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Economic and Social Policies, PUBLICATIONS

Austerity, labour market and international treaties. Cases of four EU countries in receipt of financial assistance

Austerity

@ ProMotion / Fotalia

Due to the global financial crisis and the European sovereign debt crisis several European countries (in particular Greece, Ireland Portugal and Spain) were forced to ask for financial assistance. In return they had to commit to implement so-called austerity measures aimed at reducing their budget deficits. These countries also agreed to implement structural changes such as labour market reforms in order to improve their competitiveness. The most recent case is Cyprus which concluded bailout negotiations in April 2013.

Structural reforms of labour markets aim at increasing flexibility with regard to wages, and to hiring and dismissal of workers. Some argue that they exacerbate the negative effects of the crisis while others claim that undertaking these reforms is necessary and will pay off in the longer term.

Furthermore, austerity measures have been criticised for having a negative impact on social dialogue and collective bargaining and human rights. There is also a growing number of observations and recommendations on their conformity with international treaties to which the countries are party, particularly the Conventions of the International Labour Organisation and the European Social Charter.

Read the complete briefing here.

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