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

Published online by Cambridge University Press:  13 June 2011

M. Victoria Murillo
M. Victoria Murillo
Affiliation:
Yale University
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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.

Type
Research Article
Information
World Politics , Volume 52 , Issue 2 , January 2000 , pp. 135 - 168
Copyright
Copyright © Trustees of Princeton University 2000

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References

1 Salinas was president of Mexico from the end of 1988 to the end of 1994, and Carlos Andres Perez was president of Venezuela from the beginning of 1989 to mid-1993. To hold the international conditions constant in the comparison with Mexico and Venezuela, I analyze the first administration of Carlos Menem in Argentina, which ran from mid-1989 to mid-1995.

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13 A number of scholars have analyzed the effect of union density and concentration, centralization of wage bargaining, and partisan affiliation on union behavior. See, for example, Schmitter, Phillipe, “Still the Century of Corporatism,” Review of Politics 36 (January 1974)CrossRefGoogle Scholar; David Cameron, “Social Democracy, Labor Quiescence, and the Representation of Economic Interest in Advanced Capitalist Society,” and Lange, Peter, “Unions, Workers, and Wage Regulation: The Rational Bases of Consent,” in Goldthorpe, John H., ed., Order and Conflict in Contemporary Capitalism (Oxford: Clarendon 1984)Google Scholar; Calmfors, Lars and Driffill, John, “Centralization and Wage Bargaining,” Economic Policy 3 (April 1988)Google Scholar; Alvarez, R. Michael, Garrett, Geoffrey, and Lange, Peter, “Government Partisanship, Labor Organization, and Macroeconomic Performance,” American Political Science Review 85 (June 1991)CrossRefGoogle Scholar; and Peter Lange and George Tsebelis, “Strikes around the World: A Game Theoretic Approach,” in Jacoby (fn. 10).

14 In Schmitter's original definition, organized interests in “societal” corporatism emerged more autonomously from the state than in “state” corporatism. In the comparative Latin American literature, Ruth Berins Collier and David Collier emphasize state “incorporation” of labor, and Francisco Zapata stresses the deeply political character of union activity resulting from the high degree of state intervention. Country studies confirm this view. In particular, these three countries are classified by both Zapata and Collier and Collier as having historically high levels of state intervention and legal benefits for formal workers. Collier and Collier (fn. 3); idem, “Inducement versus Constraints: Disaggre-gating ‘Corporatism,’” American Political Science Review 73 (December 1979); Zapata, , El conflicto sindical en América Latina (Labor conflict in Latin America) (Mexico City: El Colegio de Mexico, 1986)Google Scholar; and idem, Autonomiay subordinatión en el sindicalismo latinoamericano (Autonomy and subordi nation of Latin American unionism) (Mexico City: Fondo de Cultura Economica, 1993)Google Scholar.

15 Katrina Burgess's dissertation, an institutionalist work on the reshaping of the alliance between organized labor and labor parties, focuses on the external costs created by political parties on the decision making of unions at the national level. Instead, I propose to analyze the internal dynamics of unions and the effect of competition for leadership or for members on their relations with political parties. Burgess, “Alliances under Stress: Economic Reform and Party-Union Relations in Mexico, Spain, and Venezuela” (Ph.D. diss., Princeton University, 1998).

16 Pizzorno, Allesandro, “Political Exchange and Collective Identity,” in Crouch, Colin and Pizzorno, eds., The Resurgence of Class Conflict in Western Europe since 1968, vol.2 (New York: Holmes and Publishers, Inc., 1978)Google Scholar; and Crouch, , Trade Unions: The Logic of Collective Action (Cambridge: Fontana Paperback, 1982)Google Scholar.

17 Volumes edited by Miriam Golden and Jonas Pontusson and by Christopher Candland and Rudra Sil provide a nice sample of new work in this direction for the developed and the developing world respectively. Golden, and Pontusson, , eds., Bargaining for Change: Union Politics in North America and Europe (Ithaca, N. Y.: Cornell University Press, 1992)Google Scholar; and Candland, and , Sil, eds., Industrial Relations in the Age of Globalization (Oxford: Oxford University Press, forthcoming)Google Scholar.

18 Due to the effect of institutional and cultural constraints, militancy was measured using diverse forms. For instance, the meaning of a general strike in Argentina, where they have occurred often in the past—even under Peronist administrations—is different from that of a general strike in Venezuela, where there were no antecedents of such means of protest for economic demands. See McGuire, James W., Peronism without Peron: Unions, Parties, andDemocracy in Argentina (Stanford, Calif.: ford University Press, 1997)Google Scholar; and Ellner, Steve, Organized Labor in Venezuela, 1958–1991 (Wilmington, Del.: Scholarly Resources, 1993)Google Scholar.

