In Spain the retirement age has been raised from 65 to 67 and companies can now change working hours and wages without consulting the trade unions if a company is facing economic difficulties. Italy's new government under Prime Minister Mario Monti has also raised the retirement age and workers now have to pay contributions for a minimum of 42 years, rather than 40, to receive a full pension. Companies are legally entitled to undercut wage agreements reached by collective bargaining, Italy’s strict dismissal protection is going to be liberalized.
The governments in these countries are risking considerable social upheaval – most recently, hundreds of thousands of Spaniards marched in protest last week – by dismantling some workers' protections, and some observers question their motives.
“If you look at measures like the lowering of the minimum wage in Greece, or the relaxing of hiring and firing in Spain, these have no direct impact on the state budget,” says Martin Behrens, expert on industrial relations at the Hans Böckler Foundation, a research institution of the German trade unions.
For Mr. Behrens such measures represent a certain idea of how an economy, and how a welfare state should be organized. “It is quite obvious that within the European Union and its institutions, the proponents of an unrestrained free market society have the upper hand now. For governments which depend on financial support from the EU, this has consequences for their budgetary and social policies.”