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Despite the lack of any solid evidence justifying deregulatory reforms of labour market institutions, the ITUC paper finds that the IMF has been pursuing deregulatory labour market reforms both in its policy advice exercises and its assistance programmes since the onset of the economic crisis in 2008.



In previous research conducted by the IMF, the effects of labour market regulations on employment were found to be null or very modest. It is generally agreed that labour market deregulation has a negative effect on employment in the short term and very modest impact in the medium term.



The ITUC paper assessed the deregulatory agenda of the IMF on labour market institutions in 9 European countries. IMF advice and programme conditions identified were the waning of employment-security protections and the dismantling of national and/or sectoral collective bargaining arrangements. The overall aim is to render the workforce more flexible and obtain ‘wage moderation’.



Deregulatory policy recommendations were applied by the IMF irrespectively of the real economic situation in the concerned countries. Policy advice in such an indiscriminate fashion could only result in negative consequences for the concerned economies particularly when one takes into account the strong interdependencies of current account balances within the Euro area.



The ITUC paper argues that the IMF advice and loan conditionality to weaken collective bargaining actually obstruct the implementation of policy measures that would assist in overcoming the crisis. For the crisis countries examined in the paper, coordinated collective bargaining institutions’ role is sidelined and dismissed despite its significance in mitigating increases in unemployment and cushioning its effects. The IMF effectively dismisses the fundamental role of trade unions and collective bargaining institutions in developing and implementing a successful anti-crisis strategy.



The ITUC background paper can be accessed in the Related files tab.