19 Golden, Miriam, Heroic Defeats: The Politics ofJob Loss (Cambridge: Cambrige University Press, 1997)Google Scholar.

20 National confederations are multisectoral economy-wide organizations to which industry-specific unions adhere.

21 In all three countries, I compare the responses of the main national confederations to a set of policies: stabilization, privatization, trade liberalization, social security, changes in the regulations for labor organization, and labor market flexibility.

22 The unions involved in the study in Argentina were the Union of Automobile Workers (SMATA), the Federation of Light and Power Workers (FATLyF), the Federation ofTelephone Workers (FOETRA), the Union of State-Owned Oil Workers (SUPE), and the Argentine Federation of Teachers (CTERA) with its rival unions. In Mexico, the unions in the study were the Mexican Union of Telephone Workers (STRM), the Mexican Union of Oil Workers (STPRM), the Mexican Union of Electricity Workers (SME), the National Union of Education Workers (SNTE), and the local union of Ford Motors Workers at Cuatitlan. In Venezuela, the unions studied were the Federation ofTelephone Workers (FETRA-TEL), the Federation of Electricity Workers (FETRAELEC), the Federation of Oil Workers (FEDEPETROL), the Ford Motors' Section of the Federation of Automobile Workers (FETRAUTO-MOTRIZ), and the multiple unions in the education sector. In all these cases, I analyzed the process of industrial restructuring and reform that involved bargaining with the specific union studied.

23 Changes in the independent variable from one category to another were used as cut-off points when possible. When there were no changes in the independent variable, the cut-off was based on two diverse reform initiatives (for example, privatization and restructuring) when possible.

24 Pizzorno (fn. 16), 278.

25 Crouch (fn. 16), 161. The imperfection of the union agency may be a desirable goal for workers that select union leaders not just to carry their demands but also to articulate them and to calculate the benefits of intertemporal exchanges.

26 Farber, Henry, “The Analysis of Union Behavior,” in Ashenfelter, O. and Layard, R., eds., Handbook ofLabor Economics (Amsterdam: North-Holland, 1986), 1080Google Scholar.

27 Farber argues that the democratic constraints on the leadership range from cases where the limits are so loose that the leadership can maximize their objective function without regard to the constraints of the political process (dictatorship) to cases where the leadership is severely hampered by the political process and the need to answer the rank and file. Yet, he shows that the possibility of insurgency constrains leaders even in imperfect democracies. Ibid.

28 In a Hirschmanian sense, replacement by alternative leaders can be assimilated to “voice” within the same organization while the abandonment of the union by members is similar to his concept of “exit.” Hirschman, Albert, Exit, Voice, and Loyalty (Cambridge: Harvard University Press, 1970)Google Scholar.

29 Valenzuela, J. Samuel, “Labour Movements and Political Systems: Some Variations,” in Regini, Marino, ed., The Future ofLabour Movements (Newbury Park, Calif.: Sage Publications, 1992)Google Scholar.

30 Walter Korpi explains this pattern as the result of a trade-off between industrial and political resources. Korpi, , The Working Class in Welfare Capitalism (London: Routledge and Kegan Paul, 1978)Google Scholar. In the Latin American context, Zapata explains the empirical regularity of political strikes by the influence of the state on industrial relations. Zapata (fn. 14, 1986).

31 The cost of bargaining with nonallied union leaders is higher due to the lack of mutual trust while part of the agency costs may indirectly feed the coffers of opposition parties.

32 Olson, Mancur, The Logic of Collective Action (Cambridge: Harvard University Press, 1971), 48Google Scholar.

33 Miriam Golden shows that coordination in wage bargaining is most likely when union monopoly is high because the competition for members “provides a strong incentive for unions to try to maximize their wage gains in order to retain members or to attract them away from competitors.” Golden, , “The Dynamics of Trade Unionism and National Economic Performance,” American Political Science Review 87 (June 1993), 441CrossRefGoogle Scholar.

34 Market reforms created a new critical juncture in the electoral politics of these countries (together with a simultaneous process of democratization or decentralization) that resulted in the emergence of new parties or divisions in the incumbent labor-based parties. Argentina experienced the emergence of FREPASO or Front for a Country with Solidarity (originating in a splintering of Peronism). Mexico saw the organization of the PRD or Party of the Democratic Revolution (also emerging from a division within the PRI). In Venezuela, Causa R grew to become a national political party and was followed by an array of new political options that reshaped the traditional two-party system.

35 Since union monopoly makes the union strong and the government can observe this strength, it seems unnecessary to enter a conflict to show it in terms of the external interaction, but partisan competition prompts union leaders to protest for reasons linked to their internal power.

