Most scholars have highlighted the commonalities of labour market reforms under austerity in Europe, mostly in terms of liberalization. We argue that a more differentiated analysis is in order, as empirical developments point to distinct reform trajectories. We analyse in detail the two Southern European cases where pressure for austerity was intense, but governments maintained a degree of discretion as they were not subjected to direct bailout conditions: Italy and Spain. We examine the period since 2010, which includes a major labour market reform in each of the two states in 2012. Using a theoretical framework that allows distinguishing forms of liberalization, we find that reforms in the two states indeed differed markedly. In Spain, flexibilization and declining coverage of protection prevailed, whereas in Italy flexibilization was combined with improved protection of workers at the margin of the labour market. The differing influence of the centre-left helps to explain this divergence.
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