European labour market reforms in the period 2000-2006

The last decade saw a sizeable increase in the employment rate in the euro area, especially in specific population segments such as women and the over-54s. Largely, these favourable results were the consequence of the reforms strategy promoted by the so-called Lisbon Agenda, which was set in train in 2000 and whose main aim – to increase the degree of competitiveness and dynamism in the European economy – required, among other elements, greater flexibility in labour markets and an increase in labour utilisation. On this basis, this article seeks to identify the characteristics of the labour market reforms that have taken place in the euro area countries in recent years, along with their potential effects. To do this it draws on the data in the European Commission’s LABREF (labour market reforms) database. The LABREF database includes qualitative information on all the legislative measures relating to labour markets adopted by the EU-27 Member States between 2000 and 2006. The measures span eight different areas: active labour market policies, employment protection legislation, welfare-related benefits, labour taxation, pensions, immigration/mobility, wage bargaining and working time. Each measure may be broadly targeted at the entire population or specifically at a particular socio-economic group. Moreover, the main expected impact of such measures may be on labour supply or demand, on wages or on potential mismatches between the unemployed and existing job vacancies. With this information, the article studies the thrust of the reforms in each field, identifying the areas where the reforming emphasis has been greatest for the euro area countries.