Peace With Justice: A History of the Israeli-Palestinian Declaration of Principles on Interim

Labour Politics in Small Open Democracies

Also by Paul G. Buchanan STATE, LABOR, CAPITAL: Democratizing Class Relations in the Southern Cone

Labour Politics in Small Open Democracies Australia, Chile, Ireland, New Zealand and Uruguay Paul G. Buchanan Senior Lecturer in Politics and Latin American Studies University of Auckland New Zealand

and Kate Nicholls Department of Political Science University of Notre Dame USA

© Paul G. Buchanan and Kate Nicholls 2003 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2003 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0–333–98196–0 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging in Publication Data Buchanan, Paul G., 1954– Labour politics in small open democracies : Australia, Chile, Ireland, New Zealand and Uruguay / Paul G. Buchanan and Kate Nicholls. p. cm. Includes bibliographical references and index. ISBN 0–333–98196–0 1. Comparative industrial relations. 2. Labor policy—Case studies. 3. Labor unions—Government policy—Case studies. 4. Business and politics—Case studies. I. Nicholls, Kate, 1978– II. Title. HD6971 .B82 2003 331.12′042—dc21 2002042818 10 12

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Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne

This book is dedicated to Anne and George Broad, labour organisers of the South, and to Karekare, a special place where dreams come true.

Contents List of Tables

ix

List of Figures

xi

Acknowledgements

xii

Preface

xv

1

Introduction: Methodological and Theoretical Issues Small countries as exemplars of policy reform Problems of analytic coupling: Case selection, dichotomous pairings and small sample comparisons Labour politics as an analytic lens Conceptualising unions as political actors: Organised labour and the labour relations regime Summary

16 23

2

Australia and Chile Introduction Australia Political insertion Institutional conditioners Agent-principal issues Relations with business Macroeconomic and social indicators Summary Chile Political insertion Institutional conditioners Agent-principal issues Relations with business Macroeconomic and social indicators Summary Conclusion

25 25 27 31 37 43 47 53 55 55 59 72 77 80 85 87 87

3

New Zealand and Uruguay Introduction New Zealand Political insertion Institutional conditioners

89 89 90 92 96 vii

1 1 4 7

viii

4

5

Contents

Agent-principal issues Relations with business Macroeconomic and social indicators Summary Uruguay Political insertion Institutional conditioners Agent-principal issues Relations with business Macroeconomic and social indicators Summary Conclusion

106 111 115 116 118 119 131 137 145 151 152 154

Ireland Introduction National, regional and global determinants of the Irish labour relations regime Political insertion Institutional conditioners Agent-principal issues Relations with business Macroeconomic and social indicators Conclusion

155 155

Conclusion: Explaining Cross National Variance in Labour Politics

157 163 169 175 179 185 187

189

Notes

200

Bibliography

226

Index

244

List of Tables

2.1 2.2 2.3

Collective bargaining regulations in Australia 1904–2001 Strike regulations in Australia 1904–2001 Union membership, density and number of unions in Australia for selected years 1911–97 2.4 Levels of collective bargaining in Australia, May 2000 2.5 Number of disputes and number of days lost due to strikes and lockouts in Australia 1975–2000 2.6 Macroeconomic indicators in Australia 1975–99 2.7 Collective bargaining regulations in Chile 1931–2001 2.8 Strike regulations in Chile 1931–2001 2.9 Union membership, density and number of unions in Chile 1975–2000 2.10 Number of strikes and number of days lost due to strike action in Chile 1975–2000 2.11 Macroeconomic indicators in Chile 1975–99 3.1 Collective bargaining in New Zealand 1894–2000 3.2 Strike regulations in New Zealand 1894–2000 3.3 Union membership, density and number of unions in New Zealand for selected years 1900–99 3.4 Number of disputes and number of days lost due to strikes and lockouts in New Zealand 1975–99 3.5 Macroeconomic indicators in New Zealand 1975–99 3.6 Collective bargaining in Uruguay 1968–2000 3.7 Strike regulations in Uruguay 1968–2000 3.8 Union membership, density and number of unions in Uruguay for selected years 1975–2001 3.9 Number of strikes and number of days lost due to strikes and lockouts in Uruguay 1975–2000 3.10 Macroeconomic indicators in Uruguay 1975–99 4.1 Percentage wage increases under centralised wage bargaining in Ireland 4.2 Collective bargaining regulations in Ireland 1943–2000 4.3 Strike regulations in Ireland 1943–2000 4.4 Union membership, density and number of unions in Ireland 1975–2000 4.5 Number of strikes and number of days lost due to strike action in Ireland 1975–2000 ix

40 42 46 50 53 54 75 76 79 83 85 103 104 107 114 115 134 136 142 149 151 161 173 174 176 184

x

List of Tables

4.6 Macroeconomic indicators in Ireland 1975–99 5.1 Labour politics in five small open democracies 5.2 Collective bargaining structure in five small open democracies

186 191 194

List of Figures 2.1 Largest export industries Australia and Chile (% of exports, 1998) 2.2 Effects of the Accord on wage growth Australia 1976–95 2.3 Evolution of real wages Chile 1975–98 3.1 Largest export industries New Zealand and Uruguay (% of exports, 1998) 3.2 Evolution of real wages New Zealand 1980–94 3.3 Evolution of real wages Uruguay 1980–94 4.1 Largest export industries Ireland (% of exports, 1998)

xi

26 51 85 90 113 144 155

Acknowledgements

We would like to thank the Center for Iberian and Latin American Studies at the University of California, San Diego for its institutional support. Paul Drake, Peter Smith, Nora Bodrian, Caroline Awbrey and Mim Thirakaroonwongse were instrumental in making our stay productive. Portions of the study at UCSD were facilitated by a research leave awarded to Buchanan by the University of Auckland Faculty of Arts research leave committee in 2001. We thank the Latin American Center at the University of Arizona and the Working Group on Political Economy at the University of Notre Dame for allowing us to present our early views to them. Raul Saba, Kathleen Schwartzman and Joel Stillerman at the University of Arizona and Michael Coppedge and Layna Mosley at the University of Notre Dame were helpful in arranging our talks at their respective institutions. Edward Epstein provided strike and collective bargaining data for Chile, and Juan Andrés Moraes and Juan Manuel Rodriguez provided sources for strike and union membership numbers in Uruguay. Francisco Pucci provided additional data on the Uruguayan case, and Ronaldo Munck shared a hard-to-locate article that helped better situate the Irish case. We are indebted to the research and statistics arm of the International Labour Organization for help in locating general data on unions, strikes and labour legislation. Useful comments on whole chapters and country studies were provided by Peter Aimer, Tim Tenbensel, Charles Nicholls, Jonah Levy, Peter Haynes and Francisco Zapata. Elizabeth Nicholls double-checked our footnotes and bibliography for omissions and mistakes, adding coherence to the presentation. We are pleased to recognise the support provided by the Department of Political Studies and Latin American Studies Programme at the University of Auckland. Early portions of the project were assisted by a University of Auckland staff research grant that facilitated Buchanan’s visit to the University of Miami’s North-South Centre in December 1997–January 1998. He is indebted to Richard Downes and William Smith for facilitating his stay at the North-South Centre. Subsequent funding from the University of Auckland Staff Research Fund in 2001–02 allowed both authors to engage in primary data research and present preliminary findings abroad. The Department of Political Studies seminar series provided an opportunity to air our views in-house. We are grateful to Nicola Viinikka for her original interest and patience with the delays in finishing the manuscript, to Amanda Watkins for her encouragement and support during the final stages of the project and to xii

Acknowledgements

xiii

Guy Edwards and Bharath Parthasarathy for their editorial assistance. Family, colleagues and friends suffered through the process, and we are thankful for their support, particularly that of Helen and Charles Nicholls and Caroline, Rebecca and Kare Witten-Hannah.

Preface

This book examines labour politics in five small open democracies during the last quarter century. Focusing on a set of institutional, organisational and ideological variables as points of comparison between Australia, Chile, Ireland, New Zealand and Uruguay, it identifies and analyses factors and combinations of factors that had the greatest impact on labour’s ability to adapt to the challenges posed by market-oriented industrial relations reforms. Specifically, it concentrates on trade union responses to the atomising effects imposed on national labour markets by the shift from variants of the Keynesian “compromise” to market-driven economic reform, and on the material and political consequences of this shift. It pays special attention to the relative weight of organised labour’s internal organisation, unity and ideology when compared to the impact of external variables such as the legal framework governing labour relations, capitalist collective action and the depth of market-driven structural reform. It argues for the importance of studying small open democracies as exemplars of the impact of structural and political change on labour relations systems. The analysis takes into account the various ways in which organised labour has been incorporated in the political economy of each nation. This requires that we describe organised labour’s relationship with the political system, with the State, with business interests, and with the rank and file as principals, and to set this series of relationships in historical and comparative context. These overlapping dimensions of the labour relations regime involve institutional marshalling of collective voice, and the stability of these relationships is contingent on reproducing the consent of all interested parties. We believe that the evolution of these relations is related to the strategic location, historical presence and ideological orientation of the unions in question. We assess these against the backdrop of marketoriented economic reform and the changed position of the union movement over time as measured by union density, membership, real wage, strike and unemployment rates, occupational stratification and concentration data and more general socio-economic indicators such as GNP per capita, wages as a percentage of GNP and income distribution figures generated by national and international organisations such as various governmental agencies and statistical data depositories, the International Labour Organisation (ILO), Inter-American Development Bank (IADB), World Bank, Organisation for Economic Co-operation and Development (OECD) and Economic Commission for Latin America and the Caribbean (ECLAC). This allows us to develop a picture of how organised labour and its xv

xvi Preface

members fared under the market-driven reforms championed in all of the countries under study, as well as explain why. The depth or orthodoxy of economic reforms is discussed, as is the prior history and institutional features of the labour relations regime in each instance. Data on labour-intrinsic variables (such as trade union density, degree of centralisation and ideological orientation) and labour-extrinsic variables (such as the organisation of business interests or new directions in labour legislation) are identified in order to compare for variance in labour relations systems. In the conclusion, we elaborate on a specific set of factors that determined organised labour’s responses and consequent fortunes in the nations under investigation. The essay begins with a theoretical and methodological discussion concerning labour politics as an important barometer of regime stability, focusing specifically on how to conceptualise labour movements during processes of political and/or economic regime transition. The use of a particular type of analytic lens through which to evaluate the relationship of organised labour and its affiliates with the larger political, economic and social milieu is proposed. The importance of comparing small open democracies as archetypes or exemplars of policy paradigm shifts is defended, and is followed by a presentation of the cases as dichotomous pairs along with a counter-factual outlier. In doing so we offer an argument on how the study of labour relations regimes in small open democracies provides useful lessons for students of transitional dynamics in the late twentieth century. We present the case studies grouped in “most similar” pairs (Australia and Chile; New Zealand and Uruguay) with one extra-regional outlier case posed as a “most different” counterfactual (the Republic of Ireland). We defend the analytic grouping in the context of a discussion about the difficulties for comparative research in selecting most similar pairings, and we explain the significance of an extra-regional case as a check and balance that serves to counter the so-called “proximity” thesis with regard to global learning curves and experience. The book concludes with a synthesis and summary of our findings, and offers some general conclusions about the comparative impact of marketdriven reform on the nature of labour relations regimes and trade union fortunes in small capitalist democracies with prior histories of welfare statism, tripartite concertative bargaining systems and heavy doses of State intervention in promoting economic development. This study is inspired by the belief that cross-regional research is useful as well as under-utilised. There is no single monograph that compares these five cases as a distinct political subset, much less in the field of labour relations and politics. Although there are several comparative surveys of the New Zealand and Australian labour movements and political systems, none extend the comparison to regions other than industrial Europe and more recently in edited volumes, Asia. Chile and Uruguay have enjoyed comparisons of their

Preface

xvii

labour relations and political regimes, and, like Australia and New Zealand, are often grouped together for comparison primarily because of their geographic proximity and cultural and linguistic affinities. Uruguay is seldom compared with any country other than its neighbours (or Switzerland), although it and New Zealand are remarkably alike in size, population, export base, rate of urbanisation, occupational structure and a host of other socio-economic indicators. Chile is sometimes compared with New Zealand (a trading rival and partner) but much less with Australia, a country more akin to its population size and international economic location if not overall levels of wealth. Australia is sometimes compared with Argentina, a trading partner that is much larger and more dependent on a host of scales. The Southern Hemisphere countries are all members of relatively new regional trade regimes with loose institutional controls, and they all compete for Northern Hemisphere permanent and winter markets in primary goods exports while maintaining sizeable service and tertiary sectors as mainstays of their domestic economies. They share certain characteristics in their labour relations as well. Yet with the exception of Donald Denoon’s work on “settler capitalism” in the Southern Hemisphere, these countries are seldom grouped together for “most-similar” comparative purposes.1 Ireland is not included in the discussion of settler capitalism for geographic reasons even though it shares many attributes of the Southern Hemisphere case studies (as semi-peripheral post-colonial nations). Where Ireland has been grouped with its Southern Hemisphere counterparts, recent discussion has been limited to comparisons of market-oriented fiscal policy reforms vis-à-vis Chile and New Zealand.2 The field of labour relations is largely ignored. The usual cultural-linguistic and regional proximity-driven grouping of these cases is flawed, and the comparative study of labour relations in small open democracies such as these is incomplete in any event. We argue that the combination of their international economic position, prior histories of State capitalism and welfare statism and the types of political insertion of the labour movement makes these countries a distinct subset on which to focus when discussing the impact of market-oriented labour market reforms and their political consequences in relatively well-developed societies. In spite of their differences, all these countries are located in the upper reaches of international human development scales, and all have institutional histories of elected government (the authoritarian regimes of Chile and Uruguay in the 1970s and 1980s being exceptional in character). Beyond the problems in making regional and size comparisons, discussion of the issues involved in analytically “coupling” national case studies is worth the reader’s interest. This involves a review of the “most different” and “most similar” case study method, defence of “small-N” methods and the utility of partial regime analysis as a micro-institutional lens on the core aspects of modern regime reproduction and national State activities. It explores

xviii Preface

the thesis that these type of democracies serve as exemplars of major structural and ideological change and argues for the use of dichotomous pairings as a comparative research tool. What it does not do is to offer hard quantitative or mathematical proof of our conclusions. Problems with uniform data collection on this group of cases combined with the use of yearly aggregate indicators (where available) would limit our sample to twenty-five individual observations. Such a small sample generally limits the utility of the types of regression models that allow for quasi-scientific research. In particular, small samples and such models leave much “noise” that cannot be accounted for, delivering low R-squared statistics (among other things) as a result. In the absence of such analysis, (quasi) informed speculation must suffice. It will satisfy neither quantitative theorists nor country specialists, and is likely to remain too much of a “political science” approach to satisfy labour sociologists, but this will allow for a general categorisation and argument about the countries taken as a distinctive subset. After discussing the problems and promise of analytic dichotomies we explain the importance of comparing, within the “small open economy” category, what are more properly seen as emergent mixed agro-industrial and boutique market democracies. Australia and Chile have close to twenty million people, a global export market based on a number of primary and secondary commodities and the makings of industrial economies of scale; New Zealand and Uruguay specialise in niche-dependent export economy production that occupies a minority of populations of less than four million in each case. The domestic economy in the latter set of cases is characterised by small manufacturing, service sector and tertiary employment with a relatively high rate of structural employment (for youth and minorities in particular) paralleling declines in public sector employment caused by the privatisation of State and State-Owned Enterprises (SOEs). Alongside the four Southern Hemisphere countries, we pose Ireland as an extra-hemispheric counter-factual outlier case. Although it shares many of the demographic and macroeconomic features shared by the other countries in the sample, the pattern of reform undertaken in Ireland since the mid-1980s sets it apart from the other four case studies. Using the same set of variables used to compare the Southern Hemisphere cases, we explain Ireland’s divergent path of reform by focusing on the nation’s peculiar location in the world economy, and its very particular twentieth century political history. In contrast to our other cases, the Irish State has increased its role in economic policymaking and industrial relations during the course of the market-oriented shift by institutionalising concertative relations between the State, labour and business. The selection of Ireland strengthens the two-edged proposition that begins the book: the size and international location matter in the transition from welfare-state to market-driven economic development, which has an impact on labour politics. Ireland is “most similar” to our four other case

Preface

xix

studies in terms of its small size and the fact that its traditional productive base of agriculture and small-scale manufacturing is giving way to a growth strategy built on services and “niche” export industries. Like the Southern Hemisphere cases, it undertook market-oriented economic and social policy reforms following the exhaustion of State-led development in the mid1970s. Yet the approach towards labour relations taken in Ireland since the early 1980s sets it apart from the other case studies, as does its collective outcomes. It therefore gives deeper perspective on the findings drawn from the Southern Hemisphere. Having explored the specific causes for difference in our most similar case pairings in the Southern Hemisphere, we counterpoise them against the obvious differences in Ireland in order to discern areas of similarity in terms of institutional features and material and organisational outcomes. The fact that differences outweigh similarities in the Irish case strengthens the argument that size and actual geographical location are important external conditioners that frame the precise way in which institutions and ideology shape the process of market-oriented labour market reform in small open democracies. In the first chapter we explain why it is important to examine the material and ideological terms and conditions of the debate constituted by the market-oriented discourse and its opponents, the latter specifically identified as the organised working class in each country (as the leading agent of subordinate group response to the structural reform projects). That makes the labour relations regime a “core” area of State activity oriented towards the securing of contingent mass consent to this particular manifestation of democratic capitalism. In essence, market-driven economic reforms in the 1980s and 1990s attempted to alter the material and ideological thresholds upon which mass consent rested in a variety of contexts, postauthoritarian and not, regardless of position within the global economy. We propose to explain how the international application of this philosophy emerged in practice as the product of ideological debates and material conflicts within changing institutional contexts. Historical overviews of labour politics are given in each case, then charted against the material and political fortunes of organised labour and the workers it represents since 1975. We reason that labour movements were the prime targets of labour market “flexibilisation” strategies utilised by economic reformers to promote international competitiveness in an increasingly globalised marketplace. As the sounding board for subordinate group demands in any capitalist context, the field of labour relations constitutes an important “decisional site” and “veto area” in which subordinate group interests are collectively organised and institutionally juxtaposed against those of the political-economic elite.3 This is why even dictatorial regimes are concerned with its institutional and legal demarcation (as the cases of Chile and Uruguay will show).

xx

Preface

Study of labour relations regimes is important because they constitute one of the main arenas in which the ideological and material terms or threshold of mass consent have been promoted in democratic (and not-so-democratic) societies moving away from State-centric to market-oriented production. This is more the case in small export-oriented economies with histories of import-substitution industrialisation, labour activism, neo-corporatist concertation and welfare states, especially those in which the structural reform project paralleled shifts from authoritarian to electoral political regimes, or conversely, the end of post-colonial trading relationships. In examining the impact that the shift from State-centred towards market-oriented economic reforms had on labour politics in these countries, we develop a corollary to the Katzenstein thesis that small States adopt neocorporatist frameworks to promote economic efficiency.4 We note that postwar democratic corporatism developed within the confines of the Bretton Woods system, in mature capitalist political economies rooted in the common belief that welfare states were the most proven vehicles for reproducing social peace. As of the 1980s, with the shift towards globalisation of production and the consequent turn towards market-driven solutions unconcerned about the politics of income distribution, economic efficiency and competitiveness rather than social peace became the paramount goal of policy-makers. The belief was that social peace based upon higher material standards of living would eventuate after a transitional period in which the previous model of accumulation was transformed. The architects of the policy shift supposed that interest group resistance and conflict would increase during this transitional period as rent-seeking actors and clientelist bureaucracies resisted the structural changes, but they also envisaged that subsequent legal changes to the interest group administration system would later act to channel and diminish these conflicts in a way that was favourable to market forces. The trickle-down effects of the market-oriented reforms would then follow. This view was held particularly strongly outside Europe, where the benefits of being geographically close to a large regional market were not present. Hence, the corollary we propose is that in small, economically vulnerable democracies that move from welfare state to market-oriented policies at the same time that they move from protectionist to export-led development strategies, there will be a corresponding shift from neo-corporatist to pluralist labour relations frameworks. There are several sub-themes imbedded in this corollary – the impact of authoritarian rule in Chile and Uruguay as setting the stage for the implementation of market-oriented reforms for example – as well as variations on the ways in which this shift was implemented (as well as the scope and extent of the shifts). Each will be examined in detail. We take 1975 as a starting point for the data analysis because it allows for deeper exploration of the current situation of labour in the case studies. We preface the post-1975 scrutiny with a political history of the labour relations

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regime in each instance. Beyond the pattern of initial incorporation of labour in the political system and its subsequent political insertion, the impact of medium to immediate historical conditions is explicated in their political, institutional and economic dimensions so as to set the stage for the disaggregating of the dynamics of labour market reforms begun in the mid 1980s. The book scrutinises the literature on labour relations and political economy pertinent to the sample, overlapped on a survey of primary data generated by governmental, non-governmental and international organisation sources. The object is to explain how labour market reform was conducted in principle and in fact, measured by the actions of the participants as well as concrete figures. Data on strikes, work stoppages, industrial disputes and lockouts are used as active measures of withdrawal of consent (with absence or declines in strikes used as passive measures of consent awarded), while information on collective bargains and collective agreements and electoral data offer a measure of the contingent consent awarded (with declines in collective bargaining or shortening of duration, reduction of coverage and scope of negotiable issues and so on used as a passive measure of consent withdrawn). Coupled with a discussion of organised labour’s insertion and role in the political system and its relationship with the State and capitalist agents, this gives us the connection between the how, why and what of labour politics in the sample. The objective is to determine organised labour’s response to and objective position after the market-driven shifts. Before turning to our individual case discussions, we use the first chapter of the book to outline, in further detail, the framework with which we approach these five cases.

1 Introduction: Methodological and Theoretical Issues

Small countries as exemplars of policy reform We start with a biological principle as methodological premise. Structural reform is to small open democracies what alcohol is to children: the impact of such reform is far more immediate and profound in small countries than in larger ones. This is because these political economies have small internal markets, narrow export bases and reduced economies of scale, all of which offer them less insulation and protection from the vagaries and vicissitudes of global market shifts. This is especially the case in the field of labour relations because attempts to remain internationally competitive usually require reducing input factor costs, the most obvious (and internally controllable) being labour costs. Raw material and other value-added factors depend on external market demand and remain relatively constant in price structure (even if different across countries), so the relative price of labour is often the edge upon which international competitiveness is made. For this reason, labour policy is central to any country’s development strategy in an age of globalisation of production, especially in the circumstances described above. Just as the generally dramatic impact of alcohol on children is filtered by drink consumption rate, age, size, weight, meals consumed and the like, so too the impact of economic policy reform on small open democracies is filtered by a host of mediating factors. Even if distinctively and dramatically affected by the said changes in a measure not seen in larger economies, small open democracies filter economic policy shifts through an array of internal and external conditioners that lead to differences among specific outcomes in each case. These include the precise international economic location of the country in question, the depth and pace of macroeconomic and labour market reform, the pattern of initial incorporation and political insertion of the organised labour movement, the institutional frameworks governing the labour market before and during the policy shift and the ideological cohesion of the labour movement when confronting such shifts. Some are external and beyond national governmental control, and others 1

2 Labour Politics in Small Open Democracies

are domestic and thus changeable – both by governments and the (re-) actions of those affected by their policies. In the pages ahead, we explore the ways in which the precise mix of these factors led to different labour policy outcomes in our five case studies. As variants of “settler capitalism”, the four case studies drawn from the Southern Hemisphere are similar in the relatively small size and export-led nature of their productive base, and because they contain roughly similar population numbers, and rates of urbanisation. In all of them, the social division of labour is characterised by a mix of service sector and manufacturing industries complementing the hard currency economy centred on beef, lamb and grain production, mining, logging, fishing and other agro-exports. This makes them direct competitors in the export of selected primary and wage goods from the Southern Hemisphere to Northern Hemisphere perennial and winter markets. They consequently provide a good comparison of labour relations in the transition from State to globalised market steerage in new and old small capitalist democracies (as measured by uninterrupted electoral cycles). For its part, Ireland represents an alternative approach to labour market reform that in turn rests upon a very different set of political-historic factors as well as economic and geographical location. The relatively recent construction of State apparatuses in the Republic of Ireland, from the 1920s, and the country’s inheritance of British trade union traditions have contributed to the fact that it has had a comparatively weak experience with tripartite concertative structures and centralised wage bargaining. This has been widely blamed for the Irish experience of instability and conflict in industrial relations prior to the 1970s. Recent moves towards integration with Europe have provided the Irish State with Western European, neo-corporatist models for negotiating between interest groups and encouraging economic growth. Opening the economy to attract foreign investment as well as encourage European Union (EU) financial assistance has revealed to business groups as much as to organised labour that a degree of centralisation is needed in order to reproduce industrial co-operation. This makes Ireland a good example on which to counterpoise the cross-regional findings from the Southern Hemisphere, where tripartite bargaining or concertation was a hallmark of those labour relations systems before the advent of market-oriented labour reform – but is not now. Not surprisingly, given the globalisation of production under marketoriented ideologies during the last twenty-five years, labour market “flexibility” has become a cornerstone of macroeconomic reforms throughout the world, be it in the OECD countries, South America (such as the much heralded 1979 Labour Plan in Chile) or Australasia (witness the Employment Contracts Act in New Zealand 1991–99). This assumes a reduction in both the State’s role in labour relations as well as in the legal protections afforded to workers collectively and individually. As a World Bank report phrased it: “Experience suggests that, except on the grounds of health and worker safety, governments

Introduction

3

should avoid interference in labour markets. If left alone, they work well. The political imperative is to interfere, but the economic logic is not. Minimum wage legislation, regulations restricting the ability of employers to hire and fire, and related interventions tend to raise costs, reduce competitiveness and strain the growth of employment.”1 Thus, from the perspective of the market advocates who have dominated global discussion of economic policy during the last quarter century, reduction in the State’s role in the labour market as well as in the provision of collective and individual guarantees assigned to workers by law equals increased economic efficiency – and eventual wealth for all in a world based upon freedom of choice. Less regulation and State involvement in the labour market may lead to increased efficiency in production when measured by cost and output, but it also means less in terms of worker’s legal rights and protections, which then become the province of unions, individual workers and the ordinary court system, rather than the State. As Patrick Barrett points out with regard to so-called “neo-liberal” development strategies, “efforts to increase the organisational capacity, bargaining power and income share of labour through state-enforced labour standards pose an inherent threat to accumulation and economic efficiency. This is because they are fundamentally seen as a drain on savings and investment and a source of labour market rigidity. Indeed, in the neo-liberal view, it is only by limiting union power and allowing wages and the supply of labour to respond flexibly to market signals that sustained growth will be achieved.”2 Efforts to increase labour market flexibility via market-oriented reform have a decided impact on the individual and collective fortunes of workers in all countries, particularly those in which their rights have been guaranteed in the past by policies of State intervention and macroeconomic management, be it Keynesian welfare Statist, populist, or socialist in nature. Because of the vulnerabilities derived from their size and international economic position, the issue for small democracies is most acute, which makes them lightening rods for students of economic policy shifts under the umbrella of marketoriented reform. For that reason, they are deserving of a more focused scrutiny as a subset than normally permitted by the specialised literature on labour markets and industrial relations. Given the above, we refer in our discussion to “labour politics” as opposed to “labour relations” or “industrial relations” because we are concerned with more than the technical details of employment and personnel management. We are interested in how institutional changes in given international and national political-economic contexts influence the ideological outlooks and practical strategies of labour movements. These strategies impact on the depth and scope of labour market reform programmes in small open democracies, which in turn determine the relative degree of success of labour unions in defending their members against the detrimental material effects of “free” labour market reform.

4 Labour Politics in Small Open Democracies

The essential point is simple: re-orienting national economies around market forces in order to be internationally competitive after years of State-directed economic policies is felt most heavily in small open agro- and tertiary export platforms impacted by international economic climate fluctuations and ideological trends.3 Institutionalising market-driven labour relations has particularly strong political and economic implications for such cases, which makes labour relations a particularly important arena in which regime legitimacy is contested. The issue is most pressing for small democracies because reproducing subordinate group consent is a cornerstone of that form of rule. The institutional and material bases of mass consent are central concerns of democratic policy-makers, regardless of the economic conditions and policies under which they operate, and are particularly crucial during times of profound economic change. During such times, reform-mongering efforts may be replaced by technical and efficiencyoriented approaches towards economic development that negatively impact on the material bases of mass consent. Whether or not it does so, and to what degree, is a matter of institutions and ideologies. We come back to this point later.

Problems of analytic coupling: Case selection, dichotomous pairings and small sample comparisons Broadly speaking, we use the method that most current studies in comparative politics adopt. We follow Przeworski and Teune in referring to this as a “most similar” method of case selection,4 although it has also been referred to simply as the “comparable-cases strategy” or the “comparative method” by other researchers.5 This strategy attempts to deal with the greatest problem faced by practitioners of “small-N” research, namely that there are far more possible reasons why a particular event has taken place than cases under investigation. This hinders our ability to engage in methods that mirror either the experimental techniques of “hard” science, or the statistical techniques of those who deal with large-N samples. At the same time, and because we very much believe that there are many important benefits in focusing on small groups of cases using qualitative analysis, we attempt to get around this problem by selecting cases that are most similar in some respects while remaining different in others. These similarities act as “control” variables, while the differences become our explanatory variables with which to assess the impact of the differences in our dependent variables, or in other words, the political process or outcome that we are most interested in explaining. Here we are interested in explaining the varying fortunes of organised labour during the recent adoption of market-oriented economic and social development programmes at the national level. A “most similar” approach seems to be the best way to spotlight the impact that State policy, union movement characteristics and employer approaches

Introduction

5

have on workforce reorganisation in response to the shift from State- to market-steerage economics. However, while we have selected cases that are most similar in many respects, we do not pretend to control for all variables that we ideally might like to control for. This is the key problem in case study selection using the controlled-comparison or most similar method: we only have one extremely complicated world from which to select our cases. Finding cases that differ only with respect to the independent variable or variables is impossible. Thus for better or for worse – and we tend to believe for the better – the adoption of a theoretical framework in conjunction with the exact problem under investigation guides the choice of cases rather than the availability of “hard” data. Beyond the basics of comparative or most similar methodology, there is little agreement over the best way to proceed. One of the most widely shared assumptions, and one with which we agree, is that selection on the dependent variable is the surest and earliest way to introduce bias into the framework of comparison.6 Thus, in choosing our set of five small open democracies, we were careful to concentrate our attention on similarities and differences between control and explanatory variables, while at the same time looking for variation in the outcomes that we were interested in discussing. For our purposes, and to this end, our set of five small open democracies share similar (though not identical) locations in the world political economy, have historically carried out similar experiments in State-led and welfare-state development but have more recently shifted to market-oriented economics, share experiences with democratic institutions, and with respect to labour relations, all have some sort of experience with neo-corporatist or at least tripartite systems of class compromise. Within the “small open economy” category reside subsets defined by the specifics of the economies in question: size, composition, domestic market consumption rates and international location. By this measure, we can identify at least three subsets of the “small and open” category. Small open economies proper are those that have at least incipient economies of scale with significant industrial bases; a diversified export structure extending to consumer non-durables and other non-traditional (non-agricultural, primary good or finished) exports to a broad array of trading partners, and expanding internal markets. In our sample, Australia, Chile and Ireland provide the case studies. “Boutique” economies are those that lack incipient economies of scale and which occupy a niche in the global supply of primary goods based upon specialisation in a narrow range of agricultural and primary good exports. They have very small internal markets rooted in service sector and tertiary activities dominated by foreign consumer imports. In this study, New Zealand and Uruguay conform to the type. “Micro” economies are those that are rooted in local subsistence production and are inserted into the global service economy as areas of recreation. Examples would be island tourist destinations

6 Labour Politics in Small Open Democracies

and small principalities with little or poorly developed internal markets. They will not be the subjects of attention here. Having established this basis of comparison, we adopt the most similar approach with a twist. The twist is that we analytically group the sample into dichotomous cross-regional pairs (Australia and Chile; New Zealand and Uruguay) with Ireland discussed as an outlier. Following Bobbio, we see “great dichotomies” as good analytic devices because they counterpoise cases in terms that are simple, specific and concise (although not necessarily either/or in nature). Yet in both comparative history and comparative political science, there is a common unwillingness to search for comparable cases outside a specific region of interest.7 Pairings or groupings tend to be drawn from strictly delimited geographical areas, possibly guided by an unspoken assumption that shared cultural understandings, linguistic affinities, or, in our cases, specific patterns of colonisation, might act as good controls. While there might be good reasons for doing this for the purposes of answering some research questions, we have chosen to stick with size and location in the world economy as the basis of our comparison. The reasoning is that by comparing pairs of most similar political economies within the Southern Hemisphere, we can explain differences in policy outcome in two subsets of the “Small Open Democracy” category similarly located, both spatially and productively, in the world market. These pairings allow us to highlight sample and subset differences in both process and outcomes. Australia and Chile are grouped together as small economies with reasonably well-developed manufacturing sectors and important metal manufacturing and mining industries. New Zealand and Uruguay are compared as far smaller, agricultural export-dependent, “boutique” economies. We juxtapose these findings against the counter-factual posed by the extra-regional example of Ireland, which exhibits a mixture of the characteristics of the two subsets but is significantly different from all of the others in that it is located in the Northern Hemisphere with direct access to the giant market (as well as aid) of the EU. In addition, it has a somewhat different political history in that its process of decolonisation began much later than the other cases and thus has comparatively late-developing political, as well as labour relations, institutions. Our most important explanatory variables are consequently located between the productive structure and location of each country in the world economy, our very loose controls, and outcomes in terms of labour politics, especially the fortunes of organised labour as measured by such factors as real wages, and membership numbers. Specifically, we focus on the very different patterns of political insertion, institutional incorporation, and labour movement ideological and organisational unity that have marked the histories of labour politics as the main explanations for variation in outcomes among the sample. This allows us to bridge the gap between purely institutional and purely interest-driven explanations for policy

Introduction

7

variations among the sample, something that has been of concern to scholars in recent years.8 A sample based on international economic insertion, geography and demographic size arranged as dichotomous pairs with an extra-regional outlier allows the cases to be brought down to a number manageable enough for qualitative analysis. They can then be differentiated from other small economies with electoral regimes, such as those in Southern Europe, the former Soviet bloc or Central America – Costa Rica in particular – which either are not as politically mature (as democracies), are not as economically or socially developed, or are lacking in the basic criteria for classification as “small and open” or “boutique” democracies.9 It also allows them to be differentiated from small countries with larger economies, such as Hong Kong, Taiwan or South Korea, which in any case do not have the history of democracy, are not very open, or are simply too large in terms of population or GNP to fit the sample. In addition to satisfying the requirements of a “most similar” small-N analysis, we also believe that our research design, incorporating the concept of dichotomous pairing, has other inherent advantages so that a new depth of analysis can be achieved. The choice of five cases allows for qualitative analysis of the historical backdrop to the post-1975 reforms as well as the circumstances surrounding and following the shifts. That better situates the consideration of the quantitative data offered in the country studies as measures of the labour response to the shifts. The limited number of cases, which are close to the universe of cases within the boundaries of the category of small open democracies in any event, allows for qualitative explanation of the quantitative data. The use of dichotomous pairs allows for comparisons within and between subsets. The extra-regional outlier allows us to test our findings against a case that is similar in most general aspects but which has evidenced a very different set of approaches to the field of labour politics. Together the sample covers a range of possibilities not observable within the general category of “small and open” democracies.

Labour politics as an analytic lens We take labour politics as the lens through which to analyse our sample because we believe that securing contingent working class consent to bourgeois rule is the key to democratic capitalist regime survivability and legitimacy. Whereas elite consent is needed for all forms of political rule, and worker consent may well have been critical for the survival of socialist regimes (which might explain their collapse), today it is worker consent that matters most to democratic regimes, both old and new. The forms in which this consent is secured and reproduced may be influenced by the impact of technology, shifting demographics and cultural dispersion, but the fact of its importance as a barometer on regime stability is not.

8 Labour Politics in Small Open Democracies

This gives importance to the institutional boundaries, procedures, material, and political outcomes upon which mass consent is constructed. Of these, the institutional frameworks governing labour relations take on special importance during periods of serious economic reform, as they impinge on the abilities of unions and businesses to exploit or resist the changes taking place. Labour market policy reform affects the pattern and type of sectoral contestation, something that is influenced by and has an impact on subsequent forms of strategic interaction. The prior pattern of sectoral contestation matters because the labour relations system is the arena in which organised class conflict is institutionally filtered, mediated and resolved. Involving procedures, inducements and constraints on the one hand, and decisional sites and veto areas on the other, the labour relations system is critical to securing contingent mass consent to democratic capitalist regimes.10 More broadly, this is the realm of labour politics. It is the partial regime in which organised labour’s political, organisational and economic interests are institutionally framed and mediated against those of competing social groups, business in particular. Tempered by the labour movement’s relationship with the political party system, labour market (de)regulation lies at the core of the labour relations system. This makes it an important agent in marshalling and reproducing working class consent. The problem, however, is that most recent approaches to labour market reform have not made the securing of consent – however it is manufactured – central to their policy goals and methods of implementing them. This may serve the interests of increasingly transnationalised economic elites over the short-term, but may not be conducive to democratic capitalist reproduction over the long-term. Contemporary structural adjustment programmes, understood as the promotion of market steerage for national, regional and international economies, are paralleled by an ideological project centred on electoral procedures for political leadership selection and legal respect for the autonomous aggregation of social group interests. This includes making labour markets “flexible” by legally imposing pluralist labour relations systems (or partial regimes)11 that have the effect of breaking union control of the labour supply and promoting greater intra-working class competition. That is done by legally and administratively facilitating the expansion of unorganised labour, diversifying collective representation of working class interests and fixing collective bargaining at the lowest level of production, while simultaneously altering the process of production itself. “The flexibility to adapt can be achieved through different approaches, including, inter alia, labour cost flexibility (adjustment of wage and non-wage costs), employment flexibility (adjusting the size of the workforce or the nature of employment, part-time, temporary), work time flexibility (adjusting the hours of the workweek), and functional flexibility (multi-tasking, increasing the mobility of workers within the firm).”12 This is a variant of OECD labour policy reforms undertaken in the 1970s and 1980s.13

Introduction

9

The premise is that such reforms will not only lead to increased productivity, but eventual real wage and employment gains for all workers. Increasing contractual flexibility can better increase productivity by better connecting collective contract provisions to firm conditions and collapsing the distance between situation-specific, firm-based knowledge and production decisions. Plus, liberalizing contracting decisions from blunt industry-, sector-, and economy-wide bargaining rules (as well as from government regulated employment stipulations) may redirect firms’ and workers’ attention from redistributive possibilities under these constraints to income generation . . . (D)centralized bargaining tempers the union’s ability to effect monopoly wage increases, keeping wages more in line with productivity of workers in a competitive market . . . Decentralized systems can provide greater pluralism of representation and make it more difficult for states to co-opt labour movements, assuming that firm-based unions are strong.14 Another significant component of these reforms is to increase labour mobility by decreasing restrictions on employer’s ability to hire and fire personnel. This includes reducing severance pay requirements as well as the introduction of part-time contracts, sub-contracting, “putting-out” work, and increasing the use of seasonal and temporary labour that do not enjoy the protections of full-time employees, unionised or not. Along with reductions in the size of the workforce due to increased industrialisation and the introduction of more capital-intensive technologies, this produces situations of un- and underemployment that increases the reserve labour pool, promotes labour fluidity and decreases labour costs. While such projects are often characterised as exercises in labour market “deregulation”, this is a false impression.15 Rather, labour market flexibilisation projects should be viewed, in most cases, as replacing one mode of regulation with a new type of regulatory regime. This allows us to see how new policies in the sphere of labour relations have been conditioned not only by external economic pressures, but also by the institutional history of the particular country in question.16 External pressures for labour market flexibility cannot be ignored and some elaboration on this issue is required. Because they are so obviously influential, our case study discussions tend to assume that these pressures are operating in the background, providing a key motive for the reform process itself. Because they are taken-as-given throughout most of the book, we simply outline the role that “globalisation” is assumed to play in reshaping labour relations regimes in the current political moment. We make note of the power of market-oriented ideologies as both a blue-print for actual economic reform as well as a philosophical predisposition and zeitgeist in

10 Labour Politics in Small Open Democracies

the world today – but one which has more than its fair share of opponents, both intellectual and real.17 According to both critics and supporters, economic “globalisation” is likely to have a specific set of implications for the formation and implementation of industrial relations policies at the national level. Based on the need to attract foreign direct investment and the need to contain labour costs in order to make national industries competitive, structural adjustment programmes since the 1970s have been accompanied by attempts to make labour markets more “flexible”, some aspects of which we have already outlined. The result of these processes is assumed to involve convergence towards a particular institutional model for governing the economy, including the labour market. While the debate between those who view global capitalism as a force for national convergence and those who argue that market-driven economics is compatible with a number of different institutional and regulatory frameworks is not new, it is a debate that has taken on a significantly new meaning and sense of intensity in the current political moment given the apparently galloping pace of economic globalisation.18 The assumption that labour market “flexibility” leads automatically to “deregulation”, in the sense that the two concepts are connected to trends in economic “globalisation”, has been challenged by industrial relations scholars who continue to identify patterns of national diversity in the field of labour relations. These observations stem from an earlier literature that sought to describe and explain the persistence of differences among national industrial relations systems between regions, but more particularly within Europe. In general, scholars reject the idea that European industrial relations systems are similar, or that they are likely to become increasingly similar in the near future. Colin Crouch, for example, is a long-standing critic of convergence theories of labour relations. Along with Wolfgang Streeck, he has argued that although current global pressures favour the low-wage and minimal forms of regulation associated with the “US model”, European integration has in fact worked to preserve more traditional forms of neocorporatist policy and wage bargaining within the region.19 Despite consensus in the literature on that point, most analysts admit that there are some pressures for convergence within the European community, even if similar outcomes cannot yet be observed. Concentrating specifically on labour relations, factors such as the apparent exhaustion of corporatist strategies as well as changes resulting from the drive to curb inflation and reduce labour costs are seen by some as the reasons behind the push for common adoption of more decentralised or pluralist collective bargaining.20 This discussion is important, and one which will be returned to during our analysis of the Irish case. One of the reasons why the institutional convergence versus continuing divergence debate is relevant is that European countries are in some important respects subject to contradictory “external” influences as a result of regional

Introduction

11

market integration. Ireland stands out in our sample as a case that has clearly been influenced by European efforts to retain traditions of social partnership and co-operation despite the international trend towards labour market flexibilisation. While our other cases are also party to regional integration projects (MERCOSUR in the case of the Chile and Uruguay; APEC and bilateral agreements in that of Australia and New Zealand), these have been generally limited to the issues of free trade and investment where, if they are mentioned at all, increased pressures for flexibility are of the “race to the bottom” variety. That is, who can lower labour costs the most. On the other hand, European countries face both pressures for “deregulation” and the need to preserve a specifically European model of economic and social development. In the field of labour relations, this is presumed to include such elements as strong independent unions; a high floor of basic worker rights; formal tripartite rights; some co-ordination of wage settlements; and the extension of such agreements to the shop- or enterprise-level.21 These features have traditionally been associated with social democratic development in Western Europe, and the challenge now is not only to extend the model to countries such as Ireland and Spain, where some of the model’s elements have always been lacking, but also to institutionalise these features at a regional level. Thus, efforts have recently been concentrated on developing programmes towards “social Europe”, which centre on issue-areas such as industrial relations, occupational health and safety, and social policy. So far, much of this attempt to “harmonise” European industrial relations has involved the surveying of national institutions, the identification of differences between them, and the development of a charter for guaranteeing a “high floor” of collective and individual worker rights in the European community.22 Thus, our attention to international or external factors is mainly confined to the Irish case. International pressures to reduce inflation and lower labour costs in order to attract investment serve as additional “control” variables, because all countries are subject to them. But the policy impact of these pressures was exponentially higher and more institutionally driven in Europe than in the Antipodes and Southern Cone. Hence, the particular role of the EU and its efforts to match economic with social and institutional integration more strongly influence the precise path to labour market adjustment in the Irish case. The contradictory effects of international factors also helps in explaining why national convergence in the field of labour relations is unlikely to occur as a result of global pressures for change. If national economic and social policies and regulatory regimes were determined by international factors alone, convergence would be predictable. However, because the policies and frameworks are actually determined by the relationship between global and local factors, institutional divergence should reasonably be expected. That is the case even if it is accepted that the pressures of “globalisation” are

12 Labour Politics in Small Open Democracies

intensifying in the contemporary political moment. Individual economies and societies have histories of their own that are not simply wiped out by new international, or for that matter, regional forces. It is here where local ideologies and prior institutional development matters. As part of our discussion of the individual countries, we explore the sequencing of general market-driven reforms and labour market reform specifically. One focus here will be whether the structural shift preceded reforms in the labour relations system or vice versa, and whether these shifts were in turn related to changes in the political landscape (such as the transition from authoritarian to electoral capitalism in Chile and Uruguay, or the shift from “old Labour” to “new Labour” politics in Australia and New Zealand). This will allow us to ascertain the patterning of reforms as well as their consequences. In some cases, labour market reform may be part of a comprehensive pattern of structural reform, while in others it may occur independently of or as an afterthought to the larger economic changes being promoted. It may or may not be associated with major political change. Moreover, the sequencing of these shifts may deviate from the prescribed reform programme (in the measure in that these are charted) precisely due to the impact of union responses and other local feedback. Our analysis takes this into account. The importance of labour market policy reform derives from its effects on both the union movement and working classes in general. “(L)abour policies have two effects on labour–capital relations that bear significantly on labour’s strength as a socio-political force, and thus on its capacity to counter the power of capital. On the one hand, by establishing rules governing collective bargaining, union formation and contract termination, they can have a major impact on labour’s organisational strength and bargaining power. On the other hand, by affecting income and the level and quality of employment, they can have a significant impact on labour’s vulnerability to the labour market and thus on its structural strength and bargaining capacity.”23 For both the organised and unorganised sectors of the working population alike, labour market policy is a major determinant of their material standards of living and quality of life. Contemporary market-oriented labour policy reform projects include narrowing of collective rights and an increased emphasis on shop-level bargaining with multiple agents along with the use of individual worker contracts. This is codified in pluralist labour legislation enforced by a pro-business labour administration personnel selected by centre-right governments; or by moderate labour technocrats (labour lawyers and economists) under centre-Left coalitions. The former act as energetic agents of the “flexibility” programme, whereas the latter serve as amelioration devices, internal conduits for union complaints and individual grievances within the State, or bearers of bad news.

Introduction

13

Successful labour market flexibilisation as part of a strategy of national market opening in small economies forces unions back to their original position: preservation of employment. Wage gains and non-wage concessions are eschewed so that even in times of real wage loss, employment will be maintained. We factor this into our assessment of whether unions were successful in engaging such defensive campaigns. That begs a question. Given recent conditions of labour union retrenchment, how exactly should “success” be conceptualised, let alone measured? Or is any claim of “success” more an instance of claiming victory in defeat? We realise that what constitutes a successful attempt by organised labour to shield its members from the effects of market-oriented reform is a multifaceted and contentious concept. We make no pretence at being able to offer a simple answer to the question, but we do have a clear notion of what success involves and how it might be measured. Since organised labour in all of our five countries found itself in a defensive position throughout much of their post-1975 case histories, successes are likely to be relative. At the most, success might entail little more than being able to pressure reformers into slowing down or narrowing the scope of the specific labour market flexibilisation project in question, as we shall see in the Australian and Uruguayan cases. In other instances it may be more a matter of simple organisational survival, such as in Chile and New Zealand. It may even involve relative gains vis-à-vis unorganised sectors of the population, such as in Ireland. We therefore explicitly pause on the changing place of each labour movement with respect to its ability to bargain – if not always win – during the course of the market-oriented structural shift. In times of retreat, being able to come back and fight another battle is of long-term importance to the union movement as a whole. Thus organisational self-preservation becomes a fundamental, and often immediate, strategic objective to which virtually all other concerns are subsumed. Under such circumstances, political objectives may become more important than economic goals. To analyse the “objective” position of the union movement as a whole, we focus on empirical measures such as union size, membership and density, levels of collective bargaining and the content of collective contracts, wages, unemployment and employment rates, and aggregate and cross-industry strike and lockout data. We consider these against the backdrop of Left-party voting in national elections and the general state of labour-based parties in the electoral and parliamentary systems. Taken together, this information allows us to determine degrees of union success in waging defensive strategies against market-driven economic reform. Organised labour’s ability to mitigate the negative impact of a structural reform programme is conditioned by its relationship with political parties, presence in State agencies, extent of horizontal networking with other subordinate groups, strategic location, membership numbers and density.24 The more ideologically united and strategically important the union (regardless

14 Labour Politics in Small Open Democracies

of the substantive bases of union ideologies), the more it should be able to defend its members from the adverse effects of labour market flexibilisation. However, other factors also shape the way in which union fortunes are contested. In particular, we believe that pre-existing institutional frameworks rather than political or economic regime change per se may be decisive in determining labour movement strategies in market-driven contexts. We focus on three features of organised labour’s role in the political economy of each nation: political insertion, institutional conditioners, and ideological and organisational unity. Political insertion refers to what Lipset called “the right to participate”: The effect of participation may best be illustrated by examining the two principal paths by which members of the working classes were accepted into the fabric of societies as political and economic citizens. The first involves their right to vote and to organize political parties that could play a constructive role in the polity; the second refers to the way working-class economic combinations, in the form of labour unions, were accepted as formally legitimate by the state and substantively legitimate by employers.25 With that in mind, we examine the way in which organised labour was initially incorporated as a political actor in the countries in question26 and its subsequent historical development as such. For example, we can differentiate State-sponsored (Chile) from Party-sponsored (Uruguay) forms of initial incorporation with the subsequent evolution of union political insertion (for example, party-dependent or independent pressure group insertion, as in the cases of Australia, Chile and New Zealand on the one hand and Ireland and Uruguay on the other). All of this is explicated in further detail in the respective country sections. Ideological unity refers to the degree to which the labour movement is united around specific strategic goals in the political and economic fields. This implies a unity of action (or praxis) as a collective actor from leadership to base rather than the ideological content of union programmes per se. For instance, labour movements that are in general classist in nature often are rendered by ideological disputes between Marxist factions that makes impossible their co-ordinated action at the shop- (or for that matter national political) level. Conversely, labour movements that display rank-and-file economism or pragmatism and ideological heterogeneity at the base can coalesce around a set of collective agents as honest brokers for the labour movement as a whole, be they classist in orientation or not, as in the case of Uruguay’s PIT/CNT. Still further, national labour leaders may display strategic outlooks that are not in concert with rank-and-file objectives even while sharing political affiliations, as in the case of Australia, Chile and New Zealand. We hypothesise that ideological unity matters more in decentralised collective

Introduction

15

bargaining systems rather than centralised ones, and among pluralist rather than monopolistically organised collective agents. The larger point is that ideological unity refers not to the substance of any specific ideology within the labour movement taken as a whole, but the degree to which strategic co-ordination is achieved between the rank-and-file and the union leadership on economic and political issues. Institutional conditioners refer to the legal and organisational framework governing the field of labour relations. As students of political economy and constitution-building well know, institutional frameworks determine collective outcomes – or at least the range of choice available to collective agents. The significance of this is recognised by market reform adherents such as the World Bank, which noted that “union behaviour is conditioned by the structure of union organization and the coverage of collective agreements.”27 This involves legislation governing, among many things, union organisation, legal recognition and registration, strikes, lockouts and replacement of strikers, dues deductions from wages, employer contributions to pension plans, occupational health and safety, working conditions, as well as the level at which collective bargaining is fixed. It also includes efforts to institutionalise labour–State–capital relations via concertative mechanisms in a number of work-related policy fields such as social security, occupational health and safety, pension programs, and so on. Even the absence of State involvement in collective bargaining tells us much about the nature of the labour relations system. Institutional history can preceed the period of initial incorporation but is often the pre-conditioner for it, which in turn is determinant of the subsequent evolution of labour insertion in the political life of the nation. As an example, consider that Chile’s initial incorporation framework and more recent labour relations system were both constructed by military regimes (in the form of the Ibañez Labour Code of 1932 and Pinochet’s Plan Laboral of 1979), which makes the control and atomising features of both pieces of legislation more understandable given the character of the authoritarians (although the motivations of each differed). This can be contrasted regionally with the Uruguay labour relations system, where no institutional constraints were placed on union autonomy or forms of collective action by the democratically elected Battle government in 1903, which is the situation today. In each case pre-existing institutional conditioners shaped labour movement responses during the market-oriented shift. For their part both Australia and New Zealand developed compulsory arbitration models in the early twentieth century as instruments of labour control, something which had a decided impact on the subsequent development of the union movement as economic and political actors. In parallel, political insertion of organised labour was decisive in the way in which both structural and labour market-oriented reforms were undertaken in each country. As for Ireland, the very late transition from guild or craft unionism

16 Labour Politics in Small Open Democracies

to a more modern brand of industrial unionism, as well as the nationalist nature of party politics after independence, made for an alternative pattern of incorporation that led to equally significant differences in the institutional frameworks governing labour relations after 1946, specifically the use and expansion of national-level tripartite wage negotiations. We argue that it is the combination of these factors, superimposed upon the structural realities of the moment and the character of the marketdriven shift, which had a decisive impact on organised labour fortunes over the last twenty-five years.

