The first decade of the twenty-first century may be remembered for the rebirth of consensus on labour market policy. After three decades of bitter political and ideological controversy between a neo-liberal and a traditional social democratic approach, a new model, often labelled flexicurity, has emerged. This model is promoted by numerous political organisations since it promises to put an end to the old trade-off between equality and efficiency. Several countries are embracing the flexicurity model as a blueprint for labour market reform, but others, mostly belonging to the 'Mediterranean Rim', are clearly lagging behind. Why is it so difficult for these countries to implement the flexicurity model? This paper argues that the application of a flexicurity strategy in these countries is complicated by the lack of social trust between social partners and the state as well as political economy traditions that highlight the role of labour market regulation as a source of social protection.The first decade of the twenty-first century may be remembered for the rebirth of consensus on the welfare state. After three decades of bitter political and ideological controversy between a neo-liberal and a traditional social democratic approach, a new model variously labelled with reference to social investment or the notion of flexicurity has emerged. This new welfare state gives a high priority to employment and focuses on effective, inclusive labour markets. The approach, promoted by academics, the EU, the OECD and other international organisations, promises to simultaneously improve the living conditions of disadvantaged people, and to provide returns for society as a whole, through lower welfare spending and higher tax receipts.In the area of labour market policy, the topic of this paper, emphasis has focused on the so-called flexicurity model. Although there are various definitions of flexicurity, most of them tend to identify a three-pronged strategy aiming to reconcile labour market efficiency and economic security for workers. The model is based on: 1) a highly flexible labour market,