Bringing history back in

Understanding the positions taken by trade unions and political parties in the scope of labour market reforms in Portugal and Spain (1974–2017)

Paulo Marques, University Institute of Lisbon, DINÂMIA‘CET-IUL

The insider-outsider politics approach conjectures that during labour market reforms unions and social-democratic parties safeguard the interests of insiders and neglect outsiders (Rueda, 2005, 2006, 2007; Emmenegger, 2014). Their argument is as follows: when governments try to deregulate labour regulations and reduce the generosity of the welfare state, they face the opposition of unions. As social democratic parties fear losing the electoral support of insiders, they keep the regulation and welfare generosity for insiders but deteriorate the position of outsiders (e.g. by deregulating fixed-term contracts and not investing in active labour market policies). Unions do not oppose two-tier labour market reforms because the position of insiders is safeguarded. According to these scholars, in all western countries, trade unions and social democratic parties followed the same strategy.

This paper challenges the insider-outsider politics conjecture and highlights the importance of history to explain the positions taken by unions and social-democratic parties in the scope of labour market reforms. Because the insider-outsider politics theory draws mainly on neoliberal economics to model this process, it imports a number of assumptions that are problematic (Rubery, Keizer, & Grimshaw, 2016, pp. 240-241; Marques & Salavisa, 2017, pp. 137-139). First, it assumes that agents are selfish by nature and try to maximise their individual utility. This is the only motivation agents can have; all others are neglected. Second, this conjecture is based on the assumption that agents have fixed preferences, i.e. preferences do not change over time. Taken together, history is neglected as in neoliberal economics (Hodgson, 2001). This paper argues that the historical process shapes the preferences of agents. Social democratic parties and unions form their preferences in a concrete historical period, preferences that can also change over time because the historical circumstances also evolve. Regarding social democratic parties, the party constellation plays an important role, if social democratic parties fear losing support from left voters due to the existence of strong radical left parties they can be more pro-outsider than in a different context (Schwander, 2018, p. 11). History is crucial to understand the party system in each country. For instance, a revolutionary transition to democracy is often correlated with a political system where radical left parties are stronger, whereas a gradual transition to democracy is correlated with weaker radical parties. As for unions, this is even more complex because rival union confederations exist in several countries. As is widely referred in the industrial relations literature, unions have different strategic orientations (Crouch, 1993; Hyman, 2001). In several European countries union confederations were linked to Communist parties and sometimes they were the most representative union confederation (this is still the case in some countries). Their strategic goal was to further develop the class struggle, not to negotiate with employers or governments in order to safeguard the positions of insiders (Marques & Salavisa, 2017, p. 140). Thus, hypothesising that unions have always the same strategy neglects the fact that there are different traditions within the trade union movement. Because insider-outsider politics only conceptualizes one type of behaviour (selfish) and it does not conceptualize change, it does not capture all this complexity. All in all, the paper argues that it is misleading to claim that unions and social-democratic parties are always pro-outsider or always pro-insider because it depends on the balance of power between left parties and the strength of radical unions.

To test this argument, the paper compares two case studies, Portugal and Spain. It analyses the positions taken by political parties and unions during key labour market reforms implemented in the two countries between the mid-1970s and 2017. These two countries share a number of similarities. They both experienced a long fascist dictatorship from the 1930s until the mid-1970s, they accessed the EU in the mid-1980s, the system of industrial relations is historically characterized by the existence of two rival union confederations (one linked to the communists and the other to the socialists), the party system has a number of similarities (the left is historically split between a socialist party and other extreme left parties), the economic structure of both countries is similar because industrialisation took place latter than in other European countries, and, finally, in both countries reforms were made to labour legislation. But, while the Spanish socialists (together with its union confederation, UGT) implemented one of the most radical two-tier labour market reforms in Europe, the same did not occur in Portugal. To explain this, the paper argues that the historical process was crucial because different historical circumstances shaped the preferences of political parties and unions. The Portuguese transition to democracy was revolutionary and the Spanish was not. This influenced the preferences of unions and social-democratic parties because the balance of power between political parties, on the one hand, and between union confederations, on the other, was different. Radical unions and radical left parties were stronger in Portugal than in Spain. Furthermore, this comparison allows us to show that preferences can also change over time, as the Spanish case illustrates.