Hard Times: The Case of Southern European Labour Reforms

Introduction: For many orthodox economists, the never-ending Euro crisis that began in late 2007 confirmed the wisdom of their long-standing crusade to transform the rules governing Southern European labor markets. These arguments were embraced by the Troika formed by the European Commission, the IMF and the European Central Bank, which declared poorly designed labor market institutions to be among the most serious ailments afflicting Greece, Italy, Portugal and Spain. The reluctance of political elites in these countries to challenge claims that the crisis was a product of domestic institutional shortcomings and their unwillingness to consider Euro exit thus pushed institutional reform to the top of the domestic political agenda