36 Ellner (fa. 18).

37 Author's interviews with AD union leaders of different factions confirmed the account of Steve Ellner. See Ellner, , “Organized Labor's Political Influence and Party Ties in Venezuela: Acción Democrática and Its Labor Leadership,” Journal ofInteramencan Studies and World Affairs 31 (Winter 1989)Google Scholar.

38 Union leaders, government officials, and company managers, interviewed by the author, Caracas, June-July 1994, May-July 1996.

39 Ibid.

40 Author's interview with Ford's labor relations manager and AD union leader was confirmed by Consuelo Iranzo, Luisa Bethencourt, Hector Lucena, and Fausto Sandoval Bauza. See Iranzo, Bethen-court, Lucena, and Bauza, “Competitividad, Calificacion y Trabajo: Sector Automotriz Venezolano” (Competition, qualifications, and work: Automobile sector in Venezuela) (Manuscript, Cendes, 1996).

41 Cite from El National, January 9, 1991. Former Minister Gustavo Roosen and union leaders of Fetra Magisterio and Fenatev confirmed this account derived from a press chronology, in interviews with the author, Caracas, June 1996.

42 The information on the Argentine cases is derived from a press chronology, union annual reports and other documents, interviews with union leaders of all factions, three ministers of labor and other government officials, as well as labor relations managers in the involved companies. The Argentine press chronology was elaborated in the archives of the newspaper Clarin and includes newspapers such as Clarin, La Nation, La Rozon, Cronica, ElCronista Comercial, Pagina 12, and Ambito Financiero. sources included the internal constitution, annual minutes, and balances for the 1988 to 1994 period for SMATA, FATLyF, CTERA, FOETRA, and SUPE. Documents included collective bargaining contracts signed by the unions and approved by the Ministry of Labor, bill proposals, parliamentary information on introduced, modified, and passed bills. Interviews included SUPE and CGT union leader Antonio Cassia (Buenos Aires, 1993,1995), FATLyF union leader Carlos Alderete (Buenos Aires, 1993), CTA union leader Victor De Gennaro (Buenos Aires, 1995), CTERA union leader Marta Marffei (Buenos Aires, 1995), ministers of labor Armando Caro Figueroa (Buenos Aires, 1994), Rodolfo Diaz (Buenos Aires, 1992, 1995), and Enrique Rodriguez (Buenos Aires, 1992,1995), managers of labor relations, such as YPF's Roberto Teglia (Buenos Aires, 1995), and Telecom's Juan Giar (Buenos Aires, 1995).

43 The policy-shift of Peronism encouraged the formation of a splinter group, which together with some left-wing parties, formed, in turn, a new opposition political party in 1992 that would became the FREPASO in 1994. Among its core organizers was a group of union leaders that had broken ties with the Peronist union movement and organized a new small confederation, the CTA (Congress of Argentine Workers) in 1992.

44 State imposed limits on strike activity discard the usefulness of using strikes as a measure of militancy but do not imply that militancy does not take place. Mexican workers have held illegal strikes, used strike petitions as a threat to show their militancy, and resorted very often to sit-ins, demonstrations, and even extreme measures such as going naked or on hunger strikes. On repertoires of protest, see the account of Cook, Maria Lorena, Organizing Dissent (University Park: Pennsylvania State University Press, 1996)Google Scholar. For a historial analysis of the evolution of union strategies, see Nas-sif, Alberto Aziz, El estado mexicano y la CTM (The Mexican state and the CTM) (Mexico City: Ed. La Casa Chata, 1989)Google Scholar; Bizberg, Ilan, Estadoy sindicalismo en Mexico (State and unionism in Mexico) (Mexico City: Colegio de Mexico, 1990)Google Scholar; and Middlebrook, Kevin, The Paradox ofRevolution (Baltimore: John Hopkins University Press, 1995)Google Scholar.

45 Graciela Bensusán confirms interviews with union leaders and government officials. Bensusán, “Los determinantes institucionales de la flexibilización laboral” (Institutional influences on labor flexibility), Revista Mexicana de Soaología 1 (1994).

46 For instance, the Revolutionary Confederation of Workers and Peasants (CROC) and the Revolutionary Confederation of Mexican Workers (CROM) explicitly boycotted CTM protest against wage ceilings in the Congress of Labor and were publicly rewarded by the government. Subsequent exit of unions from the CTM into preferred organizations, most notably the CROC, increased the pressure on its leadership. See my press chronology, which derives from the archives of Entorno Laboral and which includes newspapers such as La Jornada, Excelsior, El Sol de Mexico, Uno mas Uno, and Reforma.