Conceptualising unions as political actors: Organised labour and the labour relations regime How should we look at labour unions in their role as collective agents of the organised working classes in transitional capitalist societies? The industrial relations literature sees unions as social interlocutors who defend the material interests of their members within production, and who together with firms see collective bargaining as the preferred instrument through which conflicts over material interests are resolved. This framework promotes mutual second-best negotiated outcomes that serve as the substantive bases for the class compromise that sits at the core of democratic capitalist reproduction. These are the material and institutional bases of mass consent to democratic capitalism.28 But how is working class consent – or at least that of its most organised sectors – awarded? We make no pretence of being able to cover the gamut of ways in which people consent to socio-economic and political status quo, much less the cultural and ideological wrappings through which mass consent is manufactured and filtered.29 Instead, we concentrate on two levels: political consent, measured by support for Left-based political parties in national elections (and where data is available, the working class vote); and material consent (or consent at the level of production), measured by strikes and collective bargains. Strike data offers us an active measure of the withdrawal of contingent material consent, whereas absence or declines in strike activity can be used as a passive measure of contingent material consent awarded. Collective bargains offer an active measure of contingent material consent, although the scope of coverage, duration and issues addressed defines the degree of contingency in each instance. The more workers covered, the broader the issues addressed and longer the duration of contracts, the less contingent each agreement. The more narrow the scope, coverage and duration, the more contingent the agreement. Hence declines in collective bargaining and its component parts can be used as a passive measure of contingent consent withdrawn. In all cases, unions serve as the agents for the collective awarding of material consent (although we recognise the need for individual measures of consent, which is beyond the scope of this essay).

Introduction

17

As a bottom line, wage rates achieved by collective bargaining identify the material threshold of consent of organised workers, and because collective bargains tend to have a spill-over effect on overall wages, which influences the marginal wage rates upon which social benefit provision (where it exists) is determined, they indirectly represent a general measure of contingent mass consent.30 Absence of strikes may not indicate consent but rather acquiescence to physical repression and restrictions on strike activity. With two authoritarian regimes in our analysis – that of General Pinochet in Chile 1973–89 and the Uruguayan junta of 1973–85 – repression cannot be discounted, and in fact is the main reason for labour quiescence during the dictatorships. In addition, a host of other, subtler repressive means (for example, legal restrictions and procedures, governmental warnings, leadership authority – if not authoritarianism – over the rank and file) limit worker’s freedom of action to exercise labour service withdrawals under both authoritarian and democratic regimes. We factor this into our analysis. As for the political dimension of consent, unions fulfil a political role as lobbyists and actors. Their role in progressive political parties and subordinate group (when not counter-hegemonic) coalitions is well understood and much discussed, regardless of the political orientation of the government, union or academic analyst in question. Suffice it to note that unions are political actors by birthright, as their appearance as collective agents complicates the use and distribution of political power in bourgeois society. This is especially so in countries transiting out of authoritarian rule and/or where labour was excluded from participation in the political and economic markets (such as Chile and Uruguay in the 1970s and 1980s). “The exclusion of workers from the fundamental political rights of citizenship effectively fused the struggle for political and economic equality . . . Where the right to combine in the labour market was severely restricted . . . the decision to act in politics was forced on trade unions. Whether they liked it or not, unions became political institutions; they had first to change the distribution of political power within the state before they could exert power in the market.”31 In short, for workers and their collective agents, political rights precede economic rights.32 Organised labour’s political role can be a decisive factor in national politics and often supersedes its economic role (as in the case of national labour confederations). While pro-capitalist “business” unions prefer to concentrate attention on bread-and-butter issues and lobby establishment political parties on matters of social policy, anti-systemic or counter-hegemonic unions espousing variants of Marxist-Leninist or populist ideologies tend to adopt a “classist” line that emphasises the political role of the labour movement over its material demands per se. Where the two types of unionism exist in the same national political and economic context, inter-union cleavages serve to weaken the overall impact of the labour movement on both government and business decision-making.33

18 Labour Politics in Small Open Democracies

Labour unions are considered here as heterogeneous interest group agents that articulate a broad array of working class interests. This gives them a leadership role when subordinate group voice is organised around material and ideological demands. The nature of this leadership role and its horizontal ties with other social groups is a product of history, political orientation and strategic location. Organised labour serves as a leader of subordinate groups in civil society because of its structural location and its efforts to expand its rights within the process of production. It carries strategic weight in the economy, which makes it harder to ignore than non-productive groups.34 In pursuing rights over the labour process, unions help expand basic notions of citizenship and entitlements beyond their immediate sphere of influence. This allows the labour movement to extend a “coat-tail effect” in that weaker subordinate groups can tie their demands to organised labour’s political agenda, thereby expanding the horizontal networks that are the collective bases for the democratisation of civil society. That in turn produces a “snow-ball effect” in that the cumulative weight of these combined demands impacts more heavily on the political-institutional structure and economic apparatus, something that reverberates in the tenor and tone of regime approaches to these demands. Finally, at a structural level, unionised wage rates have a “spill-over effect” in that they establish a base line upon which general wages and benefit provision are determined. The higher the productive and political level at which working class interests are aggregated and the more they are linked to the interest demands of other collective agents, the more unions will ably defend the material and political fortunes of their memberships, attract the support of other subordinate groups and influence the course and content of public policy. We speculate that the more ideologically united and strategically important the labour movement, the more it will be able to defend its members from the adverse effects of labour market flexibilisation as well as fulfil its (theoretically) broader social role. We believe that the other factors will serve as contextual arenas in which union fortunes and market reform are contested. In order to test these hypotheses, we elaborate on the labour politics partial regime as a critical arena in which class conflict is institutionally filtered, mediated and resolved. This partial regime is three-dimensional, in that it involves organised labour’s interaction with the State, with employers, and with the rank and file. These are overlapping, inter-related but distinct issue-areas. The dimension of State–labour relations is more than labour legislation, and includes union’s political affiliations and representation within the parliamentary system.35 With regard to labour market dynamics, it is an avenue of dialogue, demand and concession that involves the State’s degree of control over organised labour activities and its legally delimited role in the labour relations regime. Of note is the use of inclusionary State corporatist or

Introduction

19

exclusionary State corporatist (depending on the emphasis on inducements or constraints), neo-, societal, or democratic corporatist and pluralist systems of interest group administration that legally frame the context in which unions operate.36 In labour relations, “pluralism” refers to more than the ideological championing of individual rights and civil liberties. It also refers to the decentralisation and deregulation of collective bargaining, and in its most extreme form, the decollectivisation of wage negotiations entirely. As we shall see, the philosophical and practical aspects of pluralism do not always run together coherently, and practical exigencies often outweigh ideological support for the principle. Alternatively, and whatever its democratic variants, “corporatism” in the labour relations arena refers to concertative (most often tripartite) collective bargaining between monopolistically organised sectoral agents. It finds ideological root in the common interest in macroeconomic co-ordination leading to social peace and economic growth under conditions of international economic competition. We should also note that the State’s role in shaping the growth of the union movement and labour politics in general is to be distinguished from relationships between political parties and organised labour. Strong partisan relationships can be developed between unions and parties in the absence of State oversight or regulation, meaning that such relationships could also be found in pluralist systems. Corporatist institutions may be reinforced or even created through dominant or main political parties, but this is not always the case. In that regard, the presence or absence of corporatist controls, whether these are of a democratic or authoritarian variety, is a core aspect of the institutional framework and can be distinguished from the historical insertion of organised labour in national political life. We base our approach to labour politics on several assumptions about the strategic outlooks of unions and business groups based on rational choice orientations (conceived in a very broad sense of the term), which are rooted in presumably unified agent-principal objectives. These assumptions pose as ideal-types of collective action to which we can compare our cases. At the most general level, organised labour’s relationship with employers will be filtered by who is in power and the depth of commitment of specific governments to market reform. With regard to the specific approaches of the actors involved, there are several assumptions to note. Capitalists prefer autonomy from the State in the labour relations field when in a position of economic and political strength. This permits divide and conquer approaches towards the rank and file, which in turn is buttressed by the atomising effects of pluralist labour codes.37 If capitalists feel weak or vulnerable, they prefer greater State intervention to protect them from competitors in the labour market more than the unions per se, so long as wage levels are sectorally if not universally stable. Tripartite neo-corporatism has often been used as the core vehicle in such cases and the use of neo-corporatist, concertative

20 Labour Politics in Small Open Democracies

approaches as economic regulation and crisis-management devices has an ample historical record.38 Under pro-business governments, business will push for narrowing of State activity in the labour relations field (again, centring on its enforcement powers), on legally ensuring greater employer discretion in the treatment of employees, and on locating union decentralisation at the lowest possible level in order to encourage unorganised employee recruitment and retention, on the one hand, and divisions in rank-and-file representation on the other. An individualised labour market is, from the employer’s perspective, a stable or at least predictable one.39 In democratic capitalist societies, organised labour prefers inclusionary societal (neo-) corporatism with direct representation in Cabinet, regardless of economic conditions.40 With a pro-business government in power, unions attempt to retain monopoly representation above the shop-level. This is harder for small businesses and pro-business governments to accept, the more so in economies with diversified small-scale labour-intensive industries such as our case studies. If organised labour is structurally or organisationally weak, it attempts to retain the right to organise and collectively bargain at the shop-level (the preferred employer outcome short of union outlawing or decollectivisation), as well as protect employment and defend wage stability. If it is focused on the first two issues organised labour has retreated to its original defensive position and raison d’être. If that is the case, business has had its preferences satisfied. If labour is political or economically strong (say, in a growth market characterised by labour shortages or with a Labor Party in government), it will attempt to stave off adverse rule changes, influence direction of labour policy and reduce or redirect the negative effects of economic policy shifts on wages and working conditions. With a pro-labour government in power, unions also prefer to change the procedural rules of engagement with capital and the State in their favour. In general, organised labour prefers mandatory State arbitration/mediation given its structural weakness vis-à-vis capital and the bureaucratic rationales justifying a mediator role for the State in such a core partial regime. If possible, unions will attempt to “colonise” administrative agencies responsible for core labour relations issues and influence political arguments on those issues in order to institutionally set the medium terms of debate with capitalist agents. The labour movement will seek to decrease unemployment, and whether or not it is successful, move on to negotiating working conditions, leave and occupational health and safety, and wages. For their part, with a centre-left government in power, capitalists use dissuasion power with regard to union rights, to include threat of disinvestments or relocation offshore. Under most circumstances local producers will be more resistant but less influential than foreign-based firms when exerting political pressure in defence of business interests in the labour market, although here again the nature of market-driven reform influences the

Introduction

21

specific disposition in each case. We test these stylised assumptions about strategic outlooks in our sample, and in the cases of Chile, Ireland and New Zealand have some points of difference to highlight. Authoritarian legacies need to be factored in where pertinent. Some of these are overt, as in the case of the authoritarian labour codes and State prerogatives inherited by the Colorado government from the militarybureaucratic regime in Uruguay in 1985 and by the Christian Democratic government that succeeded the Pinochet dictatorship in Chile in 1990. Others are less obvious, such as the culture of political and social intolerance produced by a combination of economic crisis and socially conservative National Party rule in New Zealand during the 1970s. Although it extends beyond the scope of this essay, the internal organisation of the State in this field is important, since budgets, bureaucratic frameworks and personnel backgrounds shape policy (as the external dimension of national labour administration), which is codified in legislation and juridicaladministrative rulings. From organised labour’s side, what matters is its degree of representation before and within the State apparatus, at what levels, in what capacity and to what extent as a matter of both law and practice. Also important in this regard is its freedom of action to act in support of both bread-and-butter and solidarity (political) appeals. For that reason the nature of the State’s role in the labour relations system is of particular focus. Some States have extensive powers of control and oversight of labour relations (such as those employing corporatist approaches to interest group intermediation), while others have virtually no powers of this sort (as in pluralist systems such as that conditioning the role of the Uruguayan and Irish States). Most States place some degree of constraint on the freedom to strike (including advanced capitalist democracies such as the United States), whereas a precious few (again, Uruguay and Ireland) do not. This matters when it comes time to make major changes in economic and labour policy. In analysing institutional conditioners we focus on two specific dimensions of State–labour relations: the organisation of collective bargaining and the rules governing strike behaviour and industrial conflicts. We believe that these are the best measures of the consent given and consent withdrawn by workers to any given economic and political formation. With regard to the structure of collective bargaining, we focus on the following questions. At what level is collective bargaining fixed, allowed or encouraged? Are individual contracts allowed along with collective contracts? Is collective bargaining mandatory? Is there compulsory arbitration or conciliation? Are there mandatory “cooling off” periods? What are the duration of collective agreements and contracts? Are there limitations to the scope of negotiable issues? With regard to the rules governing labour service withdrawals, we focus on whether replacement workers can be hired to substitute for strikers, on whether there is the employer’s right to lockout workers during strikes, on

22 Labour Politics in Small Open Democracies

whether there are limits placed on the duration of strikes, on whether union dues deductions are mandatory or voluntary (which has an impact on strike funds), on whether there is dismissal without severance pay, on whether non-economic strikes (that is, “solidarity” strikes in support of other unions or “political” strikes that do not address specific firm, sectoral or occupational grievances) are allowed, and on the more general conditions of job security at a given point in time (which is determined by such as the increased use of temporary employment schemes, sub-contracting, and “putting out” forms of labour service). Taken along with the data on collective bargaining frameworks and other aspects of the labour relations system, this will give us a better idea of the institutional framework within which unions evolved during the period of study. Labour–business relations centre on where collective bargaining is fixed and the role of the State in mediating these; the nature and terms of negotiated mutually binding agreements (contracts); and the forms of grievance and consultation procedures followed. Use of strikes, lockouts, slowdowns and other forms of labour or capital withdrawal is subject to State controls and often not explicitly bargained by unions and business, but they remain cards in the game. Employment protection, wage and productivity levels, labour market conditions and labour mobility, and occupational health and safety issues constitute the main areas of concern for unions and firms alike. Of particular relevance are the relations between management and unions in State enterprises, quasi-private (formerly) State agencies, and the civil service in general, all of which (negatively) figured in the reorganisation schemes proposed by labour market reformers in all of these countries. Many of the key indicators of labour–business relations also act as good indicators of organised labour’s “success” in defending the interests of its members through the period of economic reform. As already noted, the level and scope of collective bargaining and the pattern of industrial conflict can be taken as signs of the presence or absence of consent to the labour relations regime, so long as these are taken in historical and country-specific context. In addition, levels of employment, wages and conditions, so far as the latter are discernible, are signs of the labour movement’s ability to shield its members over time. To that effect, selected macroeconomic data (for example, real wages, strikes, union membership) are presented for each case during the period 1975–2000. As well as charting changes in these indicators, we offer summary findings of the institutional frameworks governing labour relations at different key points in time for each country. Collective action problems between business and organised labour in small democratic regimes may also have to do with the relative numbers of each, and more importantly, the ratio between them (what we term “organisational symmetry” in interest group representation). Because of the relative symmetry between collective agents, wages and working conditions are determined in pluralist labour relations systems by the bargaining strength of local unions

Introduction

23

and firms within market limits. Where the ratio of unions to firms (or employer bargaining agents) is high or roughly similar (that is, there are significantly more or relatively equal numbers of unions and firms), we hypothesise that regardless of union preferences both business and the State will prefer decentralised, pluralist institutional arrangements governing collective bargaining and the general contours of the labour relations system. However, when the ratio of unions to firms is low (with many more firms than unions), we hypothesise that problems of capitalist co-ordination in the face of greater union strategic co-ordination will compel businesses and the State (because of its interest in macroeconomic stability and capitalist feelings of vulnerability) to encourage more centralised, neo-corporatist or concertative frameworks governing collective action and other aspects of the labour relations system. This includes promotion of collective agent amalgamations in order to force a degree of organisational symmetry that will be conducive to better co-ordination of their strategic approaches. It should be noted that this latter framework is compatible with shop-level pluralism, as the promotion of federation, occupational or confederation (national) bargaining can still be grounded in rank-and-file ratification at the shop floor. In this essay we do not dwell on the issue, but take it as a background factor in the institutional approaches adopted in each case. The key point is one of organisational and institutional symmetry between collective agents and the agencies that oversee their interaction.41 As agents and principals, union-worker relations focuses attention on the relationship of union officials as agents and interlocutors and the rank and file as constituents. It requires focus on union density, size, party affiliation, ideological unity, material history and recent demographics. This “contextualises” organised labour, which will help explain variance in response to the structural and ideological paradigm shift. Issues of free riding and the problems associated with Michel’s notion of “iron law of oligarchy”, Lenin’s concept of vanguardism and Weber’s rationales of bureaucratic self-preservation all warn us about the authoritarian tendencies and other pathologies of complex organisations engaged in collective action.42 Recent studies point to the importance of ideological orientation in formulating union strategy, but also clearly demonstrate that the vicissitudes of pragmatism, economism, ideological divisions, politics and corruption within the labour movement add difficulties and uncertainty to the transitional moment.43 Although we cannot do justice to the instances of each case due to our broader focus, we attempt to explicate, with some primary data, the nature of this relationship in each country.

Summary To foreshadow the conclusions derived from the case study analyses which follow, we believe that a country’s location in the global chain of production,

24 Labour Politics in Small Open Democracies

a labour movement’s prior history of insertion in the political sphere, a nation’s pre-existing regulatory framework for governing labour relations, and the ideological and organisational unity of the union movement in question are the main factors which determine labour’s ability to shield its members from the adverse consequences of labour market reform. This is regardless of the ideological position of the specific labour administration in focus, because market-oriented economic restructuring has the designed effect of reducing the State’s role in labour relations to that of an enforcement agent in a privatised economy with a pro-employer bias when handling labour market dynamics. This leaves the labour movement to fend for itself using whatever organisational resources it has at its disposal, which is a product of the influences that we have outlined here and will elaborate on in the following chapters. The role of the State in particular serves as a conditioner framing organised labour’s position in each case, and the more dependent on the State and political representatives unions were prior to the market-oriented shift, the more vulnerable they found themselves during it. To see how this plays out in each of our five small open economies, we begin with a comparison of labour politics in Australia and Chile.

2 Australia and Chile

Introduction At first glance, the political economies of Australia and Chile appear to be worlds apart. Shaped by their different geographical locations, the liberalisation of regional and global trade regimes has made Chile into a major, though certainly not the biggest, player in the South American market, while Australia, along with New Zealand, uneasily but increasingly looks to strengthen ties with Asian trading partners. In terms of absolute wealth, Australia’s output in 1999 measured in GDP per capita was US$ 24,574 compared to Chile’s US$ 8652.1 In addition, the Commonwealth of Australia has been fortunate enough to have experienced uninterrupted democratic rule since gaining political independence, and its welfare system and patterns of property ownership have permitted a relatively egalitarian social structure to develop. In Chile, on the other hand, wealth has tended to be more clearly concentrated in the hands of a local elite, a process that was intensified during the country’s turn to authoritarianism between 1973 and 1990. However, our main focus is on the way in which a country’s location in the world economy shapes the political and policy choices it can make, and how the interplay of key social actors acts as a mediating factor in these decision-making processes. In this respect, the Australian and Chilean political economies have much in common to warrant their further comparative investigation. Historically, both economies have relied on a mixture of agroexport growth and resource extraction, specifically mining and quarrying a range of natural minerals in each case. These mining sectors helped to underpin comparatively strong union movements tied to distinct regional locations as well as to central peak organisations, both of which varied in their influences over time. Though in both cases agricultural workers to a great extent remained unorganised, seemingly solid labour organisations developed across most other sectors, based largely at the shop-level in the case of Chile and at the occupational level in the case of Australia. In the 25

26 Labour Politics in Small Open Democracies

wake of the Depression and World War Two, variations on import-substitutionindustrialisation (ISI) policies allowed for substantial manufacturing bases to be developed in both cases. Following the downturn of the world economy from the late 1960s, opinion-leaders in both nations believed that traditional development strategies would need to be abandoned along with the social welfare and labour relations systems that had supported these development paths. To varying degrees, organised labour was regarded by both sets of political and business elites as an obstacle to the re-orientation of the Australian and Chilean economies around “value-added” exports (Figure 2.1), agricultural and otherwise, as both nations attempted to carve out a new niche in the changing world economy. In 1975 Australia was searching for solutions to a new series of economic and social problems. In particular, the worldwide economic shocks of 1972–74 placed the country’s extensive welfare state and system of (semi-) centralised wage-bargaining in particular under intense strain. Rising unemployment, followed by attempts at wage restraint aimed at controlling inflation, was met with outbreaks of industrial unrest and a radicalisation of demands and strategies on both sides of the conflict. In contrast to the other Englishspeaking OECD countries of Britain under the Conservatives, the United States during the Reagan era, and New Zealand under the Fourth Labour government, market-oriented economic reform was slow to get underway in

Mining/quarrying (26.0%) Other (44.0%) Manufacturing (16.0%) Agriculture (14.0%)

Mining/quarrying (13.0%)

Other (38.0%)

Agriculture (18.0%)

Basic metal (31.0%) Figure 2.1

Largest export industries Australia and Chile (% of exports, 1998).

Source: United Nations Statistics Division, Statistical Yearbook. 1998 edition.

Australia and Chile 27

Australia. Although tentative moves in this direction had been made by the Whitlam Labor government between 1972 and 1975, and by the centreright Liberal-National Coalition between 1975 and 1983, it was not until the election of a new ostensibly labour-friendly government in 1983 did such a decisive break with the past begin to take shape. Despite the fact that this represented a significant shift away from the policy platforms traditionally identified with the Australian Labor Party (ALP), the pace and depth of reform even then was incremental and cautious in nature. While the policy shift presented a strong challenge to the historical relationship between the Labor Party and organised labour in Australia, these ties also ensured that the union movement was able to act as an important ameliorating force during the policy shift. The particular structural and political location of organised labour in this case meant that changes to the industrial relations framework were clearly more moderate than they might have been otherwise. By contrast, Chile in 1975 was in the early stages of one of the most successful exercises in military-bureaucratic authoritarianism seen in modern South America. Only the Argentine dictatorship of 1976–83 matched the Chileans in ferocity and murderous intent, and even then the Argentine “Proceso” was not as successful in restoring the class hierarchy that was under siege in both countries in the early 1970s. In its systematic and comprehensive nature, the Chilean dictatorship of Agusto Pinochet Ugarte stood apart not only from its South American brethren, but also from the Central American variants of capitalist authoritarianism. The high level of threat posed to the Chilean bourgeoisie by a Marxist in power led to an equally high level of class-based repression once he was overthrown.2 In Chile more than elsewhere, it was the restoration of capitalist supremacy after years of leftist challenges, culminating in the government of Salvador Allende, that became the paramount goal of military and business elites who, along with their international backers, constituted the military-bureaucratic regime that emerged after Allende was overthrown and killed in 1973. However changing in terms of specific class composition over time, they comprised the economic and repressive bases of the regime led by Pinochet from September 11, 1973 until January 1, 1990. In turn, their experiment in working class disarticulation and capitalist reconstruction became a blueprint for similar experiments throughout the region, and more importantly, is held as an exemplar of market-oriented economic reform by champions both inside Chile and elsewhere. Given their areas of specific difference and similarity at this point of departure, it is time to turn to a more involved examination of each case.

Australia Australia is the largest of our five small open economies along all dimensions. It has the biggest economy, the largest population, and it covers the greatest

28 Labour Politics in Small Open Democracies

geographical area, making it our only case study with a federalist political system. This is an important difference, because it has encouraged broader variance in union and worker experiences across different state boundaries and has thus played a significant role in shaping labour politics. However, in absolute demographic and economic terms, the country is still small, and like our other four cases was presented with a particular set of challenges stemming from the economic crises of the 1970s. In particular, the two Australasian labour market “flexibilisation” programmes under review here can be seen as both analytically distinct from and yet inextricably linked to the overall processes of economic liberalisation that took place in Australia and New Zealand during the 1980s and 1990s. On one hand, the onset of stagflation during the 1970s led to an escalation of industrial conflict, stemming in both cases from unsuccessful attempts to negotiate or control wage growth. Business groups at this point began to call for a curbing of trade union power. However, given the historical commitment to collective bargaining and a century-old tradition of State-sponsored union membership in both nations, there was considerable reluctance to depart from the existing model. During the 1970s and during the 1980s, in fact, it was politically impossible for the ostensibly centre-left governments of either of these two countries to pursue the radical labour flexibilisation strategies adopted in Chile. However, by 1991 in New Zealand and 1995 in Australia, changes in political circumstances allowed for more fundamental reforms to take place. Not only had the labour-based political parties been replaced by centre-right coalitions in government, but also labour relations reform was more clearly linked to macro-economic liberalisation strategies by this stage. The two nations, which were once regarded as having two of the highest levels of protectionism in world, came under intense pressure, from both external and internal sources, to open up. As they did so, the perceived need to “flexibilise” labour relations was deepened. During the 1980s and 1990s, Australasian governments were often reluctant to admit that their programmes were somehow connected to the “neo-liberal” reform packages that were at the same time being implemented in Europe and North America, let alone South America or other parts of the developing world. Reforming governments in Australia and New Zealand were well-attuned to the cultural and ideological contexts in which they were operating. Thus, they sought to promote their economic and social policy reforms in pragmatic rather than visionary language. This sets them apart from their neo-conservative British and US counterparts in particular. In addition, the fact that the Australasian reform processes were initiated by centre-left governments also played a role in shaping the substantive nature of the market-policy shift, conditioning the degree and scope to which changes occurred. However, despite these similarities, there was a marked divergence between the Australian and New Zealand reforms. While the

Australia and Chile 29

New Zealand case will be examined in the next chapter, the Australian reform process for its part will be discussed as a heterodox one in comparison to both the strategy pursued by its smaller neighbour from the 1980s, and that by Chile from the mid-1970s.3 The incremental and cautious approach that reforming governments took with respect to Australian labour relations reform was mirrored in the mixed nature of its structural adjustment programme in general. Economic liberalisation was a gradual process in Australia, certainly in comparison to the Chilean experience, and had started to take shape during the short-lived Whitlam Labor government years of 1972–75, even though the swing to market-oriented structural adjustment did not begin in earnest until a new Labor government was elected in 1983. The most dramatic and early reforms associated with the shift included the deregulation of the financial sector and the floating of the Australian dollar, strategies also implemented in New Zealand at about the same time, but after that, the programme was much more mixed. Easton and Gerritsen identify two areas in particular in which Labor bucked the deregulatory trend. Despite reductions in the funding allocated to traditional “laborist” areas of concern such as housing, education, social security and employment programmes, the initiatives that were taken in their place more than offset the cuts. In addition, while import tariffs were slashed, government involvement increased in areas such as industry development.4 Some market-oriented structural adjustment policies that were difficult to implement, such as the introduction of a goods and services tax, were left in the too-hard basket by Labor and had to wait for a centre-right government before they could be attempted. While the attitudes and strategies of key interest groups and the Labor Party’s relationship with them are central to our explanation of the approach that Australian governments took with respect to market-oriented reform, it is also important that we take note of the influence of political institutions, in general, on this particular course of reform. Not only does bi-cameralism provide a check on governmental power, but the fact that the Australian Senate is elected by (effectively) a proportional representational system meant that the Labor Party had to negotiate with minor parties, especially the Democrats, during its terms in government.5 Added to that, federalism also potentially constrains governmental policy-making, and more in some policy areas than others. In the field of labour relations, responsibility had always been divided between federal and state governments in Australia.6 While this meant that, as we shall see, some particular state governments helped to drive forward changes in industrial relations policy, especially during the 1990s, it also meant that state governments could help preserve some elements of the traditional arbitration system. Again in contrast, New Zealand’s system of majoritarian and unitary government provided very few checks and balances on the reform process undertaken there.

30 Labour Politics in Small Open Democracies

Through the 1980s and early 1990s the ALP was unusually successful in the electoral arena and, following conflict within the party leading to a very public leadership coup in 1993, Australia did not see the return of a traditionally pro-business government until 1996. During this period, the union movement worked closely with the Labor government in order to negotiate the pace and nature of change, and the leverage that the union movement could gain over the reform process depended not only, very obviously, on the presence of a pro-labour government in power, but also on the willingness of both sides to work towards mutual second-best outcomes. In the case of organised labour, this required centralisation in the hands of its peak organisation, the Australian Council of Trade Unions, as well as a move towards co-operative strategies or “constructive engagement” with management at the shop-level and negotiation with business groups in the political sphere on the part of the union movement as a whole. This apparently worked to organised labour’s advantage while the Labor government was in power, but left labour in a tenuous position once this government lost power. The dilemma was how to combat the pursuit of more radical “flexiblisation” strategies by the centre-right Coalition government of the late 1990s and beyond. The heterodox market-oriented reform strategy implemented in Australia over two decades, perhaps not surprisingly, delivered mixed economic and social outcomes. While it did not follow the prescriptions of the most dedicated advocates of reform, and was thus regarded as somewhat of a failure from that perspective, the consensus appears to be that while economic outcomes were not spectacular, they were at least better than those of other countries that were placed in a similar position during the same period. This will become especially clear when we come to our discussion of the New Zealand case against this backdrop. In relation to growth and productivity, Australia’s results were modest but on average better than for the OECD as a whole. The consensus also, however, is that any benefits of reform were distributed unevenly across Australian society, causing a series of social dislocations perhaps best measured by a series of national identity crises that spilled into the political arena during the latter half of the 1990s. In particular, the rise of the nationalist One Nation party combined a nostalgia for economic protectionism with a backlash against Asian immigration and Aboriginal groups seeking redress for historical injustices and inequalities. While such ethnic groups are often targets of populist outbursts in Australia, these political and cultural conflicts, combined with evidence of increasing wage and income equality, attest to the social dislocation experienced in Australia as the result of the shift to market-oriented development strategies despite the gradualist and comparatively cautious nature of this shift. It is to the story of these tensions as they played out in the arena of labour relations that we now turn.

Australia and Chile 31

Political insertion From its inception, the Australian labour movement has been shaped by its history as a British colony, and further to that, as a penal colony. The first wave of non-Aboriginal workers to arrive in Australia during the late eighteenth century consisted of convicts and indentured workers, and early labour codes reflect these circumstances. The State thus played an unusually key role in the creation and control of the labour market, the main legacy of which was that Australian governments would always take an interventionist role in industrial relations, eventually resulting in a vast array of tripartite institutions at both state and federal levels of government. Despite the market-oriented shift that took place from the early 1980s, this pattern of State–labour relations was difficult to shake off, particularly in the face of a dense union movement that represented approximately half the Australian workforce through much of the twentieth century. The early history of the union movement in Australia is made up of two distinct organisational strands that continue to be reflected even in contemporary Australian labour politics. Very early trade unions were primarily craft-based, modelled on their British counterparts, and found in the cities of Sydney and Melbourne from the 1840s and 1850s. Some of these were loosely formed into trades and labour councils, which were politically moderate, generally conservative, and inward looking. However, by the 1880s these organisations no longer reflected the experiences of many Australian workers, particularly the itinerant workforce located on the goldfields of Victoria and in the “bush” communities based around mining and shearing found in Western New South Wales and Queensland during the second half of the nineteenth century.7 The “new unionism” that sprang from these new sources of production was decidedly more radical in nature than local traditional guild and craft-based unionism.8 However, the ideological programme of this new movement, though broadly class-based, was eclectic and often contradictory. Borrowing from various syndicalist, socialist, communist and social democratic influences, several strands of thought and organisational strategy became particularly dominant. From the United States rather than Britain came the “one big union” (International Workers’ of the World) movement, which suited the style of many new unions which, though clearly rooted in particular industries, were general in coverage. The Amalgamated Shearers’ Union, which later became the Australian Workers’ Union, was the main representative of this movement and continued to be an ongoing influence in national and particularly in Queensland labour politics throughout the next century.9 In addition, while never a dominant force, the Communist Party was able to exercise considerable influence over the strategies adopted by the labour movement until the Party’s relative demise during the 1960s.

32 Labour Politics in Small Open Democracies

While these distinctive imported ideological influences can be identified, the over-riding ethos of the Australian labour movement can be characterised as “mateship”. Even socialism in the Australian context, and as far back as 1892, was described as “the desire to be mates”.10 This indigenous ideological outlook stemmed from a meeting of the individualistic liberalism prevalent in radical middle-class politics of the late nineteenth century, underpinned by the seasonal, casualised nature of work in the bush and in the mines, with an egalitarianism that was class-based in the sense that it was anti-elite and anti-authority.11 This particular brand of class solidarity was profoundly masculine, establishing the basis of a union movement that was notably patriarchal and often socially conservative.12 In addition, the mateship ethos brought a suspicion, if not hatred, of outsiders, particularly racial outsiders, which resulted in the adoption of “White Australia” immigration policies by successive governments through most of the twentieth century. This particular egalitarian ethos was also drawn on by and contributed to the early successes of the ALP, after which the “laborist” tradition came to dominate the politics of organised labour for the next hundred years. Branches of the ALP were formed, first at the state level, then nationally, after the great industrial defeat of the union movement in 1890. The Maritime Strike of that year had spread quickly to other sectors dominated by “new” factions of organised labour which then led their own defensive series of strikes through the mid-1890s, most of which were crushed decisively. These events preceded a shift to political moderation on the part of the labour movement, prompting the formation of a parliamentary representative for the first time. During the 1890s craft unions in the major cities and the bush unions of Queensland and New South Wales lent their support to state-level labour parties, which together gained representation at the first federal elections in 1901. Consolidation continued to occur through the next twenty years, with the first majority ALP federal government being elected in 1910. By 1915, the party also held power in all state legislatures excepting Victoria. Despite its origins as a socialist party of a sort, the ALP’s early programme in government included the establishment of means-tested pensions, a system of import tariffs to protect local industries, the protection of “White Australia”, and the establishment of a system of compulsory arbitration in the field of labour relations.13 This programme laid the foundations of “laborism” until the mid-1980s. Paralleling developments in New Zealand, Australia constructed a rather unique labour relations system in the late nineteenth century that had the ambitious aim of constructing co-operative relationships between workers and employers and thus permanently putting an end to industrial conflict.14 The cornerstones of this model were the compulsory arbitration systems that were adopted by state legislatures in New South Wales, Queensland, South Australia and Western Australia through the 1890s, which were soon followed by the federal government. By “compulsory” it was meant that

Australia and Chile 33

industrial disputes could be referred to a third party without the permission of both employers and workers. In addition, alternative wage-board systems were implemented by the states of Tasmania and Victoria at this time. The wage-board frameworks lacked the strict legalism and multiple layers of tripartite institutions that became associated with the arbitration model, though the latter clearly came to dominate the development of industrial relations in Australia after the enactment of the Conciliation and Arbitration Act at the federal level in 1904.15 Over time, the central function of arbitration institutions became the granting of awards to employees covered by a single occupational category, so that centralised wage bargaining became the norm in Australian industrial relations. A division of labour was developed between the state and the federal arbitration systems, with federal awards covering workers who tended to cross state boundaries, such as transport and construction workers, or who tended to move locations frequently, such as shearers, while state awards covered most other groups of employees. It should be noted, however, that the earliest features of the arbitration system were all geared towards the settlement of industrial disputes, with tribunals allocated powers to enforce decisions, and limitations placed on the scope for engaging in strikes and lockouts during the settlement of the dispute. Justice Henry Higgins, who was the President of the Commonwealth Court of Conciliation and Arbitration between 1907 and 1921, and who is identified strongly with the early development of the system, went so far as to claim that “the rude and barbarous process of strike and lockout” would become quite irrelevant in the new system.16 The general attitude held by law-makers and adjudicators was that “where machinery for the settlement of disputes by conciliation and arbitration exists, resort to strikes is unnecessary.”17 Thus, there never was a right to strike (and to a parallel extent, to lockout workers) in Australian labour law. However, this did not mean that there were no strikes, or that unions and workers involved in these strikes were necessarily punished. Despite the existence of explicit legal penalties for illegal industrial action, ranging from fines and imprisonment for involvement to union deregistration under the Conciliation and Arbitration Act, Australia did in fact have consistent outbreaks of strike activity. In general, industrial action was tolerated until it was perceived to threaten political or economic stability. Strikes activity tended to be short in duration, but frequent, with one study placing Australia fifth in a list of 20 OECD countries ranked according to the number of days lost to strike action per 1000 workers between 1961 and 1981.18 Whether or not processes of compulsory conciliation and arbitration constituted an early exercise in Western European-style corporatism is a question very much open to debate. In general, analysts of “neo-” or “democratic” corporatism rate both Australia and New Zealand low on their scales, at least in comparison to their European counterparts. For the most part, this is because arbitration systems do not necessarily encourage centralisation of

34 Labour Politics in Small Open Democracies

worker organisations and thus central co-ordination of demands.19 In fact, the requirement of the arbitration system that unions be formed along occupational lines encouraged the proliferation of small organisations and the creation of a fragmented union movement in general. In Australia, this was compounded by federalism, meaning occasional overlaps in the jurisdiction of tripartite bodies and the limitation of many worker organisations to the state level only.20 Early on in the development of the Australian system, in contrast with the New Zealand experience, disputes were referred directly to the arbitration court, by-passing possible chances of resolution through the processes of conciliation or mediation. To some extent the role of legal processes in Australasian arbitration removes much of the decisionmaking away from central government and leaves it in the hands of formally more neutral and less political bodies.21 The model also contrasts with the West European one, where the success of neo-corporatism is partially attributed to the closeness and co-operation forged between political parties and peak union and employer organisations. The Australasian system of semi-centralised wage bargaining is far more legalistic and rigid. However, by far the most distinctive feature of Australasian “corporatism” is that, at least for a democratic system, it provided for an unusual degree of State control over the internal workings of individual trade unions. Participation in the compulsory arbitration system required registration with either state- or federal-level supervisory bodies, and while participation was not originally enforced, the advantages offered to unions that worked within the arbitration system soon increased the incentive for most of the movement to join in. Registration ensured that unions gained a high degree of protection from the State and, gradually, the ability to secure a minimum wage for their members. However, particular unions could be deregistered where they posed a major threat to the interests of the State or the government of the day. In addition, registration also brought with it a set of restrictions governing the election of officials, the collection of membership dues, and the adoption of trade union constitutions. Controls over organised labour were increased as the compulsory arbitration system was consolidated, often in response to specific precipitating events and notably to increase “democracy” in trade unions, whether this related to the option to strike, or more directly to the power of union leaderships over their members.22 While many new restrictions on the internal operation of unions were genuine responses to what were by the early 1970s deeply ingrained principal-agent conflicts in the Australian labour movement, they were also open to manipulation by political leaders engaged in personal or political disputes with union officials. The depth of division, conflict and often disunity within the Australian union movement is difficult to overemphasise. Partly as a result of organised labour’s “hard” neo-corporatist initial incorporation and partly due to the structural and cultural origins of the movement itself, Australian unions

Australia and Chile 35

have often spent much of their energies waging battles with each other and with the Labor Party rather than with employers or non-Labor governments. Underlined by the fragmented nature of occupational unionism, labour movement centralisation was historically slow. Power within it was divided between the system of trade councils, which had survived since the 1860s, and the Australian Council of Trade Unions (ACTU), which had been formed in 1927.23 While the labour movement was gradually centralised, uniting around 85 per cent of all trade unionists by 1980,24 the ACTU’s history has been fraught with affiliation wars, expulsions, and bitter conflicts between left and right-wing factions. In its early years in particular, the ACTU had to grapple with and make compromises between its laborist and more conservative sectors, and the radical tradition represented by the General Workers’ Union in particular. The “Right” gained influence within labour organisations from the 1940s with the support of the Catholic Social Studies Movement and groups working within the laborist tradition. During the 1950s this faction tended to dominate, and the expulsion of the Communist Party in 1955, having itself divided into several groups after gaining prominence in the labour movement from the 1930s, was one of the Right’s major victories.25 The complex system of factionalism found in the trade union movement was mirrored in the ALP, which over time developed three formally recognised factions, Left, Right and Centre-Left. Though illustrating the extent of divisions within the union movement, this had the advantage of bringing ideological conflicts, as well as leadership battles, into the open. This was to prove an important mediating factor during the market-oriented shift. Despite periodic efforts by pro-business governments to the contrary, union membership in Australia was in effect compulsory through most of the twentieth century. This guaranteed the movement one of the consistently highest rates of union density in the world. By the turn of the twentieth century approximately 200 unions covered 100,000 workers, or about 9 per cent of the working population.26 However, this followed the long depression in which unemployment and union defeats had been common and the morale of organised labour low. Following the establishment of compulsory conciliation and arbitration at the federal level in 1904, the number of Australian workers who were members of trade unions had almost doubled by 1910. By 1940, 381 unions covered almost 1 million workers, a number which more than doubled by 1970. Through the 1940s until the mid-1970s, union density remained steady at around 55 per cent of the workforce.27 Maintaining these membership rates would have been be one of the greatest challenges faced by organised labour in Australia during the 1980s and 1990s. The history of organised labour in Australia thus so far hinges on the fact that it became increasingly party-dependent over time, even though the ALP itself was initially a creation of the union movement. In other words,

36 Labour Politics in Small Open Democracies

the fate of labour became increasingly intertwined with the fate of the ALP, particularly when it was in government. As we will discuss with respect to our other four case studies, from the perspective of trade unionists and the workers they represent, there are multiple long-term dangers associated with party-subordinate political insertion. In particular, union movements that are conditioned to putting their faith in labour-based political parties are especially vulnerable when an ostensibly pro-labour government actively participates in facilitating a market-oriented shift. This was indeed the case in Australia after 1975, though labour did not suffer as much for it as the union movement did in New Zealand (as we will discuss in the following chapter). In part, this is because the labour movement, increasingly represented by the ACTU, was willing and able to use its structural and political weight to play a greater role in negotiating the market-shift. The ALP’s system of formalised factions, fully developed by the mid-1980s, was one such mechanism by which this power was exercised. This will contrast sharply with at least the Chilean and New Zealand cases, as well as with other parallel structural reform projects carried out by pro-labour governments, of which the Peronist version of shock treatment in Argentina after 1990 and the implementation of Solidarity’s economic policy package in Poland after 1991 are but two examples. In 1975 the Australian union movement was divided and damaged after a major fall out with the Labor government headed by Gough Whitlam. In fact, 1975 is a significant year in Australian political history since that is the year in which the Governor-General of the country “sacked” the Whitlam government following a series of financial scandals and a later government deadlock over the Prime Minister’s refusal to pass the annual budget passed by the Senate. Labor lost the snap election that was subsequently called. In particular, the Whitlam era was marked by a pattern of conflict between government officials and organised labour that was to set the scene for the shift to market-oriented reform after 1984. When the Labor government came to power in 1972 one of its key objectives was to control inflation by waging a war on “second-tier” bargaining, above and beyond that which was guaranteed by industrial awards.28 Enterprise bargaining of this type took place between individual companies and the large, strategically important unions in the mining, construction and transport sectors especially. For social democratic leaderships that were not aligned with these interests, the concern was not only that the wage drift was contributing to the country’s economic problems, but also that union members in sectors of the workforce without structural weight were being left behind. A rift soon developed between the parliamentary wing of the ALP and Bob Hawke, who was simultaneously the President of the ALP and the ACTU, before going on to lead the Labor government between 1983 and 1992. The somewhat authoritarian leadership style of Whitlam was compounded by the fact that the government believed close links with the

Australia and Chile 37

trade union movement to be an electoral liability.29 Attitudes on both sides hardened, and the relationship broke down. This episode saw the ALP give electoral ground to pro-business political forces for the next decade, during which the economy suffered a steady downturn. When Labor was returned to power under the leadership of Hawke it was in the wake of a recession that had begun in 1981 and an immediate currency crisis of 1983, and both wings of the labour movement were determined not to repeat the mistakes of the Whitlam era. As a result, the ALP went into negotiation with organised labour, represented by the ACTU, well before the 1983 election. The outcome of this process became known as the “Accord”, which consisted of a trade-off between wagerestraint on the part of the union movement and a series of social and industrial policy commitments on the part of the government. The Accord was re-negotiated several times through the late 1980s and early 1990s around substantially the same themes. The first version, which lasted from 1983 to 1985, included a commitment by the federal government to maintain real wages in exchange for controls on prices and non-wage incomes. Subsequent agreements established modest across the board wage increases and a greater commitment to tax cuts and improvements in the social wage, and allowed for further wage increases based on productivity, signalling an explicit move towards the encouragement of enterprise bargaining by the Labor government. The Accord experiment has led some observers to claim that the process represented an innovative and unexpected way to implement marketoriented economic reform at the local level. Furthermore, the apparent political success of these processes has given rise to an argument that the pace of structural reform in Australia had been kept in check by a strong tradition of corporatism. However, this has raised the objection that the Accord was not an outcome of “real” corporatism since it did not provide for the “real” input of organised labour into government policy-making. However, this is debatable, and by far the more important objection to the corporatist label is that the process was bi- rather than tripartite: business was not a party to the agreements.30 Thus, the co-operative strategy was one that was developed within the labour movement itself, even if the ALP is considered as a separate and distinct body from the rest of organised labour. In addition, the commitment to the Accord process had distinct consequences for the strategies pursued by the union movement, both in its relations with business and in the political sphere. This theme will be returned to shortly. Institutional conditioners The disillusionment with the arbitration system that had begun during the early 1970s intensified during the 1980s following the structural and social dislocations resulting from the shift to broadly market-oriented development

38 Labour Politics in Small Open Democracies

strategies. Yet because of the leverage granted to the union movement by the Accord process, the Labor government was comparatively moderate in its treatment of labour relations. At the same time, however, the Accord provided for the basis of Labor’s partial decentralisation of bargaining during its terms in government. In general, Labor favoured a gradual shift to enterprise bargaining underpinned by a continuation of the award system to cover minimum labour standards and low-paid workers in particular. In a sense, this was not much more than an acknowledgment of what had been occurring under the arbitration system in the form of “over-award” bargaining anyway, though it did provide a new set of mechanisms for facilitating the process further. Specifically, the award system was both “restructured” through job reclassification, and “stripped back” in terms of which industrial issues centralised bargaining could deal with. Labor also favoured the use of “Enterprise Flexibility Agreements” which, after being incorporated into the legislative framework, signalled an explicit shift to shop-level bargaining. The declared goals of Labor’s Industrial Relations Act (1988) did not fundamentally depart from those of the Conciliation and Arbitration Act of 1904. It aimed to “promote industrial harmony and co-operation among the parties involved in industrial relations” through the provision of a “framework for the prevention and settlement of industrial disputes by conciliation and arbitration in a manner that minimises the disruptive effects of industrial disputes on the community”.31 It thus retained the familiar processes of trade union registration, compulsory unionism, and tripartite wage bargaining. Calls for “flexibilisation” of the award system were met partway by a loosening of the institutional framework to allow for the contracting out of or around industrial awards. However, the ability of employers to negotiate for productivity-based wage increases still depended to a great extent on the willingness of the Australian Industrial Relations Commission to rule in their favour. The Commission refused to do so, frustrating business groups and intensifying political pressure for change in the process, until its National Wage Case decision of September 1991. This stated that enterprise agreements granting wage increases above those negotiated through the processes of the Accord and the award system would be subjected to a “public interest” test. This test would be based on the “actual implementation” of efficiency measures designed to increase productivity levels at the shop-level. Changes in the labour relations regime that occurred under the 1988 Act and through the Accord process itself were then consolidated by the enactment of the ALP’s Industrial Relations Reform Act of 1993. Geared much more clearly towards labour market “flexibilisation”, this set of amendments also included a new set of limitations on strike activity, restricting industrial action to the period of contract bargaining. In addition, it created a more formal structure to agreements that contracted over or out of occupation-based awards. The Reform Act allowed for parties to an industrial dispute or a potential industrial dispute to enter negotiations and reach an agreement

Australia and Chile 39

that would then be “certified” by the Commission. Certified Agreements under the 1993 legislation, however, were still intended to involve individual unions, and though the intention was not to create industry-wide coverage, a system of “pattern bargaining” emerged under the 1993 legislation in which model agreements were certified, then copied throughout a particular industry in a similar pattern to the older industry-wide award system. So the intention of the new Act was also to boost the use of Enterprise Flexibility Agreements, which were wider in scope and could be negotiated with less union involvement.32 With respect to industrial action and protest, moves to put firmer and more clearly defined limits on strike activity had paralleled gradual moves towards the decentralisation of bargaining. In particular, the Trade Practices Act of 1974 placed specific bans on secondary and “political” boycotts. The restrictive nature of the wording contained in this legislation became a point of union protest, and several sections were repealed and replaced by the Labor government in 1993. The Labour Relations Reform Act in fact granted the right to strike, and lock out, for the first time in Australian legislative history, following the logic that “if the participants in the industrial relations process are to be encouraged to rely on direct bargaining rather than compulsory conciliation and arbitration to resolve their differences, they must have the right to defend their bargaining position.”33 However, the Labor government’s strategy can also be seen as a longer-term effort to define and ultimately restrain industrial action. Strike and lockout “protection” in this instance was comparatively limited, being confined to disputes arising during a narrowly defined “bargaining period” as it relates to the negotiation of collective contracts. In addition, secondary strikes were still banned under the new legislation. Thus, changes to labour legislation that took place at the federal level between 1983 and 1995 aimed to decentralise bargaining, but in a managed sense that did not fundamentally undermine existing institutional structures. However, the push for further deregulation did gather momentum after the election of centre-right government in 1996, building on initiatives that had occurred at the state level during the early 1990s. In particular, state legislatures in Victoria, Western Australia, and Tasmania had answered calls for further flexibilisation through the stripping back of the state-wide award system that had traditionally complemented central wage-bargaining. The Victorian state government led the way here, when in 1993 a coalition led by Premier Jeff Kennett implemented a more orthodox industrial relations reform package than was being carried out by the federal government. This included the abolishment of the state award system, meaning that workers who were not covered by the federal award and agreement structure were subject to a very minimal set of state protections.34 In comparison, state legislatures in Queensland and New South Wales were less hostile to organised labour’s interests through the 1990s, resisting calls for such radical change.

