Repression, Exclusion, and Inclusion: Government-Union Relations and Patterns of Labor Reform in Liberalizing Economies

Abstract

In both Latin America and Europe the role of labor in governing coalitions has been crucial in explaining the organization of labor markets in the first part of the twentieth century.1 However, national coalitional patterns are paradoxically ignored in most comparative attempts to assess labor deregulation in the developing world.2 Labor's coalitional position has an important effect on both the type of labor deregulation that countries undertake as part of their shift to a marketized economic model and the patterns and targets of compensatory policies to cushion the costs of reform. More specifically, the place of labor in reforming coalitions, ranging from democratic inclusion to repression, triggers a trade-off between the degree of labor deregulation (or commodification) in the formal sector and the amount of compensations targeted to the unemployed and unorganized workers in the informal sector. The more recent studies of labor in transitional economies in Latin America and southern Europe play down the importance of national patterns of state-labor relations in accounting for alternative types of labor reforms. Victoria Murillo's seminal work, for example, suggests that market reformers tend to be more responsive to labor demands, among them those related to labor reform, when unions enjoy a monopoly of representation, a condition that seems to boost their bargaining power.3 Yet her analysis is restricted to three countries with similar corporatist traditions, Venezuela, Argentina, and Mexico. Ultimately, her explanation of government concessions is focused on sectoral government-union interactions and deemphasizes national coalitional patterns. From a different perspective, Rafil Madrid maintains that labor and pension reforms are more costly to union leaders compared to tax and financial reforms and even to trade liberalization.4 Consequently, labor opposition to the former tends to be stronger, and the likelihood of reform, lower. Madrid's approach is helpful in comparing the dynamics of labor reform with that of other market reforms in liberalizing contexts. However, like Murillo, he focuses on two similar cases, Argentina and Mexico, where labor law reform was relatively blocked. There is still no way to explain quite different outcomes or patterns of deregulation. M. L. Cook, in contrast, focuses on different outcomes.5 She argues that during democratic transitions labor law reform generally extends labor rights, whereas promarket governments push forward labor flexibilzation. Although