Underestimated European Regulatory Governance? The EU's Influence on Labor Market Policy in Pandemic Times in Southern and Eastern Europe

The COVID-19 pandemic affected the European economy as an exogenous shock, with lockdowns severely restricting the economic activity of companies and leading to a wave of layoffs. In the economic and financial crisis of 2007/2008, the German and Austrian STW had praise for their protection of employees and companies with short-time work. After the Great Recession, the European Commission proposed creating greater internal flexibility for employment. Shortly after the outbreak of the pandemic, the European Commission reinforced the importance of job retention schemes (JRS) in order to preserve employment and support businesses. The temporary Support to mitigate Unemployment Risks in an Emergency (SURE) provides significant financial resources to the member states of the European Union to combat the negative economic and social consequences of the pandemic. With a financial volume of €98.4 billion utilised, SURE is a milestone for European social policy. Especially Southern and Eastern European member states have taken advantage of funding from the SURE instrument. The configuration (such as wage replacement rate, state assumption of labor costs, access requirements, duration) of JRS between the welfare states in Europe highly varies. Depending on the primary objective and the type of support, this paper develops a typology of three different categories of JRS: short-time work, furlough schemes, and wage subsidy schemes. Despite the assumption that countries with the same welfare institutions should tend towards a similar design of JRS, a high variance of JRS within the welfare state types can be observed. Although no best practice model exists, this paper observes that most states without an existing JRS that use the SURE programme for financing introduced STW during the pandemic. The paper argues that the European Union's soft law in social policy has had a strong influence on member states in the implementation of JRS. Despite the EU's subsidiary regulatory powers in social policy, the EU's influence on crisis policy during the pandemic appears to have been high. Following the financial and economic crisis, the European Semester introduced a new economic policy control system to monitor national policies. The main argument is that the European Semester and the SURE programme had a strong influence on the implementation of JRS in the member states. Therefore, the paper takes a comparative look at the labour market policy crisis responses of Southern and Eastern European member states during the pandemic. It then analyses the influence of European crisis policy in a multi-level governance environment. The paper examines whether harmonisation of labour market policy in crises during the pandemic was facilitated by the EU.