A tale of oversimplification and deregulation: the mainstream approach to labour market segmentation and the recent responses to the crisis in European countries. WP C.S.D.L.E. “Massimo D’Antona”.INT – 102/2013

After advocating flexibilization of non-standard work contracts for many years, some European and international institutions and several policy makers now indicate the standard employment relationship and its regulation as a cause of segmentation between the labour market of "guaranteed" insiders, employed under permanent contracts with effective protection against unfair dismissal, and the market of the “not-guaranteed” outsiders, working with non-standard contracts. Reforms of employment legislation are therefore being promoted and approved in different countries, allegedly aiming to balance the legal protection afforded to standard and non-standard workers. This article firstly argues that this approach is flawed as it oversimplifies reasons of segmentation as it concentrates on an “insiders-outsiders” discourse that cannot easily be transplanted in continental Europe. After reviewing current legislative changes in Italy, Spain and Portugal, it is then argued that lawmakers are focused on “deregulation” rather than “balancing protection” when approving recent reforms. Finally, the mainstream approach to segmentation and some of its derivative proposals, such as calls to introduce a “single permanent contract”, are called into question, as they seem to neglect the essential role of job protection in underpinning the effectiveness of fundamental and constitutional rights at the workplace.

Should non-euro area countries join the single supervisory mechanism? Bruegel Policy Contribution 2013/06, 13 March 2013

Irrespective of the euro crisis, a European banking union makes sense, including for non-euro area countries, because of the extent of European Union financial integration. The Single Supervisory Mechanism (SSM) is the first element of the banking union. From the point of view of non-euro countries, the draft SSM regulation as amended by the EU Council includes strong safeguards relating to decision-making, accountability, attention to financial stability in small countries and the applicability of national macro-prudential measures. Non-euro countries will also have the right to leave the SSM and thereby exempt themselves from a supervisory decision. The SSM by itself cannot bring the full benefits of the banking union, but would foster financial integration, improve the supervision of cross-border banks, ensure greater consistency of supervisory practices, increase the quality of supervision,avoid competitive distortions and provide ample supervisory information. While the decision to join the SSM is made difficult by the uncertainty about other elements of the banking union, including the possible burden sharing, we conclude that non-euro EU members should stand ready to join the SSM and be prepared for the negotiations of the other elements of the banking union.

Bank versus non-bank credit in the United States, Europe and China. Bruegel Policy Contribution, 2012/07, 5 June 2013

In the wake of recent crisis developments in the US and Europe, non-bank credit channels have often been portrayed as 'shadow banking' and have been considered primarily through the lens of the risks they may pose to financial stability. However, the debate about financial system structures remains immature, in large part due to lack of reliable and comparable data. The available evidence actually points towards a correlation between the development of non-bank credit and higher resilience against systemic risk, at least in developed economies. Policy should aim at better statistical information, and at strengthening the infrastructure for the gradual development of sustainable nonbank credit provision.