40 Labour Politics in Small Open Democracies

The Liberal-National Coalition government that was elected in 1996 rapidly moved to implement similar nation-wide changes, enacting the Workplace Relations Act (1996) (WRA) which removed the remainder of what employers saw as barriers to enterprise bargaining. In particular, the possibilities for the negotiation of collective contracts (Certified Agreements) without union involvement were greatly enhanced by the new legislation. Under the WRA, awards would be limited to 20 “allowable matters” and would come to act as a “safety-net” for low-income workers rather than the centrepiece of collective negotiations they had been in the past. Departing from the objectives of the now repealed legislative guidelines, the new Act would ensure “that the primary responsibility for determining matters affecting the relationship between employer and employees rests with the employer and employees at the workplace or enterprise level”, which would enable employers and employees “to choose the most appropriate form of agreement for their particular circumstances”.35 Peter Reith, Minister of Labour under the new government was more explicit about the intention of the Act, stating in introducing the Workplace Relations Bill in 1996 that the new policy would “promote a legislative framework without unnecessary complexity and unwanted third party intervention.”36 This amounted to an indication that organised labour’s traditionally special status in the labour relations regime was threatened. However, as we will discuss, even this attack was only partially successful in further splintering collective bargaining and union organisation (Table 2.1). As will be seen in the following chapter, just as Australia followed New Zealand in adopting the arbitration model at a national level in the early twentieth century, the WRA mirrored legislative developments in New Zealand that took place in 1991. Borrowing from New Zealand’s Employment Contracts Act, the new Australian labour laws gave the option for employers

Table 2.1

Collective bargaining regulations in Australia 1904–2001

Mandatory collective bargaining? Compulsory arbitration or conciliation? Cooling off period? Limited scope of negotiable issues?

Limits to duration of agreements ?

1904–88

1988–96

1996–2001

Yes

Yes

No

Yes

Yes

No

Yes Yes (to “industrial matters”, though this broadly interpreted) Yes (in practice)

Yes Yes (narrowed)

Yes Yes (narrowed further to “20 allowable matters”)

Yes (in practice) Yes (in practice)

Australia and Chile 41

to avoid having to negotiate collective employment contracts. Adopting the tone of the Victorian legislation in particular, “Australian Workplaces Agreements” or AWAs were to be private and confidential agreements negotiated between employees and their employers – the intention was for the private agreements to be negotiated between individual workers and their employers. However, there are also major differences between the Australian and 1991 New Zealand legislation. Most importantly, AWAs are still a form of registered employment contract, even if they no longer involve collective bargaining. This means that the State is, even in this case, reluctant to give up its powers of oversight and regulation, and that labour relations is still regarded as a special legal arena. The New Zealand reforms, by contrast, more readily pushed the labour relations framework in the direction of ordinary contract law. Despite its continuities with the past, the WRA did contain a number of new features that further undercut the traditional role of organised labour in the labour relations regime. These included new restrictions on the ability of unions to guarantee entry to worksites. In addition, a requirement that the Australian Industrial Relations Commission consult directly with peak labour organisations with respect to its rulings was removed, and a new possibility for the federal registration of unions at the shop-level was introduced.37 The Coalition government also placed further restrictions on the recently established “right” to strike, largely centring on the disallowance of payment of wages during the course of industrial action. In addition, the new Act raised the possibility for either a strike (on the part of an individual employee only) or a lockout to occur in pursuit of an AWA (individual) contract.38 The likelihood of an individual employee engaging in strike action struck most observers as highly improbable, although the scope for employers to use the new provisions to break with a commitment to collective bargaining was now clearly expanded. However, despite of the erosion of the system that had occurred since 1983, even the reforms enacted by the Liberal-National Coalition headed by John Howard did not completely destroy the arbitration framework. By the late 1990s, a three-tiered bargaining structure governed Australian industrial relations, in which the importance of the award system had been reduced in favour of shop-level and “individual” bargaining arrangements. To clarify the situation, which had become rather complicated by this stage, individual workers could be covered by awards only, either registered or unregistered collective agreements with or without union involvement, or either registered (Australian or state-level Workplace Agreements) or unregistered (common-law) individual agreements. For unions with respect to their rights within the workplace, and for workers with respect to their pay and conditions, the level at which they were covered by state or federal labour legislation mattered a great deal (Table 2.2). But, as Dabscheck points out, the Australian system had always had three levels, and even the WRA envisaged a role for

42 Labour Politics in Small Open Democracies Table 2.2

Strike regulations in Australia 1904–2001 1904–88

1988–96*

1996–2001

Right to strike?

No in theory, but often yes in practice

Yes, but restricted to a limited set of circumstances

Replacement workers allowed during strike? Right to lockout?

No

No

Yes, but further restricted to a limited set of circumstances No**

No in theory, often yes in practice

Yes, but restricted to a limited set of circumstances

Limits on strike duration?

No

Mandatory dues deductions? Dismissal without severance? Non-economic strikes allowed?

Yes

No (though initiation confined to specific bargaining period) Yes

Yes, but further restricted to a limited set of circumstances No (though initiation confined to specific bargaining period) No

No

No

No

In theory no, but often occurred in practice

No

No

*Incorporates period of Labor’s Industrial Relations Act 1988 and the Reform Act 1993. Though there were significant changes made by the Reform Act, the general trend remains the same. **Although this provision was put to the test in a spectacular sense during the 1998 Waterfront Dispute.

awards and state involvement in contract negotiation and enforcement. The struggle was simply over which of the three tiers would be of most importance at any given time.39 The pace of reform slowed down after 1997, with the federal government backing off somewhat after the explosion of worker protest on the waterfront during 1998 and in response to emerging evidence of flagging government support as it was revealed in by-election and state-level electoral results. Although a “second wave” of industrial relations reform was proposed, including moves to exempt some types of businesses and exclude some types of workers from unfair dismissal procedures, labour movement and political opposition slowed the course of this reform package.40 While the government was re-elected in 2001, with further labour market decentralisation remaining on the agenda, other issues began to dominate public debate. Meanwhile, the ALP re-oriented its focus towards centralised bargaining shortly after the implementation of the WRA, while the Liberals concentrated their efforts on expanding the scope of individual rights under the existing framework.

Australia and Chile 43

Agent-principal issues A distinguishing feature of the development of the trade unionism in Australia after 1975 is that the market-oriented shift, or at least the negotiated nature of the transition, substantially centralised the labour movement and increased the political weight of the ACTU.41 This was a process that had begun much earlier than 1983, as the peak body had the unusual advantage, in contrast to New Zealand in particular, of representing workers across most industries in both the public and private sectors. The experience of the Whitlam years and the subsequent adoption of a market-oriented strategy, albeit of a heterodox variety, on the part of the Labor government convinced organised labour that unity was needed if the transition was to work in its favour. Such ambitions however were difficult to realise given the history of conflict and inter-union rivalry that had marked the history of Australian unionism. In the first few years that the ALP was in power, a familiar pattern of disunity could be observed. Demarcation disputes continued, creating tension between the Builders Labourers’ Union and most of the rest of the ACTU affiliates, and a series of conflicts erupted over the admission of several “right-wing” white-collar unions into the ALP, which deepened existing factional lines.42 It was not until the situation became more pressing in the late 1980s with the approaching possibility of labour law reform that a comparatively unified response was developed. In 1987 the ACTU leadership and a set of government officials embarked on a mission to investigate Western European economic development strategies and the role of trade unions in facilitating them. The result was the 1987 report Australia Reconstructed which was to form the basis of ACTU policy in the following years.43 The mission reported back that the Australian labour movement needed to adopt “strategic unionism” in line with West European models, which it defined as a shift away from a narrow focus on wages and conditions towards the advocacy of centrally co-coordinated and integrated development strategies, participation in tripartite institutions, a commitment to growth and “wealth creation”, the development of strong workplace organisations, and the extension of trade union education and research services. Strategic unionism, the report argued, would assist countries such as Australia in adjusting to large external shocks without high unemployment and inflation. In addition, it was suggested that the Accord process would form the basis of such a strategy. “The Mission has, from its observations, confirmed that the Accord processes must be deepened and broadened. Too many still see it only as a temporary mechanism for restraining real wage growth with little restraint on other incomes and prices.”44 In fact, although some union activists did feel uncomfortable about the direction being pursued by the ACTU, these voices remained on the far left

44 Labour Politics in Small Open Democracies

of the movement during the late 1980s and were quickly marginalised. Fears that rhetoric about co-operative strategies would cede the terms of the debate to pro-business, pro-deregulatory groups gave way to fears about what disunity could mean for the Accord process, and thus for the main source of leverage that the union movement had to exercise power over the federal Labor government. In addition, as MacDonald and his co-authors point out, there might have been other ulterior motives for some sectors of the union movement to argue for the shift to enterprise bargaining. Specifically, given the divisions within the federal industrial relations tribunal at the time, some of the “better placed unions” wanted the freedom to pursue wage increases “more aggressively”.45 During the 1987 Congress, despite the concerns of some delegates that current limits placed on second-tier wage increases might lead to a decline in real wages, Australia Reconstructed was adopted with a surprising lack of opposition. Contemporary commentators were enthusiastic: “The unity of purpose displayed will aid the ACTU and unions in their quest to reorganise the structure of the union movement and to pursue major change in economic and industry policy.”46 In other countries, the decision to enter a relationship of “constructive engagement” with potential enemies resulted in the co-option of organised labour and an intensification of the market-oriented shift. According to some academic analysts, this is indeed what happened in the Australian case: the ACTU “sold out” its membership and paved the way for the postLabor government developments of the late 1990s.47 However, while the ACTU did move politically to the right during the course of the policy shift, the incremental nature of change within the labour relations regime along with the social and macroeconomic data presented below illustrates the fact that the union movement was able to provide at least some degree of protection for its members. This is partly because even though by 1987 the ACTU had gained a greater importance in national politics than it had in the early 1970s, a second layer of sectoral organisation and (direct) action continued to thrive below the layer of ACTU–ALP compromise. Despite the liberalisation that was taking place through this period, the historically militant unions in the mining, construction and transport sectors in particular still carried enough strategic importance in the Australian economy to prevent the implementation of employer flexibilisation strategies at the shop-level. In addition, these unions took advantage of the increased emphasis on enterprise efficiency in order to gain real wage increases for their members above what was guaranteed by the Accord and the remainder of the award system.48 Resistance to the industrial relations policies of the Liberal-National Coalition was particularly strong in some sectors of the labour movement, leading to a series of conflicts between rank-and-file union members in traditionally militant organisations and their increasingly moderate leaderships. These conflicts tended to centre around the election of union officials, most notably in the Maritime Union of Australia (MUA)

Australia and Chile 45

during and after the Waterfront Dispute of 1998. Such vigorous internal union battles illustrated that although major divisions over ideology and strategy still haunted organised labour in Australia, the tendency for reconstructed labour movements, particularly those aligned with Third Way, New Labour or New Democrat politics in the English-speaking world to gloss over class-based ideological conflicts was not possible here. Despite these features, which we cautiously regard as strengths, the Australian movement did suffer a series of defeats as a result of the shift to market-led development strategies after 1983. Principally, these were in the arena of union membership, which had mimicked international trends and entered a period of steady decline. In 1975, during the turmoil of the Whitlam government, 56 per cent of all employees were union members. This level of union density remained steady, even rising very slightly, during the first term of the Hawke Labor government. Membership then began to drop after the implementation of the Industrial Relations Act in 1988, most decisively from 54 per cent in 1989 to 41 per cent in 1990. Just under 3 million or 35 per cent Australian workers were still members of a union by 1994, and by 1997 union density had dropped to 25.7 per cent.49 This meant that while unionised workers generally did better than their non-unionised counterparts during the policy shift, the ability of the labour movement to defend the workforce as a whole had seriously been eroded as a result of membership decline. In addition, losses were experienced unevenly across industrial sectors. Union membership in mining, for instance, was more or less maintained until 1990, rising to a rate of 71.5 per cent in 1986 from 64 per cent in 1982 before dropping back to 62.9 per cent in 1990.50 On the other hand, the transport sector suffered losses of around 18 per cent over the same period. After 1990 union density rates then actually dropped most significantly in the mining sector, from 63 per cent in 1992 to 39 per cent in 1996, compared to only a 2 per cent loss in the retail sector.51 This may be attributable to the aggressive pursuit of shop-level, and later individual level employment contracts, on the part of specific, large, companies. While union membership in the public sector was always higher than in the private sector as a whole, both sectors suffered losses (Table 2.3). Union density in the public sector dropped from 72.9 to 66.8 per cent compared to a drop from 38.6 to 30.8 per cent in the private sector between 1982 and 1990.52 Measurements taken at the shop-level also reflect the fact that the decline in union density from the late 1980s was experienced variously across different industries. The Department of Workplace Relations and Small Business surveys of 1990 and 1995 revealed that the number of worksites that had no union presence rose from 20 per cent in 1990 to 26 per cent in 1995. Those workplaces that had union members but no union delegates present dropped from 27 to 22 per cent, while sites with union and delegate presence dropped very slightly from 53 to 52 per cent.53 The collapse in

46 Labour Politics in Small Open Democracies Table 2.3 Union membership, density and number of unions in Australia for selected years 1911–97

1911 1921 1931 1941 1951 1961 1971 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Union membership (millions)

Number of unions

Union density (%)

– – – – – – – – 2.51 – – – – – 2.57 – – – 2.59 – 2.54 – 2.66 – 2.51 2.38 2.28 2.25 2.19 2.11

– – – – – – – – – – – – – – – – – 323 326 316 308 299 295 – – – – – – –

27.9 51.6 45.0 49.9 60.0 57.0 52.0 56.0 55.0 55.0 55.0 55.0 55.0 54.0 56.0 56.0 55.0 50.6 50.0 49.0 48.0 47.0 48.0 47.0 44.0 43.0 38.0 35.3 34.7 –

Sources: Australian Bureau of Statistics Labour Force Survey; and Survey of Union Members, cited in D. Peetz, Unions in a Contrary World. Cambridge: Cambridge University Press, 1998, Tables 1.2: 6 and 1.3: 26; and Australian Bureau of Statistics, Labour Statistics, 1990 edition for data on number of unions.

union presence was experienced more heavily in smaller worksites of 20 to 49 employees, and more heavily in the private sector than in the public, with union representation in the public sector staying more or less constant through the early 1990s. Between 1990 and 1995, the percentage of public sector worksites with no union presence rose from 0 to 3; the rate of those with union members but no delegates fell from 13 to 14 per cent; compared to those with union delegates which fell from 85 to 84 per cent.54

Australia and Chile 47

One other significant development in Australian trade unionism during the shift to market-led development strategies was the trend towards union amalgamation, prompted by a requirement of the 1988 Industrial Relations Reform Act that registered trade unions have at least 1000 members (rather than the previous requirement of at least 100 members). In 1987 there were 316 registered unions; by 1989 this had been reduced to 299. This development continued so that by 1993 only 188 unions, and by 1996 only 132 unions remained in existence. The trend can be partly attributed to the drop in trade union membership, and the subsequent demise of small and vulnerable unions, but it also represents a conscious effort on the part of organised labour to reverse its history of fragmentation altogether. Union amalgamations of this sort were made possible through the shift away from strictly defined occupational unionism in the new industrial relations environment. This posed a threat and provoked much resistance from some traditional sectors of the labour movement, partly on the grounds that it would help facilitate the shift towards shop-level bargaining and thus further undermine centralised collective bargaining. However, despite the growth of enterprise bargaining in Australia after 1988, trade union amalgamations have not resulted in smaller and more isolated bodies as a general rule. In 1988, 69 unions had a membership of less than 250, representing 22.4 per cent of union members overall; by 1996, 0.1 per cent of unionists belonged to 33 unions with less than 250 members each.55 In addition, the number of unions operating in one state only dropped from 156 in 1991 to 83 in 1996.56 At the shop-level, these developments resulted in fewer number of unions operating in single work-sites, a trend which was particularly true for the “infrastructure” group of industries: gas, electricity and water supply, communications, and transport.57 Relations with business During the market-oriented policy shift, and under the Hawke and Keating Labor governments in particular, traditional organised Australian business was relatively restrained in its pursuit of “flexibilisation” strategies. Historically decentralised, business groups took some time to develop a coherent lobbying strategy for change. The shift in political relationships that was an inevitable result of economic policy change did however open up the opportunity for a new series of coalitions and pressure groups to emerge. One of the most important of these was the Business Council of Australia (BCA), which was formed during the 1970s but attained national prominence during the Hawke Labor government, becoming the key collective voice of business through the late 1980s and 1990s. Yet although it represented larger rather than smaller businesses and was clearly interested in the promotion of market-led development strategies, the BCA was relatively cautious in its approach to labour relations in general and organised labour in particular. In contrast to much of the rhetoric voiced in New Zealand at

48 Labour Politics in Small Open Democracies

the same time, the BCA’s demands for reform were aimed at the “inflexibilities” of the award system, rather than union presence in the workplace per se. During the three terms of the Labor government, the group called for a shift to enterprise bargaining that definitely envisaged the continued need to enter negotiations with trade unions. Decentralisation, rather than decollectivisation, was the goal, which would have required a shift away from occupational to industry and shop-based unionism through amalgamations and union reorganisation at the enterprise level.58 At the same time, however, in the early 1990s a series of more militant demands came to be heard from then established lobby groups such as the H. R. Nicholls Society, a private think-tank, as well as individual multinational manufacturing, mining and transport companies operating in Australia. The H. R. Nicholls Society, formed in 1986, is notable for its specific focus on labour market deregulation. Participants in and contributors to the Society’s conferences and publications painted a picture of Australian industrial relations in which individual businesses as well as entire industries were under constant attack from militant unions determined to undermine attempts to restructure and flexibilise the workplace that were designed to make productivity gains. Even here, however, the immediate concern was to prevent any further concentration of power in the hands of union officials through a process of union “reform” rather than the removal of trade unions from the collective bargaining process altogether.59 Such developments prompted centre-right political forces to revise their labour relations policies, which then permitted more radical employer strategies to be implemented at the shop and industry-wide levels. During the 1993 election campaign the Liberal-National Coalition proposed an abandonment of Labor’s incremental approach to decentralisation in favour of a reform package that would abolish awards and compulsory arbitration altogether. The attachment of Australian voters to centralised wage bargaining at least in some form has been cited as a contributing factor, if not one of the main reasons, to why the Coalition then went ahead to lose the 1993 election.60 The Coalition revamped its proposals before enacting the WRA in 1996, the provisions of which were designed to meet further demands for labour market “flexibilisation”. Infamously, the Waterfront Dispute of 1998 illustrated the extent to which the new pro-business government was prepared to work with transnational companies in order to further business goals. Following over a decade of attempts to “reform” the waterfront industry, Patrick Stevedores used a complex series of corporate manoeuvres along with the new provisions of the Coalition’s 1996 legislation to lock out members of the MUA, attempting to replace them with a non-union workforce. Yet, mainly because of the industrial action that followed, which was not limited solely to MUA members, the Australian courts largely ruled in favour of organised labour in this case despite the anti-strike provisions contained in the WRA.61

Australia and Chile 49

This episode was a clear test of how “flexible” labour relations in Australia had become. Patrick’s took the 1996 legislation to mean that they now had the right to lock out and replace striking workers, but although employer rights had been strengthened under the tightened strike-related provisions, the courts were unwilling to take this to a logical anti-union conclusion. Institutional and macroeconomic changes led to a decrease in union membership, which in turn promoted a collapse in collective bargaining after 1990. In 1989, the proportion of employees covered by awards and/or other collective agreements was around 85 per cent; by 1990 it had dropped to 80 per cent, although this is still a high rate by any country’s standards. Again, reflecting how the shift to market-oriented labour relations impacted variously across different sectors of the workforce, public sector collective bargaining coverage still remained at more or less 98 per cent in 1990. The public sector did however begin to make use of productivity provisions over and above wage guarantees offered by the award system, with 35 per cent of Australian public service employees covered by certified enterprise agreements by 1997.62 Crucially, award coverage in manufacturing remained at 80 per cent during the early 1990s.63 Illustrating the extent to which employment contract negotiation in Australia remained tied to the award system during the mid-1990s, 96 per cent of workplaces still had at least some employees covered by state or federal awards in 1995. Of those with over-award or enterprise-based agreements, 39 per cent of employers reported that they were party to agreements that either partially or wholly overrode occupational awards, while 67 per cent of shop-level agreements only overrode some aspects of the occupational award.64 By 1996, after the adoption of the Workplace Agreement framework in some states, though not long enough after the enactment of the federal WRA to assess the impact of AWAs on the federal award system, 70 per cent of workers were still party to a collective contract. Thirty-five per cent of these employees were covered by awards only, 30 per cent by a combination of awards and registered enterprise agreements, and 5 per cent by shop-level contracts only. The remaining 30 per cent of the workforce was covered by individual or common law agreements.65 By the end of 1997 however, at which point the impact of the Liberal-National Coalition government’s labour relations reforms could start to be measured, only 4493 employees at 231 workplaces were covered by AWAs. Most of these workers were located in very small or “micro” workplaces apart from a group of workers employed by the Rio Tinto (mining) Corporation and the US-based Keystone Foods.66 In addition, out of the 26 per cent of workplaces that had at least some of its non-managerial employees on individual contracts, most had no more than 20 per cent of their employees covered by such agreements.67 Despite the widespread welcoming of the push for “deregulation” in 1996, employers in general were in fact very reluctant to embrace the AWA

50 Labour Politics in Small Open Democracies Table 2.4

Levels of collective bargaining in Australia, May 2000 Awards only

Collective agreements

Individual agreements

Registered Unregistered Registered Unregistered Public sector 9.8 Private sector 26.8 Both sectors 23.2

83.2 22.3 35.2

1.6 1.5 1.5

3.0 1.5 1.8

2.5 47.8 38.2

Source: Australia Bureau of Statistics, Employee Earnings and Hours Australia. Cited in MacDonald, Campbell and Burgen, 2001: 7.

framework. By March 2001, only 2 per cent of the Australian Workplace was covered by this formalised system of “individual” bargaining.68 A slimmed majority of workers were still covered by collective contracts, though the reliance on the award system had clearly been eroded. As Table 2.4 quite clearly shows, collective bargaining remains the norm in the public sector, while the State still retains a key role in the oversight of collective bargaining across both the public and private sectors. The impact of the reduction in collective bargaining across different groups of workers is remarkably clear-cut. In general, the Accord process did what it set out to do and restrained real wage growth. However, unions were able to negotiate greater wage increases and better conditions for their members so long as they could retain those members after the introduction of enterprise flexibility agreements in 1988. Average weekly total earnings grew by an average of 11.64 compared to an average growth of the consumer price index of 9.92 per cent between 1978 and 1983; while only rising by an average of 6.88 between 1983 and 1988 compared to an average rise in the consumer price index of 7.26 per cent.69 Then, as the industrial award system came to be regarded by the federal government as a “safety net” rather than as a central wage-fixing device, wage growth became increasingly reliant on bargaining at the shop-level (Figure 2.2). This trend became particularly clear after the fully fledged shift to enterprise bargaining in the early 1990s and the introduction of the AWA framework in 1996. During the year to September 1999, unions across all sectors negotiated an average wage increase of 4.1 per cent, compared to the 3.1 per cent delivered by non-union collective negotiations and 3.1 per cent by AWAs. This pattern is exaggerated in the private sector, with 4.3, 3.3 and 3.6 per cent wage increases guaranteed by union, non-union, and individual agreements respectively.70 Overall, studies tended to suggest that the difference between being organised and not being organised was experienced most significantly by male workers in the bottom quintile of wage-earners.71 This emphasises the tendency towards wage inequality that has occurred through the decentralisation of bargaining in Australia, as well as elsewhere. Confirming international

Australia and Chile 51

250 200 150 100 50 0 1976 1978 1980 1982 1984 1985 1987 1989 1991 1993 1995 Wage growth Figure 2.2

Effects of the Accord on wage growth Australia 1976–95.

Source: International Labour Organization, LABORSTA database, Table 5A. Prior to 1985 index base 1976 = 100; from 1985 index base 1985 = 100.

experiences, the main changes have been in the distribution of earnings across middle wage-earners, although in Australia there has also been concern for the sectors earning the least, as the stripping back of award guarantees made this group suddenly extremely vulnerable. The framework of centralised bargaining that had been built around the award system did not only guarantee minimum wages. It also laid down a set of working conditions that could be expected by workers in a particular occupation across an individual state or across the entire country. Objectives of “flexibility” and “efficiency” on the part of employers were often achieved through the erosion of such guarantees during the shift to enterprise bargaining. Provisions that used to be standard in industrial awards have been contracted out of in the new forms of registered agreements and new ones have been established in their place, though this employer strategy is more successful where union involvement can be avoided. During 1996–97, 85 per cent of non-union contracts contained a provision for flexibility in terms of clock hours, compared to 71 per cent of union contracts. Fourteen per cent of collective contracts negotiated without union involvement provide for overtime to be paid at a single rate, compared to 1 per cent of union-negotiated contracts.72 Another widespread example of employer “innovation” includes the introduction of productivity and performancebased payments across sectors as diverse as metal manufacturing, transport, public administration, and construction.73 During the late 1990s, 29.6 per cent of AWAs link wage increases to performance, compared to 16.9 per cent of union agreements and 8.9 non-union agreements.74 The higher rate found in union-negotiated agreements here might reflect the increased adoption of such strategies in the public sector. The “flexibilisation” of working time arrangements has also clearly contributed to a rise in the use of casual and part-time labour. While such

52 Labour Politics in Small Open Democracies

workers have always played a significant role in the Australian economy, the new casualised workforce differs from the traditional itinerant workforce in that it tends to be located in the urban service environment. The proportion of the employees engaged in full-time, permanent employment declined from 67 per cent of the workforce in 1982 to 57 per cent in 1995. In 1995 this included the 14 per cent of workers that were employed under part-time, casual arrangements.75 The concern here is that, as the award system was gradually stripped back, this group of workers were more likely to experience the negative consequences of new changes in working conditions.76 Labour relations legislation in both Australia and New Zealand has generally been concerned with reducing instances of industrial conflict. Early in its history of operation, the compulsory arbitration system was believed to have achieved this goal. However, following the economic decline from the late 1960s, levels of strike and lockout activity increased dramatically. During the shift to market-oriented labour relations, new restrictions placed on the right to strike, as well as the actual enforcement of old restrictions, were designed to curb the escalation of conflict and were met with mixed success. While under the arbitration system most strikes themselves, particularly of the political variety, had never actually been legal, they were tolerated for the sake of the long-term survival of the industrial relations system. While the Accord assisted in reducing strike action during the 1980s,77 and new legislation placed further limits on industrial protest during the 1990s, levels of strike activity in Australia were still relatively high, particularly by the European standards that the ACTU was attempting to model its strategy on. Rates of days lost to industrial stoppages ranged from 223 per 1000 employees in 1987, to 265 in 1991 down to 79 in 1995 and 87 in 1999 (Table 2.5).78 In particular, the decrease in strike action could be observed in those industries in which the “giant” unions dominated. For example, in the mining and quarrying sector the number of days lost to industrial stoppages decreased by approximately four times between 1975 and 1997 after peaking in 1980, while construction experienced a very similar though more gradual decrease over the same period.79 A general reduction in outbreaks of industrial conflict can, in part, be attributed to the model of “new” or “strategic” unionism and collaborationist management strategies implemented at the shop-level since the late 1980s. However, the trend also depended on falling union membership rates in general, and the tighter controls placed on strike action, particularly those of the political variety, by the new labour relations regime. Thus, any analysis that takes a reduction in the number of days lost due to industrial conflict as a sign of worker consent, and especially, union consent to the industrial relations system, must be taken with a grain of salt. The political fallout from the 1998 Waterfront Dispute in particular illustrates the extent to which organised labour was unwilling to accept further industrial relations reform. Patterns of continued collective bargaining coverage, relative to the

Australia and Chile 53 Table 2.5 Number of disputes and number of days lost due to strikes and lockouts in Australia 1975–2000

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of disputes

Number of days lost

2,432 2,055 2,090 2,277 2,042 2,429 2,915 2,060 1,787 1,965 1,895 1,754 1,517 1,508 1,402 1,193 1,036 728 610 560 643 543 447 519 731 698

3,509,900 3,799,400 1,654,800 2,130,800 3,964,400 3,319,700 4,189,300 1,980,400 1,641,400 1,307,400 1,256,200 1,390,700 1,311,900 1,641,400 1,202,400 1,376,500 1,610,600 941,200 635,800 501,600 547,600 928,500 534,200 526,300 650,400 469,100

Source: International Labour Organization, LABORSTA database, Tables 9A and 9C.

Chilean case, which we turn to shortly, appear to reinforce this picture. Government and business leaders, despite their successes in the late 1990s, remained constrained by the presence of a weakened though relatively well-organised labour force and moreover, by the historical commitment to at least some level of tripartite bargaining on the part of State institutions and structures. Macroeconomic and social indicators Commentators on Australian politics, especially native Australians, tend to downplay any positive aspects of Australian economic performance and focus squarely on the failures of the past two decades (Table 2.6). Those who are sympathetic to social democratic concerns argue that structural adjustment has occurred at the expense of workers, the middle classes, and the welfare system,

54 Labour Politics in Small Open Democracies Table 2.6

Macroeconomic indicators in Australia 1975–99

Average annual growth (%) Average annual change in consumer price index (%) Official unemployment (%)

1975–79

1980–84

1985–89

1990–94

1995–99

2.5 12.26

2.64 9.66

3.88 7.36

2.38 3.04

4.2 1.98

5.6

7.62

7.58

9.58

8.16

Sources: OECD, National Accounts. Volume 1, for years cited; Australia Bureau of Statistics, Average Weekly Earnings, Australia 1945–90. Cat. No. 6350.0, Canberra: Commonwealth of Australia, 1992; and OECD, Historical Statistics 1970–1999. Organisation for Economic Co-operation and Development, 2001.

leading to increased poverty and inequality. Pro-business and conservative commentators argue that the market-oriented process has not gone nearly far enough. In making this argument, they point to what are perceived as still overly strong unions, continuously high strike rates, and the struggles of both small businesses and overseas investors attempting to work within a still overly regulated framework. While a core of truth can be found in both of these arguments in that much has changed and yet much has stayed the same, both sides of the debate ignore the fact that the Australian economy is actually doing much better than many other economies in the OECD as well as elsewhere in the world. Growth has remained reasonably steady, inflation has steadily decreased during the 1990s, and only unemployment remains somewhat high in comparison to the most successful economies of the past decade. The general health of the economy, at least in comparison with some of its neighbours in the Asia-Pacific region, caused the OECD to comment on Australia in the wake of the Asian financial crisis of 1998–99: “By mid-1999, the current expansion had entered its ninth year, making it the longest upswing since the 1960s. It was accompanied by robust employment growth, a substantial reduction in unemployment, a pick-up trend in productivity and much lower inflation than experienced at any time since the early 1960s, factors which underpin the sustainability of the current expansion.”80 Similarly, considering especially the gains in labour productivity made in Australia during the period of structural adjustment, another analyst concludes that during the 1980s at least, “labour market outcomes in Australia were clearly superior to those in New Zealand, and very good in absolute terms”.81 It is also true that, like all market-oriented structural adjustment projects, the benefits of success have been distributed unevenly. While Labor paid more attention to welfare concerns than many “neo-liberal” reformers, rising inequality is likely to be deepened with the implementation of such reforms as the Goods and Services Tax after 1996. However, and while it is the case that the United Nations Human Development Report may not adequately control

Australia and Chile 55

for inequality – it ranked Australia second in the world in 2001, just behind Norway, and up from fourteenth place in 1997. Summary The degree of leverage that Australian organised labour was able to exercise over the market-oriented reform process in general and the decentralisation of labour relations in particular was the product of a specific set of institutional developments embedded in a political culture that traditionally favoured the implementation of moderately pro-labour development strategies. While the compulsory arbitration or “Australasian” model of industrial relations had tended to increase party-dependence and fragmentation on the part of the union movement, the unity of purpose displayed in some specific sectors and at some particular crucial moments permitted unions to act as important mediating influences on the market-oriented shift. Most importantly, the experiences of organised labour under the Whitlam government established enough political will on the part of both the Labor Party and the peak union organisation upon which the Accord process could then be based. During the 1980s and 1990s the Australian labour movement attempted, with some comparative success, to balance the dangers inherent in collaboration with political and business elites against the possibilities of alienation from the policy-making process that resistance to the decentralisation of collective bargaining might have entailed. On one hand, losses were incurred due to falling rates of union membership, a reduced scope for engaging in industrial action, eroded working conditions, and increasing, though not dramatic, levels of poverty and inequality in Australian society. On the other hand, organised labour was able to retain a special legal recognition and place in the labour relations regime that was only partly undermined by the promotion of “individualised” forms of bargaining during the late 1990s. Importantly, a stream of centralised collective bargaining remained, underpinning new forms of collective negotiations at the shop-level. This continues to permit the union movement some degree of leverage in the political and economic spheres, at least in comparison to the Chilean case that we now turn to. Above all, the gradual and from the perspective of the reformers, incomplete, nature of the shift places Australian labour in a stronger place from which to bargain next time around. However, the union movement’s ability to push any further changes in its favour will depend, to a great extent, on the re-election of a pro-labour government in the near future.

Chile 1975 marked the beginning of the Chilean experiment with “neo-liberal” economic policy, even though it occurred two years after the coup d’etat that brought the military junta to power. Prior to that, the regime concentrated

56 Labour Politics in Small Open Democracies

on enforcing the State terror that allowed them to destroy the class enemies it held responsible for the assaults on the traditional Chilean way of life. These included students, left party activists and working class militants. Foremost were union leaders who comprised an integral part of the Unidad Popular (UP) coalition that had helped Allende gain power, and who extended down to the shop floor in several strategically important sectors of the economy, including mining and consumer non-durable manufacturing. Given the magnitude of the task, it was not until 1975 that the purge had progressed far enough so that the process of eliminating its root causes could be addressed – and a new foundation installed. The dictatorship exhibited four distinct phases of development during its 17 years in power. During 1973–75 it engaged in a purgative phase which, as mentioned, attempted to “forcibly extirpate” the malignancies and pathologies that the regime held responsible for the debacles of the previous decade.82 The second phase, beginning with the structural opening in 1975 and culminating in the constitutional plebiscite of 1980, constituted the foundational moment, in which the new structural and ideological bases of Chilean society were promoted and the national economy re-inserted in the capitalist world system. The third phase, from 1980 to 1984, marked the era of regime consolidation in which the transformations in Chilean society were codified in the 1980 Constitution and socially reproduced via the gradual easing of repression and its replacement with a new legal edifice and the dissemination of market-driven individualist social philosophies. The final phase, that of regime decline beginning in 1986, marked the period of top-down devolution of power that led to the elections of 1989. Pinochet had hoped to rig and win the 1988 plebiscite that would have confirmed him in office for another eight years as the first civilian president after the junta exited power in 1990. However, his defeat and the subsequent defeat of his hand-picked candidate, Hernan Bücchi, in the December 1989 elections, saw the resurrection of civil society and the reformation of a democratic-minded coalition that included remnants of the old left and union vanguard amid the resurrected mainstream parties and new generation of anti-authoritarian activists. We shall discuss each phase as part of our examination of the various dimensions of labour politics during this period and after, once the current democratic regime was installed. For the moment, we briefly return to the structural reforms of 1975 and their consequences for society and the labour movement. The structural reform plan announced in 1975 deregulated the financial market, devalued the currency and dropped import tariffs on a variety of consumer goods while easing the terms of foreign capital investment in previously nationalised sectors of the economy such as copper, shipping and forestry. It eliminated minimum wage regulations and voided existing wage bargains and other provisions of collective contracts that interfered with managerial prerogatives, and opened up State enterprises to private purchase.

Australia and Chile 57

Additional measures in 1979 eliminated State-managed pension and social security programmes and privatised the insurance industry. Using tax credits, and low land and physical asset prices, it encouraged foreign investment in capital-intensive and new agricultural production. The effect was immediate and dramatic.83 Most domestic consumer industries folded, whether they had been nationalised or not. Industrial production fell from an index figure of 117.6 in 1972 to 85.0 in 1975, and remained 8.3 per cent below 1972 rates in 1986.84 Textiles, glass, small-scale metal works, plastics, and electronic manufacturing were particularly hard hit. Manufacturing as a percentage of the GNP dropped from 25 to 21 per cent between 1970 and 1981, with industrial employment declining 3 per cent.85 Unemployment averaged 19.6 per cent for the twelve years between 1974 and 1985, more than triple the historic rate,86 with industrial employment experiencing the sharpest declines. In 1983 the unemployment rate exceeded 30 per cent, which had a direct impact on wage levels. Real wages fell more than 20 per cent during the first two years after the coup, then remained relatively stagnant for the next decade.87 Using 1970 wages as the index standard (1970 = 100), wages dropped an average of 15 per cent by the end of the decade (1980 = 85.5), levelling off between 85 and 90 on this scale by 1990.88 This initiated a steady, gradual rise through the nineties, slowing between 1994 and 1996. Most wage increases were in lower paid unorganised sectors of the economy. At the same time, income differentials increased. Between 1971 and 1973, the poorest 40 per cent of the population received 12.90 per cent of the total national income, while the richest 20 per cent received 50.50 per cent of the national income. In 1985 these figures were 9.33 per cent (poorest 40 per cent of income earners) versus 60.94 per cent (richest 20 per cent of income earners). The middle sectors saw a decline in their share from 36.60 to 29.74 per cent during the same period.89 Even by the time of the transition to democracy in 1990, real wages remained below 1970 levels, unemployment continued to be double, and union density rates were half that of the Allende years. The overall picture was depicted by economist Alejandro Foxley (later Minister of Economy in the Aylwin government that replaced the dictatorship in 1990): “In a nutshell, the results of the Chilean monetarist experiment are negative in almost all aspects. Drops in production, investment, and employment had been accompanied by a strong deficit in the balance of payments and an over indebtedness with external sources by 1982. Unemployment has risen dramatically, and the income indicators show a sharp regression for wage earners.”90 The financial sector saw a proliferation of private conglomerates, and a new set of agricultural export and private insurance businesses emerged as major growth industries. New oligopolistic economic groups came to dominate the productive apparatus, combining financial resources and new technologies

58 Labour Politics in Small Open Democracies

in pursuit of new forms of value-added production oriented towards the external market. At the same time, the traditional industrial sectors in which the bulk of the labour movement was concentrated were reduced appreciably. As a microeconomic complement to the policies of macroeconomic reform, new forms of production were introduced that were modelled on Japanese and American management practices. These trends were reinforced with the promulgation of the 1979 Plan Laboral (Labour Plan). The objective of the structural project went beyond economic reform. The consequences of these reforms were as much political and social, in that they imposed a new form of ideology as social construct. In this view “the Nation” was displaced by “the Market” as the primary organiser of society, and market rationales and preferences rather than nationalism and collective solidarity were the guiding principles of social organisation. Self-interest prevailed over notions of commonweal, and everyone was supposed to become self-interested maximisers of opportunities in an unregulated exchange of goods and services. These were the dictates of the “Chicago School” of economics championed by the likes of Milton Friedman, Arnold Harberger and their Chilean students (the infamous “Chicago boys”).91 In the monetarist’s view, human labour became an economic commodity pure and simple, subject to exchange like any other. The idea underpinning the shift to a market-oriented social ideology was that there existed undue mediation between individuals and social actors in Chilean society prior to 1973. This came in the form of State agencies and regulations, and the political and social agents that formed client relationships with them (unions and parties in particular). Free expression of individual choice was thwarted by the rent-seeking behaviours of these interlocutors, which made for economic inefficiency and contributed to the expansion of the State and social dependency on it. Hence rent-seeking mediators and behaviours needed to be eliminated in order for individuals and contracting parties to interact directly in pursuit of efficient and optimal social equilibrium. Ironically, this type of strategic interaction between business and labour was not the product of the second-best strategies that the Chicago School believes to characterise rationally calculated exchanges in a democracy.92 Here it was an authoritarian imposition. Championing of individualism and consumer mentalities was designed to break with the class-based collectivist traditions of the past, decrease social reliance on collective agents and the State, increase the commodification of social relations and increase the freedom of choice (if not opportunity) to those who exhibited genuine entrepreneurial values and ambition. The fact that school curricula were altered to reflect this ideological shift demonstrates the systematic way in which this project was deepened through civil society.93 In addition, disarticulation of working class collective agents and the structural bases for subordinate group solidarity was reinforced by changes in the actual labour relations partial regime.

Australia and Chile 59

Political insertion Chile has one of the longest histories of union activity in Latin America, extending back to small craft unions emerging in the ports and among transportation workers in the 1850s. As elsewhere, this was greeted with repression by the oligarchic regimes that governed Chile until 1920. The first major wave of strikes occurred in the 1890s and continued for decades thereafter. In 1906 the Partido Democrático (Democratic Party) introduced several bills that sought to create a social security system, workmen’s compensation and the legal status of trade unions.94 These did not prosper in the face of conservative opposition, and labour relations continued to be marked by open class conflict until the election of Arturo Alessandri at the head of a middle-class reformist coalition in 1920. Until the formation of the Federación Obrera de Chile (FOCh) in 1909, anarcho-syndicalist organisations engaged in the politics of conflict suffered State repression. Following the creation of the Communist and Socialist parties in 1922 and 1933 respectively, the bulk of the union movement came to be grouped under their partisan umbrellas. Central to the process of market-oriented reform after 1975 was the elimination of the structural bases of working class power, which had traditionally been rooted in domestic manufacturing industries protected by importsubstitution policies and a long history of State paternalism in the labour market and in labour relations that dated to the 1920 election. In its promotion of domestic industry and in the institutional demarcation of labour relations, the Chilean State occupied a central role in the labour relations partial regime until Allende’s overthrow. In 1924 the first Alessandri government introduced a series of labour laws, written by respected labour sociologist Moíses Poblete Troncoso. With military participation in the promulgation of these laws, they included a law of union registration and compulsory arbitration for urban labour as well as laws limiting the right to strike and excluding rural labour from the right to collectively organise and bargain. In 1931, during the dictatorship of Colonel Carlos Ibañez, a Labour Code was written that codified in one volume what had been four books of labour legislation governing the collective and individual rights and obligations of workers as well as a variety of welfare, pension and social security regulations. Along with its constraints on collective bargaining (legal only at the shop-level) and powers of union registration and oversight, the Code established mandatory labour participation (through their representatives in the Communist and Socialist parties) in policy-making agencies along with the so-called “social clauses” as inducements for co-operation. It also granted the unlimited right to strike in the private sector and prohibited the hiring of replacement workers during the duration of strikes. Public sector strikes, though allowed, were more limited in nature, and subject to mandatory arbitration and conciliation procedures. Along with this pattern of State-dependence, the

60 Labour Politics in Small Open Democracies

labour movement eventually became party-subordinate and politically divided. Union federations displayed low levels of autonomy vis-à-vis both the State and political parties and were therefore highly reliant upon them for defence of their interests. Shop-level unions in the private sector had more freedom of action, although they were eventually incorporated into the larger national union framework on partisan political grounds as well. State extension of recognition and benefits to co-operative unions occurred in two phases – during the Alessandri (1920–24) and Ibañez (1927–31) regimes, in spite of their very different political orientations. The first phase involved the provision of State benefits and legal recognition to organised labour, while the second established an institutional framework for industrial relations and designated allowable forms of collective action. This pattern of initial incorporation was largely State-sponsored, even though the party affiliations of the union movement were also used to secure their co-operation. It was also inclusionary State corporatist in that all union rights as political and economic actors were conferred by the State, including legal recognition as well as the delimitation of union bargaining authority, union elections, dues deductions from wages, processes of compulsory arbitration, an interventionist role of the State, and restrictions on strike activity. This meant that the labour movement depended upon the State for its existence, to say nothing of most of its material and political needs. As noted by the ILO, the Labour Code of 1931 “assigned strong State intervention in labour relations according to principles prevalent at the time, of an overtly Socialist stripe. This Code was a significant advance in that it organically regulated all individual and collective labour law as well as the procedures and tribunals charged with adjudicating conflicts between parties.”95 This made the State rather than employers the focus of union attention, which institutionalised the politicisation of the labour movement while increasing its dependence on the State.96 In contrast to previous history, leftist political parties became increasingly active in union politics, as this allowed them to make inroads into the State policy-making apparatus even when outside positions of formal authority. They came to wield considerable influence over national politics in general, which set the tone of the debates over social legislation for years to come. At the same time, “independent” or non State-sanctioned and non-registered unions which had opposed enactment of the 1924 provisos and the 1931 Labour Code because of their fear of government control, were increasingly outweighed by “legal” unions, which sought to capitalise on the reformist urges of both Alessandri, who returned to power in 1933, and Ibañez. Most of these unions eventually came under the tutelage of the Communist (PC) or Socialist parties (PS) that shared leadership of the labour movement until Allende’s overthrow.97 By the end of the 1930s, the political orientation of the Chilean labour movement, both in terms of its focus on the State and its ideological bases in left-wing parties, was well established. It was inserted as

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a party-subordinate, State-dependent, system-oriented (as opposed to antisystemic) pressure group on the political system. Although Communists and Socialists dominated the national leadership of Chilean labour and concentrated on defining and expanding the political role of the labour movement as a whole, collective bargaining was limited to shop or firm level “industrial” or “professional” (craft) unions by law. In addition, unions were divided into occupational categories: unions of empleados for white-collar workers and unions of obreros for blue-collar workers. From time to time this allowed the union movement to coordinate industry or occupation-wide collective bargaining according to the political dictates of the moment, but more often than not the legal framework institutionalised its structural weakness as a collective agent. Coupled with the focus on the State for the satisfaction of union demands, this made shop-level bargaining and shop-level unions less relevant to the majority of working class fortunes at the same time that it cemented the political orientation of the labour movement as a whole. This was crystallised with the foundation of the Chilean Workers Confederation (Confederación de Trabajadores Chilenos or CTCh) in 1936. This organisation provided a more institutionally oriented successor to the often confrontational FOCh. The CTCh was an amalgam of various independent and legal union federations under Socialist and Communist leadership. By the time the leftist Popular Front was elected in 1938, which included centrist parties like the Radicals as well as Socialists, Communists and CTCh leaders, and throughout its subsequent domination of Chilean politics until 1952, national union politics outweighed the bread-and-butter objectives of the shop unions that were its organisational core. This eventually led to divisions between the national and shop-level union leadership on the one hand and the rank and file on the other, even if in the main they all shared a proletarian orientation and class conflict-based perspective on society. During the 1940s, the political role of organised labour and the preeminence of its national leadership, with direct influence in cabinet and a central role in the governing coalition, made rank-and-file concerns of minor importance to the leaders of the CTCh, making for top-down union politics. The political affiliations of shop-level leaders allowed them to coalesce in de facto regional and occupational federations driven by the political agenda of the national labour confederation. More often than not, party affiliation was determinant of shop steward status. This was accentuated by the “vanguardist” tendencies of many union leaders, who followed Lenin’s notion of proper party role and organisation when discharging union functions. Most union leaders came from left-leaning parties rather than from the shop floor. As a result, political party competition rather than rank-and-file demands fuelled the activities of the labour movement throughout its period of major growth in the 1940s, and it was the State rather than the unions that realised limited working class gains during this period. 98

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Union membership grew after the founding of the CTCh, a process accelerated after the election of the Popular Front government in 1938. Between 1936 and 1948, legal union membership jumped from 200 unions with 60,000 members to 1849 unions with 263,676 members, and independent union membership (mostly in shop unions) swelled to between 85,000 and 100,000 members. The latter included important unions in the mining and public sector that continued to exist outside the official legal structure framing labour relations at the time.99 Union density rose at a rate of 11.3 per cent per year throughout this period, moving from under 5 per cent of the total labour force to well over 10 per cent, and in spite of attempts to curb union growth and political activities from 1948 to 1958, continued to climb slowly through the early 1960s.100 Real wages, however, did not enjoy as much sustained growth, and after achieving historical highs in the period 1945–51, industrial wages began a two decade-long period of decline.101 This was to serve as the backdrop to the electoral campaign of 1970, and the remedies that followed. In the 1960s, the growth in union density accelerated as a result of Christian Democratic overtures to labour – a Christian Democratic government having been elected in 1964 – in competition with increased efforts on the part of the CUT leadership to expand the left-party vote. This politically driven strategy proved successful and accelerated dramatically after Allende was elected, with union density nation-wide reaching historical levels of over 30 per cent by 1973, and with union density in strategically important sectors like mining and construction reaching over 75 per cent of the workforce.102 Overall union membership went from 268,035 in 1964 to 855,404 in 1972, with the number of unions climbing from 1875 to 6118 during the same period.103 At the same time that union membership grew continously from the 1930s through the early 1970s, Socialists and Communists came to blows within the CTCh within a few years of its creation. This led to a struggle for power between an increasingly factionalised leadership. Although the Communists had three cabinet ministers in the Popular Front government in 1946, in 1947 the Partido Comunista (PC) was outlawed by president Gonzalez Videla and forced out of the CTCh, ostensibly because of its promotion of illegal strikes and other disruptive activities.104 By the end of the decade the labour movement was atomised into a number of political factions loosely connected under the umbrella of the increasingly strained Popular Front alliance. Rendered by partisan disputes, the CTCh had little discernible impact on individual union fortunes, which reinvigorated the activities of shop-level unions around defence of bread-and-butter issues within the decentralised collective bargaining framework outlined by the 1931 Labour Code. To offset their political and structural weakness, a number of unions explored relations with non-Marxist union internationals such as the International Confederation of Free Trade Unions (ICFTU). There also emerged a number

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of pro-business “company” unions that rejected the political role played by the CTCh as well as the class-conflict orientation of most of the rank and file. Soon following Ibañez’s election in 1952, a new labour confederation was created called the Central Unica de Trabajadores (CUT). Dominated at birth by Socialists, it nevertheless grew to include a number of non-Marxist unions, which were mostly affiliated with the centrist Radical Party and were influential in public sector unions through the 1950s and later, and to a much lesser extent, the Christian Democrats, as well as Communists concerned about Ibañez’s anti-labour tendencies. When the Communist Party (CP) was legalised in 1958 it returned officially to run electoral slates for CUT leadership positions. Although it continued to be divided by factional disputes between the militant and moderate wings of the major leftist parties and served as little more than a political sounding board without real bargaining power or political weight of its own, remaining illegal until 1971, the CUT remained as the national representative of the Chilean labour movement until its forced disarticulation in 1973. It was able to incorporate a number of the Christian Democratic unions that emerged during the Frei administration (1964–70), which then united with their Socialist and Communist counterparts to sign a “governability” pact with the Christian Democratic government when it was confronted by coup rumours in 1969. Although this unity rapidly dissipated in the wake of Allende’s election, what is most important to note is that for over forty years organised labour was firmly inserted in the Chilean political system as a left party-subordinate, State-sponsored social movement dedicated to improving the material and political rights not only of its members, but of the urban working classes in general. Rank-and-file concerns and the designation of collective bargaining at the shop-level meant that local union representatives and local, regional and national political leaderships had to compete fiercely for their loyalty. But the labour movement’s strength was more apparent than real. Unions organised in the more modern and large, monopolistic State enterprises that were the centrepiece of the developmental strategy followed from 1947 until 1973, such as those in steel and electricity production, preferred to use their strategic weight and location to reinforce the predominance of shop floor organisation. Given the governmental interest in preserving the developmental model and the relative ease of passing wage gains onto consumers via price increases or other indirect levies, these unions found a degree of strength in decentralised collective bargaining. Although they maintained ties with sectoral federation and progressive political parties, they retained a considerable degree of independence from them. On the other hand, unions in small and medium businesses that did not enjoy monopoly status, and thus were more immediately affected by the dynamics of private sector competition, preferred to bargain through federations and were more closely tied to political party competition in order to secure favourable results from winning coalitions in government.

