Since the beginning of the Eurozone crisis the European authorities and the IMF have exerted a decisive influence on the content of labour market reforms implemented in Southern Europe. The Troika’s unprecedented intrusiveness prompted influential scholars to argue that the crisis led to a situation of democracy without choice in which irrespective of their partisan orientation Southern European governments were forced to implement the same tough austerity and deregulatory measures. By focusing on the cases of Italy, Spain, Portugal and Greece, this paper seeks to qualify this claim by showing how even at the peak of the crisis, Southern European left-wing and right-wing governments attempted to pursue different agendas when reforming the labour market and wage-setting framework. It is argued that, although constrained by the Troika in the choice of internal devaluation, Southern European governments retained some room for manoeuvre to shape the policy design and focus of specific austerity and deregulatory measures in accordance with their partisan preferences. This discretion was used to protect or compensate their core constituencies or consolidate new bases of support.
