The ongoing Eurozone crisis has revealed the centrality of the EU’s varieties of labor market institutions as determinants of socio-economic preconditions for fiscal stability. Strengthening the economic competitiveness of member states in crisis with the help of labor market reforms has been at the center of the reform programs required by the Eurogroup and the IMF in order to get access to financial assistance through the ESM and its institutional predecessors. However, the prescribed labor market reform programs have received criticism for focusing exclusively on lowering unit labor costs, on reducing levels of collective bargaining, and on lowering job protection. The puzzle explored by this paper is whether or not the implementation of the ESM’s programs lead to the convergence of the Eurozone’s labor market institutions. To assess the influence of the ESM on national labor market institutions, the paper will firstly propose an analytical framework of the Eurozone’s varieties of labor market institutions. Secondly, the paper will provide empirical evidence on labor market reforms implemented in line with the ESM’s programs in Greece and Ireland. In conclusion, the paper argues that both cases demonstrate that Eurozone reform programs have not only intended but also effectively promoted a reconfiguration of European varieties of labor market regimes, albeit at high social costs.