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This had two effects. On an external level, with the exceptions of the State monopolies noted, the union movement as a whole remained structurally weak due to the decentralised nature of collective bargaining, extensive State involvement in union oversight, and the legal limitations on strikes. Internally, there were considerable horizontal cleavages within the national union leadership as well as vertical cleavages between the national leaders, shop floor agents and the rank and file over issues of political and economic interest. Union dependence on both the State and political parties was rewarded with preferential treatment on a number of labour and social issues as well as representation in national policy-making bodies connected with workplace health, welfare and safety issues.105 Of less concern was organising rural labour. One of the hallmarks of labour political insertion in Chile is that it has been historically bi-frontal in nature, meaning that what benefits were extended to urban and industrial workers by the 1931 Labour Code were paralleled by the total exclusion of rural labour from such protections and rights. In an effort to keep the cost of food staples and other wage goods low, the oligarchic structure of the countryside, which was characterised as semi-feudal as late as 1962,106 was maintained at the expense of rural workers. It was not until the 1967 under the Christian Democratic government of Eduardo Frei (1964–70) that rural labour was allowed to legally organise as part of an agrarian reform project, and even that occurred in a piecemeal and segmented fashion, mostly under Christian Democratic leadership. This pattern has been accentuated during the last twenty-five years, where the legal sanctioning of “temporary worker” unions without bargaining power has accentuated the subordination of agricultural, and most often, seasonal workers to their urban counterparts. What did occur from the early 1960s was successive waves of internal migration from the countryside to the cities, which in an era of economic stagnation led to increases in urban unemployment, the emergence of new and larger shanty towns, and a growing sense of desperation and anger against the system as a whole. Increasingly, these sectors of the population threw their support to the UP (Popular Unity) electoral coalition spearheaded by Salvador Allende. As is well known, their hopes were only briefly rewarded. The 1950s saw Ibañez restored to power as a reconstructed conservative (1952–58) and his replacement with Jorge Alessandri, son of the former president, as the head of a conservative government between 1958 and 1964. This period also saw the legal restoration of the Communist Party in 1958 and the emergence of Salvador Allende on the national scene, where he campaigned for and lost the 1952, 1958 and 1964 elections in increasingly close races (with the 1964 election generally agreed to have been rigged against him). From then on, in spite of the Frei government’s attempts at progressive policy reform, such as its land reform scheme and the initial moves to nationalise the copper industry, the tone of Chilean

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politics became more strident and class-conflict oriented. Coupled with the economic downturn caused by the nitrate and copper busts of the 1960s, this augured poorly for what until then was considered to be one of Latin America’s few successful examples of democracy in action. The period between the promulgation of the Labour Code in 1931 and Allende’s election in 1970 can be characterised by five trends: ongoing State domination of the labour relations system using inclusionary corporatist mechanisms of control and co-optation; the increased electoral presence of the left in both national and local elections as well as its gradual domination of the labour movement; the increased division between the political objectives of the national union leadership grouped under the umbrella of national confederations and the objectives of the shop unions around which collective bargaining was centred (in spite of a shared proletarian consciousness and the high degree of responsiveness of shop-level union leaders to rank-and-file demands); the gradual and irreversible decline of the import-substitution-industrialisation model and its eventual stagnation and crisis by the mid 1960s; and the increased polarisation of society along class lines as a result.107 These trends crystallised in the election and subsequent political crisis of 1970–73. Much has been written about the events that led up to and followed Allende’s ill-fated presidency, and thus will not be dwelt upon here. Built on a narrow plurality of 36 per cent, Allende’s victory over the conservative Alessandri (32 per cent) and the Christian Democrat Tomic (27 per cent), who then threw his votes to Allende in the mandatory run-off between the two leading vote-getters as per a pre-electoral party agreement, represented the first democratic election of a socialist in the Western Hemisphere. This sat poorly with the Chilean business elite and external actors such as the US government and major transnational corporations. What followed was a campaign of destabilisation, political impasse, increased polarisation and sectarian violence between right and left, and the eventual intrusion of the military in politics on behalf of the Chilean elite and their foreign backers.108 Organised labour played a negative role because in spite of obvious capitalist agitation and obstructionism in parliament, and even with a direct presence in the UP government, militant unionists emboldened by Allende’s victory pressed for the socialisation of the economy. This led to numerous factory takeovers, violent street protests, farm occupations and other non-institutional forms of redress amid calls for revolution. For their part, Christian Democratic unionists conspired with their party elders to act as a disloyal opposition, pressing wage and other workplace demands with strikes and other forms of work paralysis. Meanwhile, conservative unions such as the truckers did likewise, often aided and abetted by covert funding from abroad. Strike activity accelerated exponentially after Allende’s election, with the total between 1971 and 1973 reaching nearly 8000, even if many of these were political strikes orchestrated by Christian Democratic unions

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at the behest of their Party leaders as part of their campaign of destabilisation. In terms of working hours lost, numbers involved and overall number per year, strikes attained historical highs under the Allende regime.109 None of this served to allay the fears of the bourgeoisie.110 Nor did it sit well with the United States government or with neighbouring countries, which were all ruled by military regimes at the time that Allende was elected.111 Of particular note are the negative effects of two seemingly synergistic trends: union wage demands and strike activity on one side, and capital flight on the other. On the one hand, the rising levels of inflation produced by the economic crisis led to increasing levels of wage demands and strikes. In a twist on the usual political approach, Communist and Socialist unions attempted to preach restraint to their affiliates in order to support the UP government. In contrast, Christian Democratic unions used the economic crisis to political advantage by being intransigent in defence of wage recuperation, something that allowed them to recruit new members and make significant inroads into the CUT. (So that in the 1972 confederation elections Christian Democratic unions garnered 27 per cent of the vote, equal to the Socialists and only four percentage points behind the Communists.) The bottom line was that the UP government could not control its own supporters, which made them vulnerable to accusations of ungovernability. With “institutionalism” compromised by militants on both sides, the regime was on shaky grounds even among its own supporters. For its part, the capitalist response to the Allende victory was equally devastating. Within months of his election a number of leading foreign transnational firms, including Peugeot, General Motors and General Electric, closed shop and abandoned the country, taking both capital goods such as heavy machinery and management personnel with them (including Chilean middle level managers as well as US citizens). Others followed suit over the next two years while those that chose to stay, such as ITT, did so as conduits and fronts for CIA destabilisation campaigns.112 This, coupled with the US embargo of Chilean goods instituted after the nationalisation of the copper industry on July 11, 1971, had a catastrophic effect on the Chilean economy. Deprived of its major foreign market and with crippled industrial capacity and a lack of human capital, by the time the coup d’etat occurred, Chile’s industrial output had slumped 15 per cent, the GDP had fallen 12.9 per cent and inflation had risen to previously unheard of levels of 369 per cent.113 This strengthened left militant calls for a total seizure of power and immediate socialisation of the economy. A 22-day visit by Fidel Castro in November 1971 did not help the matter, as it only confirmed to the Chilean bourgeoisie that their demise was imminent. Both in parliament and within unions, moderates found themselves outflanked by militants uninterested in the politics of class compromise that had been the hallmark of labour and parliamentary politics since the 1920s. Institutional paralysis and parliamentary deadlock aggravated the economic crisis, which was abetted by US

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financial support for a year-old truck drivers’ strike that began in 1972 and which led to food shortages in the main cities. That in turn led the escalation of class conflict into low intensity street warfare by the beginning of 1973. On September 11, 1973, tanks rolled, the Moneda presidential palace was strafed and Allende died. Along with him died the socialist dreams of his supporters, and what followed was their worst nightmare – the restoration of a capitalist class hierarchy and, for them, two years of hell on earth.114 As our historical review has noted, Chilean labour operated within the confines of one centralised labour confederation for most of its modern history, but was nevertheless always riddled by factional/partisan disputes between left-party factions that continued even after Allende was elected. This made the different political factions within the union movement very responsive to rank-and-file demands in order to secure electoral mandates for shop floor leadership, which were put up to a vote every one to two years depending on the union, but also led to a polarisation of those demands once the UP government assumed office. Moreover, the installation of the UP government only accentuated union dependence on the State. After the coup and the outlawing of the CUT along with several important labour federations, such as the Copper Workers, most leftist union leaders sought physical refuge within the Catholic Church, which strained relations between the Church and the military hierarchy. In many unions that did not cease operations, Christian Democratic unionists continued in or were appointed to leadership posts because they were not as prone to being targeted by the regime’s repressive apparatus. Although this helped the unions avoid some of the repression directed at them, the Church could not substitute for unions as a source of collective strength, nor could it argue the bread-and-butter issues that were the only allowable union concerns even if the political climate had permitted it. For their part, Christian Democratic union leaders enjoyed a very brief period of attempted co-operation with the authoritarian labour authorities, but by the beginning of 1976 had moved into a position of confrontation due to the regime’s unwillingness to listen to even the most basic of grievances and rank-and-file pressures for them to do something more than talk. Attempts to launch tripartite vehicles for “dialogue” foundered on the shoals of government and employer intransigence, and by the time the new Labour Codes were introduced in 1979, virtually the entire labour movement was in vocal opposition to the regime. In the vacuum created by the absence of a coherent labour relations framework during the first five years of the dictatorship emerged several de facto labour confederations, with the Cordinadora Nacional Sindical (CNS), the Confederación Democrática de Trabajadores (CDT), the Chilean Copper Workers Confederation (CTC), the Private Employees Confederation (CEPCH)

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and United Workers Front (FUT) being foremost among them. Mostly grouped by political affiliation, they competed for shop union loyalties in an atmosphere of retreat and retrenchment. These new organisations were divided between Marxists who had escaped the brunt of repression, Christian Democratic and other non-Marxist unions affiliated with international labour confederations like ORIT (such as those grouped in the CDT), plus a new generation of unionists not linked to the pre-1973 regimes. Even so, by 1977 the Christian Democratic union leadership had moved into a position of open confrontation with the regime, and increasingly coordinated their efforts with their more radical counterparts still operating clandestinely. These emerging union currents were paralleled by the appearance of several “official” or pro-government unions supportive of Pinochet, but who were rapidly shown to be mere puppets of the regime that did not realise substantive gains for their members or enjoy much support among the rank and file. Instead, they served as a façade to deflect international labour criticism over violations of union rights, but even here were rapidly exposed as such and discredited at home and abroad. By the time of the resurrection of the CUT in 1988, the three traditional political tendencies seen in the labour movement – Communist, Socialist and Christian Democratic – returned to hold roughly a third of the leadership positions each, with a slightly stronger presence of the Christian Democrats, a diminishing presence of the Communists and just a small minority of business unions bringing up the rear. This continued after the restoration of democracy, albeit with the elimination of pro-Pinochet or overtly pro-business unions and the continued strengthening of Christian Democratic unionists at the expense of the Communists, although left party affiliated unionists constituted the majority of the CUT leadership after the 1991 union elections. Even with severe limitations on collective bargaining and strikes, the resumption of “legal” union activities in 1979 allowed unions to begin to establish their presence as social actors, albeit first only on the shop floor. Although confined by law to limited bread-and-butter issues, the re-emergence of unions as legal collective agents allowed them to re-establish de facto (if illegal) labour confederations that served as sounding boards for popular unrest, particularly after 1981. This resurrection of labour’s political role was especially evident in the protests of 1983–85, which led to a series of monthly national protests against the regime and the re-imposition of the state of siege as well as the murder of several union activists. The most important issue is that with the State’s self-imposed withdrawal from the labour field and the proscription of political parties, shop-level unions in the early 1980s were able to achieve a previously unseen level of autonomy

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from both while reasserting their basic defence of jobs and to a lesser extent, wages. This grassroots mobilisation re-attuned the emerging national labour leadership to rank-and-file demands rather than partisan objectives as they coalesced around the common demands for democracy and basic civil liberties. In May–June 1983 the leading national-level labour organisations united under the banner of Comando Nacional de Trabajadores (CNT) to act as an agent of social protest. In a repetition of an old theme, the non-Marxist CDT withdrew the following year due to ideological and organisational differences with Socialists and Communists towards the days of national protest called against the regime’s economic policies during the recession of 1982–83, which among other things involved a devaluation that halved real wages at the time and which saw unemployment rates reach 30.7 per cent in 1983. The Socialists, who had splintered in 1979 over how to approach the dictatorship’s new Labour Code, renovated their leadership along moderate lines that were oriented towards co-operating with Christian Democratic unions, as the Communists continued to be the major target of the military regime’s repression. This led to a series of nation-wide social protests in concert with other collective agents, including shanty town dwellers, pensioners, and human rights activists, against the regime’s economic and political policies that confirmed labour’s re-emergence as a leader of subordinate group resistance. Even if unions were at the forefront of the resurgence of social protest in the early 1980s, and were reconstituting their membership bases within the confines of the regime’s revamped Labour Code, the dictatorship’s selective repression of union spokespeople invariably shifted opposition leadership to moderate political party leaders and the Catholic Church hierarchy. By the time that the dictatorship announced in 1986 that it would honour the timetable set in the 1980 constitutional plebiscite on the continuation of Pinochet as chief of State after 1990, political parties re-emerged and displaced the labour movement as the main sources of opposition. This was despite the fact that trade unions were at the forefront of the protests against the regime that began in 1983 and which culminated in a series of monthly “days of national protest” (rather than national strikes proper, which were technically illegal at the time) during 1984–85. The labour movement from that time on, although divided by different ideological orientations, began to pursue broad strategies of political accommodation with other opposition groups under the banner of political party re-unification around the efforts to defeat Pinochet in the 1988 referendum. As part of this effort in 1988 the CUT was reconstituted with the merger of the CNT and CDT and eventually came to dominate union politics at the same time that it formalised links with other emerging social movements. But with the electoral timetable established and the shift from a social mobilisation strategy to a coalition politics-focused approach, organised

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labour never regained the strength or influence it had in the early 1970s and remained subordinated to the political objectives of the mainstream centre-left parties. Thus, as it re-emerged it was eclipsed by the events of the transitional moment. For both the rank and file as well as union leadership, there was also a re-valuation of democracy as having intrinsic worth as a fundamental human right rather than as a mere instrument of social transformation (on the road to socialism). This is what initially allowed the union movement to form horizontal links and networks with social movements as well as with nonMarxist political parties (particularly the Christian Democrats), something that was especially felt on a local level. This situation continued until 1988, when the plebiscite on Pinochet saw the CUT support the strategy of the mainstream opposition political parties united in the Concertación opposition around the “NO” vote (in that the plebiscite called for the continuation of Pinochet’s presidency (“YES”) or the calling of general elections the following year (“NO”)). In other words, the resurgence of democratic politics brought with it the return to party subordination of the labour movement. This continued throughout the first ten years of restored democratic rule. Rank-and-file interests and any larger social pretensions of the labour movement were eschewed in favour of protecting the electoral regime from a transparently disloyal conservative opposition grouped in the so-called authoritarian enclaves and protected by the authoritarian legal residues that together constitute what the transitional literature refers to as “authoritarian legacies”. Since the rank and file would opt for electoral regimes in any instance over a conservative authoritarian reversal (which is a distinct possibility in Chile), the Christian Democratic and (now Democratic) Socialist leaders of the Concertación coalitions could afford to downplay their material and ideological claims. Particularly since these types of claims were – in the historical re-read – what prompted the authoritarian intervention in the first place. Modest institutional gains were nevertheless made after the election of Christian Democrat Patricio Aylwin as the head of the Concertación coalition in 1989. The signing of memorandums of understanding between the CUT and national business federation (CPC) led to involvement in tripartite and bipartite (State-labour) agencies such as Consultative Committee on Professional Training, the Labour Commission, the Union Training and Formation Fund (which sought to teach potential union leaders about collective bargaining procedures, labour law and so on), the Public–Private Committee for International Economic Relations and the Social Investment and Solidarity Fund (FOSIS).115 Even so, this represented more of a token CUT presence in State agencies rather than real tripartite concertation in policy-making, which was a matter for the Cabinet and Parliament, and dominated by pro-business interests. If anything, it was more symbolic concertation rather than pragmatic concertation, with tripartite interaction limited to discussing policy proposals

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rather than implementing concrete changes. This mirrored the Pinochet tripartite boards of 1977–78, although arguably these later attempts at tripartite dialogue were more sincere than those of their authoritarian counterparts. But neither the “Reference Mark for Dialogue” signed on January 31, 1990 nor the “Model Agreement” signed on April 27, 1990 between the CPC, CUT and the Aylwin government, did more than give the illusion that class dialogue had replaced class conflict, and that labour was an equal representative in matters of labour market policy. “Concertation talks may have allowed the CUT’s national leadership to become more acceptable to the business elite represented in the CPC, but claims from government officials that this new status as the national spokesman for labour meant much to typical workers seem unsubstantiated.”116 Other than modifications to the minimum wage and indigent family subsidies, which had little impact on organised workers per se, union participation in tripartite vehicles had little discernible impact on the substance of either labour law or economic policy, but instead served as a legitimating device for the elected government. Symbolic or hollow as it may seem, this interest in being involved in policy-making also saw the resumption of a strand of State-dependence on the part of organised labour. In spite of the changed nature of the labour relations partial regime relative to previous periods of engagement in the policy-making process, involvement in national-level consultation continues to be beyond the financial means of the constituent unions encompassed by the CUT. Regulations surrounding dues deductions restrict their circulation outside of the place of employment, which limits the ability of federations or confederations to finance their activities. To this day the CUT remains dependent on the State, and its international union connections for budgetary support and even physical assets like its headquarters building, which had been confiscated by the Pinochet regime and basically pillaged before the return of democracy. This makes the union leadership finely attuned to the political climate, and to the ideological exigencies of the moment. Also similar to the past is the rank-and-file’s political leanings. In the three presidential elections since the end of the dictatorship (1989, 1994, and 1998), working class voters have returned to their pre-dictatorial preferences, voting for Socialist, Communist and Christian Democratic leaders in both the CUT and national parliamentary and presidential elections. There was a marked trend towards Christian Democrat electoral gains at the expense of Communists until 1998, especially in national union and parliamentary elections, whereas Communist union leaders remain strongly representative on the shop floor and serve to remind the CUT leadership of their ongoing obligation to their grassroots constituency. Socialists and Communists make up the majority of the CUT executive board, and together with their party representatives represent the core of the “progressive” elements in parliament and the political system, even though only two union officers were elected to parliament in the 1990s. This created space for the Christian

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Democrats to act as a mediating force between the left, the National Party and other conservative elements, some of whom are openly contemptuous of democracy, as well as to award the presidency to the Christian Democrats in the first two post-authoritarian elections. With the elections of 1999 the entire political spectrum shifted centre-left, although here the left is grouped around the defence of democratic institutions rather than the policies of redistribution. In this fashion, the traditional social cleavages that had resulted in tripartite division of working class political preferences prior to 1973 has been reproduced in both the unions as well as in their political representatives. Not surprisingly then, today as before the Chilean labour movement remains subordinate to the political parties to which the national union leadership is affiliated. This has increased the distance between the rank and file and shop floor leaders on the one hand, and the national union leadership on the other. The former see themselves as being “sold out” by a compromising political leadership devoted to partisan party competition. The latter see rank-and-file demands as unrealistic and dangerous given the post-authoritarian moment. The result is an accentuation of the traditional pattern of labour political insertion. It retains decentralised collective bargaining at the shop-level, somewhat loosened limitations on strike activity and collective bargaining in the context of the market opening and rejection of State-oriented economic strategies, and accentuated divisions between rank-and-file bread-and-butter interests and those of the national leadership.117 What is different from the past is that the State has largely withdrawn from mediating in the social division of labour as well as the labour market, and neither is it a direct source of employment or development strategies in the measure it was before 1973. The interest of the national labour movement in following the moderate and co-operative policies of the Socialist and Communist Parties, as well as of the Christian Democrats, in the interest of preserving democracy in the face of ongoing conservative threats once again runs counter to the more militant actions of many shop unions. It also serves to limit the ability of the latter to make discernible changes in the labour relations partial regime. Instead, the institutional framework inherited from the Pinochet years remains largely intact, even if “humanised” around the margins, and continues to institutionalise the structural weakness of unions and employer biases inherent in a flexible labour market. The interests of the union and party hierarchies are first served, then those of the business and conservative elites. Last served is the rank and file. In this measure the recent historical pattern of labour movement disarticulation has been affirmed. Institutional conditioners Frequently modified along the margins, the basic framework governing the labour relations partial regime in Chile remained largely intact from 1931

Australia and Chile 73

until 1979. Because it was State corporatist in nature, the Labour Code could be used for inclusionary or exclusionary purposes with only minor modifications being made, or none at all. This served the purposes of those who courted and those who sought to weaken or destroy the labour movement because, in the end, it was the State that retained ultimate authority as arbiter, guarantor and enforcer of all things related to union life. After the 1973 coup and as a supplement to the provisos outlined in the 1931 Labour Code, the military regime dictated Decree Law 12, outlawing the CUT; Decree Law 32, voiding all existing contracts and facilitated the firing of workers; Decree Law 43, suspending all agreements regarding salaries, benefits and other forms of remuneration as well as automatic adjustments to pensions to compensate for inflation; Bando 36 of September 19, 1973, followed by Decree Law 44, which suspended all collective bargaining and conciliation mechanisms; and Decree Law 198, which gave the regime special powers of intervention and designation with regard to union leadership.118 Collective bargaining remained suspended from 1973 to 1979, and under provisions of the 1979 Labour Plan, was thereafter restricted to the shoplevel. Although the purgative phase did not require that much attention be paid to the legal delimitation of the labour market, the introduction of market-oriented reforms clashed with the labour relations partial regime inherited from the 1931 Labour Code then in force, albeit suspended. After a period of vacillation and disagreement within the dictatorship about how to craft the new labour legislation, particularly between the Air Force, which had certain populist tendencies within it and which initially held control of the Labour Ministry, and the Army and civilian technocrats, who had no interest in accommodating organised labour, the regime in 1979 was forced to institutionalise its new labour relations regime in order to counter the threat of an international boycott of Chilean goods spearheaded by the AFL-CIO and a variety of non-Marxist international labour confederations such as the ICFTU and ORIT.119 To not do so would have undermined foreign investor confidence and US government attempts to certify Chile as fulfilling basic rights of free association and redress. The fundamental goal was labour market flexibility and a diminution of union power in the workplace. Rather than a Labour Code per se, the 1979 Plan Laboral was a series of five decree laws and subsequent executive orders and constitutional edicts signed off by the Labour Ministry and promulgated from 1979 until 1987 that outlined labour market regulations and the legal framework governing business–union relations. The foundation of the Plan rested on Decree Law 2756 of June 29, 1979, on union organisations, and Decree Law 2758 of the same day, governing collective bargaining. According to these measures, the collective rights and autonomy of unions remained circumscribed while the individual autonomy of workers purportedly expanded. The laws encouraged the multiplication of collective representation on the shop floor, allowing for contracts to be signed by unions of 25 workers or more, by so called

74 Labour Politics in Small Open Democracies

“groups” that had no minimum number, and by individuals. Although there were four types of unions allowed, namely shop-level, industry-wide, independent and those grouping temporary workers (especially in agriculture), only shop-level unions could bargain collectively. Needless to say, these restrictions on collective bargaining, continuing the historical trend, and on strikes, which accentuated the historical powers of State control and intervention, kept the union movement structurally weak. Additionally, proscriptions on political activity were designed to restrict ideological debate on the shop floor while preventing coherent strategic planning above the shop-level. Especially important in this regard were the clauses that allowed for individual and mass dismissal without cause or more than minimal severance pay, and which removed the “fuero sindical”, which was the right of union officials to not be fired for carrying out union activities that had existed for 50 years. Decree Law 2200/1979 outlined the new, decentralised structure of collective bargaining. Collective bargaining could only occur at the shoplevel and could only concern wages and working conditions. As mentioned, Decree Laws 2756 and 2758 of 1979 defined the new organisation of the labour movement. No occupational differentiation was afforded between white- and blue-collar workers, so there was a compression of their wage demands. National labour confederations were outlawed. In practice, temporary worker unions served as labour exchanges, while inter-company (grouping workers in 3 or more firms in the same industry) and independent unions were little more than mutual aid societies. All worker participation in management decision-making schemes was forbidden and unions could be constituted with 10 per cent of the employees in firms with 25 workers or more, or, if the firm employed less than that, eight members so long as they represented 50 per cent of the workforce employed. In addition, nonunionised “groups” of workers and individual workers within firms could sign contracts. Unlike before, salaries negotiated by collective agreement did not have to be transferred to unorganised workers, which along with individual and group contracts, productivity bonuses, and the elimination of the maximum hours worked and overtime pay, increased income differentials within the same occupational categories. This was accentuated by the breaking up and sale of many State monopolies, which led to increased unemployment and job insecurity in their privatised successors. A form of labour market Darwinism came to take hold of worker approaches towards employment. According to the Plan Laboral there was no closed shop or compulsory unionism, as had been the case under the 1931 Labour Code, which stipulated that if 50 per cent of workers were organised at the shop-level, all workers were covered by the union contract and were required to pay union dues. In theory this allowed for worker independence and the proliferation

Australia and Chile 75 Table 2.7

Collective bargaining regulations in Chile 1931–2001

Mandatory collective bargaining? Compulsory arbitration or conciliation? Cooling Off Period? Limited scope of negotiable issues? Limits to duration of agreements?

1932–73

1979–90

1990–2001

Yes Yes No Yes Yes

No Yes Yes Yes Yes

No Yes Yes Yes No

of competing bargaining groups, but in practice there were relatively few parallel unions in individual firms, and where they were they often negotiated as a group (Table 2.7). Even so, loose collections of workers (the so-called groups or “grupos”) and individual labour contracts took their toll on union’s ability to control the marshalling of working class voice within the firm.120 In addition, labour courts were disbanded by Decree Law 3648/1981, which forced individual workers’ grievances into the civil courts and limited union involvement in their representation. This eventually overloaded civil court resources with workplace grievances, so the measure was rescinded and labour tribunals reconvened in 1986. With this exception, all of the decree laws enacted as part of the Plan Laboral were codified in the Labour Code of 1987, subsequently modified by the Labour Code of 1994. The strike legislation of 1979 set a maximum strike period of 60 days, after which it was considered that strikers had unilaterally ended their employment. It also allowed employers to hire replacement workers during the strike as well as permit strikers to return and negotiate individual contracts after 30 days. If more than 50 per cent of the workers returned to work during the 60-day period, the strike was declared over by law. At the end of 60 days workers were considered to have voluntarily quit their jobs and the strike was legally declared over. The Plan also prohibited strikes of public employees and “essential” industries, and allowed employers to lock out workers if after 30 days the employer felt it was economically necessary to do so. Article 19 of the 1980 Constitution reaffirmed the new regulations by prohibiting strikes in State enterprises and in essential industries, with “essential” being those where a strike might injure the economic health, law and order or morale of the nation.121 Only in 1995 was the maximum 60-day strike duration eliminated and public sector workers allowed to engage in very limited work stoppages (Table 2.8). But as we shall see below, even this did not significantly alter the limited effectiveness of strikes as a weapon of working class defence. As part of the political pacts agreed to by the anti-Pinochet Concertación coalition that opposed Pinochet and Bücchi in 1989, agreements were made among the opposition political parties and the CUT, as well as some business sectors grouped in the Confederación de la Industria y Comercio (CIC), that

76 Labour Politics in Small Open Democracies Table 2.8

Strike regulations in Chile 1931–2001

Replacement workers allowed during strike? Right to lockout? Limits on strike duration? Mandatory dues deductions? Dismissal without severance? Non-economic strikes allowed? Job security (unemployment rates + ease of replacement)

1932–73

1979–90

1990–2001

No No No Yes No Yes Yes

Yes Yes (qualified) Yes No Yes (qualified) No No

No No Yes/No No No Yes No

whoever won the foundational elections, they would revise the labour legislation in order to remove some of its more restrictive tenets. In 1991, Law 19,049 on labour confederations and Law 19,069 on collective bargaining were modified by the Concertación government so as to allow for the legal existence of central labour federations, thereby legally recognising the CUT, and to allow industry-wide collective bargaining. Aylwin and his successor in 1994, Eduardo Frei, Jr., another Christian Democrat and son of Allende’s long-term rival, worked to relax the more restrictive provisions governing rights of association, but continued largely intact the limitations on collective rights while maintaining the atomising thrust of the collective bargaining framework and the emphasis on a minimalist definition of individual labour relations. In 1994 amendments to the Labour Code allowed for the creation of public sector unions (Law 19,296/February 28, 1994, “Associations of Employees of the State Administration”), although they remained subordinate to the edicts in Article 19 of the 1980 Constitution, which forbade strikes in economic sectors deemed essential to national security or wellbeing.122 The overall effect of these reforms was felt at the margins of the labour relations system, and did not alter the fundamental fact that organised labour remained structurally and politically subordinated to business and the State well after the dictatorship was replaced. During both the Frei presidency (1994–2000) and the Socialist-led government elected in 2000, led by Ricardo Lagos, several significant changes were made in the Labour Code that expanded union rights under the law. These included Law 19,481/November 14, 1996, which increased the Ministry of Labour’s workplace health and safety inspection duties that had been all but eliminated by the 1979 Labour Code; Decree 227/February 17, 1999, which promulgates and ratifies ILO Conventions 87 (freedom to unionise); 98 (right to collectively bargain); 105 (prohibiting forced labour); and 138 (minimum working age). Law 19,631/September 3, 1999 increased social security payments to laid off workers, while Decree Laws 39/June 17, 1999 and 1/January 20, 2000 regulated Law 19,234/1991 governing dismissals for political reasons,

Australia and Chile 77

making them much harder to do. Decree 649/April 26, 2000 promulgated and ratified ILO conventions 131 on minimum wages, 135 on worker protection and 140 on study leave for unionised workers.123 Additional reforms were enacted in November 2001 that addressed redundancy payments, vocational re-training, employer contributions to pension schemes and related welfare issues. This brought Chile into agreement with the most important ILO standards for the first time in its history. But here again, most of the benefits were in the individual aspects of the employment field, not in its collective dimensions. The difficulties in addressing the “labour question” are apparent in the high rate of ministerial turnover within national labour administration during the dictatorship. After being in the hands of Air Force personnel from 1973 to 1975, corporate managers with overtly anti-union and decidedly pro-Pinochet sentiments staffed the upper echelons of the Labour Ministry until the advent of the elected regime. Among many others, this included Jose “Pepe” Piñera, the author of the infamous 1979 Labour Plan, who turned his variant of labour market reform into a successful post-government career as a policy analyst and fellow at conservative research centres in Chile and the US. Under the Aylwin and Frei governments, labour specialists and Christian Democratic and Socialist party appointees replaced corporate managers. Turnover within the ranks slowed considerably as the government attempted to depoliticise labour administration and turned labour policy questions over to parliament – where they more often languished. With the election of Lagos, “pragmatic” (that is non-ideological or “Third Way”) Socialists and left-leaning academic specialists came to dominate the upper ranks of the Ministry, although throughout the restored democratic tenure the overall objective of national labour administration was to offer procedurally neutral and dispassionate expertise in labour-related matters. Agent-principal issues Although sharing a general class-conflict perspective, the labour movement remains factionalised along partisan lines, occupational and regional divisions, and between political leadership of confederations and rank and file on shop floor. Rural labour remains un- and under-organised in the new agricultural sectors, most often in the form of temporary unions. Union density, which had risen steadily through the 1960s and accelerated under Allende, reaching 32 per cent in 1973, dropped off dramatically thereafter, only reaching 11 per cent in 1980, climbing to 18 per cent immediately before and after the elections of 1989, then gradually dropping back to existing levels of just under 11 per cent. Promotion of business or company unions after 1979 did not prosper in the main, and no more than 10 per cent of unions defined themselves as such. Instead, non-Marxist unionists (mostly Christian Democrats) claimed more space in national labour politics along with Communists and Socialists, although Communist influence waned and Christian

78 Labour Politics in Small Open Democracies

Democratic influence waxed within the CUT in the 1990s. As per the historical trend after 1932, today union partisan representation remains divided among the three major political tendencies, albeit with the shift towards the Christian Democrats mentioned above. Proliferation of shop-level unions under provisos of the Labour Plan continued apace after the restoration of democracy, with the number of unions increasing steadily each year from 5391 in 1986 to 8861 in 1990 to 14,652 in 1999. At the same time, the percentage of the private sector salaried population organised in unions varied from 14.2 in 1986 to 19.8 in 1990 to 15.3 per cent in 1999, with the overall unionisation rate reaching just 10.7 per cent by the end of the decade.124 The advent of the dictatorship had an indelible impact on union density. As mentioned, it fell from a third of the active workforce to below 8 per cent by 1980. After implementation of the Labour Plan and the resumption of limited collective bargaining, it increased to an average of 10 per cent throughout the 1980s.125 Thereafter union density remained relatively stable, peaking at in 11.3 per cent in 1991, then; slowly decreasing to 8.7 per cent in 1998 before increasing to just under 11 per cent in 1999.126 Although the overall number of union members increased throughout the 1980s and peaked at 724,000 in 1992, declining thereafter, the overall number of unions increased exponentially, rising from just 3977 in 1981 to 14,276 in 1998. As a result the average size of unions dropped nearly 40 per cent during this period, falling from approximately 140 in 1973 to 129 in 1977, 72 in 1985, and 67 in 1992, and remained on average below 55 members thereafter with a low of 43 in 1998.127 This small average size should not be surprising given the historical prevalence under the law of shop-level unions as the sole agents allowed to collectively bargain. Even with the legal granting of collective bargaining authority to occupational and industry-wide federations in 1995, by 1997 65.7 per cent of union members were affiliated with shop unions, 11 per cent with industry unions, 18.8 per cent in independent unions and 4.5 per cent in unions of temporary workers.128 The combination of historical weight and authoritarian disarticulation combined to reaffirm the structural weakness of the union movement; only that this time, under the ensuing democratic conditions, neither the government nor the State were overly sympathetic or much involved interlocutors (as they had been prior to 1973). As a result, the forced atomisation project continued to bear fruit long after the dictatorship departed. The dictatorship’s overall macroeconomic reform project, which resulted in increased unemployment and decreased unionisation and wage rates when compared with the historical averages that preceded it, was reinforced by microeconomic policies modelled on US and Japanese management styles but which had particularly Chilean twists to the exigencies of so-called “flexible production” and “market-driven” labour relations. These included production techniques that broke the assembly line into small team units competing for bonus incentives tied to output; “just-in-time” production in

Australia and Chile 79

which inventories were reduced and made responsive to immediate demand fluctuations; use of non-union out-sourcing and sub-contracting (which was facilitated by the new Labour Plan); and the extension of part-time and temporary or seasonal contracts (in the new agro-export and construction sectors especially) that increased job insecurity (Table 2.9). Added to this was the widespread use of workplace authoritarianism on the part of employers, many of whom used retired military officers as personnel and plant security managers, some of whom continue at their posts to this day.129 This included the practice of politically motivated dismissals and reporting of unionists as communist sympathisers to the secret police, arbitrary increases in work hours under threat of dismissal, and the removal of privileges. Codified in the 1979 Labour Plan and the 1987 revised Labour Code, these measures were only

Table 2.9 Union membership, density and number of unions in Chile 1975–2000

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Union membership (thousands)

Number of unions

Union density (%)

– – – – – – 396.0 347.5 320.9 343.3 361.0 387.0 422.2 446.2 507.6 606.8 701.4 724.0 684.4 662.0 637.6 655.6 617.8 611.5

– – – – – –

– – 23.6 – – – 12.1 11.8 10.1 10.3 8.7 9.9 10.5 10.4 11.4 13.6 15.3 15.0 13.7 13.3 12.7 12.4 11.5 11.3

3,977 4,048 4,401 4,714 4,994 5,391 5,883 6,446 7,118 8,861 9,858 10,756 11,389 12,109 12,715 13,258 13,795 14,276

Sources: Ministerio de Trabajo y Previsión Social, Dirección de Trabajo, Anuario Estadístico; Departamento de Relaciones Laborales, Estadística Laboral. Santiago: for the years cited. Patricio Frias, “La Afiliación Sindical en Chile: 1932–1992”, Economia & Trabajo, V.1, N.2 (1993): 263–88.

80 Labour Politics in Small Open Democracies

partially rescinded by the 1994 reforms of the Labour Code, and it took until the advent of the Lagos administration to finally eliminate them from labour relations legislation, even if some of these practices continue to persist informally, particularly in the agro-export and service sectors. Workplace authoritarianism was complemented by the extension of easy credit schemes to blue and white collar workers that created a consumer debt culture that had the simultaneous effect of promoting individualism and competitiveness in the workplace, while displacing the primary social bases of working class identities that had existed before. The results were devastating. “By 1995 the lowest three quintiles of income earners in Chile averaged debt closer to three times their monthly income.”130 Of particular note is the deepening of the historical pattern of division between the rank and file, shop floor representation and the national union leadership, especially during the 1990s. Following the historical pattern, national labour leaders are more interested in the political arena as a policy-making forum and in continuing the politics of compromise within the Concertación government in face of common adversaries, such as military and retrograde elites. Hence they do not wish to rock the boat of labour relations, which makes for a divorce between more militant shop floor activism centred on bread-andbutter issues within firms, and national labour politics revolving around the politics of conciliation/accommodation on larger issues of social policy. Moreover, as the 1990s wore on and the futility of union political efforts became apparent, with virtually all labour movement logics subsumed to the politics of party compromise and the logic of labour market flexibilisation, factional and partisan disputes accentuated within the CUT. This was particularly evident in the bitter struggles over the confederation’s leadership in 1996 and 1997. The deepening of political disputes at the national level and the frustration of the rank and file in improving their lot has allowed for the resurgence of company unionism and currents not tied to the traditional political representatives. Even so, the rank and file as well as its federation and confederation leadership supported the candidacy of Socialist Ricardo Lagos as the head of the Concertación ticket in 1999, although for the former it was more a case of choosing the lesser evil rather than a preferred candidate per se, since Lagos was committed to maintaining the market-oriented economic programme. From the shop floor to the national leadership, the Chilean labour movement remains divided between three major political tendencies, even if more leftist on the shop floor than in the national leadership, and a host of “independent” political factions. However, all now eschew the militant anti-capitalist rhetoric of the past in favour of an orientation towards defence of democracy and the realisation of incremental gains within it. Relations with business Historically, business–labour relations have been contentious but courteous, given traditional elite opposition to the expansion of franchise and civil

Australia and Chile 81

rights for lower classes but its shared interest in the State-led developmental project. Much like organised labour, business focused on the State for redress after 1924, but without the history of grass-roots activism. Notwithstanding the electoral gains of the left between 1938 and 1948, by and large business interests and logics had prevailed until 1964. However, as of 1964 there was quick devolution of power towards the left. The tone of the sectoral debate thus sharpened. Business sought State protection while ISI policies were in force, since it could pass labour costs directly onto prices, but it increasingly chaffed over the leftward drift of politics in the 1960s. By 1973 business interests had coalesced against the Allende regime, having been increasingly disaffected with the government’s agrarian reform programme and its copper nationalisation scheme. Not reconciled to the loss of its status and alarmed by the Allende experience, business consolidated as part of the authoritarian coalition – only to see domestic manufacturing crippled by monetarist policies. Even so, the rise of financial conglomerates and new agro-export businesses which could effectively block unionisation through a series of “right to work” measures, made union inroads in these sectors very difficult and often a losing proposition. In all cases there was a marked level of hostility in the business approach towards labour, in which it took advantage of the overall mantle of repression and fear promoted by the military regime to engage in workplace authoritarianism that re-asserted the class hierarchy at the most basic levels of production. Hence, regardless of their specific fortunes, the majority of business leaders remained allies of the dictatorship until after the 1988 plebiscite that Pinochet lost. Confronted by the departure of their military protectors, from then on Chilean business began to explore relations with organised labour above the factory level. This strategy was used as a political hedge against the uncertainties of redemocratisation, although business remained firm in its defence of the macroeconomic model and its prerogatives in the labour market. What was allowed by the dictatorship in terms of business organisation was a centralised business association (Confederación de la Industria Chilena – CIC), which, unlike labour, had the power to negotiate industry and nationwide trade and occupational guidelines. Capitalists could and can coordinate above the shop floor; until 1991, labour could not. Despite this, and as part of the democratisation process, business and labour began to explore possibilities of dialogue regarding the future of labour relations. On January 30, 1990 a memorandum of understanding titled “Reference Mark for Dialogue” was signed, which essentially was an accord designed to explore bipartite and tripartite forms of sectoral exchange on major issues of incomes, welfare and employment policy. Although a variety of these concertative vehicles were created, very few had more than symbolic value as arenas for exchange of view between the national labour and business leaderships. Although union coverage and collective bargaining agreements covered well over 60 per cent of the urban industrial workforce in 1973, and had

82 Labour Politics in Small Open Democracies

near 100 per cent adherence rates in strategic industries such as copper, the effects of the dictatorship’s labour policies had a discernibly negative impact on overall rates of coverage thereafter, a situation relatively unchanged to this day. Collective bargaining did not resume until 1981, and never covered much more than 10 per cent of the workforce for the entire period of study. As noted, in 1995 over 65 per cent of unions remained at the shop-level, as did the number of collective contracts struck at that time.131 The trend continues to the present.132 Overall, from 1981 to 2001 less than 9 per cent of the labour force was covered by collective agreements, although the rates were higher in selected manufacturing, copper, and the public service.133 Moreover, most of these contracts were strictly limited by law to wage issues because the Labour Plan and its subsequent modifications excluded nonwage issues from within the purview of collective bargaining. The number of “collective instruments” (including contracts, conventions and arbitrator rulings negotiated between unions and employee “groups”) climbed from 1407 in 1983 to 2342 in 1989 and 3008 in 1993, and then remained relatively steady at above 2350 per year during the latter part of the 1990s and 2000.134 Average coverage ranged from 18 to 24 months. More tellingly, by the mid 1990s less than 10 per cent of Chilean workers were covered by collective contracts of any sort, and of these, less than 8 per cent were negotiated by unions.135 Coupled with the limitations on what is negotiable and the low rates of union density throughout this period, to this day organised labour vis-à-vis its business counterparts has relatively little economic or political strength – at least when compared to the pre-1973 historical record. Confronted with the crisis of its traditional forms of organisation in the restored electoral regime, and given the changes in the productive apparatus resulting from the opening of the Chilean economy since 1975, one novel form of union response has emerged in the form of the cross-sectoral but company-specific labour union, organised to negotiate with the Grupo Luskic, Chile’s largest oligopoly. Covering diverse interests such as banking, metal working, insurance and consumer retail outlets, most of which were acquired and expanded under the dictatorship, the family-run Luskic group is Chile’s most successful private firm, with holdings in the billions of US dollars. In 1992, confronted with the divisive effects at the shop-level of the labour legislation, unions in Luskic-owned firms organised into an umbrella bargaining group that, even if prohibited by law in negotiating collective contracts at the federation or inter-company level, nevertheless served as a coordinating agent for various occupational categories when confronting management. By sharing information and coordinating their bargaining, shop unions were able to better advance the interests of their members within the structural and legal limitations imposed upon them. Although little research has been done on this new bargaining agent, early results indicate that the unions grouped within it have fared better than others operating in decentralised fashion in the same economic sectors.136

Australia and Chile 83

Given the levels of repression and the dictatorship’s ban on union activity, there were no strikes from 1973 until 1979, in which several spontaneous shop-level work stoppages were held. With the recession, rollbacks and layoffs of 1981–83, this climbed to over 50 in addition to two general strikes by 1984. The military responded by increasing repression of strikers once again, but even so the number of shop-level strikes increased gradually throughout the last seven years of the military regime and the build-up to the elections of 1989 (Table 2.10). With the creation of the democratic regime after the November 1989 elections, strike rates rose very rapidly, reaching a peak of 247 in 1992. From then on strike rates declined steadily, only rising slightly

Table 2.10 Number of strikes and number of days lost due to strike action in Chile 1975–2000*

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of strikes

Number of days lost

– – – – –

– – – – – 428,300 676,295 51,544 58,492 41,980 131,630 60,700 104,200 87,400 298,600 245,192 733,794 344,708 59,741 34,819 350,124 234,566 214,485 123,507 103,232 114,306

89 – – 41 38 42 41 81 72 101 176 224 247 224 196 187 183 179 121 108 125

*International Labour Organization data for Chile covers the number of days lost due to strike action only (lockouts are not accounted for). Before 1980, strikes were illegal. Source: International Labour Organization, LABORSTA database, Tables 9A and 9C.

84 Labour Politics in Small Open Democracies

again in 2000. The figures in Table 2.10 dramatically illustrate the emasculation of the strike as a weapon of sectoral defence, particularly when compared to the 3037 strikes that occurred in 1972 or the million plus workers involved in strikes in 1970.137 The majority of strikes occurred in the manufacturing and service sectors and for the most part involved private sector employees. Strike duration remained under 20 days on average throughout the entire period of study, even after the 60-day strike limit was removed in 1995. The number of working days lost decreased throughout the decade after 1991, which had culminated a two-year period surrounding the restoration of democracy when strike levels and numbers of strikers were at their maximum. Ninety per cent of the strike activity occurred at the shop-level, although public sector workers grouped in occupational unions got more agitational after the relaxing of restrictions on public sector organising in the mid 1990s.138 Thus we see a pattern in which increased strike activity coincides with organised labour’s attempt to exploit a political opening, but subsides over time once the political status quo is stabilised. In addition, the number of illegal strikes, tacitly permitted by political authorities and which had been a major feature of the pre-1973 labour relations system, dropped to zero after the coup and were only resurrected after the restoration of democracy. Conversely, the ratio of collective bargains to strikes increased over time through the turn of the twenty-first century while the number of working days lost decreased. In effect, working class consent has increasingly been secured upon the lowered material and political thresholds engineered by the political and economic changes of the last three decades. What did not increase commensurate with the number of collective contracts were real wages (Figure 2.3). When compared to 1970 wages, these dropped by a third in the 1970s, increased by just 3 per cent in the 1980s, and 5 per cent in the 1990s. Real wages in 2000 were just a little over the 1970 standard and only 40 per cent of 1975 levels, with unemployment rates hovering just under 10 per cent for the 1990s, having reached a third of the work force in 1983 and over 15 per cent in 1990.139 The bottom line is clear: changes in the structure of employment and the labour relations partial regime, superimposed on the historical pattern of labour movement insertion in national politics, coupled with the marketdriven economic reform project begun in 1975, equalled overall debilitation of the labour movement as an economic and political actor. By contrast, Chilean business has seen its position strengthened immeasurably by the dictatorship’s economic and labour policies, which have largely been continued by its elected successors. The irony is that both the anti-labour and ostensibly pro-labour political elites benefited from this fact, because in the post-authoritarian moment, given the continuing threat of an authoritarian regression on the part of the military hierarchy and its conservative civilian

Australia and Chile 85

140 120 100 80 60 40 20 0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 Real wages Figure 2.3

Evolution of real wages Chile 1975–98.

Sources: J. Weeks, “Wages, employment and workers’ rights in Latin America, 1970–98”, International Labour Review, N.138: 151–69(2), 1999, calculated using ECLAC, 1986, 1992, 1996, 1998. 1982 = 100. Real wages here refers to real median, as opposed to real minimum wages.

allies, labour movement political restraint and economic acquiescence has been assured.

Macroeconomic and social indicators The seemingly positive picture of Chile painted by the broad macroeconomic data belies the fact that it came at the expense of organised labour as an economic and political actor (Table 2.11). Most real wage increases occurred in unorganised, minimum wage sectors of the population, and while growth was steady and constant throughout the 1990s in spite of the impact of the recession during the middle of the decade, and inflation continued to drop throughout the ten years of democratic rule, income differentials and concentration

Table 2.11

Macroeconomic indicators in Chile 1975–99

Average annual growth (%) Average annual change in consumer price index (%) Official unemployment (%)

1975–79

1980–84

1985–89

1990–94

1995–99

3.4 139.8

0.5 21.5

5.8 19.9

7.3 16.0

5.5 5.6

13.4

14.0

8.1

5.2

6.3*

Sources: *9.8% in 1999; 8.4% in the first quarter 2001. For unemployment: ILO, Laborsta Table 3A. Geneva: 2001 (www.ilo.org/laborsta). Chile, Instituto Nacional de Estadística, “Tasas de Desocupación a Nivel Nacional.” www.ine.cl/ind_mens/11312.htm:1. For inflation and growth: ECLAC, Main Economic Indicators, 1982–2000. NY: UN, 2001.

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increased dramatically along with the number of people living in poverty. Structurally, organisationally and in terms of union influence on politics, the trends begun under the Pinochet dictatorship were continued – when not accentuated – by the ostensibly labour-sympathetic Concertación governments of Aylwin, Frei and Lagos. To be sure, improvements were made around the margins of the labour relations partial regime, particularly in the area of individual labour rights and grievance procedures. But in terms of labour’s collective rights, the situation after 1990 continued much as before: unions no longer occupy the place in Chilean life that they had prior to 1973, and what is more, have proven to be unable to surmount the divisive tendencies associated with Party-dependence and the forced decentralisation of collective bargaining. Both membership and unionised wages declined after 1992 relative to 1973, and initial resistance to the democratic regime’s ongoing pro-business bias was gradually replaced by disenchantment, apathy and the adoption of survivalist strategies on the part of the working classes.140 Playing on partisan affiliation, some national union leaders were able to parlay their positions into parliamentary seats, but for the rank and file, democracy brought meagre material rewards and much dashed hope. By replacing the early 1980s social mobilisation strategy led by the resurrected labour movement, based upon strong rank and file as well as solidarity orientations, with a political strategy oriented towards achieving and preserving a post-authoritarian elected regime with vertical ties to organised labour, union subordination to the dictates of political elites convened within the framework of the Concertación coalition was ensured. More importantly, given the orientation of the political class in the post-authoritarian moment, union subordination to business was assured as well. Patrick Barrett summarises the situation: “(T)he experience of Chilean labour during the 1990s can in important measure be understood as a product of the seventeen years of repression and deprivation it suffered at the hands of the military regime. But it was no less a product of the changing strategy and priorities adopted by the centre-left opposition during the transition to civilian rule . . . (O)ver the course of the 1980s, the centre-left gradually abandoned a social mobilization strategy in favour of an electoral one. This strategy eventually proved successful in bringing the Concertación to power. But it also had the effect of weakening the labour movement further, not only because it marginalized labour politically and aggravated its internal differences, but perhaps more importantly because it was powerless to prevent the regime from consolidating the socio-economic features of its transformative project . . . (R)ather than a class compromise, what has emerged is an accommodation between the Concertación and business, which the labour movement has been too weak to prevent.”141

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Summary The party-subordinate and State-dependent mode of initial incorporation and political insertion left Chilean unions structurally weak, ideologically divided and lacking in grassroots autonomy, although the national labour leadership grouped under the CUT grew to have considerable political influence from time to time before 1973. The political focus of the national labour movement had encouraged union growth prior to 1973, but it also made for regular tension between rank-and-file demands and the political aspirations of the national union leadership and their Party overseers. The 1973 coup saw the initial turn towards exclusionary State corporatism as part of the Pinochet dictatorship’s purgative phase, which set the stage for the enforced or atomising pluralist framework imposed in 1979 as the labour market equivalent of the market opening of the national economy after years of inward-oriented protected growth and progressively more extensive redistributive public policies. This forced atomising project continued in the economic realm even after the traditional political party connections were re-established along with return to democracy in 1990. From 1979 on, the decentralised nature of collective bargaining and severe limitations on union freedom of action kept labour at a strategic disadvantage relative to business, and political divisions among resurrected labour leaderships after 1990 subordinated rank-and-file concerns to larger political considerations of the day, mostly tactical in nature. Although labour unions initially were leading agents of social protest against the military regime in early 1980s, they eventually gave way to political party directives and an electoral focus. This has led to the reaffirmation of the party-subordinated status after the return to democracy in 1990, although not as State-dependent and corporatist as before. Instead it is now of an enforced pluralist character, leading to greater divisions between labour leaders and membership and less strategic importance of the labour movement as a whole.

Conclusion From this comparison we can deduce that party-subordinate, State-dependent patterns of labour political insertion operating on a decentralised collective bargaining framework make for a lack of labour movement autonomy and increased subordination of rank-and-file concerns to those of the national union leadership. This is accentuated when limitations are placed on the right to strike, and where the shift to market-oriented reform was accompanied by legal regulations that increased job insecurity and the flexibilisation of production. The combination of institutional framework and structural shifts, added to the political divisions of the labour movement as a whole,

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prevented Chilean unions from defending against the purposely debilitating impact of the labour market reforms begun under the Pinochet dictatorship and largely continued by his elected successors. Organised workers lost materially and politically under these conditions, although the restoration of democracy brought certain benefits to their leaders. In the Australian case, a traditionally pro-labour government willing to formalise negotiations with its (mostly) subordinate trade union wing initiated the market-oriented shift, permitting the union movement a greater degree of leverage over the reform process. The material and political outcomes in the Australian example were thus much more mixed. There is a moral to this story, but first we must examine the other cases.

