Social Policy Responses to Rising Inflation in Southern Europe

Abstract

As they were just coming out of the COVID-19 pandemic, Southern European nations were confronted with a new shock to their economies – this time in the form of a steep rise in prices. This article describes and typifies the social policy responses and measures adopted in Greece, Italy, Portugal and Spain in response to rising inflation. We find that Southern European (SE) governments have put forward a substantive fiscal response – which compares well with that of its neighbours, and even with the previous crisis. The thrust of the response was targeted at limiting the pass-through of international energy prices to consumers. This was complemented, albeit to a lesser degree, with direct support to families. Nevertheless, we do find important differences concerning the weight given to (traditional) welfare transfers, and the role given to indexation mechanisms and wage increases. We also find important continuities with the model of crisis-response adopted during the pandemic.