Technocracy inside out. The distributive Effects of the Troika Reforms through the Lens of Labour Market Dualisation.

Mr. Fabian Mushövel

This paper studies the distributive effects of the structural labour market reforms in Greece and Portugal. This is done to uncover whether the consequences of the labour market reforms were similar to those of the fiscal reform measures, i.e. more progressive, in contrast to expectations. The central question the paper aims to answer is whether the stronger involvement of the Troika in Greece led to a different reform trajectory than in Portugal, and how this affected workers in both labour markets. Building on Thelen’s Varieties of Liberalisation framework and the burgeoning dualisation literature, the paper first assesses the reform trajectories as agreed-upon in the EAPs. Utilising data from the European Commission’s LABREF database the paper then evaluates whether the reform prescriptions have been followed in the implementation stage. It finds that reform trajectories indeed diverged, following a wholesale deregulatory path in Greece, and more dualising principles in Portugal. This divergence from the EAPs is corroborated in the ex-post evaluations of the EAPs conducted by the Troika. Using a status-based operationalisation building on Rueda (2007), the paper then evaluates concrete outcomes for workers. It finds that dualisation went down in Greece but persisted in Portugal. Greek labour market insiders thus became more vulnerable whilst those in Portugal were able to retain some of their privileges. On the other hand, unlike in the case of fiscal reforms, the Troika involvement, whilst technically equalising, did not incorporate any compensatory elements for vulnerable groups and thus did not contribute to improving employment conditions for labour market outsiders in Greece.