IDEAS home Printed from https://ideas.repec.org/a/sae/eurjou/v30y2024i1p31-53.html
   My bibliography  Save this article

Same same but different? The Mediterranean growth regime and public sector wage-setting before and after the sovereign debt crisis

Author

Listed:
  • Donato Di Carlo
  • Oscar Molina

Abstract

This paper analyzes the role of public sector wage-setting (PSWS) in Mediterranean countries before and after the Eurozone crisis. Extant literature suggests public sector wage inflation to be the norm in these countries due to the lack of institutional preconditions for wage restraint and the role of PSWS in shoring up the publicly financed domestic demand-led growth regime. Yet, the cases of France, Italy, Portugal and Spain do not to neatly fit these predictions, showing instead notable cross-country and intra-country diachronic variation. We provide an alternative account by treating PSWS as fiscal policy under EMU. Variation in PSWS outcomes before the Eurozone crisis is best explained in terms of the institutions governing PSWS. In France and Portugal, PSWS is highly centralized at the national level, and a strong Finance Ministry plays a central role in the oversight of PSWS to ensure budgetary discipline. To the contrary, Italy and Spain underwent processes of disorganized decentralization of PSWS through the 1990s and 2000s, leading to fragmented – and often clientelist – practices resulting in disorderly inflationary wage increases across the country. After the sovereign debt crisis, all countries relied on restrictive PSWS to support internal devaluation and fiscal adjustment, though with different intensity related to the country-specific problem load and external constraints.

