One of the stated goals of austerity in Southern Europe is to weaken the employment protection that is characteristic of the so-called ‘Mediterranean model’ of capitalism. Employment protect refers to labour market ‘rigidities’ such as legislation that makes it difficult for employers to engage in collective or individual dismissals. Given the underdevelopment of Mediterranean welfare states, social services and benefits are often tied to employment; thus, the defence of employment protection becomes an importance means of maintain one’s access to healthcare, pensions, etc.
Numerous pieces of legislation have been passed in Greece and Portugal in order to increase the flexibility of the labour market. Yet, these labour market reforms did not always start with the Eurozone crisis. In fact, in the case of Portugal, we can trace them back to the reform process initiated by each countries preparation to enter the Eurozone.
Figure 1: Employment Protection Against Individual and Collective Dismissals (Regular Contracts)
Figure 2: Employment Protection – Temporary Contracts