Measuring Resistance to Reform in EU Member States: Lack of Trust in Policy-Makers Blocks Reforms in Southern Europe

The resistance in Southern EU Member States against necessary reforms largely stems from three factors: shattered trust in the countries' policy-makers and governments, an ageing population, and insufficient protection against poverty by the existing welfare systems. These are the findings of an in-depth analysis of the situation in Greece, Spain, Portugal, Italy and 13 other EU Member States conducted by the Centre for European Economic Research (ZEW).

Even though the EU crisis policy has bought some time for the eurozone, the underlying causes of the crisis can only be tackled with far-reaching reforms. Yet reforms are met with severe resistance within the population, especially when it comes to reforms addressing social policy, the labour market or government budgets.

According to ZEW researchers, European institutions need to get strongly involved in the reform process, especially in Southern European countries, to improve the chances of successful reform. In many EU Member States, citizens have more confidence in European political bodies than in national policy-makers. The authors of the study call for increased attention to the restructuring of welfare systems to ensure a more effective protection against poverty.

An overall "Reform Ability Indicator" that reflects the resistance to reforms in the countries investigated was developed to compare EU Member States. This indicator incorporates demographic data on the countries' age structure because older voters tend to be more skeptical towards reforms, given their shorter time horizon. The indicator also considers the quality of the protection against poverty provided by the existing welfare systems and their ability to cushion potential reform losers. The efficiency of social policy institutions has a major influence on the citizens' willingness to support reforms. Education is yet another factor covered by the indicator since the outcome of complex reforms is difficult to evaluate for individual citizens. The level of education was assessed using educational attainment indicators such as PISA scores. The indicator also includes the results of surveys about the citizens' confidence in policy-makers. When confidence in governments and political parties is low, voters believe that reforms would only serve certain pressure groups instead of the public good. As a result, their support of reforms is weak.  

The data of the European countries investigated were integrated into one overall indicator to compare the level of reform resistance in a "reform ability index". In this index, each country is attributed a value between 0 and 1 with 0 representing the least and 1 the largest openness to reform. With a value of 0.15, Greece ranks last behind Spain. Portugal and Italy rank above these two countries with values between 0.2 and 0.3. The Netherlands and the Scandinavian countries are among the most reform-friendly EU Member States with values higher than 0.7. France occupies a position at the lower end of the middle-ranking countries with a value just over 0.45. Germany lies precisely in the middle of the EU Member States investigated with a value just over 0.5.

For further information please contact

PD Dr. Friedrich Heinemann, Phone +49(0)621/1235-149, E-mail heinemann@zew.de