Suggested Citation

  • Donato Di Carlo & Oscar Molina, 2024. "Same same but different? The Mediterranean growth regime and public sector wage-setting before and after the sovereign debt crisis," European Journal of Industrial Relations, , vol. 30(1), pages 31-53, March.
    • Handle: RePEc:sae:eurjou:v:30:y:2024:i:1:p:31-53
    DOI: 10.1177/09596801231183787
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/09596801231183787
    Download Restriction: no
    File URL: https://libkey.io/10.1177/09596801231183787?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alan Stoleroff, 2007. "The revolution in the public services sector in Portugal: with or without the unions," Transfer: European Review of Labour and Research, , vol. 13(4), pages 631-652, November.
    2. Martin Heipertz & Amy Verdun, 2005. "The Stability and Growth Pact ‐ Theorizing a Case in European Integration," Journal of Common Market Studies, Wiley Blackwell, vol. 43(5), pages 985-1008, December.
    3. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    4. Marc Lavoie, 2015. "The Eurozone Crisis: A Balance-of-Payments Problem or a Crisis Due to a Flawed Monetary Design?," International Journal of Political Economy, Taylor & Francis Journals, vol. 44(2), pages 157-160, April.
    5. Thomas Palley, 2018. "Government Spending and the Income-Expenditure Model: The Multiplier, Spending Composition, and Job Guarantee Programs," FMM Working Paper 30-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Isabel Távora, 2019. "Collective bargaining in Portugal in the aftermath of the crisis: trends and prospects," Industrial Relations Journal, Wiley Blackwell, vol. 50(5-6), pages 548-563, November.
    7. Scharpf, Fritz W., 2016. "Forced structural convergence in the eurozone: Or a differentiated European monetary community," MPIfG Discussion Paper 16/15, Max Planck Institute for the Study of Societies.
    8. Mair, Peter, 2009. "Representative versus responsible government," MPIfG Working Paper 09/8, Max Planck Institute for the Study of Societies.
    9. Albert Alesina & Stephan Danninger & Massimo Rostagno, 2001. "Redistribution Through Public Employment: The Case of Italy," IMF Staff Papers, Palgrave Macmillan, vol. 48(3), pages 1-2.
    10. Sofia A. Perez & Manos Matsaganis, 2019. "Export or Perish: Can Internal Devaluation Create Enough Good Jobs in Southern Europe?," South European Society and Politics, Taylor & Francis Journals, vol. 24(2), pages 259-285, April.
    11. Luigi Burroni & Emmanuele Pavolini & Marino Regini, 2020. "Southern European political economies: In search of a road to development," Stato e mercato, Società editrice il Mulino, issue 1, pages 79-114.
    12. Anke Hassel & Bruno Palier & Sonja Avlijaš, 2020. "The pursuit of growth. Growth regimes, growth strategies and welfare reforms in advanced capitalist economies," Stato e mercato, Società editrice il Mulino, issue 1, pages 41-77.
    13. Attinasi, Maria Grazia & Berardini, Francesco & Palazzo, Alessandra Anna, 2019. "Do public wages in the euro area explain private wage developments? An empirical investigation," Working Paper Series 2231, European Central Bank.
    14. Schmidt, Vivien A., 2002. "The Futures of European Capitalism," OUP Catalogue, Oxford University Press, number 9780199253685.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reto Bürgisser & Donato Di Carlo, 2023. "Blessing or Curse? The Rise of Tourism‐Led Growth in Europe's Southern Periphery," Journal of Common Market Studies, Wiley Blackwell, vol. 61(1), pages 236-258, January.
    2. Donato Di Carlo & Christian Lyhne Ibsen & Oscar Molina, 2024. "The new political economy of public sector wage-setting in Europe: Introduction to the special issue," European Journal of Industrial Relations, , vol. 30(1), pages 5-30, March.
    3. , Stone Center & Ranaldi, Marco, 2020. "Distributional Aspects of Economic Systems," SocArXiv n7wj4, Center for Open Science.
    4. Bruno Amable & Elvire Guillaud & Stefano Palombarini, 2011. "The political economy of neo-liberalism in Italy and France," Documents de travail du Centre d'Economie de la Sorbonne 11051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Georgios Maris & Floros Flouros, 2022. "Economic crisis, COVID-19 pandemic, and the Greek model of capitalism," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 469-484, April.
    6. Bieling, Hans-Jürgen, 2011. "Varieties of Capitalism, Regulationstheorie und neogramscianische IPÖ: Komplementäre oder gegensätzliche Perspektiven des globalisierten Kapitalismus?," ZÖSS-Discussion Papers 23, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    7. Christos J. Paraskevopoulos, 2017. "Varieties of capitalism, quality of government, and policy conditionality in Southern Europe:Greece and Portugal in comparative perspective," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 117, Hellenic Observatory, LSE.
    8. Claude Dupuy & Stéphanie Lavigne & Dalila Nicet‐Chenaf, 2010. "Does Geography Still Matter? Evidence on the Portfolio Turnover of Large Equity Investors and Varieties of Capitalism," Economic Geography, Clark University, vol. 86(1), pages 75-98, January.
    9. Baccaro, Lucio & Hadziabdic, Sinisa, 2022. "Operationalizing growth models," MPIfG Discussion Paper 22/6, Max Planck Institute for the Study of Societies.
    10. Aristea Koukiadaki & Chara Kokkinou, 2016. "The rise of the dual labour market: fighting precarious employment in the new member states through industrial relations (PRECARIR) Country report: Greece," Research Reports 17, Central European Labour Studies Institute (CELSI).
    11. Hugo Dias, 2021. "The evolution of Portuguese trade unionism: Political economies and power resources," Industrial Relations Journal, Wiley Blackwell, vol. 52(3), pages 237-254, May.
    12. Leo McCann & John Hassard & Jonathan Morris, 2010. "Restructuring Managerial Labour in the USA, the UK and Japan: Challenging the Salience of ‘Varieties of Capitalism’," British Journal of Industrial Relations, London School of Economics, vol. 48(2), pages 347-374, June.
    13. Gutberlet, Melissa & Preuss, Lutz & Thorpe, Andrea Stevenson, 2023. "Macro level matters: Advancing circular economy in different business systems within Europe," Ecological Economics, Elsevier, vol. 211(C).
    14. Graf, Lukas, 2008. "Applying the varieties of capitalism approach to higher education: A case study of the internationalisation strategies of German and British universities," Discussion Papers, Research Unit: Skill Formation and Labor Markets SP I 2008-507, WZB Berlin Social Science Center.
    15. Nölke Andreas, 2018. "Dependent versus state-permeated capitalism: two basic options for emerging markets," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 54(4), pages 269-282, December.
    16. Gerber, Christine, 2014. "Trade union responses towards labour market dualization comparing the impact of the varieties of industrial relations in Germany, Slovenia and Poland," PIPE - Papers on International Political Economy 23/2014, Free University Berlin, Center for International Political Economy.
    17. Colin Crouch, 2012. "Employment, Consumption, Debt, and European Industrial Relations Systems," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51, pages 389-412, April.
    18. Sharunina, A., 2016. "Where Do Public Workers Live Well? Public-Private Wage Gaps in Russia's Regions," Journal of the New Economic Association, New Economic Association, vol. 30(2), pages 105-128.
    19. Girardone, Claudia & Kokas, Sotirios & Wood, Geoffrey, 2021. "Diversity and women in finance: Challenges and future perspectives," Journal of Corporate Finance, Elsevier, vol. 71(C).
    20. Adrian Nicholas Gachet, 2022. "Help Me Help You? Populism and Distributive Politics in Ecuador," Economics Discussion Paper Series 2205, Economics, The University of Manchester.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:eurjou:v:30:y:2024:i:1:p:31-53. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.