The European Semester in the North and in the South: Domestic Politics and the Salience of EU‐Induced Wage Reform in Different Growth Models*

Abstract

AbstractMacro‐economic policy coordination remains a challenge in the EU. The European Semester was designed to help facilitate more coordination. In the area of wage policies, it encourages Germany and the Netherlands to support stronger wage growth, while Italy and Portugal have been told to exercise wage restraint. This paper analyses how domestic interest group politics influence how EU recommendations are received. Reflecting on the different growth models that underpin these four countries, we find that country‐specific recommendations meet country‐specific obstacles – independent of whether recommendations aim at increasing or reducing wages. Specifically, we observe that domestic actors successfully mobilize against EU recommendations that go against the interests of their constituencies, but are less effective in mobilizing for recommendations aligning with their interests. Hence, we submit that high salience of EU influence poses an obstacle for EU‐induced reform in the South while low salience limits EU influence in the North.