Since the onset of the crisis in 2009, the main answer put forward by the conservative majority in the European Union was a combination of austerity and “structural reforms“.
The European Commission, dominated by conservative commissioners, has implemented this through the European Semester framework of policy coordination. We’ve lived under this regime for several years, but in 2016 the consequences of the crisis remain dramatic.
Yet the answers from the European institutions remain the same – further efforts on structural reforms are presented as the only way forward for growth.
Why are the conservatives so wedded to this idea, even when the benefits are not materialising for citizens? It is because the concept of “structural reforms” long pre-dates the current crisis.
Originally, the concept served as a reference for various political initiatives aimed at liberalising and privatising economies in Europe and developing countries in the 1990s. These initiatives were built on the conditions of financial assistance from the International Monetary Fund (IMF) starting in the 1970s.
Even though these conditions were later largely discredited, this biased approach still predominates today. Most of the measures put forward under the label “structural reforms” are pushing for competitiveness based on the price of labour and the reduction of public expenditures. Systematic privatisation and the limitation of the state’s role in the economy are also a key part of the conservatives’ reforms.
Consequently, the concept of structural reforms has generally been perceived as synonymous with a dismantling of the social acquis. When people think of reforms, they think of deregulation of the labour market and an aggravation of the crisis’s social impact. It is time to consign such “first-generation” structural reforms to history.
In Europe, neoliberal structural reforms have been too often invoked as an alternative to more growth-friendly fiscal and monetary policies. The conservatives argue that their reforms will have an expansionary effect and are enough to reduce unemployment.