3 New Zealand and Uruguay

Introduction As boutique economies, New Zealand and Uruguay share a similar location in, and similar problems when confronting the international market. Most of their hard currency earnings derive from primary goods exports, particularly agricultural staples destined for seasonal markets in the Northern Hemisphere. Both have much larger neighbours and are heavily dependent on trade with them. With populations around 3.5 million each, with relatively high rates of unemployment, particularly amongst rural youth, the domestic economies are driven by service sector industries and small manufacturing. Even so, the responses of these two countries to the dictates of market-led economic reform have been dramatically different, as have been their overall results and the impact this has had on the labour movement in each case. In 1975, New Zealand, like our other four cases, was partway through a drawn-out economic crisis that had begun in the late 1960s. With a conservative centre-right government in power that clung to a strategy of social democratic and State-led development yet spent a great deal of its energy rhetorically and legally attacking or side-lining urban liberals as well as the union movement itself, both cultural and industrial conflict reached a high during the late 1970s and early 1980s. From 1984, led by a traditionally prolabour political party in government, a series of market-oriented reforms was implemented that fundamentally changed the role of the State in the New Zealand economy and society. Due to its party-subordinate political insertion, and the traditional conservatism of the union movement, along with the nature of New Zealand political culture itself, organised labour’s moderate and accommodationist approach to the economic liberalisation project allowed for a comparatively orthodox strategy to be pursued by the technocratic elite that represented the ascendant class fraction through the 1980s and into the 1990s. In 1975, Uruguay was governed by the first military-bureaucratic regime in its history. Like its contemporary counterparts in Argentina, Bolivia, 89

90 Labour Politics in Small Open Democracies

Agriculture (14%)

Other (35%)

Metal manufacturing (13%)

Food, beverage, tobacco (38%)

Agriculture (14%) Other (25%)

Textiles (22%) Figure 3.1

Food, beverage, tobacco (39%)

Largest export industries New Zealand and Uruguay (% of exports, 1998).

Brazil and Chile, the dictatorship was overtly hostile to organised labour, with the consequent suppression of all union activities and labour rights. The authoritarians also imitated their neighbours in embracing a marketoriented economic reform programme that was designed to promote economic efficiency and re-insert Uruguay in its proper place in the world economy as an agro-exporter, eliminating the protected manufacturing industries promoted by the previous forty-year history of import-substitutionindustrialisation and welfare Statism that gave the organised working classes their structural (and therefore political) power (Figure 3.1). Although this inevitably hurt domestic business elites as well, the threats posed by the Tupamaro guerrilla insurgency and nearly twenty years of economic decline justified, in the minds of the military leadership and their civilian allies, the need for a drastic restructuring of Uruguayan economy and society. As we shall see, they ultimately were unable to do so.

New Zealand Like our three other Southern Hemisphere cases, New Zealand’s adoption of market-oriented development strategies during the early 1980s was conditioned by both economic and socio-political factors. Even more so than Australia, economic growth in New Zealand, until at least the late 1960s,

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was based on the export of “processed grass”, in the form of dairy products, meat and wool almost exclusively to Britain. This is where the nation’s similarity with poorer mono-crop agro-exporter countries, especially in Central and South America, both begins and ends. On one hand, the extreme dependence of New Zealand on a small range of agricultural products and a single export market deepened the local experience of economic crisis that flowed from global shifts in economic power and fortunes during the 1970s. On the other hand, New Zealand has traditionally produced such relatively essential and thus “inelastic” goods as dairy and wool, contrasting with luxury and thus “elastic” products such as bananas, sugar and coffee. While vulnerable to price fluctuations, and only so long as the historical trade ties were maintained, British demand for New Zealand agricultural goods ensured that the country could provide a relatively high standard of living for its citizens. The two-party political system and a pragmatic political culture helped to confine ideological debates to a centre built on principles of comparative wage equality and a universal welfare state. Following the worldwide collapse in prices of agricultural produce and Britain’s gradual integration into the European community during the late 1960s, and the general economic downturn that followed the oil shocks of the early 1970s, the ability of the traditional State-centric and agro-export development model to continue to deliver prosperity was increasingly put into doubt. Between 1960 and 1967 the New Zealand economy grew at rates between 3 and 6 per cent, before suffering the recession of 1968–70. By contrast, the economy shrank by 0.9 per cent in 1968 and only grew by 2.1 per cent in 1969.1 The uncertainty that was produced as New Zealand attempted to diversify both its range of agricultural products and its export markets fed into a series of cultural and political tensions that set the stage for the economic and ideological changes of the 1980s. The 1970s and early 1980s witnessed not only increased industrial conflict, but also an explosion of protest led by peace, anti-racist, indigenous and environmental activists. While the Third Labour Government of 1972–75 provided processes by which to incorporate these post-materialist concerns into mainstream politics, the conservative government that held power between 1975 and 1984 did its best to protect the traditional, relatively egalitarian social model, but at the expense of a deepening economic crisis and increased industrial and social conflict. This provided the backdrop for the radical approach taken by the Fourth Labour Government, which implemented a comparatively orthodox “neo-liberal” reform package between 1984 and 1990. Business groups as well as left-leaning liberals, along with some elements of the trade union movement, were happy to see any change take place, even if the presumed long-term benefits of a market-oriented shift were neither guaranteed nor shared by all. This first phase of economic change was marked by tight monetary policy, privatisation of formerly State-owned companies and trade liberalisation. During this period social inequalities widened, though

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some entrepreneurs, particularly in the new booming financial sector, appeared to be doing well. The National Government that was elected in 1990 extended the reform process to the industrial and social policy arenas. This dramatically altered the operation of the labour market and had a devastating impact on the union movement in particular. By the mid-1990s, most New Zealanders agreed that the structural adjustment programme had gone on for long enough, and the pace of change was gradually slowed through the switch to a proportional representational electoral system and the subsequent election of centrist and left-of-centre coalition governments during the late 1990s. However, by 2000 the new market-driven development model was clearly there to stay, at least while free trade and liberal economic strategies remained popular at the international level. To some degree, the economy still remained reliant on agricultural exports, but the service sector had expanded and while traditional manufacturing industries, such as food, drink, footwear and clothing had collapsed, only an embryonic group of indigenous high-tech industries had taken their place. Political insertion Although Australia and New Zealand shared a common colonial heritage, by the late nineteenth century, it was also very clear that at least in terms of economic development, the two countries were already set along two very different paths. Australia had similarly to Chile a substantial mining sector and an embryonic manufacturing base, while New Zealand remained largely a rural and agricultural society. As a result, the New Zealand trade union movement was slower to gain membership, create a central body, or gain representation in the political sphere than its Australian counterpart. Until the 1890s, organised labour consisted of small craft or guild unions, most of which were modelled on and many of which were directly affiliated to their British equivalent bodies. This resulted in the trade union “movement” being highly decentralised and limited to a few sectors only, though alliances between unions began to be made as regional trades councils were established. Ideologically moderate, these organisations were the backbone of what came to be known as the “Liberal-Labour” coalition, in which labour forged a united front with middle-class progressives and actively supported the first and only Liberal government between 1891 and 1912. The Liberals’ reform programme was inspired by a desire to escape the class conflict and failing charity-based welfare system of nineteenth century Britain. During this period of the government some of the world’s first State-sponsored old age pensions, widows’ benefits and workers’ housing projects were established. In addition, the Liberals designed the country’s first major piece of industrial relations legislation, building on attempts to encourage the formation of politically moderate trade unions in order to foster industrial and social peace that had begun previously under the Trade

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Union Act (1878). The Industrial Conciliation and Arbitration Act (1894) preceded the Australian Conciliation and Arbitration Act by eight years, mimicking the framework that was being designed and implemented at the state level in Australia. Perhaps even more so than the Australian Act, New Zealand’s IC & A Act was pre-emptive in nature, resembling an experiment in colonial administration and representing a new pattern of State intervention designed to solve the “Labour Problem”,2 while offering trade unions some degree of State protection. In particular, the spread of the Australian 1891 Maritime Strike to New Zealand along with outbreaks of industrial unrest in Britain during the same decade prompted the Liberals to construct a new system of labour relations that would survive throughout the next century.3 The industrial conflict experienced in New Zealand between 1890 and 1891 signalled that a new type of unionism was developing locally, even if the evidence suggests that actual union membership remained very low. With the influx of various migrant groups, many of them arriving via Australia, young workers in the small but significant mining and transport sectors were introduced to a host of socialist and syndicalist ideologies. While the Maritime Strike that spread from Australia was a dismal failure from organised labour’s perspective, it illustrated to union leaders the need to create a more formal and centralised organisation. Agitation shifted to the mining sector, where radicals led strikes in Blackball in 1908, and on the West Coast of the North Island between 1911 and 1913. This latter series of industrial disputes was led by the new “Red” Federation of Labour, and was the most serious and violent outbreak of industrial unrest until the Waterfront Lockout of 1951.4 It is worth noting here that although clearly radical and clearly class-based in rhetoric and nature, the ideological influences on the “Red Feds” were varied, and that the body lacked a durable organisational basis. The progressive nature of the Liberal government’s social and industrial policies helped to hinder the formation of a separate class-based political party during the 1890s and 1910s. While several attempts to create an independent party to represent the interests of organised labour had been made, these efforts were too concentrated in one geographical area or too weak for the Party to become a national political force. This pattern contrasts sharply with the formation of the Australian Labor Party two decades earlier.5 However, developments during the 1910s finally allowed for formation of the New Zealand Labour Party (NZLP) in 1916. The first of these was the demise of the “Red Feds”, which transferred the union movement’s leadership to the more moderate Trades Council while boosting workers’ support for a political party which could work within the parliamentary system without becoming subordinated to middle-class interests (as had been the experience under the Liberals). The need to achieve electoral success was made even more urgent by the period of relatively conservative reform-dominated

94 Labour Politics in Small Open Democracies

government which followed and which witnessed a deceleration in the development of New Zealand’s welfare state.6 Despite its determination, the NZLP did not achieve any real electoral success until, in the wake of the Depression, its landslide victory in the 1935 election. Contemporary New Zealand political mythology, which comes close to deifying certain leaders of the First Labour government, stems from this period in which the social welfare initiatives of the Liberal era were deepened and built on. Guided by the leadership’s simple belief in “applied Christianity”, initiatives included the implementation of a major State housing project, a moderately successful attempt to provide universal free healthcare, the provision of a universal family benefit and an extension of State welfare to the unemployed in particular. From the point of the Labour Party’s formation, the fate of the organised labour in New Zealand has been inextricably linked to that of its formal representative in parliamentary politics, both in and out of government power. While the formation of the union movement preceded the formation of the Labour Party, and while the arbitration system was under construction well before the first Labour government came to power, organised labour’s insertion in the national political game became increasingly party-subordinate as the century wore on. While this pattern reflects the general shift in party-union relationships found in Australia during the twentieth century, trade union dependence on its parliamentary ally ran deeper in New Zealand than it did across the Tasman Sea. Possible explanations for this are found in the absence of formalised party factions and a more ideologically moderate political culture in the New Zealand case. Despite Labour’s early successes, the party fell out of favour with voters during the mid-century. More often than not, the Labour Party had to concede defeat to the centre-right National Party, which tended to maintain the First Labour government’s welfare and labour relations structures without significantly extending them – but not destroying them either. Conversely, the electoral failures of the NZLP were often perceived to be linked to its relationship with the trade union movement. New Zealand political culture, rooted in the pragmatism of “settler capitalism”, has always been resistant to what it perceives as foreign and dangerous “ideology”. As a British political scientist pointed out: “Ideologies, where they have made an impact, have always been imported and short-lived, as the single tax campaign, the Wobblies and the early socialists can demonstrate. .. Intellectuals, accustomed to intrude ideological overtones, or at least give an ideological façade to conflicts of interest, have been few enough in New Zealand politics.”7 This, along with the fact that many union leaders tended to be foreign born, even in the post-war period, meant that a strong anti-union current ran through the population’s political culture. Unions were embarrassing reminders of a class system that New Zealand, as the “better Britain” of the South, was supposed to have overcome. Thus, the NZLP, and to some extent

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the politically moderate peak body, the Federation of Labour, which was not formed until 1937, had to distance themselves from union politics that showed signs of radical influence or class-based ideology. Communist groups did exercise some influence between the 1930s and 1950s, but this was kept to a minimum within the labour movement. Meanwhile, Labour governments did their best to prove that they acted with relative autonomy from their union affiliates. By 1975 a new set of tensions between the labour movement and the Labour Party had stemmed from the developing relationship between post-materialist social movements and traditional centre-left political forces after 1960. Students, Vietnam War protestors, feminists, and proto-environmentalists ran into conflict with what had become a relatively conservative, inwardlooking union patriarchy. By the time the Third Labour government was elected in 1972, it was clear that organised labour was loosing the struggle for the Party’s leadership. The one-term government concentrated its efforts on carrying through concerns over abortion, nuclear testing in the Pacific and apartheid into public policy, further alienating a disgruntled union movement. However, the marriage of convenience between the Labour Party and the labour movement was somewhat restored by the return of a National government between 1975 and 1984. This decade of National dominance, directly preceding the market-oriented shift, brought with it a series of direct attacks on the union movement identified strongly with populist Prime Minister and Finance Minister Robert Muldoon. Union militancy reached a peak during this period, culminating in New Zealand’s first and only general strike in 1979. Strikes especially in the construction and transport sectors became common, but often centred on demarcation disputes that divided the union movement rather than uniting it against centre-right political elites. Muldoon’s response was undoubtedly authoritarian in nature, by-passing traditional channels of tripartite negotiation and further facilitating the unravelling of the arbitration system by resorting to a series of wage freezes and other direct State interventions in order to keep industrial conflict under control.8 Just as the strategy of the Australian union movement and the Australian Labor Party was shaped by the political conflicts of the Whitlam government, the authoritarian tendencies of Muldoonism established the basis of organised labour’s strategy in New Zealand after 1975. Political experiences of the late 1970s and early 1980s channelled the union movement’s efforts into replacing National with a Labour government. By 1984, organised labour’s political threshold of consent had been lowered to the point that it was willing to accept any alternative programme that the Labour Party could offer. This illustrates how, while affiliation to a mainstream political party can obviously work to advance the interests of organised labour, in a culture of low-intensity ideological conflict as is found in New Zealand, the

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relationship also assists in the co-option and pacification of the union movement. This legacy of political insertion was reinforced by the way in which the arbitration system had shaped the growth of organised labour throughout the twentieth century. Institutional conditioners Like the Australian trade union movement, organised labour in New Zealand was sponsored and shaped, if not created, by an active and interested State during the late nineteenth and early twentieth centuries. The Liberal vision for twentieth century society included a framework for co-operation and negotiation between labour and capital that would lead to industrial peace. Enacted in the wake of the 1890–91 upheavals, the IC & A Act was a compromise solution that meant something different to each interested party. As Olssen and Richardson point out, to the defeated unionists the legislation “offered recognition as a negotiating body and thereby a means of building union forces after the shattering blow of 1890”. For employers, especially farmers, “it offered the alluring prospect of a land free of strikes, while liberal politicians saw the system as a means of balancing the sectional interests upon which their electoral survival rested.”9 Like the Australian model, the institutional framework that governed labour relations until the 1990s was corporatist in the sense that it channelled industrial disputes and, to some extent, the formation of government policy, through a set of formally neutral tripartite structures. Similarly, it defied the “State corporatist” versus “neo-corporatist” dichotomy in that it gave the State extraordinary powers, particularly over the internal organisation trade unions, given that it operated within a democratic political system. As New Zealand’s arbitration system developed, the main difference between it and the Australian model was that the political power was more greatly diffused in the Australian case. Lacking the second tier of state-level arbitration institutions found in Australia, New Zealand’s system was slightly more centralised and thus more tightly co-ordinated by the national government. The key provision of the 1894 Act was that it allowed unions and associations of workers or employers to register with the Department of Labour. Industrial disputes between registered parties could be referred firstly to Board of Conciliation, then to the Court of Arbitration where an industrial award would be made. Decisions made by the Arbitration Board and Court more often than not favoured labour during the first decade or so after the Act’s implementation, increasing real average wages and thus the incentive for groups of workers to register as arbitration unions. As a result, the union movement grew steadily during the early years of the twentieth century. In 1901, 202 unions were registered under the Act, with a membership of 23,768 or about 8 per cent of the working population. Union membership then more than doubled by 1911, and quadrupled by 1921, so that union density reached 26 per cent at that time. The number of registered unions

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at this point had also increased to 418, a number which remained fairly consistent until the 1960s. Subsequent amendments to the central piece of industrial legislation meant that the system was constantly tightened and refined through to the 1950s. Importantly, the First Labour government rewarded trade unions for their support after the 1935 election by making union membership effectively compulsory. Other adjustments were made according to the political and industrial issues of the day. Following the Waterfront Lockout of 1951, led by a group of radical though not necessarily communist-affiliated unionists, the restrictions on legal strikes and the penalties for illegal action were significantly increased. In addition, the State gained closer control over union elections and fee collection in particular. Since the demise of the Red Feds, however, industrial activity outside the arbitration framework had been fairly rare as most labour organisations were incorporated into the system. Union density declined somewhat during the Depression, before steadily rising again after the election of the First Labour government and remaining at around 45 per cent through to the 1980s. As in Australia, the special legal recognition awarded to trade unions under the IC & A Act brought with it a set of restrictions and constraints on the activities and operation of the labour movement. Registration as an arbitration union was not automatic but required that the union in question mould itself to certain criteria stated in the 1894 Act. By the same token, unions could be deregistered where it was felt that they posed a threat to the interests of the government of the day. Thus, the State could potentially act as gatekeeper over the membership and internal organisation of particular trade unions or central union organisations with the purpose of limiting the scope for labour militancy. Given liberal democratic commitments to at least giving an appearance of freedom of speech and association, exclusion was usually a combination of legislative guidelines together with discretionary action on the part of State actors. The main legislative requirement used to make such manoeuvres was a clause contained in amended versions of the IC & A Act stating that the Registrar of Trade Unions “may refuse to register a society as an industrial union in any case where he is of the opinion that in the same locality or industrial district and connected with the same industry there exists an industrial union to which the members of such a society might conveniently belong”. The threshold for registration in terms of membership was low: fifteen individuals working in a particular district in the same occupation could register as an arbitration union, which would then bargain on behalf of all workers in that same occupation and location. This permitted governments to establish alternative ideologically permissible unions to replace potentially dangerous ones; those that threatened the stability of the system could be deregistered.10 The tactic was used on the Waterfront several times, notably, though not exclusively, during the 1951 conflict. In this instance,

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the Labour and National Parties, as well as the Federation of Labour itself, united to deregister the Waterfront Workers’ Union, which had acted against Arbitration Court rulings and struck work illegally. Its members were blacklisted and a new union was established in its place. New Zealand’s arbitration framework also shaped the growth of organised labour in several important ways. In the short term, these particular features of the union movement were not necessarily problematic, though the way in which “hard” democratic corporatism had distorted the representation of labour in national political life would become abundantly apparent once the shift to market-led strategies began in the 1980s. Firstly, compulsory unionism caused organised labour to become highly dependent on the State for membership and consequently, resources. Given the begrudging attitude towards trade unions on the part of many New Zealand workers, rank-andfile commitment to organised labour was thin and frail. This, for many workers, was entirely understandable because New Zealand unions, encouraged by the regulations and rules governing them, tended to be highly bureaucratic and distant. Professional unionists, even if they started out working in the occupations that they then set about organising, often occupied their elected positions for years if not decades, far removed from the shop floor. Secondly, and also contributing to the potentially problematic organisational structure of arbitration unions, the requirement that registered unions be formed along occupational lines, first regionally and then nationally, was interpreted extremely narrowly. While collective bargaining was centralised, and shop-level bargaining was actively discouraged by the Arbitration Court, genuine industry bargaining was also disallowed. This resulted in the fragmentation of organised labour, notably the proliferation of small unions that were unable to respond adequately to the needs of their members. Wage-fixing on the part of the Arbitration Court (sometime known as the Commission, depending on the government of the day) tended to follow the lead of awards made to several large and strategically important unions, meaning that smaller and more vulnerable unions did not necessarily have to fight any of their own battles. In particular, “paper” unions with weak to non-existent workplace structures persisted in the clerical and service sectors. Women tended to be over-represented in these unions, where union organisers were stretched to visit hundreds of worksites consisting of one or two workers each. This problem came under increased scrutiny during the 1970s and early 1980s. Thirdly, the IC & A Act stated that the concerns of unions must be limited to “industrial matters” only. Again interpreted very narrowly by the relevant State institutions, this steered organised labour in New Zealand towards bargaining over wages and, to a limited extent, conditions, and away from broader industrial, political and social issues.11 Political or secondary strikes did happen, but only with the tacit consent of government officials.

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The arbitration system appeared to work well for New Zealand so long as it was accompanied by a robust economy underpinned by interventionist and protectionist economic and social development strategies. However, New Zealand’s economy went into a steady decline from the early 1970s, mainly as a result of the loss of its guaranteed export market following Britain’s entry into the European Community in the 1960s. Followed by the oil shocks, economic stagnation escalated industrial conflict, particularly in the transport, forestry and meat-work industries. Faced with these developments, the efficiency and fairness of the arbitration system became open to question, as it no longer seemed to provide an adequate framework for reaching a compromise between labour and capital. In particular, second tier bargaining at the enterprise level, above and beyond what was guaranteed through the award system, appeared to be out of control and was increasingly identified as a root cause of inflation.12 Accompanying attempts to turn around the downward economic spiral, which included efforts geared towards agricultural diversification as well as a series of rather unsuccessful heavy industrialisation projects aimed at energy self-sufficiency, successive governments reformed the IC & A Act with a view to making the arbitration system more “flexible”. Calls for institutional change in order to “flexibilise” labour relations, leading to a revamping and subsequent unravelling of the arbitration system, began under the Third Labour government (1972–75). The Industrial Relations Act of 1973, however, did not break fundamentally with the traditional model. Similarly, the 1975–84 National administration’s anti-union and anti-award rhetoric far outweighed the concrete changes it was able to make to the system. Its main initiative was to put an end to compulsory unionism in 1984, though this policy was not in place for long enough to make any real significant impact on union membership. Rather, the major effects of National’s strategy of the 1970s and early 1980s were to be experienced over the longer term. Specifically, Muldoon’s leadership style and the controversial nature of his economic policies, which in general stepped up State control over economic development, polarised New Zealand and produced a series of social and political tensions that shaped the pattern of market-oriented policy implementation carried out by the Fourth Labour government (1984–90). In particular, Muldoon’s style of interventionism was blamed for the worsening economic situation, particularly the escalation of overseas debt, and a backlash against this style of government followed. Shortly after gaining power, Labour held an Economic Summit Conference, bringing together representatives of labour (the Federation of Labour) and business (Federated Farmers and the New Zealand Manufacturers’ Federation in particular), in the hope that some sort of consensus with respect to economic policy might be reached. This gave the impression that the new government would follow the Australian Labor Party in utilising traditional corporatist networks in order to negotiate its way through the economic

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downturn. However, lacking economic policy expertise, the Labour Cabinet gratefully accepted the advice of Chicago School-influenced treasury officials while traditional policy-making strategies were abandoned.13 This was in direct contrast to the Australian Labor Party’s strategy, where the first version of the Accord was negotiated well before the Labour government was elected, and was renegotiated and implemented through its terms in office. Relatively orthodox market-oriented policy implementation followed, beginning with a standard structural adjustment package which overlapped with a long-term programme that aimed at more fundamentally changing the role of the State in economy and society. Financial deregulation, monetary reform and, importantly from a political point of view, trade liberalisation and the removal of agricultural subsidies, were followed by either the corporatisation and commercialisation of formerly State monopolies, or the eventual privatisation of these recently established State-owned enterprises (SOEs). The shift to market-oriented economic development in New Zealand deepened pre-existing divisions in the Labour Party, both inside and outside government.14 These tensions are well reflected in the government’s industrial relations policy of 1984–90. As a concession to the left wing of the party, its affiliated unions and working class voters, Labour avoided the temptation to slash welfare programs and benefit levels or withdraw completely from the provision of housing, healthcare and education. In fact, Labour’s 1988 Royal Commission on Social Policy argued in favour of an increased role for the State in order to alleviate the social effects of economic reform. While the recommendations of the Commission were largely ignored, the government’s Labour Relations Act of 1987 (LRA) and its application to the State sector in 1988 mirrored Labour’s somewhat cautious approach to social policy. The LRA and State Sector Act on one hand furthered attempts to make the industrial relations system more “flexible”. With a general thrust towards voluntarism rather than compulsion in tripartite negotiation, one of the motives of the LRA was to encourage the devolution of collective bargaining down to the shop-level. On the other hand, the new legislation neither fundamentally departed from the arbitration model nor answered demands voiced by business groups aimed at full deregulation. Most importantly, the new Act retained the emphasis on trade unions as defenders of workers’ interests in the workplace and maintained their special legal recognition. Trade union registration continued and an option to retain compulsory union membership clauses in collective contracts remained. Traditional institutions such as the Tripartite Wage Conference and processes of conciliation and arbitration, while no longer compulsory, were continued. In addition, Labour answered the criticism, often made by workers as well as business groups, that previous legislation encouraged the proliferation of small and ineffectual unions by implementing a new requirement that individual trade unions have at least 1000 members. Several other pieces of legislation also reflected the government’s internal contradictions. Significantly, the

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Employment Equity Act (1990) sought to solve the problem of gender discrimination in the workplace by requiring that employers offer “equal pay” for work of “equal value”. Labour’s industrial relations policies reshaped the labour relations regime in a number of important respects. While the arbitration system remained in theory as well as in practice, it had been significantly undermined by the late 1980s. This was reflected in the “internal” dimension of State– labour relations through the reorganisation of the Department of Labour (DOL). The Department had been established along with the development of the IC & A Act and had been the main administrative and advisory body in the arena of labour relations since then. Unlike many other government departments, the DOL did not undergo a process of corporatisation during the 1980s and continued to perform most of its traditional functions through the period of market-oriented reform. However, it did experience a major restructuring effort in 1988 following “new public management” prescriptions, aiming at making the department more streamlined, accountable and effective.15 A system of district offices responsible for implementing a wide array of services, statutes and regulations was replaced with a managerial framework which split the department into six separate bodies. The corporate management group would retain the functions of policy advice and analysis, while the policy itself was to be delivered through the New Zealand Employment Service, Training Support, which would contract with private as well as public training providers, the New Zealand Immigration Service, Occupational Health and Safety (OSH) and the Industrial Relations Service. Of the five delivery agencies, the Employment Service, Training Support and OSH transformed and consolidated their roles, rather than reducing them, during the market-oriented shift. The demand for employment assistance increased steadily from 1984, corresponding to a climbing unemployment rate as well as government efforts to either encourage or force welfare recipients into paid work. While the State withdrew from its role of employment creation, which had developed since the Great Depression, new relationships with training providers were forged, particularly with Maori community groups. While OSH now aimed to encourage businesses to “manage their own workplace hazards” rather than provide set prescriptions for how this should be done, the DOL noted an increasing demand for these services during the late 1980s and into the 1990s.16 By contrast, the role of the Industrial Relations Service changed much more significantly during the shift to market-led development strategies as the State gradually withdrew from direct participation in mediating employer–worker relations. Labour’s policy programme made it popular with the young urban middle classes, though this support was contingent on the government being able to deliver what it promised in terms of economic growth and the “trickle down” of wealth to at least these groups. At the same time, the traditional base of working class support had been eroded. Following the stock-market

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crash of 1987, which revealed how vulnerable the government’s marketoriented policies had made the country in general and those individuals and companies who had put their faith in the new economic model in particular, the path of reform appeared to lose its way. In Prime Minister David Lange’s words, it was “time for a cup of tea”, as Labour backtracked on its commitment to orthodox “neo-liberalism”. Cabinet sacked its most dedicated advocate of reform, Finance Minister Roger Douglas, followed by Lange’s own replacement by Geoffrey Palmer in 1989. Labour lost the election to the National Party, which, having reformed itself considerably since the days of Muldoon, staked itself on leading the country out of recession and restoring “fairness” in the social and industrial policy arenas. The National government’s (1990–96) reform programme both mirrored and deepened that of the Fourth Labour government. The economic model did not change much, though the new government did impose stricter controls on government spending and monetary policy, sped up the pace of overseas debt repayment, and advanced further along the privatisation agenda. However, the government’s first two terms in office will be remembered most of all for the social and industrial policy reforms outlined in its budget of 1991. Social welfare recipients bore the brunt of this attempt to reorganise and reduce the welfare state, in which social security payments were slashed and proposals were made to reduce the role of the State in the provision and delivery of social services.17 In conjunction with these changes National announced that it would provide “a more dynamic framework” for industrial relations in which workers and business could “achieve progress for mutual benefit”. The arbitration model and Labour’s inability to complete the market-oriented reform process were blamed for poor growth during the late 1980s, with the new Minister of Labour and State Services arguing that the traditional system was “not conducive to a direct relationship between employers and employees which would enable them to work together to improve productivity and quality”. The new legislation would “place the responsibility for negotiation where it belongs”, namely between individual workers and their employers.18 With these aims in mind, the labour relations regime under National was altered much more dramatically than it had been under Labour. Rather than tinkering with the old arbitration and award model, National scrapped the system altogether, forming the basis of a completely new framework of industrial relations for the first time since 1894. From the perspective of organised labour, the crucial aspect of the Employment Contracts Act (1991) was that it removed the advantages that State recognition of trade unions had given to organised labour in the past. In fact, the Act managed to remove the notion of “trade union” from labour legislation altogether, so that the labour movement would have to compete with other “bargaining agents” or “employee organisations” for membership and the right to be recognised by employers. In addition, the first part of the Act clearly

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outlined the principle of voluntary unionism, stating that no person can, “in relation to employment issues, apply any undue influence, directly or indirectly, on any other person by reason of that other person’s association, or lack of association, with employees” (section 5 part b). This clause was obviously difficult to enforce in practice, and had the potential to allow employers to block unions from the workplace altogether. Theoretically, the Employment Contracts Act (ECA) allowed for employers and workers to make a “choice” as to which form, either collective or individual, the “employment contract” would take. However, the bias of the Act was clearly in favour of individual contracts. Section 19 of the Act states that where a collective contract expires, employees are bound by an individual contract based on the provisions of the expired contract (Table 3.1). This reflected the preference for an unorganised and atomised labour force,19 a goal which was further achieved through a requirement that union access to worksites be subject to “the agreement of the employer”. Thus, the goals of the ECA went further than most attempts at labour-market “flexibilisation”, promoting decollectivisation rather than simply decentralisation of bargaining down to the shop-level. Note that the ECA shared the same objectives as the 1996 Australian Workplace Agreements framework, but was much more successful and sweeping in its implementation, sharing many aspects in practice with Chile’s Plan Laboral. In particular, the ECA placed very strict limits on the right to strike in what was clearly still a liberal democratic political system. In general, strikes and lockouts could occur only where they were related to the negotiation of a collective contract for the workers concerned, thus ruling out secondary or political boycotts, and then only when the contract had already expired (Table 3.2). Combined with reduced union access to workplaces, the restrictions that this imposed on the ability to pursue collective bargaining prompted the Council of Trade Unions to make a complaint to the International Labour Organization (ILO). The NZCTU alleged in 1993 that the ECA “contravened Convention Nos. 87 and 98 through various violations of the right to organize and to bargain Table 3.1

Collective bargaining in New Zealand 1894–2000

Mandatory collective bargaining? Compulsory arbitration or conciliation? Cooling off period? Limited scope of negotiable issues? Limits to duration of agreements?

1894–1987

1987–90

1991–2000

Yes

Yes

No

Yes

Yes

No

Yes Yes (to “industrial matters”) No in theory; yes in practice

Yes Yes (to “industrial matters”) No in theory; yes in practice

Yes Yes (narrowed in practice) No in theory; yes in practice

104 Labour Politics in Small Open Democracies Table 3.2

Strike regulations in New Zealand 1894–2000

Right to strike?

Replacement workers allowed during strike? Right to lockout?

Limits on strike duration? Mandatory dues deductions? Dismissal without severance? Non-economic strikes allowed?

1894–1987

1987–90

1991–2000

No in theory, but often yes in practice No

No in theory, but often yes in practice

Further restrictions placed by ECA

No

No in theory

No automatic right in theory, often yes in practice No

No automatic right in theory, often yes in practice

Restricted to similar instances as when strikes allowed

Yes

No (though initiation confined to specific bargaining period) No

No (though initiation confined to specific bargaining period) No

No

No

In theory no, but often occurred in practice

No

Possible under individual contracts No (stricter penalties imposed)

collectively”,20 a complaint that the ILO upheld. The National government’s response was dismissive, and the ILO’s recommendations were ignored.21 At the same time that collective labour rights were reduced, the right of individual workers to pursue their interests through legal channels was bolstered during this period. After 1991, personal grievance cases, mainly concerning unfair dismissals, outstripped the ability of the Employment Court and its associated mediation services to hear cases. Waiting times lengthened dramatically as the remaining labour institutions became overburdened.22 Obviously, middle or high wage-earners, or those workers who had otherwise remained members of unions, were much more likely to utilise these channels. Workers who lacked either personal resources or representation would have to fend for themselves. In response to the rapid pace and constant nature of the shift to marketoriented development strategies in New Zealand, voters opted to change from a majoritarian to a proportional representative electoral system in 1993. As many had hoped, the first election held under the new system, in 1996, delivered a coalition government that was bound to put an end to radical reform. Between 1996 and 1999, attempts at further deregulation of the labour relations system on the part of National Party leaders were foiled either by its junior coalition partner, the populist and nationalist centre-right

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New Zealand First, or by rising public dissatisfaction with the market-oriented shift in general. Policy stagnated under the Coalition, the economy took a downturn after the Asian financial crisis of 1998, and a Labour-Alliance centre-left coalition government was elected in 1999. The 1999 election, the second to be held under the new electoral system, delivered a coalition government that was dominated by a somewhat reformed Labour Party, kept in check by a centre-left economic nationalist party, and supported by a minor left-wing party, the Greens. Labour, in particular, remained committed to a model of economic growth based on niche marketing in a free trade environment, pursuing new trade ties in Asia and with South American countries, including Uruguay, and the United States. While keeping with the market-oriented development model in general, the new government signalled the first real change in policy direction since 1984 by softening some of what were perceived to be the harsher social and industrial policies put in place over the past fifteen years. Importantly and tellingly, the new coalition government paid special attention to social policy arenas such as public housing, restructuring of the health system and the administration of the welfare benefit system. This stemmed from a concern to offset some of the worst consequences of structural adjustment, but also illustrates the fact that such “side-effects” of reform as unemployment and increased inequality were now permanent features of the New Zealand economic and social landscape. On the labour relations front, the ECA was repealed and replaced with the Employment Relations Act (ERA). For organised labour, this represented a substantial victory over business groups and, in particular, the individual employers who had used the ECA to exclude unions from the workplace altogether and who had used the court system in order to financially undermine specific unions. Pro-labour Members of Parliament joined with unionists to burn copies of the ECA in the streets of the main cities. This irritated business leaders, who argued that the new legislation would give organised labour too much power, damaging the economy through increased strike action. In fact, the minimal shifts away from the strategy of top-down pluralism that had been embodied by the ECA were met with widespread resistance from employers, a theme that will be returned to below. However, while some unions did take advantage of their regained strength by engaging in a series of generally brief strikes in anticipation of and immediately following the implementation of the new legislative framework, this was not to become a long-term pattern, and the government rhetoric that accompanied the repeal of the ECA was far more vengeful than the changes that the actual legislation carried. Most importantly for organised labour, the ERA restored some sort of legal recognition to trade unions. Under the new law, only “unions” would be able to act as bargaining agents, and a stricter requirement was placed on employers to recognise and give workplace access to particular unions.

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Unlike the old arbitration system however, which specified not only compulsory union membership but also that unions be formed along occupational lines, and despite a requirement that unions operate at “arms length” from employers, “unions” under the new legislation were more likely to operate at the enterprise level given the trends in bargaining since 1991. This meant that the ERA leans slightly towards collective bargaining at the shop-level, but shies away from a return to centralised wage fixing, sectoral negotiations or industry negotiations. In addition, the guiding principle of the new Act was the commitment of all parties to negotiate in “good faith”, a rather weak requirement that was derived from US experiences and expertise and is thus entirely compatible with the pluralist model. Even so, business groups also raised concerns that bargaining in “good faith” might place unfair requirements on individual employers to open up company books and declare profit goals.23 Agent-principal issues In 1984, when the shift from State-centric to market-led development strategies began, organised labour in New Zealand was singularly ill equipped to defend its members, and workers in general, against the negative consequences of the change. A combination of “hard” neo-corporatist initial incorporation and subsequent party-dependent political insertion, boosted by compulsory unionism and the somewhat bureaucratic nature of both individual trade unions and peak organisations, had made organised labour rather complacent and institutionalised to the status quo. In addition, the fact that the “movement” was embedded in a political culture that was resistant to class-based appeals delivered a weak and tenuous rank-and-file loyalty to the union leadership.24 The response of organised labour to the actions of the Fourth Labour government, and the market-oriented policy shift in general, also needs to be set in the context of the relationship between the union movement and the National government of 1975–84. Besides the political and ideological clashes that had occurred, between unionists and Muldoon and his supporters in particular, the economy was admittedly in a disastrous state by the time that Labour came to power. Increased government investment in the face of economic decline had added the problem of overseas debt to the mix, and calls for economic liberalisation in order to increase productivity were beginning to be heard from many different sources. Given this combination of factors, it is not perhaps surprising then that the New Zealand union movement threw its wholehearted support behind the Labour government, regardless of the costs (Table 3.3). A “wait and see” approach was adopted in relation to the policy shift on the grounds that anything had to be an improvement on the Muldoon years. A 1986 Federation of Labour policy decision makes this position very clear, identifying “the main direction of FOL policy as being directed against the employers, the largest monopolies and these National

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Party representatives who clearly desire to smash the unions . . . the future interests of the Trade Union movement will be best served by the retention and the strengthening of the Labour Government”.25 The direct impact of Labour’s push for enterprise bargaining within the existing arbitration and award model can be observed after the implementation of the Labour Relations Act (LRA) in 1987. In general, against stagnating trends in minimum wage growth and rapidly widening income gaps, the union movement was in some respects strengthened during this period. The LRA’s 1000 member clause forced a series of trade union collapses and amalgamations that was to carry through the 1990s. The number of registered trade unions dropped from 259 in 1985 to 112 in 1989. While this meant that some workers were potentially no longer covered by collective contracts, others were now serviced by stronger and less resource-starved unions. Union membership, however, was successfully maintained, with one set of calculations identifying a slight rise in the rate of union density during the term of the Labour government, from 43.5 per cent in 1985 to 44.7 per cent in 1989.26 The shape of the labour movement and the balance of power within it also began to change in the late 1980s. Prior to the passage of the LRA, most private sector unions were affiliated to the Federation of Labour, with the notable exception of several comparatively militant unions in the transport Table 3.3 Union membership, density and number of unions in New Zealand for selected years 1900–99

1901 1911 1921 1936 1951 1966 1976 1981 1985 1989 1991 (May) 1991 (Dec) 1992 1994 1997 1999

Union membership

Number of unions

Union density (%)

23,768 55,629 97,719 80,929 272,957 353,093 454,991 519,705 683,006 648,825 603,118 514,325 428,160 375,906 327,800 302,405

202 307 418 487 415 369 292 258 259 112 80 66 58 82 80 82

8.0 19.0 26.0 18.0 48.0 41.0 43.0 48.0 43.5 44.7 41.5 35.4 28.8 23.4 18.8 17.0

Sources: New Zealand Official Yearbook for years cited prior to 1991; A. Crawford, R. Harbridge and K. Hince, Unions and Union Membership in New Zealand, Industrial Relations Centre (Wellington: Victoria University Press, 1997 and 1999).

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sector. Treated slightly differently under separate legislation, public sector unions were organised under the Combined State Unions organisation. By 1988 the Federation had been dissolved and replaced by the Council of Trade Unions (CTU), to which most strategically important unions in the private and public sectors became affiliated as all sectors were brought under the same type of industrial legislation. As the new economic strategy evolved, unions which had been strategically important in a protectionist economy with an agro-export base, lost some of the political weight they were able to exercise within the trade union movement. In particular, the watersider and seaman’s unions, the boilermaker’s union and other organisations had already lost ground to white-collar and ideologically moderate public sector unions by the time that the Fourth National government was elected in 1984. Subequently, the CTU adopted a new professionalised or corporate image that was not to the liking of traditional union leaders, even if the strategies themselves did not change a great deal. Union collapses and amalgamations of the late 1980s were a sign of things to come after the implementation of the ECA in 1991. However, what the union movement seemed most unprepared to cope with was the end of compulsory unionism. The immediate and devastating effect this had on membership numbers is quite remarkable. In May 1991 603,118 or 41.5 per cent of New Zealand workers were members of trade unions. By December that year, only 514,325 or 35.4 per cent were still members. The union membership continued to fall until the very late 1990s, even after the pace of reform was slowed after 1996. The density rate by 1994 had fallen to 23.4 per cent, then to 17 per cent by 1999. In addition, the trend towards fewer numbers of unions continued after 1991. Smaller and weaker unions that had managed to survive under the 1987 LRA either collapsed under the weight of membership losses or combined with larger organisations. Through 1994–97 around 80 trade unions remained in existence, representing the collapse of smaller unions, further amalgamations, and a consequent move away from strictly defined occupational unions in the new industrial relations environment.27 Union membership and collective bargaining remained strongest in the public sector, communications, the finance sector and metal manufacturing, in comparison to agriculture, food, beverage and clothing manufacture, and the service and transport sectors which suffered the most significant losses in membership.28 Despite the fact that many of these consequences of labour market deregulation were easily predictable before 1991, the moderate and accomodationist stance that organised labour had taken in response to the Fourth Labour Government’s policy programme was carried through the early 1990s. This was signalled by the CTU’s response to National’s announcement of its plans to present what was to become the Employment Contracts Bill in late 1990. While the CTU insisted that it opposed deregulation of the labour market, the organisation’s behaviour during the 1990–91 period

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reflected an unwillingness to reject reform altogether or engage in a militant campaign strategy in opposition to the Bill. In essence, the CTU leadership believed that militant action, and a general strike in particular, would not generate enough support from union members. In 1991 Ken Douglas, President of the CTU until 1999, stated that there was a wide consensus around 95 percent of actions that had to be taken before and after the passage of the Act. There was a split about one form of action that could have been taken. A call – I repeat a call because it was be no means clear what the level of response to the call would have been- for some sort of general stoppage, from four hours to indefinite, was the only point of disagreement, a disagreement over tactics. No sane person has ever said that a four hour general stoppage would have defeated the Bill, or slowed its passage, or substantially modified its content. In the end, and this is the key, by a majority a different form of protest was endorsed.29 This alternative strategy consisted largely of political lobbying on the basis that the CTU supported “reform of the industrial relations system but opposed total deregulation of the labour market”. Support for the strategy was to be garnered from the union membership through “stop work meetings, seminars, Special Branch Meetings and lunch time discussions”. 30 This plan of action was consistent with the economic, social and industrial policy prescriptions that the CTU increasingly subscribed to following the organisation’s formation in the late 1980s. In general, the confederation advocated a policy of “constructive engagement” with orthodox reformers, believing that organised labour’s concerns would be taken into consideration only if union leaders entered into negotiation with business and government representatives over the scale and scope of reform. This “realistic” agenda took account of the seeming irreversibility of economic reform, and demanded that labour act with moderation and self-restraint when presenting policy demands.31 Lobbying of elites was to occur at both national and international levels, with National Government prime ministers being invited to speak at CTU conferences, and CTU delegates attending OECD and Asia-Pacific Economic Cooperation meetings, for instance. Throughout, the labour movement appeared anxious that it was not seen as anti-business, supporting the shift from occupational to industry and enterprise bargaining in the belief that a primary goal of unions should be to support the activities of businesses attempting to compete in the “new” economy. This played into the hands of capital and both major political parties, who argued that economic growth would occur only if unions altered their strategies with a view towards co-operation with business. During the late 1990s, organised labour’s proposals for reforming or repealing the ECA revolved around the

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concept of “good faith bargaining”, eventually incorporated into the policy programme of the NZLP, which, as noted, remains entirely consistent with market-oriented models of labour relations. It is also the case that constructive engagement policies and strategic alliances of this type were also pursued by the Australian Council of Trade Unions, particularly after 1987. These parallel histories are not surprising, given the regular contact and information-sharing that occurs between the ACTU, the NZCTU, the ALP and the NZLP. However, the ACTU’s strategy changed once a centre-right political party gained power and began to make direct attacks on the rights of trade unions to represent employees. In addition, the ACTU always had to negotiate with its militant wing made up of construction, mining, and transport unions in a way that the NZCTU did not have to by 1991. While the CTU remained the main voice of organised labour during the 1990s, bitter ideological and personality conflicts did surround the confederation’s stance in relation to the ECA, leading to a split of the union movement into two unequal camps. During the early 1990s, when organised labour was at its weakest, the New Zealand Trade Union Federation (TUF) was formed as a splinter from the CTU, to which traditionally more ideological militant unions such as the Seafarers’ and the Amalgamated Workers’ Union joined. Some unions, such as the large and politically important National Distribution Union, chose at times not to affiliate to either peak labour body, though they aligned themselves more readily with TUF rather than the CTU when it came to most political issues. However, TUF remained a small and divided group throughout the 1990s and was for the most part effectively side-lined in the political sphere. Advocating policies which were at odds with the Labour Party moderate centre-left programme, TUF lobbied the leftist Alliance Party for a return, with some moderation, to a centralised wage bargaining model. Through the 1990s, much of the tension between the CTU and TUF resulted in personality and political clashes between the leaderships of the two organisations, illustrating again how New Zealand’s political culture causes ideological conflict to quickly lose its substantive content, particularly if there is a hint of class-based politics involved. In particular, comparatively militant unionists blamed the lack of resistance to the ECA on individual CTU leaders, reflecting the increasingly personalist and inward-looking nature of union politics. This conflict carried through until a change in the CTU’s leadership in 1999, after which the two confederations announced that they would be willing to consider an amalgamation in the near future. The overall picture is nevertheless clear: organised labour in New Zealand remained divided in its opposition to the market-oriented programme of reform through the 1990s. This placed unions in a weak position vis-à-vis employer organisations, which were united, (albeit not uniform) in their commitment to the reform process. The weakness stemming from disunity was reinforced by the lack of a broadly

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shared ideological programme which the central labour organisation could use to mobilise individual unions and workers behind.

Relations with business New Zealand’s most important representatives of capital through the postwar period included Federated Farmers, the Employers’ Federation and the Manufacturers’ Federation. These groups, though aligned more closely with National than Labour governments, had had continuous input into policy decision-making before 1984, much in the same way that organised labour had done. One of the most remarkable aspects of the market-oriented reform process in New Zealand was that it had the almost wholehearted and unqualified support of these established employer representatives as well as that of new business groups formed largely to advocate further reform. This was in spite of the fact that, particularly during the first phase of the shift under Labour, traditional businesses had the most to lose from economic liberalisation. The farming community was devastated by the removal of farming subsidies, which was one of the first actions taken by the Fourth Labour government, while small-scale manufacturers, especially in the food and beverage and the clothing and footwear industries, were undercut by the removal of import duties throughout the period of reform. However, despite early protests by farmers against the policy direction taken by Labour, business groups, including Federated Farmers, fell in behind the market-oriented project to oppose the interests of organised labour. Partly, this was a result of the strong leadership shown by the New Zealand Business Roundtable, formed in the mid-1980s. This group, representing the largest New Zealand-based companies, became the leading proponent of the policy shift as well as the main representative of business interests after 1984. Interestingly, because of the country’s very small population and even smaller pool of local policy “experts”, there was a particularly strong crossover between Treasury officials and representatives sitting on the Business Roundtable. These individuals, when trained overseas, also tended to have strong links with the Chicago School of Economics or the Harvard Business School, and thus with policy implementation strategies used in similarly reforming nations such as Chile. In contrast to the Business Council of Australia, which pushed for enterprise bargaining through to the 1990s, the New Zealand Business Roundtable and the Employer’s Federation consistently and loudly advocated complete deregulation of the labour market from the outset. The 1987 Labour Relations Act was a compromise between the demands of organised labour and organised business, which business in particular was far from satisfied with. Their goals were much better met by the ECA, although even there the retention of the Labour Court was regarded as an unnecessary intrusion in the labour market and wrongful dismissal procedures as too pro-labour.32

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In 1999, after the intentions of the new Labour–Alliance government were announced with respect to labour relations, business groups moved to a defensive position. While the government’s Employment Relations Bill was attacked on the grounds that it would lead to an increase in strike action and a loss in overseas direct investment, the government’s moderate reform programme was blamed in general for a fall in the value of the New Zealand dollar, a loss of business confidence, capital flight, and a “brain drain” of local entrepreneurs and talent to other parts of the globe. Although the new administration’s approach to labour relations did not fully meet the expectations of even the CTU, business showed an unwillingness to compromise after a change in government that apes the behaviour of “disloyal oppositions” in the breakdown of democracy elsewhere in the world.33 Such business strategies reflect the adoption of zero-sum approaches to labour relations on the part of employers and their representatives in New Zealand. It appears that the constraints placed on capital by the arbitration system fostered anti-democratic business behaviour rather than the culture of compromise and tripartite negotiation in search of “social peace” that has been identified as an outcome of Western European experiments in neocorporatism. New Zealand’s “hard” variant of democratic corporatism did not provide incentives for business to develop self-limiting strategies in its relations with labour, since all restraints or inducements were imposed from outside the labour–business relationship on the part of the State. The longterm consequences of such a historical pattern of interest group articulation were revealed in the shift to market-oriented labour relations. The changes made to the labour relations partial regime, as well as the moderate and divided responses of the trade union movement itself, permitted individual businesses and their representatives to pursue short-term gains at the expense of co-operative strategies. At the level of the shop floor, it became clear that employers would take advantage of the new powers granted to them by the shift to market-oriented labour relations. In the sectors where the decollectivisation of bargaining occurred most rapidly, conditions deteriorated further and faster. The effect on real average wages of the collapse of multi-employer bargaining, for instance, is mixed. Real wages dropped most significantly between 1981 and 1985 (Figure 3.2), while early evidence suggested that they also fell in the first few quarters after the implementation of the ECA.34 Later assessments showed that this trend had levelled out by the mid 1990s, followed by a steady increase in wages.35 However, these aggregate estimates often fail to show how the ECA impacted on workers across different industries, while narrower studies of workers in specific sectors illustrated how bargaining outcomes had diverged. In particular, low-wage workers in the service sector especially were vulnerable to cuts in take-home pay as a result of changed working conditions.

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180 160 140 120 100 80 1980

1982

1984

1986

1988

1990

1992

1994

Real wages Figure 3.2

Evolution of real wages New Zealand 1980–94.

Source: P. Dalziel and R. Lattimore, The New Zealand Macroeconomy: A Briefing on the Reforms and their Legacy. Melbourne: Oxford University Press, fourth edition, 2001: 133–45. Calculated on the basis of real annual average wages.

