Employment Protection Legislation and labour market dualism: France, Italy, Portugal and Spain, from 1975 to nowadays

In this paper, I review the evolution of Employment Protection Legislation (EPL) strictness over time, for regular and temporary contracts, and the many reforms that have a↵ected open-ended and atypical employment contracts since the late 1970s in France, Italy, Portugal and Spain. For this purpose, I use the OECD indicators of EPL strictness, the Fondazione Rodolfo DeBenedetti-IZA Social Reforms Database and the EU-LABREF. This historical perspective on EPL attempts to clarify which measures led to a segmented labour market. I then briefly review the recent labour market reforms and compare the current legislation a↵ecting both permanent and fixed-term contracts in the four countries considered. At last, I explore the di↵erent proposals for future reforms that have been discussed amongst academics and policy makers alike. I argue that successive measures have contributed for the segmentation of labour markets in France, Italy, Portugal and Spain, until the early 2000s. These measures consisted mostly in the introduction of new atypical forms of employment or the extension of motives to use fixed-term contracts. Such measures were especially directed towards young and inexperienced workers, or those further at risk of unemployment, and were unaccompanied by substantial reforms to EPL for permanent contracts. I find that there were some attempts at reverting the upward trend in temporary employment before the 2008 financial crisis, although it was not reflected significantly in the percentage of temporary contracts out of total dependent employment. Since 2008, significant changes were introduced in rules governing permanent contracts in Italy, Portugal and Spain. In Portugal and Spain, severance payments were considerably reduced and dismissal procedures were simplified. Nonetheless, special regimes for temporary and fixed-term contracts were approved to contend the growing youth unemployment rate after the crisis, therefore preserving the dual structure of the labour market. In Italy, major EPL reforms have been implemented since 2014, which should be carefully monitored. The Italian Jobs Act attempts to address one of the major concerns regarding EPL for permanent contracts: the large extent to which judges intervene and the high level of uncertainty associated with labour court processes. The evaluation of such reforms in the near future can inform policy makers in all countries about the direction to follow.