Here to Stay? Analysing Policy Reversals in the Aftermath of the Crisis

This paper defines, categorises and illustrates policy reversals in the post-crisis context, an issue not yet duly addressed in the literature. In European countries that were more severely constrained by explicit or implicit conditionality in the Great Recession, reforms adopted during the crisis strived to address short-term fiscal imbalances and boost structural competitiveness. However, as conditionality wanes, the question of policy persistence comes to the fore. Indeed, preliminary evidence points to instances of policy reversals in the post-crisis context. For example, in Italy, the Monti pension reform of 2012 has been mitigated through several exemptions to the general rules; in Portugal, the criteria set in 2012 for the mandatory extension of collective agreements was relaxed significantly; and in Spain, judicial rulings are eroding some aspects of the labour market reform of 2012. Thus, Italy, Portugal and Spain provide an apt case selection for the illustration of the concept of policy reversals. This paper undertakes the fundamental task of defining and categorising policy reversals, by analysing their form and operational mechanisms in the selected cases. It first elaborates on the concept of reversals in relation to other classifications of types of policy change, and goes on to propose an analytical framework. It then addresses policy reversals across the inter-related arenas of labour market regulation, social protection and taxation in the cases under scrutiny. Instances of policy reversals are analysed in terms of directionality, type, policy mechanism, actors involved and instruments. The final section highlights the main empirical findings, drawing them together to discuss patterns of similarities and differences across cases and policy arenas and to assess the frequency, degree and relevance of policy reversals. The paper concludes with a discussion of the usefulness of the new concept and proposed categorisation.