The traditional award system not only guaranteed minimum wages across specific industries, but it also guaranteed a set of minimum conditions, including meal breaks, over-time rates and conditions, and workplace health and safety standards over and above those covered by additional legislation. This changed under the ECA. One survey of women workers in the service industry for example, taken four years after the implementation of the Act, found that despite some improvements in basic pay rates, 30 per cent of workers experienced a decrease in take-home pay as the result of changed working conditions. In addition, half of these workers were not working to a written contract, even though they were entitled to under the ECA, and negotiation in many similar industries was becoming almost nonexistent.36 The shift away from the award and arbitration system towards individual contract negotiation and “flexibility” had intensified the casualisation of the workforce, with decreases in take-home pay due to cuts in allowances and the loss of overtime and penal rates accompanying this trend. Not surprisingly then, inequality continued to grow throughout the entire period of reform. A gradual flattening of the tax system and the introduction of regressive goods and services levies in 1986 deepened the inevitable growth of wage inequality in a decentralised and partially decollectivised system. In combination, these developments resulted in a rapidly shrinking middle class, and an increasingly impoverished group of working poor.37 The decollectivisation of the bargaining process and the consequent atomisation of the workforce further reduced the possibilities for halting these trends, let alone reversing them. Given relatively high rates of unemployment as well as reduced social welfare entitlements, workers had little choice but to accept the new industrial relations environment. Along with

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the ECA’s restrictions on the right to strike, the accommodationist stance of the union movement towards business ensured that the frequency of industrial action decreased significantly during the 1990s (Table 3.4). The total number of working days lost dropped from an average of 318,062 days in the four years prior to the implementation of the ECA, to an average of 68,701 days between 1991 and 1994, and an average of 39,814 days between 1995 and 1998.38 Proponents of reform argued that this was one of the most important consequence of labour market “deregulation”, and that any future policy reversals would be disastrous for the country. Judith Sloan, an Australian academic, for instance, argued that for most of the twentieth century “New Zealand and Australia had two of the worst industrial relations regimes among western countries.” However, more recently “industrial unrest has fallen in both Australia and New Zealand following liberalisation – in New Zealand’s case dramatically so . . . Strikes are almost extinct in this country.”39

Table 3.4 Number of disputes and number of days lost due to strikes and lockouts in New Zealand 1975–99

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Number of disputes

Number of days lost

428 487 562 411 523 360 291 333 333 364 383 215 193 172 171 137 71 54 58 68 69 72 42 35 –

214,632 488,441 436,808 380,605 381,896 373,496 388,086 330,028 371,774 424,921 756,432 1,329,054 366,307 381,710 193,308 330,923 99,032 113,742 23,770 38,262 53,352 69,514 24,614 11,778 16,674

Source: International Labour Organization, LABORSTA database, Tables 9A and 9C.

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Macroeconomic and social indicators Since the Fourth Labour government embarked on its programme of reform in the mid-1980s, New Zealand, along with nations such as Chile, has been held up as an exemplar of structural adjustment (Table 3.5). In the sphere of labour relations, the ECA has been studied and advocated by reformers elsewhere as a model “flexibilisation” programme. However, while a change in policy direction was clearly needed by 1984, it is not at all clear that the path chosen delivered the economic growth and increased productivity that was promised. Rather, as New Zealand became even more vulnerable to fluctuations in the world economy, success became more dependent on the fortunes of others. Labour’s economic program delivered sluggish growth rates, averaging well below 2 per cent between 1985 and 1990. Real growth fell by 0.5 per cent during National’s first year in office, then dropped by 1.3 per cent in 1992 before beginning to pick up and again by 3 per cent in 1993 and 5.4 per cent in 1994.40 This followed international trends, though National politicians were quick to claim growth as a result of its labour policies. OECD figures report that between 1995 and 1999, growth averaged below the OECD average, and well below Australian successes.41 Part of the country’s struggle was in finding a new “niche” in the global chain of production once it ceased to act as Britain’s foreign farmyard. Shut out of the European Union, Labour and National governments who were ideologically committed to free trade worked to expand bilateral agreements such as Closer Economic Relations with Australia while implementing the provisions of non-binding multilateral agreements well ahead of other signatories in Asia, North and South America and Europe. In the process, local manufacturing died a slow death, while “boutique” industries such as private boat building and winemaking were slow to develop. Despite the talk of creating a “knowledge” economy based on the Irish model from the

Table 3.5

Macroeconomic indicators in New Zealand 1975–99 1975–79

Average annual growth rate (%) 0.7 Average annual change in 13.8 consumer price index (%) Registered unemployed (%)* 0.7

1980–84

1985–89 1990–94 1995–99

2.4 13.1

2.3 11.5

1.3 2.9

2.8 1.8

3.8

5.9

12.8

9.5

* “Official” unemployment data give a lower estimation (and some argue, underestimation) of unemployment in New Zealand, and no consistent official unemployment figures exist before the mid-1980s, making comparisons across the twenty-five year period using this indicator difficult. Sources: All data is calculated from Statistics New Zealand, PC INFOS timeseries database reported in P. Dalziel and R. Lattimore, The New Zealand Macroeconomy: A Briefing on the Reforms and their Legacy, Melbourne: Oxford University Press, fourth edition, 2001: 133–45.

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mid-1990s, investment in higher education remained low, and local entrepreneurs found it difficult to attract the information technology expertise that such a strategy requires. It is also clear that any benefits of structural adjustment were distributed unevenly. New Zealand’s two waves of market-oriented reform had obvious and observable consequences on workers, organised and not. Fundamentally changing the political culture of a country in which politicians had traditionally promised full employment, the rate of registered unemployed rose from around 4 per cent in 1986 to around 10 per cent or more during the late 1980s and early 1990s. While the rate of registered unemployed is presumed to slightly overestimate the level of unemployment, the official unemployment rate reveals a similar trend.42 Official figures also show that employment did increase after the implementation of the ECA, but much of this was in low-wage and casualised work which is not well accounted for in official government figures.43 Pacific Islanders and Maori fared worst of all in terms of joblessness. In regions such as Northland, with a high indigenous population and a semi-rural decaying economic environment, unemployment was estimated at anywhere between 25 and 50 per cent. The effects of the reform process on poverty and inequality are difficult to measure, even if there is a broad agreement in New Zealand society as to the negative effects of structural adjustment on the country’s social fabric. Part of the difficulty in estimating effects on poverty is created by the fact that New Zealand has no official poverty line. However, following the implementation of the ECA and the cuts in social welfare spending, concern during the 1990s centred on increases in levels of “diseases of poverty” such as meningitis and tuberculosis. Outbreaks of such “Third World” diseases were found in regions, such as South Auckland, with large Maori and Pacific Island populations, high rates of unemployment, restricted access to primary health care and cramped housing conditions. Increased inequality, given the household labour-force surveys collected by Statistics New Zealand, is comparatively easy to measure. As mentioned above, what this data shows is that the rich did indeed grow richer during the period of reform, while the middle classes in particular fell increasingly behind. One estimate of rising inequality that takes into account the first phase of reform, using individual tax data and the Gini coefficient, reports that inequality rose from 0.391 to 0.430 between 1983 and 1990.44 Summary What the New Zealand case illustrates, above all and in a similar sense to the Chilean case, is that specific patterns of State–labour relations that appear to benefit organised labour over the medium term might in fact prove detrimental in the longer run. In short, the New Zealand union movement’s responses to the market-oriented shift can be explained in terms of its particular historical and legal incorporation into national political life

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since the late nineteenth century. Three specific features of this process should be noted. Firstly in terms of its insertion in national-level party politics, the New Zealand labour movement became increasingly party-subordinate over time. Secondly, the conciliation and arbitration model that was adopted in 1894 fragmented the union movement along occupational lines and caused labour to become heavily reliant on the State. Thirdly, the institutional framework both arose from and reproduced a political culture that remained allergic to class-based or solidarity appeals of any sort, yet susceptible to disputes and divisions along personality lines. This feature was reflected in the tendency of the labour movement to divide itself over issues of demarcation and territory, while for the longest part of its history remaining subservient to its parliamentary wing. Overall, the process was one which pacified and co-opted organised labour, limiting its ability to operate as an autonomous political actor during the new phase of market-led development that occurred from 1984. Since the union movement had placed its entire weight of support behind the Fourth Labour government, organised labour had nowhere else to turn once the political party abandoned its traditional moderately social democratic programme in favour of the new economic and social model. This pattern of accommodation was, rather surprisingly to some, substantially carried through the 1990s during the second phase of market-led reform in which a self-declared pro-business government set the terms of the political debate. While the compulsory arbitration framework and a close relationship between the Labor Party and the union movement also shaped the labour politics of the market-oriented shift in Australia, there were marked differences between the two experiences. We further explore this comparison in the light of our remaining case studies in the conclusion to this book, but for now, it should be noted that the relationship between the Australian labour movement and the Australian Labor Party had more of an element of interdependence rather than strict subordination during the entire period of reform. This set a very different set of strategies in place, which were much more effective in restraining the process of labour market deregulation attempted by the centre-right Coalition government after 1995. The pattern of State dependence that shaped the growth of the New Zealand union movement gave it a certain set of advantages and guarantees that benefited organised labour for the greatest part of the twentieth century. Most obviously, compulsory union membership ensured a relatively high rate of union density. However, simultaneously such guarantees weakened and undermined labour over the longer term. By 1984, the labour movement was highly bureaucratised and many New Zealanders, and many union members, justifiably perceived that union leaders were out of touch with their members and supporters. The sudden and devastating decline in membership and apparent union strength after 1991 was thus a result of institutional change, rather than the economic shift itself that underpinned

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the National government’s new legislation. The Uruguayan case contrasts with the New Zealand experience in almost all respects, and it is to this case that we now turn.

Uruguay Uruguay mirrored the Chilean experience in military bureaucratic authoritarianism in 1975, having suffered an anti-communist military coup d’état in 1973. Yet it differed from the Chilean case in two important regards. First, the process of transition from democracy to authoritarianism was more gradual and incremental, beginning in 1966 with a “hardening” of the democratic regime headed by the centre-right Colorado Party president José Pacheco Areco in response to increased social unrest caused by long-term economic decline and the emergence of the Tupamaro insurgency. This hardening process came to fruition after the 1971 national elections, won by ultraconservative Colorado Juan Maria Bordaberry with a slim and highly polarised parliamentary majority over the centre-left Blanco Party and the Marxist Broad Front (Frente Amplio). Thus a labour-based political party was not in power at the time of the coup, and the armed left was in a losing battle against a conservative government and its military allies. With parliamentary gridlock the norm in the midst of the guerrilla war, in 1973 the military high command dispensed with the trappings of civilian constitutionality and assumed direct control of the executive branch (although Bordaberry served as a civilian figurehead until 1976). In doing so it also suspended parliament, declared a state of siege and outlawed all union and political activity. It was not until 1977, till the introduction of its constitutional reforms, that the military relented in its repression of political opponents. And it was not until 1981, after the failed constitutional plebiscite of 1980, that some modicum of civil liberties were restored as part of the managed transition to democratic elections in 1984. As in Chile under Pinochet, in 1975 organised labour was legally outlawed and severely repressed. There were total bans on syndical organisations and on rights of association, strike and judicial redress. Union property was seized and militants jailed. In some extreme cases, particularly visible labour activists disappeared or were forced into exile. Some of them were later killed abroad by foreign agents allied with the Uruguayan military. Yet, although the military regime had on a per capita basis more political detainees than anywhere else in the region, it was nowhere as murderous as its neighbours to the south and west. In 1977 and in 1980 it attempted to institutionalise a new constitutional order that restored a conservative bias in the political and economic systems without systematically destroying the human and organisational bases of working class power. As we shall see, its relative concern with civil niceties, constitutionalism and attempted co-optation of the labour movement not only constituted a second major point of difference

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when compared to Chile (or Argentina, Brazil or Bolivia at the time), it also ultimately led to the demise of the military regime – and the restoration of the labour relations partial regime that existed prior to 1968. Nevertheless, the economic impact of the dictatorship’s policies had a markedly negative impact on the working classes. By 1985, real wages had fallen to half of their 1968 levels, over half of the urban population were working twelve hours a day or longer, and the top 10 per cent of income earners controlled 40 per cent of the total national income (31 per cent of which was controlled by the top 5 per cent of income earners). Wages as a percentage of national income fell from 40 per cent in 1973 to 27 per cent in 1982. Rent controls were abolished and social security, pension benefits and public health services were all dramatically curtailed while the cost of living increased over ten-fold. Unemployment reached 15 per cent by 1980 before the recession of 1981–83 devastated the urban industrial sector. When the recession hit, it hurt the debilitated working classes the most. Real wages fell by another 28 per cent in 1982–83, and unemployment rose to over 16 per cent. The number of workers employed in manufacturing declined from 21 per cent in 1963 to 18 per cent by 1985, and in the service sector grew from 35 to 42 per cent of the economically active population from the early 1970s to the mid-1980s. In addition, the number of under-employed, multiple-employed, self-employed and informal sector workers increased dramatically, as did the number of women and children in the workforce.45 The sum total of these changes was a disarticulation and recomposition of the workforce around service activities and other individualised forms of work. Seen in retrospect, the dictatorship went through three phases. From 1973 to 1977 it concentrated on purging Uruguay of armed insurgents and their supporters. Very little was done to restructure the economy or labour relations system while it maintained the state of siege. From 1977 to 1980 the regime attempted to consolidate its rule by redrawing the rules and regulations governing the economy and interest group collective action, while relaxing repression and preparing a national referendum on its proposed constitutional reforms. When its proposal was rejected in the 1980 plebiscite, the military engaged in a top-down withdrawal from power that resulted in the “pacted” transition to democratic elections in 1984.46 Neither in its institutional or economic reforms did it achieve significant success, which only hastened its retreat once its ideological project was rejected in the referendum. Political insertion As in Chile, Uruguay had an early history of union mobilisation relative to most Latin American experiences. Italian immigration in the mid- to late 1800s brought with it the first stirrings of anarcho-syndicalism, communist sympathies and working class protest. These were organised under the banner of enterprise-level stevedore, transportation, meat packing, leather-working

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and craft unions in other areas of the service economy. With the rise of these agro-export infrastructure industries by the turn of the century, the agrarian elite that had dominated national politics since independence under the aegis of the conservative Blanco Party (founded in 1836) ceded authority to a rising middle class coalition centred in the service industries of Montevideo, the capital and major export port. These rising urban classes came to constitute the bases of the liberal Colorado Party, also founded in 1836. In an effort to integrate working class voice into the political process, in the early 1900s, the administration of Colorado José Battle y Ordoñez drafted a highly pluralist constitution that afforded untrammelled freedoms of association and a unique electoral system in which individual political parties ran several competing presidential and parliamentary slates that served as simultaneous primary and final elections (the Ley de Lemas of 1910). In 1917, a Swiss-style collegiate executive was established as part of a major constitutional reform. Under the new charter the powers of the presidency were reduced with the establishment of a nine-member executive council (the colegiado) elected by the parliament that made domestic policy with guaranteed one-third minority party representation. The presidency was charged with the conduct of foreign and security affairs. Although the collegial executive and party slate system was disbanded by military fiat in the constitution of 1934, it was gradually re-introduced after 1943 (with the restoration of the Party lemas), and was restored in 1952 with the elimination of the presidency altogether (a situation that lasted until 1966). In terms of interest group representation and freedom of association, under the 1917 constitution and its modifications, no restrictions were put on the right or ability to organise or collectively bargain, nor were there any State regulations covering collective action outside that covered by standard contract law. This included no regulations or limitations on the right to strike, slowdown or other forms of labour service or capital withdrawal. Enshrined in Articles 34 and 57 of the 1917, 1934, 1943 and 1967 constitutions, in spite of major modifications to the rest of the political charter, freedom of association remained as the cornerstone of interest group politics until the slow descent towards military authoritarianism began in 1966. Given these institutional and internal union dynamics, the period of initial political incorporation of Uruguayan labour (1905–17) was pluralist and pressure-group in nature, in that neither the State nor political parties mediated the way in which unions organised and bargained. As explicated below, that permitted the consolidation of Marxist unions relatively early in Uruguay’s democratic history. This type of political insertion was well established by the time of the shift towards Import Substitution Industrialisation (ISI) and welfare Statism in the 1930s. The response to the Depression and loss of export markets was, as elsewhere, a shift to State management of the economy as a national industrybuilding and redistributive device. This served to expand the role of the

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State in the provision of employment, health and welfare benefits to workers, but it also helped increase the membership and organisational bases of the urban labour movement as part of the inward-oriented development project. That in turn improved organised labour’s strategic position and influence in both the economic and political spheres, and increasingly focused its attention on the broader contours of social policy-making. Unlike its neighbours, the move towards State management of the Uruguayan economy did not bring with it State intervention in the labour relations partial regime until 1943, when tripartite wage boards, the Consejos de Salarios, were established as concertative wage-bargaining mechanisms governing a variety of occupational categories. As a result of its type of initial incorporation, a pattern of labour political insertion developed in which unions and employers looked first to negotiate their differences independent of the State, in bipartite fashion. In the measure that individual unions and firms adopted autonomous collective bargaining as the recourse of first choice, during the first three decades of the twentieth century, labour conflicts were increasingly less political than localised material disputes. In turn, national level union politics were increasingly those of pressuring the mainstream parties on the terms of contingent class compromises, and what labour conflict occurred was left for the actors involved to resolve. Only in the case of violence did the State intervene, as per criminal statutes. Even so, class divisions sharpened after 1929 with the loss of traditional export markets as part of the global Depression. This in turn prompted the adoption of progressive welfare reform on the part of the mainstream parties and the move towards increased State intervention in the economy and the social division of labour. Influenced by the regime changes occurring in its larger neighbours, Uruguay followed the regional trend of the times and underwent a military coup in 1933. Yet here too the Uruguayan experience was short-lived and dissimilar when compared with the authoritarian experiments of its larger neighbours. It had come nowhere near the Fascist-inspired ambitions of the Perón or Vargas regimes in Argentina and Brazil, or the Socialist-inspired notions of the Marmaduke Grove regime in Chile (including their State corporatist approaches towards national labour administration). Instead, the short-lived authoritarian regime fronted by conservative Colorado Gabriel Terra served more as a caretaker or arbitrator administration while the political elites reorganised a consensus around the new institutional and economic bases of the Uruguayan State. In an effort to stabilise and standardise collective bargaining in an expansionist economy with a heavy State presence (since the advent of World War II saw a sharp rise in demand for Uruguayan agricultural commodities), the Consejos de Salarios (wage councils or wage boards) were created as part of the democratic restoration of 1943. The Consejos acted as national-level, functionally or occupationally defined concertative wage-bargaining vehicles. They eventually became the centrepiece of the collective bargaining system

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for over twenty-five years, with their scope of jurisdiction and authority extending well beyond wage setting into public health, welfare and social security policy. They also opened the door for the establishment of an extensive concertative network that sought to co-ordinate social policy at the national, regional and local levels. The Consejos were comprised of a majority of representatives of autonomously aggregated unions and employer associations, with State representatives (officials from the Labour Ministry) limited in their powers of jurisdiction, authority, ratification and intervention. Pluralist political insertion of Uruguayan labour led to the particular mix of class-based ideological competition and material pragmatism, which located the labour movement as an autonomous grassroots pressure group on the political system with significant presence and influence on all of the mainstream political parties as well as those of the Left (Communists and Socialists) that dominated shop union leadership. Absence of legal restrictions on collective action and the accommodationist approaches of the mainstream political parties allowed unions to engage in grassroots activism around bread-and-butter issues while engaging in the politics of contingent class compromise at the parliamentary level. Maintaining a skeletal organisational structure at the national level prevented the bureaucratisation of the labour movement hierarchy and, given the tripartite structure of wage bargaining as of 1943, it focused attention at the federation or occupational levels in which union leaders were selected on the basis of their shop-level performance, as much, if not more than, their ideological persuasion (which was predominantly Marxist). In the late 1950s, following the contraction of the post-war export economy, the ISI model began to decay, economic growth stalled, real wages began to decline, inflation and unemployment increased and social tensions in the declining protected market began to accentuate. Unemployment surged from under 5 per cent to 9 per cent in the decade preceding the military takeover, and industrial production and GDP dropped by 12 per cent between 1954 and 1972. The State assumed a larger and larger burden of defraying the costs of this decline and ameliorating the dislocations in the social division of labour, thereby incurring increasing burden of debt. Low international prices for agricultural commodities reduced hard currency earnings for both producers and the State (which depended on export taxation for the bulk of its revenues). The balance of trade, traditionally in deficit, continued to decline. This contributed to the inflationary spiral and the flight of capital and people throughout the ensuing decade as conflict over the shrinking economic pie increased. The tripartite collective bargaining system could not cope with the competing demands of workers and firms seeking simultaneous protection from the economic crisis, and the system entered into institutional paralysis as both business and workers resisted government attempts to reduce protections for domestic industry and increase its international competitiveness.

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Influenced by the Cuban revolution and a resurgence of anti-imperialist sentiment throughout Latin America, class conflict began to spill into noninstitutionalised grounds as the politics of compromise gave way to the politics of confrontation and conflict. Historically high strike rates were accelerated both in number and duration, rising from 121 in 1957–58 to 405 in 1963–64 and 552 in 1969–70. Between 1971 and 1973 there were over 1000 strikes, many of which were political rather than economic in focus, and in the year preceding the military coup, 26 general strikes were called.47 Social cleavages deepened into social anomaly by the end of the 1960s, something that was exacerbated by its repercussions in parliament, where legislative activity ground to a halt. Even so, the Uruguayan Communist Party (PCU) and Socialists were unable to increase their share of the electorate, receiving well under 10 per cent of the vote in both the 1962 and 1966 congressional elections. In fact, workers increased their support of the traditional parties in a quest for stability rather than further polarisation even as they increased their levels of support for union Communists, with over 80 per cent of the national union leadership being PCU members by 1966. Under these conditions, the 1966 national elections saw the presidency go to the candidate of the most conservative slate of the Colorado Party, José Pacheco Areco (although Pacheco Areco was elected Vice President and assumed the presidency upon the untimely death of his duly elected predecessor). More importantly, the strong presidency was restored as a remedy to the gross divisions that had prevented effective policy-making within the Executive Council during the first half of the decade. From that moment on, the democratic regime began to harden, as Pacheco Areco increasingly relied on executive decrees to enact economic policy and used emergency security measures (the Medidas Prontas de Seguridad) to control social unrest. Disenchanted with the turn of events, in 1971 the political arm of the left and radical Christian Democrats united in the Frente Amplio (Broad Front) in order to secure significant parliamentary representation in the elections of that year – albeit under the banner of moderate factions in both major parties, since the Frente was not at the time a political party per se but instead a loose coalition of over twenty leftist groups that placed their affiliates in the electoral slates or lemas of the larger parties. In uniting its various strands, the Frente Amplio was able to make significant electoral inroads in the 1971 elections, receiving 18 per cent of the vote. In addition, the Blanco Party abandoned its traditionally conservative stance – which was assumed by the Colorados – and shifted to the left, thereby increasing the left presence in parliament. Even as these changes transformed the traditional two-party system into a three or two-and-a-half-party system and tilted the parliamentary balance leftwards, thereby polarising debate and eventually paralysing it, both the Blanco Party and the Frente Amplio were cleaved by divisions between Leninists,

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Maoists and Che Guevara-inspired focistas. This made it impossible for them to vote as a bloc for more than obstructionist tactical reasons, and even then they were unable to stop the continuation of the regime “hardening” project under Bordaberry. Unable to control their members, exercise party unity, deliver on their promises or prevent the slide towards dictatorship, and with clear ties to the Tupamaros, the Frente Amplio and the Blanco Party were left in a weak position once the authoritarian response came. Both were outlawed after the 1973 coup and many of their leaders were arrested or exiled.48 The tenor of the times throughout the region contributed to the boldness of the militant left. In the late 1960s and early 1970s, the Southern Cone and the Andean nations were all embroiled in armed struggles and violent regime change, or as in the case of Chile, on a seemingly “peaceful” road to socialism. The dependent capitalist model of accumulation was increasingly subject to question and political elites were increasingly confronted by uncompromising challengers. Cross-border co-operation between revolutionary movements against imperialist “puppets” was commonplace – but even more so was the co-operation between national military and intelligence services and their international supporters. Given the transparent means by which this assistance was provided, the weakness of the parliamentary façade of 1968–73 was quickly exposed. Instrumental defence of liberal democracy, the common thread of Uruguayan politics to which organised labour had so long contributed, gave way to direct action in which the ideological and organisational substance of the regime was increasingly contested via a war of manoeuvre.49 In parallel (if not in response) to the evolutions of the left, the Pacheco Areco government increasingly restricted civil liberties as part of the war on subversion. One of the primary areas of focus was the field of labour relations. In 1968, legislation was passed that created the COPRIN (Commission on Productivity, Prices and Income) as an oversight and comptroller agency that set wages and prices within designated economic sectors. Beyond the more interventionist and regulatory scope of the agency, which was an arm of national labour administration organised under the umbrella of the Ministry of Labour and Social Security, what was most notable about the law was the mandatory nature of wage and price-fixing and the powers of registration, ratification and sanction awarded by the State. As part of the law, regulations were placed on the right to strike and procedures to be followed. Although the COPRIN ostensibly had a tripartite character, the State had majority representation within it. In effect, the Consejos had been replaced by the COPRIN.50 Collective bargaining all but ceased and industrial conflict over procedural issues of representation as well as ongoing material demands escalated regardless of the increased levels of State repression directed at organised workers. Thus by 1968 it was clear that the “dualist” strategy of the rank and file had worked against them.51

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The Uruguayan military bureaucratic regime emulated its neighbours in the labour field, initially using repression to silence its opponents (1973–74), then imposing an exclusionary State corporatist labour administration system by executive decree (1974–81). However, the military was not as uniform in its commitment to removing all vestiges of the previous system as was the case in Argentina and Chile. Instead, it opted to contain those elements of the labour movement that were not outlawed, in jail or exiled. To that end it created a General Confederation of Uruguayan Workers (Confederación General de Trabajadores Uruguayos – CGTU), only to have it met with rejection by the International Labour Organization and most of the rank and file. For its part, although supporting the repression and disarticulation of organised labour, Uruguayan business was not as keen to open up the domestic market because the small scale of the national economy made them vulnerable to foreign competition, particularly from neighbours (which subsequently proved true with the opening of the MERCOSUR regional free trade regime in 1993). Domestic manufacturers were particularly averse to market opening, although agricultural interests and the finance sector were keen to see a loosening of state controls on those sectors. The market-oriented reform project of the authoritarians consequently was not as orthodox or dramatic in impact as that implemented in Chile, nor did it have the same devastating impact on the institutional or structural bases of working class power. Instead, it was overshadowed by the superstructural aspects of the regime project, which concentrated on re-mapping the political system and reimposing order and class hierarchy in civil society after defeating the guerrilla insurgency. Although unprecedented, the level of threat in Uruguay was not as great as that confronted the Chilean bourgeoisie in 1973 because neither the Tupamaros nor their more parliamentaryoriented counterparts were in power. In fact, the Tupamaros were all but defeated as early as 1973, having been done in by strategic miscalculations, US-backed governmental repression and a general lack of public support.52 The impact of the coup on Uruguayan unionism was nevertheless dramatic. Along with leftist political activists, parliamentarians, and Tupamaro members or sympathisers, hundreds of unionists were imprisoned or exiled. From the days of the failed fifteen-day general strike of June 1973 (called to protest the military coup and poorly attended as well as massively repressed) until the November 1980 plebiscite, organised labour remained outlawed and publicly quiescent. At best, its jailed or exiled leadership quietly organised resistance to the authoritarian labour legislation and policies, but on the surface little, if any, union activities occurred during the first seven years of the dictatorship. No collective bargaining occurred, no strikes were called, and left-party political activity all but ceased. In 1977, the military announced a reorganisation of the State and political system as prelude to a major constitutional overhaul that was designed to “protect” Uruguay from the excesses of unbridled pluralism. As part of this

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reform, the State corporatist alterations to the interest group intermediation regime begun in 1968 were expanded and reaffirmed by executive decrees. In spite of numerous inducements for cooperation under this system, the labour movement by and large ignored the regime’s efforts and remained underground. Workers preferred to be ruled by decree and suffer authoritarian (including workplace) indignities rather than legitimise the dictatorship’s labour relations system, and union leaders preferred to remain in jail or in exile rather than be seen as stooges of the regime. Blind to these signs of repudiation, the military regime attempted to ratify its constitutional reforms in a national plebiscite called in November 1980. Unlike the overtly rigged plebiscite staged by the Pinochet regime in Chile, which served to cloak its authoritarian constitution in a legitimating mantle, the Uruguayan referendum was characterised by relative transparency and honesty, even if the lead-up to the vote was filled with hostility and conflict. Unsurprisingly, given the traditional Uruguayan view of politics, the military’s constitutional reform was rejected by almost 57 per cent of the voters. At that point the military announced that it would withdraw from power. Because of this sequence of events, economic policy implementation was slow and disjointed prior to the plebiscite and stagnated afterwards. This was compounded by the effects of the international recession of 1981–83. This is not to say that change in a market-oriented direction did not occur. To the contrary, leading agricultural and financial interests were fortified by changes in economic policy under the umbrella of repression, and whole-scale purges of leftists during the period of union outlawing allowed employers to remove and replace militants with non-union workers. Yet because the process of structural reform never progressed to the extent that it did elsewhere in the region, it was left to the elected regime to complete the market shift. What was similar in orthodoxy to authoritarian Argentina was the attempt to impose a State corporatist framework governing labour relations and the acuity of the economic crisis inherited by the Colorado government of José Mária Sanguinetti, a former minister under Bordaberry, in 1985. Beyond the less severe application of authoritarian market-oriented reform, what was different from Chile was that none of the modifications of the labour relations partial regime made by the military had any lasting impact. With the rejection of the military constitution in the 1980 referendum, organised labour moved quickly back into the public eye and spearheaded the pro-democracy movement during its earliest days. The ideological divisions that had rendered the labour movement prior to the coup were overridden by a common interest in the return of a parliamentary regime. In 1983 the Plenario Intersindical de Trabajadores (PIT) was founded as a successor to the outlawed CNT, melding with it to form the PIT-CNT in 1984. Defeat in the armed struggle had sobered all sides of the leftist coalition, and moderation dominated strategic decision-making among the re-emerging union leadership. This was abetted by the dictatorship’s 1981 legal reforms, which among

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other things restored shop-level unions as bargaining agents (albeit without the right to strike, engage in political activity and with a limited range of negotiable issues). Although restrictive, these changes were not as dramatic or debilitating of Uruguayan labour as the 1979 Plan Laboral was on unions in Chile because the unions were not dependent on the outlawed political parties for their survival, and hence could reconstitute themselves – albeit as ostensibly non-political agents – at the shop-level much as they had done before. While the political tone of the national labour leadership subsequently became more pointed in nature, the (re-) emerging unions by and large avoided violating the dictatorship’s rules governing collective action until the return of democratic politics was assured, something which did not occur until 1984. Restoration of democracy in Uruguay was achieved via a series of sectoral and partisan negotiations done in sequence: first, the parallel negotiations between military regime supporters and “acceptable” opponents to organise the bases of negotiations over the terms of the political transition; and second, negotiations between the protagonists in the electoral transition. To that end, primaries were held in November 1982 for the two major parties, in which anti-military factions in both outpolled pro-military adherents. In addition, 7 per cent of those who voted handed in blank ballots in protest against the restricted nature of the primaries (which excluded the Frente Amplio). With that as backdrop, the process of transition by extrication was subsequently codified in the Club Naval agreements between the military and various business and political elites signed in August 1984. The Club Naval meetings excluded organised labour from participation and were boycotted by the Blanco Party (the Communist Party and Frente Amplio having been banned from the negotiations by elite agreement). Even so, the Club Naval agreements set a timetable for elections and allowed for the reconstitution of outlawed parties and interest groups, to include the Frente Amplio and Blanco Party. Once the Club Naval agreements were in place, and given its presence as a spearhead of the popular movement in favour of democracy, the PIT-CNT was eventually awarded a place in the concertative forum dedicated to negotiating the main subjects to be addressed by the electoral regime (the Concertación Nacional Programmática or CONAPRO).53 Regrouping under the banner of the PIT-CNT allowed the labour movement to demonstrate continuity with its historical antecedents while incorporating a new generation of unionists who had emerged after the coup. Even so, ideological divisions within contending leftist factions spilled into agitational street politics as a means of voicing displeasure with the elitist nature of the bargains preceding the regime change, as well as demonstrating commitment to the rank-and-file’s demands. This included spearheading a number of popular mobilisations (rather than strikes proper) in favour of the prompt restoration of democracy, and the first general strike in ten years called on May Day 1984.

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Throughout the transitional process the PIT-CNT used direct action as a means of influencing the direction of the negotiations, particularly after its displacement from the forefront of the re-democratisation efforts by the major political parties once the electoral timetable was announced in late 1983, much as was the case in Chile after 1985. With real wages and workers’ share of the GDP at all-time lows by 1984,54 and in the absence of a viable labour relations framework (since unions refused to utilise the dictatorship’s State corporatist labour administration agencies and wages continued to be set by executive decree), institutionally channelling labour demands became one of the main priorities of both the labour movement and the Colorado Party leadership that won the foundational elections of November 1984. The Sanguinetti government immediately addressed the issue upon inauguration, restoring virtually intact the industry or federation-wide tripartite wage boards, the Consejos de Salarios. Although many of the occupational and functional categories required revamping and redefinition in the light of changes in the structure of production during the previous decade and a half, the post-1985 Consejos were based upon the institutional framework outlined by the pre-1968 labour relations partial regime. This included a complete restoration of unlimited rights of association and collective action, that included the right to strike. In this sense, the pre-authoritarian labour relations system represented a key institutional precondition for democratic restoration in Uruguay.55 As the primary social interlocutor for subordinate groups prior to the elections, organised labour also constituted a significant bloc within the Frente Amplio coalition that, having been restored to legal status in 1985, increasingly carved out a parliamentary presence in opposition to the restored mainstream parties. Over the ensuing fifteen years, the Frente Amplio increased its share of parliamentary seats to over 30 per cent, claimed the mayoralty in Montevideo, and seriously contested presidential elections under the leadership of former Montevideo mayor, one-time Tupamaro and moderate Socialist Tabaré Vasquez in 1999. This confirmed the Uruguayan political system as a three party affair, with the Frente Amplio gaining votes and parliamentary seats at the expense of both major parties, but especially the Blancos after 1994. There was one major reason for this turn of events. After the Sanguinetti government was replaced by the Blanco Party administration of Luis Lacalle in 1990, only the third time that a Blanco Party candidate had won a presidential election since 1917, the latter reversed on his campaign promises and attempted to open the Uruguayan market much in the way Carlos Menem had gone about opening up the Argentine market after his electoral victory in 1989. But “opening” had its limits, and Lacalle attempted to restrict the right to strike amid the deregulatory initiatives associated with the signing of the MERCOSUR accords in 1993. The idea of these centrifugal initiatives (restriction of labour market freedom of action simultaneous with an opening,

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privatisation and deregulation of the domestic market) was to legally prevent disruption of the economic reform programme via working class direct action and other forms of labour service withdrawals. Lacalle’s legislative proposal was greeted with a wave of strikes, including over a dozen national strikes, and parliamentary opposition not only from the Frente Amplio but from the Colorado Party as well (as a matter of basic civil rights). In a country with a long tradition of social pluralism and State non-interference in interest group politics, the regulatory initiative was anathema, especially when coming from an ostensibly centre-left party such as the Blancos. Faced with strong resistance, the Blanco government pursued what it considered the next best thing: total withdrawal of the State from the reconstituted occupational wage boards or Consejos, which meant that employers and unions were obliged to negotiate and self-enforce bipartite agreements without State mediation or oversight. In essence, this constituted a return to the pre-1993 labour relations regime. The opening of the Uruguayan economy with its entrance into MERCOSUR had a devastating impact on local manufacturing, and fundamentally altered the nature of the productive apparatus. Flooded by consumer non-durable imports from its neighbours, domestic manufacturing declined over 60 per cent from 1993–2000. Unemployment increased to well over 10 per cent, with 35,000 jobs lost during the course of the 1990s. Whatever employment was available was increasingly concentrated in the service sector where forms of work were more individualised and isolated. The details of this will be noted further ahead. More immediately, although it successfully ended the era of inward-oriented development, as an ideological project the marketopening experiment failed to garner popular support. This was also evident in the waves of strikes and popular demonstrations against it that swept the nation throughout the first three years of its implementation. After the market opening of 1993 there was a shift back towards the corporate role on the part of individual unions, and a revitalisation of left party parliamentary activity. While holding firm to a classist view of capitalist society, both leaders and rank-and-file unionists adopted pragmatic strategies of employment defence and wage maintenance while supporting opposition politics in a variety of jurisdictions. Retrenchment in the corporate role not only recognised the obvious impact of the market opening, but also strengthened popular support for the political opposition to market-oriented economic reform. The Frente Amplio gathered all groups opposed to the market logics, while unions reverted to strategies of rank-and-file defence. Horizontal networking at the political level did not interfere with the vertical thrust of union economic pressures on its national leadership. Instead, it gave concrete structural basis to the opposition. By the 1994 election the project of economic liberalisation was exhausted by public opposition, parliamentary resistance and ongoing corruption scandals involving Lacalle and his retinue. That election saw the restoration of Colorado government under Sanguinetti’s leadership and the strengthening

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of the Frente Amplio at the expense of the Blanco Party, whom they equalled in terms of popular votes and only slightly trailed in parliamentary seats. The 1999 national elections saw a continuation of the trend, as the Frente Amplio displaced the Blancos as the second leading party in parliament (where it had 40 per cent of the seats to the Blancos’ 17 per cent, a historical low for the latter and high for the former). In the presidential race, Tabaré Vasquez narrowly missed winning the presidency from moderate rightist Jorge Battle when the Blanco Party threw its support to its traditional rival during the electoral run-off between the two largest vote-getters. Since then, continuation of Colorado Party control of the presidency and parliamentary majority has been hotly contested. The Frente Amplio currently has the largest plurality of congressional seats, control of the Montevideo mayoralty and a number of important provincial and local posts. In the words of one conservative analysis, “(b)y establishing itself as the single biggest political force in the country, taking the largest portion of congressional seats and winning the most votes ever, the (1999) election constituted a serious challenge by the Uruguayan Left to the country’s traditional, but ailing, twoparty system”.56 This means that the organised left – and the unions that are fundamental pillars of the Frente Amplio coalition – have a major role in determining the political course of the nation. Of note in this regard is the relative labour peace that obtained throughout the most recent electoral period, demonstrating the requisite moderation often mentioned as a condition for securing labour-based party electoral victories in capitalist societies of any size. Also of note is the relative peace and lack of social conflict in general throughout the late 1990s, in stark contrast to its immediate neighbours and Chile. Social stability was and is a paramount concern of the Uruguayan political elite pre- and post-coup, not in small part due to the constant reminders to that effect from the union movement and its Frente Amplio representatives. Even so, the PIT-CNT did its part in the transitional moment and ensuring years by reorganising its leadership cadres to incorporate more non-Marxist unionists and by refraining, as the 1990s wore on, from calling general strikes over matters of concern only to labour unions. Instead, it concentrated on bolstering its presence within the Frente Amplio in order to bring pressure on policy matters to bear in parliament rather than the streets, and used the limited power of general strikes to address broader concerns of the community in the face of economic restructuring and dislocation. On the material plane and in the shop floors, after a period of conflict and resistance preceding and immediately following the entrance into MERCOSUR, organised labour subsequently bowed to the logics imposed by the market opening and grouped its collective action around employment defence, wage maintenance, vocational retraining and social services for its members. As in neighbouring Argentina (and to a lesser extent in Chile and New Zealand), there has been a clear repudiation of the market reform project

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during the last electoral cycle in Uruguay. Unlike in the other countries, the Uruguayan labour movement remains an autonomous political and actor in its own right, not beholden to the State or traditional political parties, and with considerable presence in the single largest vote-getter in national elections. The political ascendancy of the Frente Amplio has consequently heightened the challenge to continuation of the market-opening project, although the impact of market forces over the last ten years will make impossible a return to the pre-authoritarian political economy. With the return of democracy in 1985, organised labour presented an a priori restraint to government economic reform because of its position in the electoral and parliamentary partial regimes and was in large measure able to resist a posteriori much of the reforms that were implemented during the 1990s, even when collective bargaining devolved to the shop-level after the termination of the Consejos de Salarios in 1992. In spite of the increase of business unions in the private sector, the majority of the unions grouped in the PIT-CNT continue to be characterised by their ideological unity. The fact that its leadership survived the dictatorship and emerged to reclaim their rights as political and economic agents helped prevent implementation of the type of labour relations reforms instituted in New Zealand (or for that matter Argentina and Chile), and better allowed them to co-ordinate economic and political strategy above the shop floor in a number of sectors. Under adverse market conditions, this generally continues to be the case. Institutional conditioners Interest in the “labour question” was such that the first State agency responsible for handling the interests and demands of the working classes was created in 1907. From its inception, the national labour administration, organised since 1967 as the Ministry of Labour and Social Security (Ministerio de Trabajo y Seguridad Social – MTSS), was charged with primary responsibility in the field of individual labour rights (workplace health and safety, individual grievance mediation and pension oversight). Unlike its counterparts throughout the Southern Cone, Uruguayan labour administration has traditionally been very light in its responsibilities regarding collective labour rights, particularly collective bargaining and other forms of collective action). It had little, if any, powers of registration, oversight or mediation in the affairs of unions and their relationship with employers. Unlike the variants of State corporatism that characterised the initial organisation of national labour administration throughout the rest of the Southern Cone, in Uruguay, labour administration adopted a pluralist legal framework governing interest group intermediation. Both internally, in the conformation of national labour administration, and externally, in the content and character of interest group legislation, the Uruguayan labour administration was singular in its circumspection. This allowed for processes of trade union institutional and political incorporation that was unique in that it was non-State and non-party

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dependent, but instead was characterised by autonomy and independence from both. The 1968 reforms that created the COPRIN represented a hardening of the labour relations partial regime, with the State assuming sole responsibility for wage and price-setting at the same time that it placed restrictions on the scope and types of collective action available to organised labour. The move towards a State corporatist framework of interest intermediation came in response to the polarisation of demands under the traditional pluralist system in an environment of profound economic and political crisis. But even if the purpose was to achieve some form of socio-economic peace and stability, it was a matter of too little, too late. By 1973, institutional performance and social consensus had broken down to the point that President Bordaberry took his orders from the military commanders and the COPRIN became just one of many instruments of authoritarian control. If anything, it served as an institutional preconditioner for the dictatorship’s 1974, 1978 and 1981 reforms of the national labour relations system.57 The military-bureaucratic regime attempted to introduce an exclusionary State corporatist labour relations regime as part of its efforts to legitimate and institutionalise its rule. Using the language of laws passed in 1968 and reinforced by the authoritarian national security legislation introduced in 1973 to combat the Tupamaro insurgency, from 1974 through 1978 the authoritarian elite formally outlined a highly interventionist and supervisory role for the State in the labour relations system. This included creating the Directorate of Productivity, Income and Price (DINACOPRIN) as a successor to the COPRIN wage-setting agency, this time with no labour presence.58 Under the authoritarian legislation national labour administration’s role was heavy on powers of sanction and control in the area of workers’ collective rights and representation, but was restricted in its provision of work-related social and welfare services to individuals, organised or not. Inducements to union co-operation in this bifrontal (in that it favoured business interests while forcibly excluding labour unions from exercising collective rights) State corporatist approach included increases in labour administration mediation in individual worker grievance matters, attempts to foster nonMarxist unionism and unilateral provision of moderate wage raises in the face of cost-of-living increases. Along with the legal constraints on rights of association and strike, political proscription of the PCU and other Marxist groups and the detention or disappearance of union activists as negative inducements (or constraints) for co-operation, these measures constituted the external faces of the military’s corporatist initiatives in the labour relations field.59 The rank-and-file response was to continue to support the outlawed union leadership and ignore the business unions that the regime attempted to set up for them. The jailed leaders were equally staunch in refusing the regime’s entreaties for co-operation, to include choosing to remain incarcerated

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rather than accept the military amnesties offered to them. Collective bargaining remained dormant well after the corporatist edicts were introduced. Recognition of their failure spurred many firms to engage in de facto negotiations with “sanitised” union counterparts outside of the legal framework outlined in 1978. Having failed to eliminate the organisational bases of the labour movement or have its new labour relations framework accepted by the rank and file, in 1981 a Law of Professional Associations was passed that attempted to foster the emergence of ideologically moderate shop unions as replacements for the ideologically militant leadership of the past, and which contained provisos against union political activity, strikes and the like.60 Federations and confederations of unions were abolished and the DINACOPRIN continued to fix wages. As had happened after the introduction of the 1973 and 1978 State corporatist reforms, most workers continued to affiliate with outlawed unions, although a number of non-Marxist controlled “company” or business shop unions did emerge as bargaining agents under provisions of the 1981 law. This led to disputes once the union movement united under the banner of the PIT-CNT, although all union factions in the main continued to adopt the dualist strategic posture that traditionally identified the Uruguayan labour movement. The divisions were more tactical than strategic with regard to approaches towards the re-democratisation efforts, and eventually subsided with the restoration of the democratic regime and the return to the pre-1968 collective bargaining framework. In light of the failure to break the organisational bases of Uruguayan labour under the dictatorship, and with the timetable for military withdrawal fixed by 1984, the institutional bases for the reorganisation of the labour relations partial regime were initially established by the CONAPRO agreements. All parties committed themselves in principle to resurrecting the tripartite Consejos de Salarios that had been the institutional basis of the labour relations partial regime prior to 1968.61 The broad consensus required to reach the electoral threshold glossed over serious disagreements among business and political elites over the scope and content of the Consejos’ authority. These differences were among the first that had to be resolved by the incoming Colorado government. Resurrection of the Consejos de Salarios as the primary vehicle for collective bargaining in 1985 required restoration of the State’s mediation and oversight responsibilities. In addition, resumption of social services and pension plans, occupational health and safety schemes, vocational training and employment programmes, and workplace grievance procedures required a revamping of the bureaucratic apparatus charged with administering them. This entailed dismantling the authoritarian labour bureaucracy, which was more than a matter of redrawing the organigrama of national labour administration.62 Reorganisation of national labour administration was

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a prerequisite for the resumption of the Consejos system and the institutional channelling of labour conflict. As a result, one of the first acts of the Colorado government was to repeal the authoritarian labour legislation and return to the legal framework initially formulated in 1943.63 Unlike the legal frameworks that are the centrepiece of the labour codes in its larger neighbours, and which inspired the authoritarian legislation of 1974–81, under the 1943 constitution and its sequels, the Uruguayan State has no powers of recognition, registration or oversight with regard to interest group associations. As part of the 1968 Labour Code reforms, the State was granted mandatory mediation and registration powers over the collective bargaining and contracts between autonomously constituted collective agents (through the Consejos de Salarios), something that was retained in the 1985 decree as part of the transitional agreements. What this meant in practice was that, as of 1985, Uruguayan labour unions once again were free to organise, bargain and strike, and coordinated their macroeconomic and political strategies through the PIT-CNT while using the tripartite wage boards for issues of immediate material redress. What was different from the pre-1968 era was the more interventionary role of the State in the labour market, where it retained some aspects of the abolished COPRIN framework by establishing a Superior Wage Council (COSUSAL) as a national-level tripartite wage-fixing agency that provided parameters to the negotiations conducted within the occupationally defined Consejos. There was ample resistance to the restoration of the pre-1968 framework on the part of business elites, as there had been in 1943 when the Consejos were originally created (Table 3.6). All things being equal, business in Uruguay preferred to bring its structural power to bear directly on the labour market. State mediation intruded upon business prerogatives in the labour field, and collective bargaining above the shop-level constrained firms’ freedom of action. Although attention to these business concerns on the part of political elites is due to dependence of the State on capital, in the cases of boutique democracies this structural dependence is heightened because of their vulnerability to international market fluctuations.64 Conversely, the relative weakness of Uruguayan domestic industries made them seek State protection

Table 3.6

Collective bargaining in Uruguay 1968–2000

Mandatory collective bargaining? Compulsory arbitration or conciliation? Cooling off period? Limited scope of negotiable issues? Limits to duration of agreements?

pre-1968

1968–85

1985–2000

No No

No Yes

No No No

Yes Yes Yes

No Yes until 1992/no thereafter Yes No No

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from foreign competition at the same time that they called for the removal of State involvement in labour market regulation other than restrictions on labour union mobilisation and strike activity. In such conditions of “mutual” dependence between the State and the capital, organised labour needed to present its best case for a resumption of the status quo ante 1968. Since Uruguayan business was averse to reintroducing the Consejos, it attempted to restore the pre-authoritarian labour legislation that pertained to individual worker’s rights without coupling it with the collective bargaining provisions of the Consejos network. It preferred pluralist labour relations rooted at the shop-level without tripartite co-ordination among occupational and federation-aggregated labour organisations, or put more simply, it wished to retain the 1981 Law of Professional Associations. When its attempts to block the reintroduction of the Consejos failed during the CONAPRO meetings, it turned to arguing for the narrowing of their scope of responsibility and jurisdiction. When that failed, business boycotted the initial convening of the wage boards, which delayed the first round of tripartite wage negotiations for almost two years. This strategy backfired when firms started losing judgments in favour of unions, when the State began ruling by default in their absence as was legally mandated by the 1968 charter. Thereafter, business grudgingly acceded to participate in the occupational-or industry-defined Consejos. What it got in return was COSUSAL wage “bands”, the so-called semi-suma, which was the average of the previous quarter’s inflation plus the anticipated rise in the cost of living for the subsequent quarter. This placed limits on both wage and price increases achievable within the Consejos, although firms and unions were free to negotiate bipartite contracts that exceeded the semi-suma depending on market conditions. This allowed the government to slow the inflation rate in general while allowing favourable market conditions to dictate the pace of wage gains in advantaged sectors of the economy.65 The major modifications to the labour relations framework since the restoration of the pluralist interest group intermediation system and the occupation-defined tripartite wage boards have been the elimination of the COSUSAL and semi-suma wage-fixing criteria after Lacalle was inaugurated in 1990, and the 1992 withdrawal of the State from the Consejos. This was not because of lack of trying. In 1995, during the first year of the second Colorado government, the MTSS attempted to reform some aspects of the 1943 charter in order to regulate the timing and process of strike calls as well as the activities of union representatives on the shop floor. As with the proposed 1991 reforms, this met with repudiation and ended in failure. Thus, although it continues to maintain a registry and archive of collective contracts, the State plays no mediatory or arbitrary role in resolving labour disputes unless invited to do so, on a case-by-case basis, by the parties involved. Of significance is the role of national labour administration once it abandoned the concertative wage boards in the early 1990s (Table 3.7). From

136 Labour Politics in Small Open Democracies Table 3.7

Strike regulations in Uruguay 1968–2000

Right to strike? Replacement workers allowed during strike? Right to lockout? Limits on strike duration? Mandatory dues deductions? Dismissal without severance? Non-economic strikes allowed?

pre-1968

1968–85

1985–2000

Yes No

No Yes

Yes No

No No No No Yes

Yes Yes No Yes No

No No No No Yes

then on it placed major emphasis on vocational training for involuntarily displaced labour, individual worker grievance hearings (for the most part a service offered to and used by unorganised workers) and occupational health and safety inspection functions. This was evident in the numbers of workers using the retraining programmes offered by the MTSS, which saw a rise in those enrolled in such programmes as well as increases in unemployment insurance benefits and the number of labour administration personnel assigned to vocational retraining schemes.66 The parallel emergence of the National Employment Board (Junta Nacional de Empleo) and Social Welfare Bank (Banco de Previsión Social), which like a number of social security and welfare agencies included union, business and municipal representation on their management boards, bureaucratically confirmed that the State had shifted from the role of mediator in the labour relations system to that of safety net provider for those displaced by the opening of the national market. It also showed that the State and social agents did not entirely retreat from the use of neo-corporatist devices such as concertative tripartism, which continued to be used as management and oversight instruments for social security, vocational training and work-related welfare services. This is particularly evident in the work of the Labour Courts, an extensive network linking municipal and regional tribunals with the national-level Supreme Labour Tribunal. Institutions at each of the three levels are constituted by representatives of unions, firms and a professional corps of labour judges adjudicating matters of law and interest of both a collective and individual nature.67 From its inception, national labour administration under the restored democratic regime has been characterised by its procedural neutrality, the technical backgrounds and administrative orientation of labour administration personnel, its emphasis on vocational (re-) training and occupational health, welfare and safety issues, and the eventual weaning of the State from a tutelary role in the tripartite wage boards to its outright withdrawal from mandatory oversight functions after 1991. By the end of the decade, the pluralist character of the collective bargaining system was ingrained in the actors, and the State was incidental to it rather than

