Tilting the Balance: The Recovery and Resilience Facility and Labor Market Reforms Inside the Italian Political Laboratory

In this paper we research the effects of the Recovery and Resilience Facility (RRF), the €750 billion post-pandemic recovery package, on compliance with reforms recommendations contained within the European Semester, the principal apparatus of EU socioeconomic governance. Recent literature has focused on the innovative design of the RRF and the content of member states’ recovery plans. In this paper we take a different perspective, considering the role of domestic actors. We construct a novel theoretical framework, combining the mechanism of Europeanization by changing opportunity structures (Knill and Lehmkuhl, 2002) with the concept of dominant growth coalition (Baccaro and Pontusson, 2022). We argue that, in a situation of contested dominance, the RRF can effectively ‘tilt the balance’ of the domestic interest constellation towards Semester-backed reforms, by redistributing material and cognitive resources to pro-compliance actors. Relying on documental analysis and expert interviews, we isolate the effect of the RRF on compliance by deploying causal process tracing. We focus on Italy, where EU socioeconomic governance has been highly politicized, and we select the salient case of labour reforms. Our preliminary findings point toward the existence of a more benign environment for socioeconomic reforms under the RRF, in which politicization of EU governance is less constraining than previously established.