From Populism To Neoliberalism: Labor Unions and Market Reforms in Latin America

Abstract

In the late 1980s, populist labor parties, which had advanced protectionism and state intervention in the postwar period, implemented market-oriented reforms in Argentina, Mexico, and Venezuela. In all three countries, market reforms hurt their union allies. The interaction between allied unions and governing labor parties, however, varied across countries and across sectors within the same country. While some unions endorsed neoliberal reforms, others rejected them despite their long-term alliance with governing parties. While some unions obtained concessions, others failed to do so.This article argues that the incentives created by partisan loyalties, partisan competition, and union competition explain these interactions. Partisan loyalty results from the long-term affiliation of unions with a political party. Partisan competition takes place among union leaders affiliated with different political parties for the control of unions. Union competition occurs in diverse national and sectoral contexts among labor organizations for the representation of the same workers. Loyalty derived from a long-term affiliation with the incumbent party facilitates collaboration between labor unions and the government. Yet, if partisan competition makes loyal union leaders afraid of being replaced by activists affiliated with the opposition parties, their incentives for militancy increase as a way of showing their responsiveness to the rank and file hurt by market reforms. Union competition for the representation of the same workers makes coordination more difficult, thereby weakening unions and making them less likely to obtain concessions from the government despite their partisan loyalty. The article presents empirical evidence from eighteen cases, including national confederations and individual unions in five economic sectors in Argentina, Mexico, and Venezuela to test this theory.