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a central protagonist. In turn, the State was central to mediating the social conditions of (re-) production, which involved both institutional neutrality and tripartite participation schemes. The post-1985 trend towards spontaneous reproduction of contingent material agreements initially found institutional support in the reconstituted wage councils that were the linchpin of the collective bargaining system for the first seven years of the democratic regime. Inherited from the preauthoritarian period along with the pluralist aggregation of individual labour unions and the classist orientation of the union movement, these institutional features served as buffers against the more dramatic alterations proposed by market-oriented theoreticians, as well as learning devices through which autonomous sectoral agreements between firms and unions eventually could be negotiated without the oversight or mediation of the State. In the latter regard, we note the shift in emphasis within national labour administration, as of 1992, from administering the tripartite wage bargaining system to providing individual grievance arbitration (labour courts), occupational health and safety, vocational training and unemployment benefits with an overall emphasis on tripartite oversight of the vocational training and social welfare network. The market was left to determine wages while leading political and social actors concertatively determined provision of public goods related to a labour market dominated by down-sizing and trade liberalisation. Agent-principal issues The union movement grew rapidly during the early part of the twentieth century, a process which was accelerated with the advent of importsubstitution policies in the 1930s. The Workers Regional Federation of Uruguay (Federación Regional de Obreros del Uruguay – FORU) was founded in 1905 after a wave of strikes among stevedores and transportation workers. The motive was to unite the ideologically diverse array of craft unions under one political banner that would serve as a pressure group on parliament, while shop unions pursued immediate material interests in production. After a series of internal ideological struggles with anarchists and anarcho-syndicalists, the labour movement came to be dominated by the Uruguayan Communist Party (founded in 1920), although the Socialist Party (PS, founded in 1910) and various independent Marxist factions continue to enjoy significant representation to this day. Although the PCU and PS were and are episodically internally divided by factional disputes, Marxists have historically retained strong support among shop stewards and the firm-level unions that aggregate the interests of workers in both private and public sectors. This is reflected in the composition of the national labour leadership. By the 1940s the rank and file had adopted a “dualist” strategic posture whereby Marxists were in the majority elected as shop floor representatives and in the federation, while workers voted for the two mainstream parties

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in presidential, local and parliamentary elections. Until 1971, when the Frente Amplio was founded, most workers’ votes went to the Colorado Party, although the Blanco Party also managed to garner a share of working class electoral support, particularly after its shift to the left in 1970. This meant weakness of the Communists and Socialists at the national political level (since the mainstream reformist Parties attracted the bulk of working class votes) but utter left-party dominance over the labour movement from shop floor to the confederation level (since the major parties made no great efforts to rely on working class electoral support but instead focused on building multiclass coalitions). Historically, this meant that the union movement engaged in militant action over bread-and-butter issues in negotiations and conflicts with employers, while pragmatic behaviour in the parliamentary sphere maximised its presence within the political system. This meant that it could tactically separate but strategically overlap the objectives pursued in the economic and political arenas. Building upon the history of shop-level collective bargaining, under the original tripartite framework established in 1943, sectoral agents led industrywide economic co-ordination, although the responsibilities of administering the tripartite system required an expansion of the State mediation and enforcement roles and attendant bureaucracy. Since the extension of nationwide industrial collective bargaining co-ordinated wage and price-fixing at the federation level, it meant a rise in importance for occupational and functionally defined unions that represented the entire rank and file involved in important areas of production. This in turn produced a shift in ideological competition between left parties towards the federation level in addition to the long-standing focus on shop-level representation. In spite of these institutional changes Uruguayan unions were and continue to be led by shop leaders grounded in traditions of workplace conflict, again most ideologically aligned with (when not member of) the PCU or Socialist parties. The process of union representation was for various leftist factions to compete for grassroots support by running shop union party affiliates as candidates in federation and national confederation levels. This required that the parties accommodate the specific interests of the unions grouped in each occupational or functional category while tying them to a larger political agenda oriented towards exerting pressure group influence in parliament. Federation and confederation union leaders were constrained in their abilities to wage electoral campaigns by the fact that union assets were limited due to the voluntary nature of affiliation and a lack of mandatory deductions for union pension schemes and other social welfare functions (which the State was responsible for and which was funded through general taxation). In practice, that meant very little national labour union bureaucracy or paid full-time leaders, as most federation and national union officials maintained their regular jobs. Along with ideological conviction, this prevented corruption of lower-ranking union cadres within each Party and

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made the higher union leadership more responsive to rank-and-file demands – much unlike the cases of Argentina and Brazil at the time. Ideological competition and pragmatic deliverance of material benefits to members under a progressive parliamentary agenda was therefore the driving force behind union strategies until the advent of military rule. This also precluded ideological co-optation of the labour movement by the State or the major political parties even as it made it susceptible to the political in-fighting between leftist ideological factions. The independence of the rank-and-file and shop-level unions made the PCU and the Socialists dependent on them for the bulk of their support, as opposed to the Chilean pattern of left-party dominance of the union movement. Thus, until the crisis of the 1960s, this pattern of political insertion allowed the union movement a degree of independence, autonomy and strategic flexibility unseen in any of its neighbours, including Chile, or for that matter, our Australasian cases. The high degree of union autonomy and shop-level independence made Uruguayan unions attractive agents for workers, especially those in the domestic manufacturing and State industries promoted by the ISI policies adopted after 1930. Union density rapidly increased throughout the first half of the twentieth century. By the mid-1950s, Uruguay boasted the highest union density rate in the Western Hemisphere, covering over 30 per cent of the workforce, with State employees almost completely organised under the banner of public sector unions. The growth of union membership was helped by internal migration from the countryside to urban areas in pursuit of manufacturing employment, since the nature of rural production (beef, grains) prevented it from absorbing virtually any surplus labour, and by net external migration, particularly of the young. This allowed unions to largely control the urban labour supply after the 1930s, with a rate of unionisation for the fifty years before military rule on average higher than in any of its larger neighbours. In fact, only under populist or labour-based regimes such as those of Perón in Argentina or Allende’s Unidad Popular in Chile did unionisation rates exceed the Uruguayan historical average – and they were short-lived affairs. Given the fierce independence of shop-level unions, ideological differences between various leftist factions within them and the concentration of collective bargaining at the federation level, it was not until 1964 that a national labour confederation, the National Worker’s Command (Comando Nacional de Trabajadores – CNT) was founded as a successor to the long defunct FOU (which had been disbanded in 1929). Comprised, at the time, of seventy unions with over 200,000 members, the CNT consolidated under Communist leadership in the build-up to the 1966 national elections. The effort to centralise was designed to give organised labour – and the political parties that competed within them – a national level political presence that would balance the structural power of capital and the neutrality of the State. The establishment of the CNT in turn paved the way for the

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creation of the Frente Amplio as a political vehicle through which to establish a parliamentary presence independent of the two mainstream parties. By 1971, organised labour was split into armed struggle proponents and opponents, with little support left for the politics of compromise. The emergence of the Tupamaro urban guerrillas in 1966 and the escalation of their irregular warfare campaign in 1968 attracted numerous union followers, especially after imposition of the COPRIN wage controls. Although a minority in the labour movement, since the majority of the armed left were students and disaffected members of the middle classes, some shop-level union militants saw the possibility of a moment of rupture produced by militarily exploiting the transparent contradictions of the moribund welfare state. On the other hand, most union members and their leaders saw the possibilities of this contradiction but had more respect for the repressive apparatuses of the State (and its international supporters). This view counselled moderation when pursuing strategic and tactical objectives. The division between militants and moderates was also generational. Younger unionists were more likely to pursue the armed struggle option, whereas older unionists, namely those over thirty years old, tended towards the parliamentary route. Hence the majority of the labour movement supported the continuing participation of the Frente Amplio in parliamentary and national elections, in spite of its fractious nature.68 Notwithstanding defections to the armed struggle, most unionists continued to support the Frente Amplio as the Uruguayan counterpart to the Chilean Unidad Popular. In spite of this moderate stance, they were targeted by the bulk of the dictatorship’s repression. Under those conditions, from 1973 to 1980 union activity all but ceased. Once the dictatorship’s constitutional project was rejected, the labour movement stirred anew, especially after the enactment of the Labour Code of 1981. Numerous shop unions sprang up to negotiate within the confines of the Labour Code, and were soon followed by resurrected unions that pushed to reclaim the positions they occupied prior to 1973. This in turn led to the establishment of the PIT, in 1983, and its amalgamation with the CNT in 1984. Thus by the time of the November 1984 elections, the labour movement was strategically united in its opposition to market-oriented economic rationalisation, especially IMF and World Bank debt repayment prescriptions. It also shared a common interest with other social movements in promoting the complete restoration of basic citizen rights and expectations under the law. For their part, the return of democracy in 1985 saw the rank-and-file revert to the traditional approach and display ideological moderation in their national political affiliations and pragmatism and incrementalism under militant leadership when pursuing bread-andbutter issues, although ideological and organisational disputes between Marxists and non-Marxists spilled into union elections at the time they were legalised.

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During the initial restoration of democracy (1985–90), many labour leaders believed that the political role of the union movement was as important, if not more than its economic (or “corporate”) role. The majority of the leadership viewed unions as “schools” in which working class consciousness was promoted by a Leninist-inspired “vanguard.”69 Even so, they also engaged in a “tactical alliance” with capital that reaffirmed the democratic political process as the best in which to advance working class interests. This defence of class compromise as a strategic perspective and of democratic institutions, such as the tripartite wage boards, as the best forums for waging “wars of position” was framed within a radical critique of bourgeois democracy as a form of rule, but did not seek to undermine it.70 If nothing else, organised labour had learned that calls to armed struggle were ultimately fruitless and counter-productive, and the instrumental approach towards the politics of compromise was the best means of securing working class interests. Marxists continue to dominate union leadership in Uruguay, especially in the public sector. Their presence in the private sector is more diluted, where they share representation with Socialists, Independents, and noncommunist unions that emerged during the waning years of the dictatorship or after the opening of the domestic economy to the MERCOSUR free trade bloc. At a national level, PCU dominance of the PIT-CNT has been eroded to the point that they no longer hold a majority of leadership positions, having been displaced by Socialists and independent Marxists associated with the Frente Amplio in the 1996 and 1999 national congresses. Bureaucratisation in the labour movement continues to remain remarkably low: the executive board of the PIT-CNT varied from fifteen members in 1985 to thirteen in 1999, and only a small administrative staff hold permanent paid positions. The ethos of unpaid leadership in which unionists engaged in production and as party activists rather than as paid union officials who did not work alongside their members is complemented by the voluntary nature of rankand-file association (Table 3.8). As was the case before the dictatorship, union “(m)embership is not compulsory and union dues are voluntary in most cases. In 1988, only three years after unions were legal again, the single National Central Union reported a total of 188,000 members and five years later, in 1993, 177,000 members, belonging to 17 federations and 359 unions. In 1996, there were 164,000 in the National Central, but some unions are not members of it. By 1993, 54 per cent of the membership belonged to the public sector, which had the smallest drop in the number of affiliates.”71 With manufacturing firms liquidated and sold off following the entrance into MERCOSUR, union membership declined, falling from around 30 per cent in 1987 to under 22 per cent in 1993, then slowly diminishing to 15 per cent during the rest of the decade. This was a reversal of the trend for the period leading up to democratic rule, which had seen union density rise

142 Labour Politics in Small Open Democracies Table 3.8 Union membership, density and number of unions in Uruguay for selected years 1975–2001 Union membership*

Number of unions

Cassoni Supervielle/ Rodriguez et al. Quinones et al. 1975 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2001

– – 250,930 – 235,833 – – 222,290 – – 173,667 – – 164,000 – – – 116,000

– – – – – – – – – – – – – 126,200 – – – 122,087

– – 227,811 – 231,479 – – 221,865 – – 145,000 – – 130,000 – – 123,000 –

Union density (%)*

Cassoni Supervielle/ Rodriguez et al. et al. Quinones – – – – – – – – – – 359 – – – – – – –

– – 30 – 29 – – 21 – – 21.4 – – 18 – 16 – –

– – – – 23 – – – – – 16 – – 13 – 11 – –

– – 37.5 – 34.0 – – 30.2 – – 17.2 – – 16.9 – – 15.9 –

* Second set of figures from M. Supervielle and M. Quiñones, “La Reforma Laboral y las nuevas funciones del Sindicalismo en Uruguay”, Departamento de Sociologia, Facultad de Ciencias Sociales, Universidad de la Republica Oriental del Uruguay (2001): 17–20. Third set of figures from J. M. Rodriguez, B. Cazzano and G. Mazzuchi, La transformación de las relaciones laborales, Uruguay 1985–2000. Montevideo: Universidad Catolica, 2002 (Statistical Appendix Chart C.1). Sources: A. Cassoni, S. Allen and G. Labadie, “Unions and Employment in Uruguay”, Grupo de Estudios en Economia, Organización y Políticas Sociales, Inter-American Development Bank, (May 2000): 10–11. (Union density), and “Afiliados-Cotizantes y Delegados a los Congresos del PIT-CNT (Entre los años 1985–2001). Montevideo: Universidad Catolica, Internal document, Programa Modernización de las Relaciones Laborales, UCDAL-FOMIN (2001).

to over 35 per cent in 1985.72 The numbers of union affiliates at the time of national congresses of the PIT-CNT documents the magnitude of the decline, falling from 250,930 in 1985 to 222,290 in 1990, 164,000 in 1996 and 116,000 in 2001.73 Although these figures do not represent the total number of union affiliates, since some unions do not belong to the PIT-CNT and do not report membership numbers, the trend after the market opening is clear: union membership was halved in the space of eight years, the bulk of the loss occurring in manufacturing as businesses downsized, shifted operations or went bust, with the concomitant loss of jobs. Membership losses were most heavily felt in the private sector, with union membership

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sliding from 34.7 per cent of the private workforce in 1985 to 27.2 per cent in 1987, 21.5 per cent in 1990, 11.1 per cent in 1993, 9.8 per cent in 1996 and 8.5 per cent in 2000. Although suffering losses, public sector unionisation rates were maintained above 35 per cent for most of this period.74 Unemployment levels varied from 13.1 per cent in 1985 to 8.5 per cent in 1990, 12.7 per cent in 1996 and 10.5 per cent in 1999. By late 2000 the figure stood at 11.3 per cent. The overall trend for the period of democratic rule was statistically insignificant, averaging approximately 10.5 per cent for the period.75 In 1994 the level of unemployment reached 26.2 per cent in the manufacturing sector, 34.5 per cent in services and 24.9 per cent in commerce. Since services occupied fully two thirds of the non-agricultural economy, followed by manufacturing and commerce respectively, this translated into serious labour surpluses in vital areas. The trend in unemployment has remained stable since then. Construction, chemicals, oil and transportation unions (most of which were public sector unions) did substantially better in defending employment, hence union density remained relatively high in those sectors where traditionally the union presence was strong. But the overall picture was sobering: both youth emigration and declining employment in the private sector equalled a loss of union members over the fifteen years of democratic rule. Even so, unions were able to defend their members from loss of jobs far better than unorganised sectors of the workforce. “Unionisation is associated with a 1 to 2 percentage point reduction in layoff odds in most years between 1986 and 1994. This may seem modest in absolute terms, but keep in mind that the mean layoff rate varies between 1.5 and 2.4 percent over this period. [T]his implies that the odds of a layoff for a union worker are 0.9 percent versus 2.4 percent for a non-union worker. [Thereafter], even though union density was declining and unionised companies were more exposed to global competition, the estimated effect of unions on layoffs actually stayed quite strong in 1995 and 1996. The aggregate layoff rate increased to 3.6 percent in 1995 and 4.9 percent in 1996. The impact of unions increased to 3.3 percent in 1995 . . . [T]his result implies that the layoff odds for a union worker were 1.0 percent versus 4.3 percent for a non-union worker. Compared to previous years, all of the increase in layoff risk was borne by non-union workers . . . [T]he layoff odds of a worker in a unionised sector were less than one percent from 1986 through 1996.”76 Although high, Uruguay did not suffer the hyper inflationary spirals and massive unemployment that precipitated political crises in both of its larger neighbours in 1989–90. Urban unemployment peaked in 1984 at 14 per cent, fell to a low of 8.3 in 1993 before averaging slightly over 10 percent for the rest of the decade.77 Average real wages varied from 108.5 per cent of 1990 levels in 1980, to a low of 81.7 in 1987 and a high of 112.2 in 1994 (Figure 3.3). After falling steadily from 1980–85, salaries averaged a growth rate of 1.21 per cent from 1986–96 (even when including the drop in wages caused

144 Labour Politics in Small Open Democracies

160 140 120 100 80 60 40 1980

1982

1984

1986

1988

1990

1992

1994

Real wages Figure 3.3

Evolution of real wages Uruguay 1980–94.

Sources: James W. Wilkie (ed.), Statistical Abstract of Latin America, University of California, Los Angeles, 1997: 352, Table 1400. Calculated on the basis of real annual average wages (1990 = 100).

by the regional recession of 1995–96). Using 1980 and 1995 income levels in constant terms as a baseline (both = 100), average real wages rose from 91.7 in 1990 to 102.7 by 1998.78 In 1999 wages increased by 1.5 per cent, although much of this increase can be explained by the contraction of employment that year.79 Overall, unions significantly raised wages during the period 1985–92, which stabilised against cost-of-living increases after the entrance to MERCOSUR. The trend towards wage stability and low wage growth continued through early 2001, with the public sector gaining a 2 per cent increase over the 1998 baseline while the private sector remained static.80 Wage differentials showed a clear trend in favour of organised, as opposed to unorganised, labour in virtually all occupational categories, which in essence means that all real wage gains made in Uruguay during this period were made by union members.81

“Unions returned on the scene as a political and economic force in 1985 and for two years more than half of Uruguay’s workers were union members. Union density settled down to about 40 percent in 1987–92 and unions were able to successfully negotiate higher wages and were able to protect against job loss by reducing employment elasticises . . . In the 1990s the end of tripartite bargaining, trade liberalization and the recession in Argentina forced unions to make compromises at the bargaining table. Faced with an adverse shift in labour demand unions reduced their wage demands to preserve jobs. Percentage union declined to 20 percent as many unionised establishments were no longer economically competitive and others were forced to increase productivity to survive . . . [T]he structure of the system of labour relations has become increasingly decentralized in

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Uruguay, and unions are apparently changing their utility function when they bargain at the firm level under competitive pressures”.82 The market opening of 1992 removed the structural bases of union power in manufacturing, especially in the private sector. At the same time, the abandonment of the wage boards made wage negotiations voluntary and self-enforcing, which allowed many employers to simply not engage in collective bargaining and instead present employees with individual contracts or across-the-board “take it or leave it” offers regardless of union protests. Given the precarious economic situation of workers and the obvious vulnerability of firms after the entrance to MERCOSUR, many workers opted to abandon collective solidarity and preserve job security on the employer’s terms against the wishes of the union. This forced unions to attempt to negotiate non-wage issues, most involving the pace and processes of production, something which met with some success. The bottom line for the Uruguayan rank and file is that they remain largely represented by a classist, shop floor, federation and national leadership but found themselves severely affected negatively by the loss of manufacturing jobs after the entrance into MERCOSUR. For those fortunate to retain unionised jobs, especially those in public sector unions covering the central administration, education, transportation, petrochemicals and utilities, wage rates were essentially maintained or slightly increased against the cost of living. For the private sector unions, the challenges were greater and the rewards much more meagre. More than changes in political regime or the structure of collective bargaining and legal framework governing labour relations per se, it was the structural opening of 1991 and its repercussive impact on collective bargaining that had the most profound – and negative – impact on their material fortunes. But even here they tended to be better off than any of their regional counterparts. Relations with business From the advent of the military bureaucratic regime until 1981 all collective bargaining was suspended and wages were set by executive decree within the framework of the COPRIN and DINACOPRIN. Issues of grievance, occupational health and safety were handled directly by the MTSS on a case-by-case basis, more often in response to individual complaints than to collective demands. After 1981 and the enactment of the Law of Professional Associations, a number of shop-level negotiations were undertaken and several contracts signed on non-wage issues, although these most often involved pro-business shop unions unrelated to the unions that had operated prior to 1973. Most workers preferred to wait until the restoration of the old labour relations regime and their traditional bargaining agents rather than honour the dictatorship’s attempts to divide them along economistic lines. This occurred with the re-emergence of the outlawed unions as of 1983 and the

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repeal of the 1981 labour relations legislation and restoration of the tripartite wage boards in 1985. Collective agreements, which were tied to government wage-indexing ratios throughout the late 1980s and early 1990s (the semi-suma), tended to extend contracts from quarterly to yearly coverage throughout that period. After 1992 they averaged closer to 18 months coverage, even though wage indexing was terminated at the same time that collective bargaining devolved to the firm without State mediation. Real wages were maintained while contract time limits were extended, something that satisfied both parties involved – and the State. For the duration of the tripartite wage boards, most collective bargaining occurred by occupational category, federation, or economic branch, with over eighty per cent of contracts negotiated at this level. Important modifications to the scope and structure of collective bargaining occurred once the State abandoned the wage boards in 1991. Collective bargaining increasingly reverted to the firm, and although wages remained the main focus of negotiations thereafter, a number of non-wage issues, most notably changes in the structure and process of production, increasingly came to the fore. From 1995 to 1999 occupational or federation-wide contracts declined from 32 to 23 per cent of all contracts signed while shop-level contracts rose from 67 to 77 per cent. In 1996–98, 75 contracts were signed per occupational sector, while 192 were negotiated at shop-level. This trend continued through 2000, with over 75 per cent of collective bargains negotiated at the shop-level.83 This was particularly felt in the private sector, which saw a reduction from 90 per cent of workers covered by collective contracts in 1990 to just 23 per cent in 1997–99.84 By 2000, 90 per cent of these contracts were negotiated with firms. Only the public sector saw a majority of employees covered by collective bargains, of which most were defined by occupation or economic branch.85 Throughout the 1990s the length of contracts continued to be extended past one year, and contracts without time limits also rose dramatically from 1 to 24 per cent of all accords. The reason for the rise of the latter type of agreement had to do with the substance of the accords, which were related to changes in the productive process that were not time sensitive once in place. Overall, contract lengths increased while the scope of coverage shifted to non-wage issues. With the retreat of the State from its oversight role in the setting of wages, the assumption was that the structural power of capital in a decentralised collective bargaining framework would redress the previous pattern of State intervention on behalf of unions. This proved to be correct. Collective bargaining, which had overwhelmingly centred on wage negotiations for most of Uruguay’s history and which continued to do so through 1995, gradually shifted towards issues of job security and workplace organisation and production. By the end of the century, salary and non-salary issues were roughly equal in the content of collective contracts. In turn, national labour

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administration restricted its activities in the labour market to registering collective bargains according to the provisions of standard contract law, directing the bulk of its attention towards occupational health and safety and vocational training, social security and pension scheme oversight functions. Ideological unity under the PIT-CNT in favour of the Consejos and the political presence of its representatives within the Frente Amplio initially made the decentralised bargaining strategy risky, but the parallel entrance into the MERCOSUR free trade regime gave a structural boost to the project. At first the “devolution” stratagem went slowly, since employers unaccustomed to firm-level collective bargaining were not keen about free riding within their ranks. As a hedge against the uncertainties of the moment, numerous firms found it best to negotiate within the occupational categories outlined under the Consejo legislation, but without the State mediator or enforcement role. PCU-dominated unions initially preferred occupational categorisation of wage bargaining, but eventually succumbed to the logics of decentralisation. There was a simple reason for this. The opening of the Uruguayan market to its larger MERCOSUR neighbours in 1991 decimated Uruguayan manufacturing, which declined by over 70 per cent in less than six years. In 1999 alone, industrial production dropped by 8.6 per cent.86 “In the 1990s the end of tripartite bargaining, trade liberalisation, and the recession in Argentina forced unions to make compromises at the bargaining table. Faced with an adverse shift in labour demand, unions reduced their wage demands to preserve jobs. Percentage union [sic] declined to 20 per cent as many unionised establishments were no longer economically competitive and others were forced to increase productivity to survive.”87 In effect, what remained of domestic manufacturing by and large remained unorganised. Autonomous bipartite collective bargaining forced a shift in union strategies from negotiation (or presentation) of demands to a negotiation (and exchange) of mutual concessions, as both firms and unions were under duress by the opening of the Uruguayan market to MERCOSUR. Firms wanted increased productivity and labour market flexibility in the form of a system of individual labour contracts as a first choice, labour defended job security and presence on the shop floor as a third choice (wage increases and wage stability being first and second union choices). For their part, public sector unions engaged concessions in order to stave off the more deleterious provisions of various State rationalisation and privatisation reforms, most of which involved exchanging wage restraint, and sometimes wage reductions, for job security. All the more remarkable, was then – but perhaps not surprising given the concern with social peace on the part of Uruguayan elites – that both the economy and real wages grew, albeit slowly, throughout this period. A measure of this peace was evident in strike rates. After a period of enforced silence from 1973 to 1981, strike activity rose steadily in the early 1980s and peaked in the months immediately preceding

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and following the restoration of elected rule, then again in 1991–93. The first four years of the democratic regime saw over 2000 strikes that affected over half of the workforce (of which one third was in the public sector), with 1000 strikes occurring during the first eighteen months of the democratic regime.88 Although most of these were occupational and industry specific and focused on bread-and-butter issues as unions re-asserted their presence on the shop floor and as bargaining agents, there were over a dozen general strikes called during this period. These general strikes ran parallel to ongoing demonstrations by health and retirement beneficiaries, students and other groups associated with the Frente Amplio, and tended to concentrate on opposition to austerity measures and benefit cutbacks dictated by the terms of foreign debt repayment schemes. It is safe to say that the rebirth of civil society in Uruguay was a noisy affair. Strike activity assumed a tidal pattern after the advent of the democratic regime: political strikes peaked in 1986–88, subsided in 1989–90, rose in 1991–92 in protest against the opening of the Uruguayan economy to MERCOSUR, fell off then, rose again during the first two years of the second Colorado government (1995–2000) in protest against the deepening of the MERCOSUR accords, then falling for the remainder if its term only to rise as of 1999 with the election of the third Colorado administration (Table 3.9). From 1996 to 1998 general strikes were eschewed in favour of sectoral or jobspecific work stoppages over bread-and-butter issues, and the total number of working-hours lost declined throughout the latter half of the 1990s. This trend of decline in labour conflict began to be reversed after 1999, reaching 70 per cent of 1995 levels in 2000. Even so, after the dissolution of the wage boards and the withdrawal of the State from a mediator role in collective bargaining, resolution of labour conflicts quickened while strikes became more localised around issues of production and employment defence. Relatively low by national standards, strike levels in Uruguay in the 1990s are among the highest in Latin America and dwarf those of New Zealand. In 1995 there were 176 strikes, of which 66 per cent were called by the PIT-CNT or union federations, 43 per cent of strikes were national in scope and 89 per cent of all strikes were wage related. Public administration employees struck the most, followed by construction, health and transportation workers. The vast majority of these involved workers in the capital, Montevideo.89 The following two years saw a drop in strikes of all natures (including national strikes, of which there were none) as well as of the total working-hours lost. This continued during the economic rebound of 1997–98, when 138 and 137 strikes occurred and the duration and man-hours lost dropped considerably. In fact, in 1998 only four general strikes were called (and these were only of 2–4 hours duration and limited to Montevideo) and the total workinghours lost dropped nearly 50 per cent with respect to 1997. Of those who struck, again the public sector was the most affected, although here it was education workers who took the most aggressive stance.

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Table 3.9 Number of strikes and number of days lost due to strikes and lockouts in Uruguay 1975–2000

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of strikes

Number of days lost

0* 0 0 0 0 0 5** 15 30 75 632*** 650 +*** 650 500 – 300 –

– – – – – – – – – – – – – – – – – – – – 2,076,758 1,278,738 1,435,498 707,425 860,000 500,000

176 – – – 138 137 120 118

* Strikes were illegal from 1968–85. ** No official figures were kept but illegal strikes increased after the 1980 referendum and accelerated after the May Day general strike of 1983. *** Estimates for 1985–86 are from ILO, Relaciones de Trabajo en el Uruguay. Geneva: 1987: 127. These numbers are estimates based upon data available, to include anecdotal and journalist accounts as well as what union statistics are available. No official statistics exist and ILO figures are based upon secondary sources. Data after 1995 provided by the data Bank of the Programa de Modernización de las Relaciones de Trabajo. Montevideo: Universidad Catolica de Uruguay, UCUDAL-FOMIN, for the years cited.

However, both public and private sector union strike activity increased at the turn of the twentieth century as the diminution of manufacturing jobs outpaced attrition through age and emigration, something that was compounded by Argentina’s worsening and prolonged economic crisis (since Argentina was a major escape valve for blue-collar labour in particular). Instances of strike activity increased in the late 1990s, with a total of 120 strikes in 1999. There were 16 general strikes over a two year period between

150 Labour Politics in Small Open Democracies

1999 and 2000, although most of the general strikes were of short duration, lasting less than a day. Most of the latter had to do with the presentation of PIT-CNT demands during the electoral campaign, which amounted to political mobilisations on behalf of the Frente Amplio. The trend continued throughout 2000, although the number of strikes relative to 1995 was 28.4 per cent less. Only four general strikes were held, all in conjunction with the electoral campaign, and employment defence became the main subject of strike activity, with the bulk of strikes shifting to the private sector. In response to the anticipated changes in labour laws and economic policy in the event of a left-influenced governmental change, collective bargaining dropped to its lowest level since 1995, with only a quarter of the workforce covered by such agreements, most of them in the public sector. Not surprising then that the private sector saw the most strikes after 1999. Workplace organisation and productive process issues shared space with wage and employment defence, in an accentuation of the trends evident throughout the last half of the decade.90 From rank and file through national leaderships, unionists preferred to “wait and see” how the electoral competition turned out. The wave of strikes that greeted the restoration of the democratic regime gradually eased over time as collective bargains took hold, with general strikes and other politically motivated labour mobilisations congregated around electoral seasons. These peaked during the market opening of 1991–92, but have not been sustained, with most of the labour service withdrawals occurring at the shop-level. From 1995 through 1999 the number of strikes and working-hours lost decreased steadily, falling from 176 to 120 and 2 million plus to less than 900,000 hours respectively.91 By the end of the 1990s, strikes were used as a basic line of union defence over economic issues vis-à-vis firms, but the general strike as a political weapon was brandished only sporadically once more market reforms were implemented, in defence of larger ideological issues associated with the Frente Amplio. Even with the rebound in strike activity in 1999–2000, the overall levels of labour conflict were significantly below that of the early post-authoritarian period and were remarkably similar to those of the middle 1950s. In sum, the first five years of the restored democracy saw an increase in strike activity and the return of the State-mediated collective bargaining at the federation or occupational level outlined in the tripartite wage boards. After 1991 and the State’s withdrawal from collective bargaining, autonomous bipartite negotiations between the unions and firms became the norm, following European type of pluralist interest group intermediation systems.92 While strikes decreased in number after 1995, the length of collective agreements increased in duration. Only in the public sector did occupational or industry wide contracts obtain, and here agreements tended to be more time-sensitive.93 The last year of the decade and first two years of the new century saw an increase in labour conflict associated with the ongoing recession afflicting the entire Southern Cone, but for all intents and purposes the

New Zealand and Uruguay

151

general characteristics of the labour relations partial regime extant since 1991 remained intact and untrammelled. Macroeconomic and social indicators After bottoming out in 1984 at 94.9 per cent of 1980 levels, the GNP grew steadily throughout the period of first elected government, reaching 6 per cent above the 1980 levels in 1990, then going on to record growth rates exceeding 5 per cent for the decade (which included a drop in growth by 2 per cent in 1994 and 1999).94 After three years of decline, the GDP grew over an average of 3.65 per cent from 1985 to 1996.95 Some of this may be attributed to the greater import opportunities presented when Uruguay joined MERCOSUR, but it should be noted that its hard currency export sector was not affected while its domestic industry declined due to competition from Argentine and Brazilian exporters of consumer durable and non-durable goods. This came against a backdrop that showed throughout the democratic period that Uruguay enjoyed the lowest poverty levels in Latin America and very high literacy rates, GNP per capita (over US$ 6000, which is above the upper middle income of US$ 4500 for the region), levels of secondary and tertiary education, low infant mortality and high life expectancy for both sexes. By most socio-economic and health indicators as well as in terms of political freedoms and rights, Uruguay is the leader in Latin America and the Caribbean (Table 3.10).96 The return of Colorado government in 1995 and the near 33-33-33 split in Congress among Blancos, Colorados and Frente Amplio adherents did little to alter the overall panorama. By the end of 2000, in spite of an ongoing regional recession, economic stability and slow growth were the norm, as inflation descended below 9 per cent, per capita GDP and real wages continued to rise incrementally, unemployment stabilised at around 11 per cent and strikes remained economistic and temporary. Overall, the quality of life for

Table 3.10

Macroeconomic indicators in Uruguay 1975–99 1975–79 1980–84 1985–89 1990–94 1995–99

Average annual GDP growth (%) 4.6 Average annual change in 60.3 consumer price index (%) Official unemployment (%)* 10.7

−3.3 43.4

3.7 73.8

4.5 73.3

2.0 17.5

11.2

10.1

8.9

11.0

* Montevideo. Source: Averages calculated from yearly aggregate indicators, Economic Commission on Latin American and the Caribbean, Economic Survey of Latin America and the Caribbean, United Nations, for years cited.

152 Labour Politics in Small Open Democracies

union members within a labour market dominated by the logic of job scarcity was maintained. Summary This survey suggests that in a small open democracy with a large amount of structural unemployment and job scarcity in its non-agricultural economy characterised by significant public sector employment and service sector dominance over manufacturing and commerce, ideologically militant and united labour organisations operating in decentralised collective bargaining systems under neo-corporatist or pluralist labour administration, with significant political presence in a progressive parliamentary coalition that serves as a swing vote in the national legislature, are generally able to shield memberships from real wage losses and (to a lesser extent) defend employment without a negative impact on overall economic growth or productivity. Industrial peace (defined as a lower incidence and scope of strikes) becomes the norm rather than the exception when autonomously aggregated socio-economic interest groups engage in bipartite collective action within the context of market-oriented reform (admitting that labour strength also prevented the implementation of orthodox structural adjustment policy programmes). We conclude that in Uruguay, union ideology and political location proved significant in sheltering union rank-and-file material fortunes from the harsher fate that organised workers suffered during the shift to market-steerage elsewhere. In Uruguay market-oriented reform was done more gradually and partially than in New Zealand – and Australia and Chile as well. The economy did not suffer as many significant changes in its overall strategic composition (agriculture, commerce and services), although manufacturing did suffer dramatic declines as a result of the opening of the domestic market to imports from the MERCOSUR neighbours. It did not diversify to the extent the New Zealand economy did, although financial markets were liberalised, the service sector grew and embryonic e-commerce began to appear by the end of the 1990s. Sandwiched between Argentina and Brazil, which had resource and technological advantages and already-diversified economies of scale, and with Paraguay as a regional free port trading on smuggling and other commodity exchanges, Uruguayan politicians did not undertake the radical reform programmes carried out in New Zealand or Chile because to do so would invite major social strife at a time when democratic consolidation was of foremost concern. This allowed the labour movement greater influence and strategic leverage in the economic reform process, which in most sectors helped to maintain a higher union density and real wages after an initial period of losses even with the decline of manufacturing jobs and overall unionisation numbers. Real wage gains during the time of trade liberalisation can be explained by the loss of unorganised low-paying manufacturing jobs after 1991. Unionised

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153

employment in manufacturing also diminished as a result of the opening to MERCOSUR. However they only constituted 20 per cent of the jobs lost in manufacturing during that time frame. What manufacturing employment remained after 1991, continued to be organised albeit with an increased presence of non-ideological “business” unions. The trend of employment defence was more acute in the public sector, where strategically important actors such as teachers, transportation and public health unions were able to defend membership bases against the cost-cutting programmes attempted by all of the elected governments that came to power after 1985. These unions were also successful at maintaining real wages over that time frame. That was less the case for private sector unions, but such was the trade-off for employment maintenance. For its part strike activity became more decentralised and industry-specific after the 1991 trade liberalisation, particularly after left-leaning parties made significant gains in parliamentary and local elections in 1995. After an initial period of confrontation where Uruguayan business sought to preserve some privileges inherited from the dictatorship, and organised labour took to the streets and used strikes to reassert its presence in the economic and political life of the nation, after 1987 both sides turned to negotiated material compromises in spite of changes to the institutional framework governing collective bargaining. Material standards and political stability were maintained in conditions of slow economic growth and declining manufacturing throughout the 1990s. Sectoral autonomy and a legal framework that placed few restrictions on collective agent behaviour, a long-standing institutional practice of State mediation in and tripartite oversight of the social costs of production and a significant role as part of a progressive third party coalition in parliament allowed the labour movement to shift most of the burdens of austerity onto unorganised sectors of the working population. Pluralist initial incorporation, autonomous pressure group political insertion, extensive history of tripartite concertation, ideological unity and class militancy left Uruguayan unions in a better position to defend its members against the harsher realities of market reform. Although political regime change from authoritarian to elected rule in Uruguay had an important impact on organised labour’s fortunes, it only did so because it opened the way for the restoration of the previous institutional framework governing labour relations and the reconstitution of the ideological bases of the PITCNT. This in turn allowed organised labour to better confront the structural shifts imposed on the labour market after 1991. Although it was the structural shift rather than political regime change that had the most negative impact on working class fortunes, the combination of institutions and ideology that characterise labour politics in Uruguay allowed them to more successfully defend against the market-driven dictates of the last fifteen years.

154 Labour Politics in Small Open Democracies

Conclusion In these boutique democracies, institutional frameworks, the form of political insertion and the ideological unity of the labour movement produced remarkably dissimilar outcomes. In New Zealand the pattern of partysubordinate insertion, “hard” neo-corporatist labour administration and divisions between the rank-and-file and union leadership (with the latter being more politically focused, and the former more economically focused) made for union weakness in the face of the market-oriented economic reform project initiated in 1985. The fact that the move was made by a labour movement-backed party paved the way for subsequent alteration of the labour relations partial regime that purposefully debilitated the organisational and structural bases of unions. Although the unions gained back some institutional protection with the 1999 election of a Labour coalition government, they remain very dependent on the whims of others for the realisation of their members’ interests, which have declined relative to those of the early 1970s. In Uruguay the combination of pluralist institutional frameworks, pressuregroup political insertion and ideological unity of the union movement allowed organised labour to postpone and mitigate many of the marketoriented reforms initiated by the military regime and “deepened” under the democratic governments that followed it after 1985. To be sure, organised labour could not prevent the loss of manufacturing jobs after the MERCOSUR opening in 1992. But it was able to resist modifications to the labour relations partial regime and increased its political presence through its leadership role within the Frente Amplio, currently the largest parliamentary bloc. Although organised labour suffered significant membership employment losses after 1992, it was able to largely maintain wages for those who remained, even after the State withdrew from the tripartite wage councils. Moreover, it used its political muscle to successfully lobby for the extension of social services and public goods to the displaced sectors of the population. This included union representation on national-level tripartite agencies charged with social, health and welfare benefit provision.

4 Ireland

Introduction In 1975, Ireland was saddled with a stagnating economy, high unemployment, considerable social unrest, net emigration and continued dependency on England for its economic and political sustenance. Repeated attempts at import-substitution-industrialisation (ISI) after the partition and granting of independence to the southern 26 counties in 1922 had not reduced the Republic’s dependence on agriculture as the principal source of hard currency revenues, and what existed in the way of manufacturing was small-scale, inefficient, labour intensive and limited in focus on the small internal market. Despite the pressures exacerbated by a wage-price spiral, recent national wage accords aimed at solving the problem had failed due to sectoral non-compliance. Even after the adoption of an export-oriented light industrialisation development model from the late 1950s, the South was still disadvantaged by the historical concentration of Ireland’s manufacturing base in the North – especially in and near Belfast (Figure 4.1). Attempts to rationalise labour costs and achieve some control over inflation and industrial conflict were thwarted when the National Pay Agreement negotiated in 1971 rapidly collapsed. This was followed by more failed attempts at piecemeal sectoral concertation and increased strike activity.

Other (10.0%) Food, beverage, tobacco (9.0%) Metal manufacturing (47.0%)

Chemicals (34.0%) Figure 4.1

Largest export industries Ireland (% of exports, 1998). 155

156 Labour Politics in Small Open Democracies

While in a better position than its northern counterpart in terms of its independence and levels of social peace, the Republic remained on the semiperiphery of the European market, in a post-colonial condition of liminal hybridity with regard to its labour relations partial regime (blending elements of pre- and post-Fordist systems), not fully industrialised, and agriculturally dependent on the English market. This continued the pattern of internal colonialism and servitor imperialism that had characterised the Celtic fringe throughout the period of British national development from the sixteenth through the twentieth century.1 1975 was a threshold year because the situation changed rapidly during the second half of the decade, mainly as a result of events external to Ireland. Acceleration of European economic integration impacted on the Irish economy and the labour relations partial regime, something that was accentuated with the recession of 1979–82. By the 1990s, ties with the European Union (EU), not Britain, mattered most in terms of Ireland’s insertion in the global market. In terms of labour relations, previous efforts at centralised wage bargaining gave way in the early 1980s to the Thatcherist impulse: total decentralisation and partial decollectivisation of bargaining in order to promote as much labour market flexibility as the regional market would allow. This shift traded on the shop-level and occupational nature of most unions, which eroded working class solidarity during economic downturns. The 1981 reforms allowed much in terms of employer prerogatives, but also led to unprecedented levels of unemployment and little, if any, economic growth. Failure of decentralised collective bargaining to alleviate economic conditions (if not worsen them) consequently gave the traditional pattern of sectoral concertation another chance. In the late 1980s, pressures to “Europeanise” Irish labour relations and address its comparatively high levels of industrial conflict led to a strengthening of tripartite institutions and a change in strategies on behalf of State bureaucracies and national representatives of labour and business groups. This gradual and belated adoption of neo-corporatist mechanisms runs contrary to the stories told in our last two chapters, and is thus what interests us the most. Because Ireland’s modern political economy has been so decisively influenced by trends in Europe towards regional market integration within the larger context of globalisation of production, and because of its unique features as a relatively young country with a very long colonial legacy, to include its labour relations, we begin with an exploration of the role that these regional and local influences had on the changing nature of the Irish economy and labour market. We ground the Irish Republic’s history of labour political insertion within this context before detailing the specifics of institutional changes, agent-principal issues, labour–business relations and macroeconomic conditions during the last quarter century.

Ireland

157

National, regional and global determinants of the Irish labour relations regime To the extent that it exists at all, the post-war “European model” of industrial relations is based on the experiences of a specific set of countries located in continental Western Europe. In particular, the post-war successes of Germany, Austria, Switzerland, The Netherlands, Belgium, Sweden and Denmark have been attributed to the use of neo-corporatist policy instruments. This particular combination of institutions and norms promoted co-operative strategies between collective agents, which helped to contain industrial conflict, ensure relative social equality and stimulate wage-led economic growth.2 It is highly centralised, both in the sense that it requires a great deal of State intervention in the bargaining process and also in the sense that trade unions and employer organisations tend to be ideologically and strategically united as well as monopolistic, and are thus able to enter negotiations with binding authority over their respective memberships. In terms of its labour politics, neo-corporatism is associated with the use of State capitalist development strategies and strong left party links with the labour movement. Although this model was usually accompanied by free trade policies, neocorporatist institutions were supported by political ideologies of government intervention for the purpose of reproducing social peace. These were reflected in extensive welfare states, active employment policies, and exercises in workforce planning. In the arena of industrial relations, neo-corporatism was credited with maintaining low strike rates combined with high union membership rates from the 1940s through the 1980s.3 This combination can be taken as a measure of consensus on the part of the actors involved in the neo-corporatist labour politics partial regime. However, alternative European industrial relations “models” exist: “AngloSaxon pluralism” and “Latin confrontation”, according to one analyst.4 Such models include components of tripartite wage bargaining, but lack the ideological dimension of social partnership that tends to accompany Northern European neo-corporatist strategies. The relationship between unions, political parties and the State differs considerably between Anglo-Saxon and Southern European sub-types. Hence, Anglo-Saxon countries were the quickest to adopt market-driven economic policy reform packages during the 1980s, but Southern Europe also felt the trend. Privatisation, the shift to tight monetary regimes, and attempts to roll back the welfare state were followed by major changes to labour relations legislation, most notably in Britain, then in France, Spain and Greece. Trade unions in these countries suffered greater losses in membership and political power as the result of radical attempts to “flexibilise” industrial relations in comparison to their northern continental neighbours. This was more closely related to the experiences of our Southern Hemisphere examples, Chile and New Zealand in particular. In the Southern

158 Labour Politics in Small Open Democracies

Cone, a “Latin confrontation” style labour politics emerged from outright class conflict resulting in the imposition of authoritarian rule and social project, though as we have discussed, Uruguay is rather unique in terms of its labour relations regime. In Chile, the authoritarian institutional framework and party ties of the labour movement in the transition to democracy were decisive in determining organised labour’s ability to cope with marketdriven change. In Australasia, party ties were similar in their post-colonial character but not as ideologically militant or class-based. The institutional apparatuses governing labour relations were significantly different in Ireland, mixing elements of pluralism with State or neo-corporatist institutions. These contained aspects of both the “Anglo-Saxon” and “Latin confrontation” models. In the case of the Irish Republic, traditions of tripartism were always relatively weak and historically free collective bargaining was the norm. The Irish system is based on voluntary compliance with labour codes and collective agreements, with a minimalist approach towards advancing individual and collective rights outside of the immediate sphere of production. Large and strategically important unions, particularly in the transport and construction sectors, traditionally used their economic weight to bear directly on employers in order to secure wage rises and favourable working conditions, but were less interested in broadening their scope of authority to include other sectors of the working population. This did not change during times of national wage agreements, nor did it alter organised labour’s strong association with Fianna Fáil, the dominant political party since independence. During the 1960s and 1970s the result of this type of political insertion was that organised sectors of the workforce focused on maintaining real wages and working conditions, while unorganised or weakly organised workforces fell behind in terms of wage defence and job security. The strategic approaches of unions were nevertheless held responsible for the upward spiralling in wages throughout the 1970s, which contributed to the problem of inflation during the economic downturn at the end of the decade.5 In the absence of strong formal process of labour mediation, arbitration and conciliation, unions frequently resorted to strike action in order to secure their demands. The number of days lost due to industrial action soared during the 1970s, with an average annual number of 583,978 compared to 317,078 for the following decade.6 Having abandoned ISI in the 1950s, Ireland became increasingly reliant on foreign investment in order to stimulate economic growth. While the economy was growing, particularly during the early 1960s, there was less of an incentive to make any changes to the voluntarist labour relations framework. With the onset of the world economic crisis at the end of that decade amid a global re-assessment of the capitalist world system, internal pressures for change began to take effect. For policy-makers faced with the escalation of industrial conflict and wage demands amid stagnation of traditional and

Ireland

159

new export markets, it appeared that the Irish industrial relations system impeded macroeconomic co-ordination. From early on in its independence, successive Irish governments attempted to impose tighter institutional control over the collective bargaining system. From the 1940s through the late 1970s, attempts to centralise Irish labour relations met without enduring success. Most failed because the agreements that resulted from tripartite negotiations had no State enforcement mechanism, and therefore relied on the “voluntarist” framework in order to be implemented.7 Under such a system, particularly in conditions of economic decline, particularistic interests prevailed over efforts at wage stabilisation. As mentioned, the situation was aggravated by the abandonment of national wage bargaining in the early 1980s, and plunged the country into deep recession. Interest in concertation then returned, and the State began to take a more active role in enforcing concertative agreements. Yet as we shall detail below, authority of the State in labour relations remains legally restricted and contested to this day. During the late 1980s, tripartite processes of wage negotiation became the norm, even though the overall voluntarist framework was not altered. Unlike other forms of European neo-corporatism, concertative negotiations in Ireland were aimed at the construction of a series of renewable national wage and tax agreements, rather than an institutionalisation of co-operation per se. Beginning with the National Understanding agreements negotiated between 1979 and 1980 (which failed and led to the brief flirtation with pluralist collective bargaining), carrying through to a series of even stronger national pay agreements after 1987, most of the negotiations centred on substantially the same themes. By the early 1990s, agreements included commitments to extend tripartism to the enterprise level. Although they remained voluntary, they initially had a high rate of compliance, something that indicated a generalised belief in the need to develop a global competitive advantage in the face of regional and international economic integration. This consensus declined during the last half of the decade, something evident in the increased lack of compliance with national accords, but remained comparatively high by international standards. In 1997, Partnership 2000 replaced the Programme for Competitiveness and Work, successor to the 1991 Programme for Economic and Social Progress (PESP) and 1987 Programme for National Recovery (PNR). The PNR was distinguished, among other things, by the creation of a permanent Central Review Committee (CRC) as a standing institutional “home” for national wage bargaining. For its part, the PESP had successfully been renegotiated in 1993 and 1996 (under different names) by deepening a three-stage approach to wage and tax reform in each phase (which included a lump first year wage increase followed by smaller increases and more local wage bargaining flexibility over the next two years). Partnership 2000 also expanded

160 Labour Politics in Small Open Democracies

the scope of concertation beyond its tripartite foundations by including the Irish National Organisation of the Unemployed (INOU). As part of these concertative agreements, organised labour traded wagerestraint for a series of governmental social policy commitments, especially alleviation of unemployment and poverty, as well as some labour-specific demands such as tax breaks for urban workers. Businesses were provided with tax incentives that helped contain labour costs and maintain labour market flexibility. Aided by EU financial subsidies in the form of the EU Structural and Cohesion Fund, assisting in the development of the national infrastructure needed to modernise the Irish economy, this allowed the government to carry through its structural adjustment programme without fear of strikes or prolonged industrial disputes. With the economic subsidies from the EU came demands for labour market rationalisation and better macroeconomic co-ordination between sectoral agents, which added strength to the tripartite impulse. Even so, both labour and business remained dissatisfied with the lack of full implementation of the national accords because of the failure to comply with these accords on the part of specific unions and firms in the face of limited State enforcement capacity. Union dissatisfaction with the lack of institutional substance of the national wage accords was openly manifest in the launch of the Programme for Prosperity and Fairness (PPF) in 2000. The Irish Confederation of Trade Unions (ICTU) recommended against acceptance of the PPF, something that it had not done with any of the previous accords. MANDATE, the country’s second largest union representing workers primarily in the service sector, rejected it because of its inattention to establishing a viable national minimum wage. Thus, notwithstanding the ongoing use of national wage accords and socio-economic concertation on other issues of public policy, the institutional underpinnings of Irish neo-corporatism remain highly contingent in nature. Nonetheless, and in contrast to our four Southern Hemisphere cases, the general trend since 1975 has been towards greater State intervention in the regulation of labour relations and the shaping of labour politics in the Republic. Ireland’s attempts to construct national level tripartite wage accords are generally seen as an exercise in European-style neo-corporatism, given that they aim at trading autonomous and particularistic collective action strategies for nationally co-ordinated industrial relations systems (Table 4.1). Irish labour administration is heavily advised by EU and ILO experts on matters of labour relations and labour market policy, which supports the view of Irish derivationism. However, recent Irish experiments in tripartite negotiation depart from continental West European experiences in fundamental ways. By itself, the relative lack of institutionalisation that characterises these processes sets them apart from most European forms of corporatist negotiation – but puts them ahead of those in Australia, Chile and New Zealand.