47 Ruth Berins Collier and James Samstad analyze the development of the FESEBES and the “new unionism” in “Mexican Labor and Structural Reform: New Unionism or Old Stalemate?” in Roett, Riordan, ed., The Challenge ofInstitutional Reform in Mexico (Boulder, Colo.: Lynne Rienner, 1995)Google Scholar. Interviews with union leaders, government officials, and company managers confirmed the numerous accounts on the strategy of this union. For telecommunications, see Garza, Enrique De La, “Sindicato y restructuracion productiva en México” (Union and labor restructuring in Mexico), Revista Mexicana de Sociologia 1 (1994)Google Scholar; and De La Garza and Javier Melgoza, “Reestructuración y cambio en las relaciones laborales en la telefomía mexicana” (Restructuring and change in labor relations in the Mexican telephone industry), in Jorge Walter and Cecilia Senen González, eds., La privatización de las telecomunicaciones en América Latina (Privatization of telecommunications in Latin America) (Buenos Aires: Eudeba, 1998). For electricity, see Melgoza, Javier, “El SME y la productividad: Los saldos de la negotiation” (SME and productivity: Outcomes of bargaining), Polis 93 (1994)Google Scholar.

48 Although my account derives from a press chronology and interviews with union leaders, government officials, and experts, the process of modernization and democratization of the union has been widely studied. See, for instance, Cook (fn. 44); and Foewaker, Joe, Popular Mobilization in Mexico, the Teachers' Movement 1977—87 (Cambridge: Cambridge University Press, 1993)Google Scholar.

49 Interviews and press releases are confirmed by Marisa Von Bulow, “Reestructuracion productiva y estrategias sindicales. El caso de la Ford en Cuahutitlán 1987–1993” (Production restructuring and union strategy: The case of Ford in Cuahutitlán 1987–1993) (M.A. thesis, Facultad Latinoamericana de Ciencias Sociales-Sede México, 1994); and Jorge Carrillo, “La Ford en México: Restructuración industrial y cambio en las relaciones sociales” (Ph.D. dissertation, El Colegio de Mexico, Centro de Estudios Sociologicos, 1993).

50 Cárdenas split from the PRI because he rejected the policy shift and failed to be selected as its presidential nominee. He launched a new coalition, later to be renamed as the PRD, and he delivered the strongest electoral blow to the PRI by dramatically reducing its share of votes (and even claiming victory stolen by fraud) in 1988.

51 Fabio Barbosa gives a graphic account of the process that confirms interviews and press releases. Barbosa, , “La reestructuración de Pemex” (The restructuring of Pemex), El Cotidiano 46 (March-April 1992)Google Scholar.

52 These two cases related to Burgess's argument about the PRI imposing external costs on union leaders' decisions. Burgess (fn. 15).

53 International Labour Organization, Relaciones de Trabajo en Venezuela (Labor relation! Venezuela) (ILO report, 1991).

54 Not only did Causa R grow in the unions and in the 1994 elections, but also many political siders, including current President Chavez, challenged the traditional political parties after that elect

55 Garrett, Geoffrey and Way, Christopher, “The Rise of Public Sector Unions, Corporatism and lacroeconomic Performance, 1970—1990,” in Eichengreen, Barry and Frieden, Jeffry, eds., The Politial Economy of European Integration (New York: Springer-Verlag, 1995)Google Scholar.

56 Nunez, Ivan, “Sindicatos de maestros, Estado y Politícas Educacionales en América Latina” Teachers unions, state and education policy in Latin America), in Franco, M. L. P. B. and ibas, D. M. L., eds., Final do Secuh: Desafíos da educacao na Améríca Latina (End ofthe century: Challenges for edation in Latin America) (Sao Paulo: Cortes Editora, CLACSO REDUC, 1990)Google Scholar.

57 Cook (fn. 44).

58 Collier and Collier (fn. 2).

59 Collier and Collier (fn. 14,1979).

60 Zapata (fn. 14,1986).

61 The new political parties emerging during the policy shift—FREPASO in Argentina, PRD in Mexco, and Causa R in Venezuela—built alliances with labor unions. Labor leaders, however, were more ware of the costs of corporatism once the state started its retrenchment, and the terms of new associtions tended to be more fluid than in the past, thus affecting the extent of future “loyalties.”

62 Maria Victoria Murillo, “The Corporatist Paradox: Labor Parties and Labor Reform in Latin Lmerica” (Paper presented at the conference “Institutional Reforms, Growth, and Human Develop-lent in Latin America,” Yale Center for International and Area Studies, April 16–17, 1999).

63 Michels, Roberto, Political Parties: A Sociological Study of Oligarchical Tendencies in Modern Democzcy, trans. Eden and Cedar Paul (New York: The Free Press, 1962), 365Google Scholar.

64 Ibid., 172.

65 These implications are consistent with Hirschman's claim on the superiority of voice over exit as mechanism for improvement in certain contexts when exit is not easily available or could provoke the emise of the organization.