The Impact of the Fiscal Crisis on G reek and P ortuguese Welfare States: Retrenchment before the Catch‐up?

This article examines the impact of the ongoing (2008–13) economic crisis on G reek and P ortuguese welfare state reforms in a comparative perspective with a particular focus on the public sector, labour markets and social protection. It is argued that the recent crisis caused ‘shock and awe’ in G reece and P ortugal resulting in an unprecedented wave of cuts, tax rises and labour market reforms. In particular, public sector remuneration and jobs were cut, pensions were significantly curtailed and pension rights significantly restricted, successive tax hikes were implemented and welfare benefits became less generous and more conditional. It is argued that these reforms constitute a critical juncture and a considerable effort towards welfare retrenchment, which is which is implemented before converging with the more advanced welfare states of the EU15 . Both countries appeared to be significantly more vulnerable to the crisis than the richer countries of N orthern E urope (e.g. G ermany, A ustria, S weden, F inland and the N etherlands) and their larger Southern counterparts ( I taly and S pain). Yet, the latter had to implement similar measures, albeit in a less abrupt and extensive fashion. In other words, it may be that size is less important than economic and political power for coping with the effects of the current crisis.