Still a distinctive case?: understanding pension reform mechanisms in southern Europe

Abstract

While Southern European countries have pursued a series of pension reforms since the early 1990s, these trajectories display important differences, ranging from path-breaking ones as in Italy in the early 1990s to more moderate ones as in Spain. Traditional welfare state approaches have convincingly pointed out the “distinctiveness” of the Southern European model of welfare and pensions; however they have been less successful in explaining the specific reform mechanisms and the variation in reform outcomes in this region. By combining concepts from the political economy and pension politics literature, I show that pension reform in this region follows a pattern that is less “distinctive” than what previous studies have acknowledged. Specifically, I focus on the concept of political replacement effect (i.e. the probability of a government being electorally punished for pursuing reform) and the changes in labour movement’s organizational structure to comparatively explain reforms in Spain and Italy since the 1990s. The comparative analysis of eight cases of reform (four in each country) shows that significant reforms are implemented in cases of low political replacement effect and/or when this is coupled with a labor movement that has undergone changes that have affected its organizational structure. On the contrary, in cases of high political replacement effect reform is harder to achieve, unless the labor movement has undergone significant organizational changes and it is therefore more willing to engage in negotiations with the government. The analysis shows that pension reform in Southern Europe follows a pattern that can be accounted by established concepts in the literature, yet combined in a specific way, and that is therefore less distinctive than what previous welfare state analyses have suggested