Commandeering Crisis

Abstract

The Eurozone crisis has triggered profound political and economic changes across the debtor member states. This article shows how the crisis and the imposition of austerity policies by the Troika have (1) forced Spain (and by extension other Eurozone debtor states) to pursue internal devaluation as a means of economic adjustment through the reduction of real wages, (2) increased pressure for liberalizing labor market institutions, and (3) given Spain’s conservative government the opportunity and cover to pursue radical neoliberal labor law reforms. Spain’s 2012 labor law reforms went well beyond external demands. The crisis and the Troika’s policy demands generated mass unemployment, devastated Spain’s Socialist Party, and created the enabling conditions for economic reforms. But domestic partisan considerations led the conservative People’s Party (PP) to commandeer the crisis to weaken unions as the electoral and organizational base of the center-left opposition. The PP channeled reform into an attack on labor that decisively shifted power to employers. As organized labor relations were reduced to concession bargaining, real wages have plummeted for the vast majority of Spaniards, even as mass unemployment and economic stagnation persist. Analysis suggests the emergence of a winner-take-all economy that will have lasting consequences for the Eurozone and the European Union.

Labour policy in the face of the COVID-19 socio-economic crisis in Spain: institutional change and social pacts

“…In particular, during the Great Reccesion, from 2008 to 2013, two state-driven (Gialis and Leontidou, 2016; Afonso, 2019) labour reforms were implemented in 2010 and 2012. This institutional change was introduced in the context of European austerity policies (Meardi, 2018; Blyth, 2013; Calvo, 2014; Cioffi and Dubin, 2016), especially during the debt crisis of the South European countries (Kickert and Ysa, 2014; Gruppe and Lange, 2014). Both reforms (2010 and 2012) significantly liberalised the labour market (Fernández and Martínez, 2013), yet failed neither to reduce the unemployment rate nor increased the economic growth (Horwitz and Myant, 2015).…”

Resistance to the dominant economic discourses : making sense of the economy from a working-class neighborhood

“…Speculation and corruption harshened an already tough financial crisis, and the austerity measures used to face the crisis worsened even more than did the living conditions of the citizenry. In this regard, Cioffi and Dubin (2016) explained that the International Monetary Fund, the European Central Bank, and the European Commission, popularly called Troika, had forced Spain to adjust its economy through the reduction of real wages and had promoted the liberalization of labor market institutions. On top of that, these scholars pointed out that the Spanish conservative party (People's Party) used the excuse of the Troika's pressure towards economic reform to develop neoliberal law reforms.…”

“…The combination of the effects of the crisis and the Troika's austerity measures have generated mass unemployment and have opened the doors to neoliberal economic reforms (Cioffi and Dubin 2016). Likewise, real wages have plummeted for most Spanish citizens, many Spanish nationals have emigrated, and many immigrants have returned to their countries (Cioffi andDubin 2016, Fernández andCollado 2017).…”