Neoliberal reform for greater competitiveness: labour market deregulation in Japan and Italy

Abstract

AbstractAccording to ‘varieties of capitalism’ (VoC) perspective, coordinated market economies (CMEs) attain comparative advantages by coordinating industrial relations and maintaining regulation to a greater extent than liberal market economies and mixed market economies (MMEs). Yet, Japan, a typical CME in the VoC literature, introduced greater labour market flexibility than Italy, an MME. This article analyses why this is the case and claims that the institutional complementarities that had functioned well previously in Japan have been unraveling since the early 1990s and neoliberal deregulation of the labour market ensued. This comparative study of Japan and Italy shows that economic stagnation and the globalisation of finance and production exerted neoliberal pressures on the state and employers to increase competitiveness by introducing market‐oriented policies and business strategies. However, the power resources of labour unions and the partisan composition of the government affected the characteristics of neoliberal changes in labour market policy.