Ireland Table 4.1

161

Percentage wage increases under centralised wage bargaining in Ireland

Agreement

Years

Terms

Programme for National Recovery

1987–91

Programme for Economic and Social Partnership

1991–94

Programme for Competitiveness and Work

1994–97

Partnership 2000 for Inclusion, Employment, and Competitiveness

1997–2000

Average of 2.5% per annum wage increases Year 1: 4% increase Year 2: 3% increase [+3 local (exceptional) bargaining clause] Year 1: 2.5% increase Year 2: 2.5% increase Year 3: 5% increase Year 1: 2.5% increase Year 2: 2.5% increase [+2% local bargaining clause] Year 3: 1.5% increase first 9 months; 1% in last 6 months

Source: J. Wallace and N. Clifford, “Collective bargaining and flexibility in Ireland”, International Labour Organization, web version, http://www.ilo.org/public/english/dialogue, 1998.

From the point of view of European analysts, recent Irish social pacts are dangerously fragile. Some argue that the partnership agreements, and the wage policies that are negotiated under them, are “merely statements of common understanding”. They have “no status beyond that accorded to them by the parties that attend the talks or signed the agreements”.8 The fear is that the ability to reach agreements over economic and social policy goals and the means of achieving them is entirely reliant on the existence of favourable economic conditions, so is ultimately contingent on material payouts – and thus inherently unstable. Yet institutionalisation of concertation is well in advance of our Southern Hemisphere cases. The creation of a standing administrative body with tripartite representation responsible for drawing up the general parameters for discussion of forthcoming wage negotiations, coupled with the ongoing use of the Labour Courts and other tripartite dispute-resolution mechanisms, more closely resembles the European model of neo-corporatism rather than the atomising pluralist approach attempted below the equator. Only in Uruguay is tripartite concertation more institutionally and “culturally” advanced than in Ireland, and as we have seen, that tradition has been rolled back in recent years. In addition, Paul Teague notes that rather than a political and economic exchange between social partners, Irish “corporatism” has acted primarily as a process through which to implement market-driven economic policies.9 Ireland underwent a process of economic liberalisation after the 1950s, pre-dating the global shift to market-oriented development strategies by

162 Labour Politics in Small Open Democracies

almost three decades. Pushed by European Market opportunities, this market orientation intensified during the 1980s. In order to address a rising international debt, the Fine Gael-led government elected in 1982 embarked on a reasonably orthodox neo-liberal structural adjustment programme that included the decentralisation and virtual deregulation of collective bargaining. This was carried through by the Fianna Fáil government installed in 1987, this time within a stronger concertative framework.10 Commitment to European integration, especially monetary union, intensified the need to stabilise the labour relations system but also provided incentives to extend market-oriented reform to this field. Somewhat contradictorily perhaps, along with the resumption of national tripartite bargaining processes, Irish governments also encouraged the adoption of employment “flexibilisation” strategies on the shop floor. The result of these particular strategies is reflected in the increased use of part-time and casual labour, the linking of wage increases to productivity, and the declining presence of unions during negotiations conducted at the enterprise level.11 Here, despite the moves towards centralisation of wage bargaining among peak associations, the parallels with the Southern Hemisphere are strong. Yet unlike other forms of European concertation as well as those of our other cases, there is no dominant left party influence in the Irish union movement, much less a left party in government exercising party discipline over it. Labour unions and their members in Ireland, both individually and collectively, prefer to throw their support to the catch-all major parties rather than the Labour Party, resulting in the parliamentary weakness of the latter and the dilution of the labour vote in the former. Even so, as a whole, the working class vote is central to Irish electoral outcomes, which, given the levels of unionisation (over 45 per cent of the employed population), implies that politicians preoccupy themselves with issues of concern to organised labour. With regard to the efforts to promote centralised wage agreements and attendant social policy, this means that the negotiations between the Irish Trade Union Conference (ITUC) and its business counterpart the IBEC (Irish Business Economic Council) are also mediated by mainstream party objectives beyond those brought by labour administration officials. In effect, “deepening” of national tripartite bargaining in Ireland since the 1980s can be understood as resulting from the interplay of regional and local factors rather than as a product of globalisation. Ireland’s status as a member state of the EU places a specific set of external pressures for policy change, the elements of which are somewhat contradictory. Attempts to create a social policy dimension to European integration have led to increased interest in promoting models of neo-corporatist approaches towards collective action within the country. However, whereas the need to create industrial stability through increased government intervention in the labour relations regime may be the result of Ireland’s commitment to

Ireland

163

European economic and especially monetary integration, Irish moves towards labour market flexibilisation, among other policy goals, do not necessarily support the European neo-corporatist model itself. These contradictory yet overlapping regional influences have shaped recent choices on the part of all key actors.12 The particular way in which tripartite bargaining has evolved must also be understood in the context of Irish labour relations history. Irish experiments in neo-corporatism may have more to do with the failure of the traditional voluntarist framework rather than any pressure to converge towards so-called European models of labour relations. It is highly unlikely that institutional and regulatory frameworks in Ireland will mirror those of Scandinavian countries any time in the near future. But looking further abroad at small countries that have pluralist or voluntarist labour relations systems coupled with national-level concertative vehicles and comparatively high rates of unionisation, most-similar comparisons can be made. One is with Uruguay.

Political insertion Organised labour in Ireland has, in a sense, both a longer and a shorter history of political insertion than our Southern Hemisphere cases. The Irish labour movement is older in that its development paralleled that of English trade union organisations, with their common origins dating back to the early 1700s. Under British rule and influence, Irish labour was subject to the same sorts of legal repression, experiments in tolerance, and finally, political incorporation, that marked the experience of British unions in general. It was different in that it was treated worse by both employers and the British labour movement alike, as Marx noted: Every industrial and commercial centre in England now possesses a workingclass divided into two hostile camps, English proletarians and Irish proletarians. The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life. In relation to the Irish worker he feels himself a member of the ruling nation and so turns himself into a tool of the aristocrats and capitalists of his country against Ireland, thus strengthening their domination over himself. He cherishes religious, social and national prejudices against the Irish worker. His attitude towards him is much the same as the ‘poor whites’ to the ‘niggers’ of the former slave states of the USA. The Irishman pays him back with interest in his own money. He sees the English worker at once the accomplice and the stupid tool of the English domination in Ireland . . . This antagonism is the secret of the impotence of the English working-class, despite their organization.13

164 Labour Politics in Small Open Democracies

This pattern of subordination of Irish labour union interests to those of their British counterparts became a constant of twentieth-century labour politics in both countries, which constrained the development of working class consciousness in the Republic. What emerged was a strong nationalist ideology within the labour movement that transcended socio-economic class and focused on the quest for an independent national identity on both a political and economic level, even in those British unions that continued to organise workers in the Republic. This working class nationalism continued after the move towards foreign-owned export-led growth that accelerated in the 1990s, even as union membership declined. Like the early trade unions found in Australia and New Zealand in the 1850s, the Irish labour movement consisted of guilds or craft unions whose primary interests were to control their specific niche in the labour market and, eventually, wages and conditions within these occupational sectors. By the second half of the eighteenth century, Irish craft unions were strong enough to pose a disruptive threat to elite interests, at which point they were banned under the English and Irish Combination Acts of the late 1700s and early 1800s. Given the lack of success these Acts had in quelling craft unions, repression gradually gave way to co-option. “Combinations” were legalised in Ireland during the 1820s, then finally permitted to register with the State under the Trade Union Act of 1871.14 Unlike the Australasian Trade Union Acts of approximately the same period, this legal framework did not become the basis of compulsory State registration, nor, for that matter, compulsory conciliation and arbitration. It is therefore important to note that despite the cultural affinities and the similar legal histories shared by the three English-speaking cases, the development of labour politics in Australasia and Ireland had already diverged greatly by the turn of the century. The history of Irish labour’s insertion into national political life is also more recent in that national State formation in the Republic can only really be said to have occurred from the late 1920s onwards. The evolution of the parliamentary regime, the party-system, not to mention the search for a development strategy that might turn the economy from Europe’s “weakest link” into a modern industrialised one, all date from this moment. Following partition and independence for the South, organised labour had to renegotiate its place in the political sphere. During the first few decades of independence in particular, the “national question” dominated Irish political ideology, limiting the extent to which class cleavages, in particular, were permitted to develop. If one single factor can explain the pattern of labour’s political insertion in Ireland until at least the 1980s, it is this. The role of trade unions in the nationalist struggle and their subsequent and quite distinctive pattern of incorporation into national politics consequently beg further exploration. Mirroring the similar yet different pattern of trade union organisation and initial incorporation of the other British colonial cases, Ireland experienced

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a growth of labour activism in new sectors of the economy during the first decades of the nineteenth century. In the latter half of the century, trade union growth stagnated and was largely confined to its craft basis. What labour activism existed was largely seen among factory workers in the north of the country, the most heavily industrialised region. The South remained largely agricultural, and craft unions in both regions remained relatively apolitical. Beginning in the 1890s and escalating through the 1910s, new syndicalist ideologies that elsewhere in Europe were radicalising organised labour began also to have an influence in Ireland. The new type of unionism was identified with several socialist leaders who also took active roles in the early twentieth-century struggles for independence. Until then, Republican and Home Rule leaderships had generally been drawn from the middle classes, advocating ideologically centrist political programmes on economic and social policy issues even if the cause of independence was a fairly radical one in itself. This dominance of moderate-populist appeals in the public arena was also to mark the development of Irish politics following independence. Those most clearly identified with the new Irish unionism from the 1890s were James Connolly and James Larkin. Connolly, a Marxist theorist and part-time union leader, formed the Independent Labour Party and was a key organiser of the Irish Citizen Army (which later formed the major part of the Irish Republican Army) in the belief that socialism and the nationalist struggle could not be separated. For his troubles in leading the 1916 Easter Rising he was tried and executed in 1917. Larkin’s major contribution to the growth of the more radical side of Irish labour was the formation of the Irish Transport and General Workers’ Union (ITGWU) in 1908, so that alongside and often in competition with the more conservative craft-based unions, a reasonably strong tradition of industry unionism amongst unskilled workers also took shape during the formative years of the century. In the decade preceding the outbreak of civil war in 1922, industrial conflict escalated, in the form of clashes between Irish-based unionists and British authorities. Most importantly, the Dublin Lock-Out of 1913–14, led by the ITGWU, lasted for more than six months when nationalist resistance to British wartime conscription intersected with clashes with employers over the recognition and role of the new union.15 Apart from the overt anti-British mobilisation on the part of these groups, a quieter, but related struggle revolved around the need to establish individual Irish-based unions along with a local peak union body. Not only were Irish trade unions generally craft-based and modelled on their British counterparts, but they were also usually affiliated or governed by English parent organisations. This was also the case with early Australasian unionism, but in the Irish context and with the longer history of colonisation, the development of locally governed trade unions took on significantly different relevance.

166 Labour Politics in Small Open Democracies

With a view to first “supplementing” the British Trade Union Congress, the Irish Trade Union Congress (ITUC) was established in 1894 with 39,000 members, many of whom were drawn from new, general unions rather than traditional craft-based agents. This number increased to 70,000 in 1902.16 The ITUC paralleled the British TUC through much of the next century, so that even recently, membership of the two central organisations sometimes overlapped. This was particularly the case with unions that still had an obvious craft basis. More importantly in terms of labour movement unity, most of the unions in the north remained as branches of British unions and the British TUC well after independence, whereas those of the South in the majority broke with their British patrons and affiliated with the ITUC. This hampered efforts to unite all Irish unions under the same post-colonial peak organisation. Despite the significant role that individual union leaders played in early twentieth-century anti-British agitation, they tended to play a relatively minor role in the post-Civil War reconstruction. What remained of the leadership of the nationalist struggle fell clearly in behind Fianna Fáil, the political party that was formed in 1926 before being led by Eamon de Valera to become the dominant force in Irish politics throughout the twentieth century. While Fianna Fáil initially committed itself to continuing the nationalist struggle through the reunion of the North and the South, the party’s goals soon became much more limited. Through its populist economic policy programme, particularly during the 1930s, and careful cultivation of both middle and working class support, it became a “catch-all” party that aimed to mobilise Ireland’s socially conservative population behind a series of different economic development strategies. The union movement was part of its constituency. The economic experiences of the Irish Republic during the 1930s falls somewhere in between those of our Latin American and Australasian cases. As a semi-peripheral agricultural export economy, the effects of the Depression on Ireland were severe, and the move to ISI was much more clearly aimed at shifting the economy from a rural and agricultural base to a manufacturing one. Even so, partition limited the impact of ISI and the adoption of Fordist production techniques, which in turn limited the development of modern industrial unionism in the South as a replacement for the craft and guild traditions. Australian and New Zealand governments also erected import barriers at the same time, but Australia already had a stronger manufacturing base, while New Zealand’s special relationship with Britain allowed it to rely on dairy, wool and meat exports for several decades to come. The Irish response to the Depression appears to have more in common with regimes that combined populist politics with massive State-subsidised industrialisation projects. It is different in that it never developed the broad assembly-line economies of scale or class solidarities characteristic of Fordism (as was the case with Latin American populism as well as the Australian

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“mateship” ethos). To the contrary, as a political economy Ireland remained for the most part in a “pre-Fordist” mode well into the 1980s in spite of the expansion of the public service and State bureaucracy, the promotion of heavy industry from 1930 to 1950 and the development of foreign-owned light industry for export in the 1960s and 1970s. The largest unions remained those in crafts, transportation and construction, to which were added public sector unions in growing importance throughout the postwar era. Figures from the period sketch the story. In 1926, 13 per cent of the Irish labour force was employed in industry, compared to 25 per cent or more in other small West European countries. Between 1930 and 1951 this increased to 22 per cent of the labour force working in industry, and 15 per cent employed in manufacturing. Manufacturing employment grew by an average of 1.9 per cent from 1926 to 1986, leading the shift towards a more industrial economy throughout the period. Although there was local investment in export-oriented manufacturing in the 1950s, it was not particularly successful. In response, from 1958 through the late 1960s foreign direct investment in clothing, textiles, footwear, plastics, light engineering and other labour intensive and low-wage production increased. From the late 1960s, the trend shifted to capital-intensive advanced technology manufacturing such as electronics and pharmaceuticals. By 1988, foreign firms accounted for 75 per cent of manufacturing exports.17 In spite of this growth in manufacturing, industrial production never employed more than 40 per cent of the labour force, and thus never came to dominate labour market dynamics as seen elsewhere in Europe. With the subsequent shift to free trade and export-oriented economic reform, some have gone so far as to argue that “what Ireland achieved in Europe in the 1980s was a decisive modernisation of capitalist social relations which, to some extent, by-passed Fordism into a post-Fordist future”.18 Filtered through the prism of nationalism and globalisation, this was deeply felt in the field of labour politics after 1975. Fianna Fáil drew on its populist base in order to implement its industrialisation project, and consolidated and expanded its cross-class support at the same time. Jacobsen reports that during the 1930s, 11 per cent of labour could be found in manufacturing and 18 per cent in industry, while only 11 per cent of output was exported. This economic base meant that Fianna Fáil was far from being an orthodox populist party, but instead more of a broad-based dominant one.19 Even so, as with other populist projects, ISI can directly be related to the leap in union membership that occurred between 1930 and 1950. In 1930, 20 per cent of the employed workforce belonged to a trade union, but this had increased to 26.2 per cent in 1940 and 45.7 per cent in 1955.20 Elected with the open support of organised labour and the Labour Party, Fianna Fáil was able to govern either alone or in coalition with Labour from the 1940s through the 1980s. The vote for

168 Labour Politics in Small Open Democracies

Fianna Fáil stayed steady at between 45 and occasionally 50 per cent, while the Labour Party never gained more than around 10 per cent of the electorate’s support despite high union density and membership rates.21 The significant remainder of the vote was delivered to what gradually became known as Ireland’s centre-right party, Fine Gael, which drew much of its support from larger businesses though in practice it also crossed class lines. In spite of its ties to Fianna Fáil and Labour, the tradition of shop-level autonomy prevented outright party-dependence. Instead, the Irish labour movement was politically inserted in a pressure group mode that resulted from two distinct phases of incorporation tied to the partitioning of the country in 1920. The long tradition of voluntarist nationalism subordinated to British union logics that characterised the original mode of Irish labour incorporation during the colonial period was replaced by a State-sponsored effort at job creation under the aegis of a populist-nationalist dominant party after independence. Fianna Fáil did not need to appeal directly to unions, nor did it need phrase its policies in a class-based fashion, treating labour as just another constituent in the nationalist coalition that sustained it. However, of the two major parties, Fianna Fáil strongly favoured both State and union involvement in national level political exchanges on socioeconomic policy, whereas Fine Gael has always been less enthusiastic on the issue. The emergence of an avowedly market-oriented party in the late 1980s, the Progressive Democrats (who favoured the abandonment of national wage bargaining and a return to decentralised collective bargaining and individual contract negotiations) pushed Fine Gael towards the centre with regard to the merits of political exchange versus “free” collective bargaining. This was paralleled by an upsurge in the Labour Party vote in the early 1990s, which allowed them to switch alliances and form a coalition with Fine Gael to successfully compete in the 1992 elections. The overall picture is that, despite a comparatively high rate of union density and a relatively strong working class identity, collective agency was ultimately tied up with nationalism, populism and Catholicism.22 To put it bluntly, Britain’s “working class Tory” phenomenon had a counterpart in Ireland, “where some workers were more devoted to rosary beads than to little red books, to republican symbols instead of the crown”.23 At the level of national politics, this subordinated union concerns to those of the Fianna Fáil Party and splintered opposition between centre-right parties as well as several very small leftist parties that competed with the Labour Party for the more militant working class vote at different points in time. Given the disposition of the major parties, and because of its overall size and ability to deliver electoral support, the union movement moved up the clientelistic hierarchy of the Fianna Fáil coalition as the ISI project advanced. This relationship was symbolically re-affirmed by labour presence in the formulation of national wage packages both before and after the recession of the early 1980s, and in the common differences with the market-

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driven approach adopted by the Fine Gael–Labour governments of 1982–87 and 1992–97. It also allowed Irish unionists to distance themselves somewhat from their British counterparts after 1987, since their fortunes were more immediately determined by political agreements at home. This was shown in the cultivation of union support by the Irish Labour Party (in spite of its modest electoral success) before 1990, and more importantly, by the later interest expressed by Fine Gael. Even so, labour politics never commanded the attention that it did in the United Kingdom or other European states as either a class, partisan or key electoral issue.24 With the development of post-war free trade regimes and the European Economic Community, Irish import substitution industrialisation died a slow death, resulting in attempts to attract foreign investment through incentives such as low corporate tax rates. These were tendered as part of European-style five-year planning programmes in 1958–63, 1964–69 and 1969–73. Although levels of foreign direct investment increased, so too did sectoral discontent with these policies, which did not compensate for the rising unemployment, emigration and strikes brought about by the demise of ISI-promoted enterprises. In a country with voluntarist labour relations, loss of jobs and the virtual elimination of an internal consumer market made for fractious times. Almost one million workdays were lost in 1969, and the approximately 500,000 workdays lost per year during the 1970s caused a great deal of concern even before the effects of the global recession of 1979 led to strike figures rocketing back to over the one million mark per annum. Before turning to further discuss how successive governments attempted to turn around this pattern of industrial conflict during the 1980s and 1990s, we briefly elaborate on the extent to which voluntarism was balanced against attempts at centralised wage bargaining and related tripartite mechanisms during post-war Irish political history.

Institutional conditioners Like Uruguay, the Irish labour relations system was originally pluralist in nature, with affiliation voluntary and no legal requirements imposed on unions in terms of registration, agency and oversight from the early 1800s until 1941 (although official repression continued to reinforce labour policy until independence). These voluntarist principles were inherited from Britain, but have been exaggerated in Ireland due to nationalist sentiment in an economy dominated by foreign interests. Moreover, “the British model of trade unionism was implanted in Ireland when there was hardly any industrial base at all.”25 This led to a situation where “the legacy of British patterns of decentralized organization and collective bargaining . . . meant that, the capacity of the ICTU (Irish Congress of Trade Unions) to articulate ‘class wide’ interests and to devise collective strategies was always limited.”26

170 Labour Politics in Small Open Democracies

As early as the 1920s there were increased efforts to constrain the range of action available to trade unions. In response to the food crisis of 1916–17, compulsory tillage orders were introduced under the Corn Production Act of January 1917, followed by the establishment of the Agricultural Wages Board to establish wage rates for farm workers involved in the labour-intensive agricultural activities promoted by the Act. In July 1919, the British Ministry of Labour opened an Irish Department that went about establishing fifteen new wage boards in “sweated trades”. By August 1920, there were 19 wage boards covering 148,000 workers.27 These remained in place until the partition. Along with increased State involvement in managing labour affairs, unions grew significantly during this period, with trade union membership rising from 100,000 in 1916 to 250,000 by 1920. A significant portion of this growth came from the agricultural sector, where farm workers operating in the compulsory tillage programs exploited their newfound strength by joining trade unions in large numbers. The ITGWU saw 60,000 agricultural workers enter its ranks in 1920, and the number of trade councils multiplied from six in 1914 to fifteen in 1918 and 46 in 1921.28 Free (bipartite) bargaining at the shop-level was the norm before 1940s, before being frozen during World War II. In the interest of wartime security as well as the desire to curb economically disruptive strike behaviour, the 1941 Trade Union Act legally required unions to register with the State in order to collectively bargain. They remained free to organise and selfgovern, but the effect of the Act on unions was to lower their numbers, promote amalgamations, and force some measure of discipline upon both leaders and rank and file. There were rewards for this. Economists trace the first national wage-round (also known as patterned bargaining) to the lifting of the freeze on collective bargaining and creation of the Labour Court by the Industrial Relations Act of 1946. It was “patterned” in the sense that nationally encompassing wage agreements were reached in strategically important sectors such as transport, construction and power utilities, freeing registered shop unions to concentrate on working conditions, productivity requirements and welfare issues beyond those ratified in the national accords (which still required shop union approval). Contrary to what some analysts have maintained, union participation in national socio-economic policy-making has been fairly extensive throughout the post-war period. Given major impetus by the Fianna Fáil government led by Sean Lemass in the late 1950s, concertative vehicles increasingly were used as macroeconomic co-ordination devices. A tripartite Capital Investment Advisory Committee was established in 1956, to which were added the Irish National Productivity Committee in 1959 and the Committee on Industrial Organisation in 1961. With farm, business and labour representatives equally distributed on it, the National Industrial Economic Council (NIEC) was established in 1963 as an oversight agency on issues of economic development and employment, in particular the implementation of the Second

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Programme for Economic Expansion. Disbanded in 1971, the NIEC was followed in 1973 by the National Economic and Social Council (NESC), charged with the task of advising government on issues of unemployment, economic growth, regional development, incomes policy and general issues of social and environmental import. The NESC had a more formal institutional apparatus than its predecessors. Initially it was compromised of ten representatives from unions, employers and farmers, plus six representatives of government departments chaired by an official from the prime minister’s office. In 1984, its membership was reduced to 25, with six of the nine government representatives replaced by experts designated by the government. Government representatives who remained came from the departments of Finance, Labour, Industry and Commerce. As for union participation in concertative agencies, by 1980, the ICTU was represented on 140 public bodies covering a broad range of social policy. It is important to note that this representation lay outside the framework of the national wage accords that were regularly signed throughout the 1970s and early 1980s, until centralised wage bargaining was abandoned by the Fine Gael–Labour coalition in 1982. Running in parallel to the other concertative ventures, the wage accords were heavily influenced by political bargaining between the major parties on issues incidental to incomes but which clearly had an impact on them, such as taxation.29 Even so, the wage accords were not as institutionalised as were the other agencies mentioned above, in that they did not have the ongoing sectoral oversight presence that characterised agencies such as the NESC. Overall, if not Austrian in style in terms of its degree of institutionalisation, neo-corporatism in Ireland is and was more substantive than symbolic, and as such is more advanced than in our other cases with the exception of Uruguay – to include the experiment with the Accord process in Australia during the 1980s and early 1990s. As these concertative arrangements were reproduced over the course of the last four decades, the labour movement’s focus gradually shifted from economic unionism, with its emphasis on material gains achieved through free collective bargaining at the shop floor, to a political exchange approach in which baseline rank-and-file gains are principally achieved through national concertative negotiations with employers and the State. Upon this general material threshold of consent are then negotiated the shop-specific details of the social contract with individual firms (although this is less the case for public sector unions). More recently, the political exchange approach has ceded ground to a social movement unionism that extends horizontal networks between labour unions and other social groups such as the unemployed, retired and women on broad issues of social policy, and which has a transnational reach in the form of its connections with regional labour organisations and non-governmental agencies. This may dilute the union message and reduce its primacy as a sectoral agent (as it could be

172 Labour Politics in Small Open Democracies

construed as just another interest group), but at the grassroots Irish unions continue to be rooted in the tradition of circumscribed voluntarism and shop-level ratification. This structural grounding gives it strategic weight, to which is added its traditional influence within the governing Party. Given the predominance of shop-level collective bargaining among multiple unions per workplace, historically there were few traditional industry, occupational (though patterned in some sectors relating to strength of unions) or national across-the-board bargaining. Collective agreements by registered collective agents are bound only by honour, as there is no State oversight, enforcement or legally binding regulations governing the said agreements. Although the State oversees through legislative fiat basic rights regarding holidays, dismissal, redundancy payments, minimum notice and non-discrimination, it has a minimal presence in the labour relations field other than registering bargaining agents and assisting in the prevention and resolution of industrial conflicts via a network of tripartite commissions and labour agencies detailed below. There are no collective bargaining frameworks institutionalised by law, which has led to the predominance of bipartite bargaining at the shop-level and made collective contracts the primary source of (self-) regulation of organised labour relations in Ireland (Table 4.2). Yet the State, through the Labour Court, has been generally supportive of the right to organise and collectively bargain, to the point that early Labour Court rulings in favour of union recognition were often done in the face of employer refusals to recognise the legitimacy of unions. This “passive” interventionist stance was reversed in the 1980s when the State, again through the Labour Court, began to strongly encourage union and employer amalgamations and discourage further union recognition as part of its efforts to “rationalise” the wage bargaining process, much as it has done in 1941. In addition, various State development agencies such as the Industrial Development Authority (IDA) and Shannon Free Airport Development Authority (SFADCO) have encouraged foreign firms to conform to local labour relations practices, and in some instances have served as brokers between MNCs and local unions – although that trend was reversed somewhat in the 1990s. Thus, the Irish labour relations system as it has evolved exhibits a hybrid character in that it combines (increasingly limited) grassroots pluralism with extensive State mediation services and promotion of concertative approaches towards national-level socio-economic policy co-ordination. Legislation was introduced over the years to guarantee certain rights with regard to holidays, redundancy, minimum notice, dismissals and nondiscrimination (minimum standards that can be improved upon by collective bargaining but not taken away or diminished) as well as minimum wage standards for certain occupational categories and the public service. Yet it was not until 2000 that a national minimum wage rate was introduced since it was (and is) considered to infringe on employer prerogatives and labour

Ireland Table 4.2

173

Collective bargaining regulations in Ireland 1943–2000

Mandatory collective bargaining? Compulsory arbitration or conciliation? Cooling Off Period? Limited scope of negotiable issues? Limits to duration of agreements?

1943–83

1983–87

1987–2000

Mixed – national wage accords with shoplevel ratification No

No

No No

No No

Mixed (voluntary ratification of national accords) Yes (though voluntary) Yes Yes

Yes

No

Yes

No

market efficiency. In other words, before and after the adoption of national concertative tripartite agreements on socio-economic policy, administrative emphasis in the labour relations partial regime was and is primarily focused on the individual dimensions of the workplace and labour market rather than on its collective action. To this day, workplace health and safety standards are virtually unregulated except by the terms of collective contracts negotiated at the shop-level, which is not often the case, something that is replicated with regard to other working conditions as well. Dispute-resolution bodies centred in the State all contain worker and employer representation. These include the Labour Relations Commission (LRC), the Labour Court, the Employment Appeals Tribunal, the Rights Commissioners, the Employer-Labour Conference and the Board of Management of the Worker Participation (State Enterprises) Act of 1977. Half of the public sector employees do not have access to the conciliation services of the LRC or the mediation services of the Labour Court, but instead rely on in-house conciliation and mediation boards that make recommendations to the Minister of Finance and Dáil Eirann, where they are usually accepted. The Labour Court serves as the ultimate dispute-resolution mechanism. It is tripartite in make-up, with members appointed by the Ministry of Employment and Enterprise (MEE) based on nominations submitted by the sectoral partners. Through its Department of Enterprise, Trade and Employment, the MEE is responsible for formulating policy in the labour relations field, to include review of industrial relations institutions and the administration of industrial relations and trade union law. The Labour Court is meant to be the court of last recourse, with parties to the dispute being required to first have exhausted all bipartite avenues of dialogue and using the services of the LRC in the first instance before petitioning the Court. The LRC was established by the Industrial Relations Act of 1990 and is comprised of equal number of employer and trade union representatives as

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well as independent agents. In addition, the court has responsibility for overseeing the implementation and terms of National Wage Agreements, as well adjudicating disputes arising from the Anti-Discrimination Pay Act of 1974 and Employment Equality Act of 1977. Decisions taken by the Labour Court in matters stemming from these two acts are legally binding. Conciliation services, which involve mediation by a third party in the form of an Industrial Relations Officer, a civil servant, and which were originally within the purview of the Labour Court, were transferred to the LRC by the Industrial Relations Act of 1990. The LRC oversees administration of the Joint Industrial Councils, Joint Labour Committees and the co-ordination of the Rights Commissioners’ Equality Officers functions. All of these agencies are tripartite in nature, and extend to the regional and occupational level as branch agencies of the Labour Commission. The Joint Labour Committees draw up minimum rates of pay and working conditions for selected industries and trades, while the Joint Industrial Councils serve as voluntary negotiating forums in particular industries. Terms reached in these two forums become legally binding when ratified by the Labour Court in the form of Employment Regulation Orders. Otherwise the Court’s recommendations are not legally binding, even though adherence to Court rulings has traditionally been very high. The Employment Appeals Tribunal, formerly known as the Redundancy Appeals Tribunal established under the Redundancy Payments Act of 1967, is comprised of a chairman, twenty-five vice-chairmen and forty members evenly divided between ICTU representatives and employer’s organisations. It is charged with handling matters related to Minimum Notice, Maternity Protection, Adoptive Leave, Unfair Dismissals, Protection of Employees (Employer’s Insolvency), Worker Protection (Regular Part-Time Employees), Payment of Wages, Terms of Employment and Protection of Young Persons Employment (Table 4.3). The Employer-Labour Conference (E-LC) is a national forum for the discussion and review of labour relations. In the early 1970s, it was instrumental

Table 4.3

Strike regulations in Ireland 1943–2000

Replacement workers allowed during strike? Right to lockout? Limits on strike duration? Mandatory dues deductions? Dismissal without severance? Non-economic strikes allowed? Job security (unemployment rates + ease of replacement)

1943–83

1983–87

1987–2000

No No No No No Yes Low

Yes Yes No No No No Low

No No No No No No Low

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in sponsoring bipartite national wage agreements between employers and unions with little direct State involvement otherwise. It consists of representatives of private firms and the State on the employer side and the Executive Council of the ICTU on the employee side, and shapes the broad contours of labour relations policy year-to-year. This includes maintaining regular communication with the standing administrative staff of the Central Review Committee (CRC, established in 1987 as part of the Programme of National Recovery), which is charged with drawing up the general framework for discussion of upcoming concertative negotiations, which occur every three years. Even so, the recommendations of both of these agencies are informal and non-binding, instead serving as points of discussion or departure for the Labour Commission and its specialised agencies as well the national concertative negotiations. What is important, however, is that the CRC provides an institutional “home” for national-level concertative wage bargaining, paralleling the broader focus of the NESC, while the E-LC offers an ongoing forum for sectoral discussion of the major matters of mutual interest that influence and provide context to the triennial negotiations.

Agent-principal issues Trade unionism in the Republic has a long history, emerging in the larger cities of Dublin, Belfast and Cork in the mid-1800s in spite of legal prohibitions against them, and with the first association of trade unions formed in 1863 to represent thirty craft and industry unions. In 1894, the ITUC was formed, and served as the predecessor to the current national labour confederation, the Irish Congress of Trade Unions (ICTU), founded in 1959. Partition saw the bulk of large-scale manufacturing remain in the North. The Republic retained its majority agrarian character, with the small-scale manufacturing organised in guild and craft unions covering small and isolated shop-level employees. The turn to ISI in the 1930s–50s promoted the growth of industrial unions to some extent, although its major impact was felt in the public sector, where the extension of State benefit and welfare networks promoted the emergence of strong occupational unions. The period saw a dramatic increase in union density, which rose from 20 to 60 per cent of the workforce, reaching a historical high of 61.8 per cent in 1980 (Table 4.4).30 Large-scale industrial unions never came to dominate in the private sector (where 35 per cent of the labour force is organised), although the public sector eventually came to see over 80 per cent of the labour force organised. The resultant aggregate union density rate (47 per cent in 1995) obscures the skew towards the public sector even if the overall rate remains comparatively high for both, and high when compared to those in our other four cases. Moreover, the pursuit of political exchange objectives after 1946 saw the emergence of larger heterogeneous unions that served as umbrella agents for various cross-sections of the employed population. This has seen

176 Labour Politics in Small Open Democracies Table 4.4

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Union membership, density and number of unions in Ireland 1975–2000 Union membership

Number of unions

Union density (%)

– 465,400 – – 498,900 499,744 552,041 546,668 546,512 520,943 516,019 517,327 483,889 483,515 486,966 482,990 474,019 477,369 487,816 499,727 518,708 539,130 538,433 545,324 561,793

93 89 88 88 85 86 86 83 80 78 77 77 76 74 68 67 62 59 59 56 56 56 55 47 46

55 – – – – 61.8 – – – – 56.0 – – 48.4 39.7 42.2 46.3 46.3 48.8 45.4 47.1 43.6 – – –

Sources: Labour Relations Commission, Labour Relations in Ireland – Trade Unions. Dublin: The Labour Relations Commission, 2000 (http://www.lrc.ie/labour_relations_in_ireland/trade_unions. htm); International Labour Organization, Trade Union Membership. Geneva: Bureau of Labour statistics, 2001; International Labour Organization, World Labour Report 1997–98: Industrial relations, democracy and social stability. Geneva: Task Force on Industrial Relations (GT/RP): Tables 1.1, 1.2 (http:// www.ilo.org/public/english/dialogue/govlab/publ/wlr/97/annex/tab11.htm(1.2.htm)); J. J. Sexton and P. J. O’Connell (eds), Labour Market Studies: Ireland. Brussells: European Commission, DirectorateGeneral for Employment, Industrial relations and Social Affairs, December 1996: 76 (for 1980 union density); B. MacPartlin, “The Development of Trade Union Organization”, in T. V. Murphy and W. K. Roche (eds), Irish Industrial Relations in Practice. Dublin: Oak Tree Press, 1997: 96 (average union numbers for 1970s).

a decline in the number of unions over the years, something that was encouraged by an amalgamation initiative pushed by the ICTU in 1983 and paralleled in both Australia and New Zealand. As a result, the number of unions has fallen from 120 in 1945 to 83 in 1980, 58 in 1993 and 46 in 1999–2001.31 The entrance of foreign transnationals in the “new” export sector after 1990 has not altered the general composition of the union movement. Eighty per cent of these firms are US-based, and most do not “encourage” unionisation,

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even if they are not able to ban their presence outright. Of the 32 firms that began operations in Ireland in 1994–95, only two effectively allow union representation. Moreover, new forms of production in both the organised and unorganised sectors of the export manufacturing economy have continued craft and guild traditions by utilising small-scale human resource management (HRM) techniques within a larger manufacturing process such as through “quality circles”, assembly-line teamwork and other post-Fordist innovations of Japanese and American variant.32 High structural unemployment acts as a continual drag on unionisation in spite of its comparatively high levels. Since the mid-1970s, Irish workers have been organised into two major types of collective organisations: staff associations and trade unions. Staff associations organise sectors of the labour force not traditionally organised by trade unions, specifically professional and white-collar workers. They are enterprise-based, have no connection with outside bodies, regional or occupational federations, and in the main do not negotiate contracts but rather serve as consulting agencies for firms on issues of employment. Association is voluntary and any agreements reached by staff associations only involve active members and the firm involved. Most workers, however, affiliate with trade unions operating as registered bargaining agents. Representation is largely organised around occupational groupings defined as craft unions (trades or skills restricted through apprenticeship), general unions (for semi-skilled and unskilled workers excluded from craft unions) and white-collar unions (professional and clerical). Although clearly on the decline due to skills obsolescence, new technologies and company closures, craft unions retain a presence in Irish union life, with over 29,000 members represented by the Technical, Engineering and Electrical Union (TEEU).33 As of the 1960s, white-collar unions grew in importance, particularly in the public sector, to the point that they now represent the largest percentage of the organised workforce, followed by general unions. The largest white-collar unions only organise public employees, with relatively few organising both the public and private sector. Heavily concentrated in health and education, public sector unions represent 85 per cent of the public sector workforce, whereas 25 per cent of all white-collar employees are represented by trade unions. The preponderance of public sector white-collar unions is attributed to the strategic importance of teachers, medical workers, power and transportation employees, to say nothing of the civil service. Even so, the bulk of union membership is grouped in general unions, with nearly 50 per cent of all unionised workers represented by them. This trend is the product of the early twentieth-century efforts towards the formation of craft unions as well as the more recent trend towards union amalgamation. Trade unions operate at significantly dense levels: 56 per cent of the labour force were covered in 1985, 49 per cent in 1993, 47 per cent in 1995 and again in 2000, with the variations between public and private sector

178 Labour Politics in Small Open Democracies

union density noted above. Trade union membership oscillated throughout the 1980s and 1990s, rising from 499,744 in 1980 to 546,668 in 1982, then gradually decreasing to a low of 474,019 in 1991. This was due to a number of factors, the most significant of which were the impact on employment of the recession of the early 1980s and the preference of foreign-based firms in the emerging value-added export market for non-union or single-union shops. This notwithstanding, from 1991 the pattern was reversed and union membership rose relatively steadily, reaching a twenty-year high of 561,793 in 1999. As a result of the efforts to promote amalgamation in order to increase union bargaining strength, union numbers showed a steady decline throughout the period, falling from 86 in 1980–81 to 56 in 1994–96, continuing downwards to 46 in 1999. This represents almost a 50 per cent drop in the number of unions over twenty years at a time when union membership numbers increased.34 Union size increased along with its interest in pursuing the political exchange option, since the return to national tripartite and regional/industrial wage bargaining in 1987 encouraged the merger and amalgamation of enterprise unions in each productive sector (although the process of amalgamation preceded the 1987 national wage agreements, and the full effects of this trend were not felt until the mid-1990s, and then most significantly among craft unions). Pushes towards amalgamation were experienced in Australia and New Zealand for similar reasons during this same period, but in the Irish case the union movement did not suffer such losses of membership as in these two other cases and was more successful in any event, since the dominant thrust of government policy in Australasia, as well as Chile and Uruguay, was to encourage the decentralisation of collective bargaining and the proliferation of shop-level unions. As a consequence, the Irish union strategy was a comparatively successful one, for it allowed better co-ordination of shop union demands in the face of a fragmented business sector that was slower to react to the requirements of imposed centralisation of wage bargaining. As a result of these amalgamation efforts, some “umbrella” unions grew to disproportionate size. The Services, Industrial, Professional and Technical Union (SIPTU), founded in 1990 out of the merger of the Federated Workers Union of Ireland (FWUI) and the ITGWU, had 227,731 members by 1999. This was nearly half of the total union membership in Ireland that year, and was nearly ten times as large as the next largest union, the Union of Retail, Bar and Administrative Workers (MANDATE with 37,885 members). Other large unions included the Irish Municipal Public and Civic Trade Unions with 34,880 members; the Technical Engineering and Electrical Union (TEEU at 28,559 members); the Irish Nurses Organisation (INO with 27,241 members); the Irish National Teachers Organisation (INTO with 21,305 members); and the Manufacturing, Science and Finance Union (MSFU with 20,750 members).35 From this we can deduce that the centralisation fostered

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by the adoption of concertative wage bargaining also increased the strength of those “umbrella” unions that grouped workers in the dynamic sectors of the economy, particularly the tertiary sector and public service that served as infrastructure for the foreign-dominated new export sector. To some degree, this offset the emergence of a predominantly unorganised skilled labour force in the latter. The ICTU groups together 95 per cent of trade union members in its affiliated unions, the bulk of which operate in the Republic of Ireland, but some of which operate in Northern Ireland. With a membership in excess of 550,000 (in a country with an economically active population of just over 1.5 million, including those in Northern Ireland), it is the national policy-making agent for the labour movement as well as its representative in the national concertative negotiations. The ICTU provides comprehensive training to shop stewards, officials and members of affiliated unions through its Education and Training Service, offers legal advice to member unions, and has a dispute mediation service, the Disputes Committee, to arbitrate grievances between member unions and employers. It is responsible for nominating labour representatives of the Labour Court and LRC, and has appointees in all standing agencies associated with the national concertation programme. Thirty-two of the unions affiliated with the ICTU have their headquarters in Northern Ireland or Great Britain, while unaffiliated unions represent 3 per cent of the trade union movement in the Republic and 8 per cent in Northern Ireland (which accounts for the discrepancy in membership figures between the Republic and for Ireland taken as a single entity).

Relations with business With some notable exceptions tied to the various industrialisation projects after 1930, such as petrochemicals and power generation, until the 1980s most manufacturing in the Republic was comparatively small-scale and relatively homogenous in nature. With the emphasis on shop floor representation and decentralised collective bargaining, national employer associations did not emerge in force until the structural shifts of the 1980s and the move towards more formal national concertative socio-economic “pacts”. Previous national wage accords tended to be either compromises within and between the political parties and the social “partners” that were awarded by the State after informal negotiations within (and between) parties, sectoral agents and parliament, or bipartite agreements between unions and employers (under the banner of the E-LC) on basic wage rates and conflict avoidance. Only businesses registered as employers could participate in these negotiations, which partitioned the representation of capitalist interests into producers or employers, but not both. This was the case with the Federation of Irish Employers (FIE – formerly the Federated Union of

180 Labour Politics in Small Open Democracies

Employers) and the Confederation of Irish Industry (CII), which divided business representation before the State and a labour movement consolidated in the ICTU. At the same time that organised business and its allies were calling for a “rollback” of the State in the regulation of labour relations in Australia, Chile, and New Zealand in particular, Irish business was more interested in achieving industrial peace through the strengthening of tripartite mechanisms and centralised bargaining in combination with new management practices at the level of the firm. Again, it should be emphasised that European-style corporatism provided at least the broad framework here. As one representative of organised business argued in 1980, Ireland’s moves towards regional integration “has fuelled our new thoughts on social harmonisation with our European colleagues”. In part, this required that “confrontation would have to give way increasingly to collaboration”.36 This reflected a widespread belief amongst Irish economic analysts of the period that if there was to be a “more effective policy” for dealing with Ireland’s economic problems, “the government will need to take an increasingly active role in formulating and applying it”. More importantly, “only the government can force the parties to the bargaining process to face the real options as they appear to them”.37 By 1983, the repeated failures of the national wage agreements, the subsequent collapse of the “free” decentralised collective bargaining model during the recession of the early 1980s, and the changing nature of Irish production as a result of global market pressures not only prompted business organisations and economists to demand a greater role for the State in negotiating between labour and capital, but made it important for business to organise around one national-level agent independent of the party system, with formal status of their own. This occurred with the amalgamation of the FIE and CII into the Irish Business Employers Confederation (IBEC). Eleven employer associations currently hold negotiating licenses, with IBEC representing over 7000 companies employing more than 300,000 people, or nearly 95 per cent of the total number of employers represented. As the ICTU’s counterpart, IBEC is responsible for all matters relating to industrial relations, labour and social affairs, as well as representing Irish industry on matters of trade, finance, taxation, planning and development. It represents business in over eighty organisations and institutions, to include all of the labour-related bodies such as the Labour Courts, Labour Relations Commissions and their dependent agencies. In the majority grouped under the IBEC umbrella, other employer federations gather members in specific economic or occupational areas: the Construction Industry Federation (CIF), with 2679 firms and 75 per cent of the construction work force represented; the Irish Pharmaceutical Union (IPU), with 1366 firms (mostly foreign); the Society of the Irish Motor Industry (SIMI), with 1664 member firms (car dealers); the Irish Hotels

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Federation (895 members); as well as a host of smaller associations such as the Cork Master Butcher’s Association, Licensed Vintners Association, Dublin Master Victualler’s Association, Irish Printing Federation, Irish Master Printers Association, and the Irish Commercial Horticultural Association. Total employer representation in 2000 was 7882 firms.38 In 1994 an IBEC affiliate, the Small Firms Association (SFA) formed a separate employers association, the Irish Small and Medium Enterprise Association (ISMA), in order to again separate its representation of corporate interests from its collective bargaining responsibilities in the labour market. ISMA is excluded from the national wage agreements, and along with the foreign-owned, capital-intensive export manufacturers prefers to negotiate contracts at the firm level, eschewing IBEC representation in talks with local unions. In spite of these ongoing divisions, given the overall ratio of firms to unions in Ireland (over 100 to 1 in 1983), it is clear that establishing national consensus on income and taxation policy was as much if not more important to business as it was to organised labour. With business representation divided among employer and producer groups, the negotiating ratio lowered but so did the scope of employer representation. Given those numbers, collective action problems were more acute for business than unions. With the adoption of more formal tripartite bargaining along with the consolidation of business interests around ten employer groups and one umbrella organisation, the ratio of firms to unions was reduced in the main negotiation forums (6:1), which made economic co-ordination more manageable. A significant economic presence since the 1970s, the foreign share of fixed capital investment (mainly US in origin) has grown steadily since, rising from 60 per cent in 1988 to between 80 and 85 per cent in the later 1990s.39 Foreign direct investment accounted for 41 per cent of manufacturing employment in 1992, increasing to over 50 per cent by the end of the decade.40 Much of the new investment is in pharmaceuticals, which is one reason why the pie-chart at the beginning of this chapter looks so remarkably different from those at the beginning of our previous two chapters. Shop-floor flexibilisation techniques were deepened by foreign investment. Unlike local business elites and politicians, foreign investors were less interested in securing working class consent to their operations or as consumers of their goods. In addition, the relatively high wages awarded to skilled workers in the new sectors was enough to minimise worker interest in long-term issues of representation and organisation. Instead, aided by free restrictions on capital mobility under Irish financial and investment legislation, foreign firms were interested in gaining a competitive regional advantage as a value-added commodity export platform vis-à-vis European, and North American, competitors. A low-wage, labour-intensive, skilled workforce with low levels of unionisation and few collective or individual labour rights was therefore the preferred labour relations framework for the

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“new” foreign investors. But with the pre-existing “old” manufacturing sector heavily unionised, this implied problems of co-ordination with their “older” counterparts over minimum wage standards and the like. Moreover, since the new export industries depended on the highly unionised service and public sector for infrastructural support – and the skilled labour force that it exploited – foreign firms were forced to establish at least tactical alliances with the older manufacturing interests represented by IBEC. Given the structural advantages to business afforded by the Irish labour market in an era of globalisation, un-coordinated capitalist collective action was best reconciled by imposing nation-wide minimum wage standards across occupational sectors. This allowed firms to co-ordinate their individual strategies on a common bottom line in terms of labour costs and taxation, above which concessions on the issue of flexibility (versus unemployment) could be negotiated at the shop-level based upon the firm’s placement in the market. Implicit in the agreements was union acceptance of the need to trade wage restraint for employment, and of full time flexibilisation changes instead of part-time, temporary, casual, piece-meal, “putting-out” sub-contracting or other forms of individualised labour. In this sense, the numerical asymmetry in favour of unions in collective bargaining is offset by the terms of debate in a country with labour surpluses confronting the dictates of a market-driven global political economy. Not surprisingly, wage dispersion has increased across all sectors of the Irish economy. One ILO study reports that in 1994 the percentage of workers earning below 66 per cent of the median income, one standard measure of “low pay”, is 23.9 per cent in Ireland, nearly matching the figure of 25 per cent in the US, but well above the rates of 19.6 per cent in the UK, 13.3 per cent in France, and only 5.2 per cent in Sweden.41 For its part, the public service resisted flexibilisation and privatisation of public goods by practicing wage restraint in a time of high growth. Both public and private sector unions wanted to prevent the development of an unorganised labour aristocracy in the new export sectors. For their part, foreign entrepreneurs anticipated that exponential short-term rates of growth in unorganised foreign TNCs would be followed by eventual levelling of labour market costs vis-à-vis other European countries. That would require them to move offshore or drive a harder bargain in the negotiating rounds. Although structural conditions favour the decollectivisation of the labour market, the national and social wage accords co-ordinated the balance of burden and sacrifice in a country in which organised labour’s political presence was as important if not more so than its economic presence. More to the point, given the state of labour politics, national-level concertation institutionally compensated for what otherwise would be a structurally unbalanced labour market prone to conflict. Strike rates were high in the 1970s, with an annual average of 583,978 workdays lost, including over a million workdays lost in 1970 and 1979. In 1975 the number of workdays lost was a relatively low 295,700, but that

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gave way to increases over the next five years. Strike numbers and workdays lost dropped in the early 1980s as the recession deepened and unemployment reached historically high levels. The trend accelerated after the adoption of national wage bargaining in 1987. In 1984 there were 192 strikes, in 1985 there were 116, 102 in 1986 and 80 in 1987. With the adoption of the tripartite wage bargaining framework, the numbers dropped and stayed relatively low (Table 4.5). The number of workdays lost fell correspondingly. From an annual average of 317,878 workdays lost in the 1980s (with a high of 434,300 in 1982 and a low of 50,400 in 1989), the average number of workdays lost fell to below 100,000 in the 1990s, with a low of 25,550 in 1994 and a high of 215,587 in 1999. Only in 1995–96 did the average rise above 100,000.42 The general trend with regard to strikes parallels that of the number of unions: both dropped markedly after the return to concertative wage bargaining in 1987. This resulted in an equally significant drop in the duration of strikes and workdays lost, as disputes became more localised and less politicised. This reflected a shift in the subject of work stoppages to working conditions, particularly work flexibilisation proposals and the use of temporary or part-time labour, as opposed to wages and issues of employment security. More importantly, the bulk of strike activity shifted to the public service, education, health and transportation in particular, as public sector employees attempted to keep pace with the real wage gains of their private sector counterparts. With regard to collective bargaining, 78 per cent of so-called “old” workplaces (those that were established in Ireland before the 1980s), where over 75 per cent of employees were unionised, had collective contracts, whereas 82 per cent of “new” industries (established after 1980) with similar unionisation rates had collective contracts. In firms with less than 50 per cent union density, 58.3 per cent of the old and 42.9 per cent of the new firms had closed shops, while 86 per cent of the old firms and 72.2 per cent of the new firms had collective contracts.43 This shows that despite the preference of many new investors for union-free workplaces, incentives such as low corporate tax rates and a well educated and yet cheap labour force outweigh the costs of investing in Ireland. The general outlook for unions consequently looks relatively positive for the period under study. Real wage shows sustained growth in manufacturing wages for the entire period. From a baseline of 3.59 in 1970 (1994 = 100), wages in manufacturing rose steadily to 6.32 by 1994. In some industries, such as chemicals, paper and print products, the increase was steeper, almost doubling in the case of the former (from 3.95 to 7.95) and rising 1.75 times in value in the case of the latter (4.48 to 7.59). This trend continued apace throughout the late 1990s, where growth rates reached double digits in construction and skilled manufacturing. The restoration of

184 Labour Politics in Small Open Democracies Table 4.5 Number of strikes and number of days lost due to strike action in Ireland 1975–2000

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of strikes

Number of days lost

151 134 175 152 140 130 117 131 154 192 116 102 80 65 38 49 52 41 48 32 36 33 27 34 32 39

295,700 776,900 442,100 624,300 1,465,000 412,000 434,000 434,300 319,000 386,400 417,700 308,600 264,300 143,400 50,400 222,900 85,500 190,600 61,300 25,600 130,400 114,584 74,508 37,374 215,587 97,046

Sources: International Labour Organization, World Labour Report 1997–98: Industrial relations, democracy and social stability. Geneva: Task Force on Industrial relations (GT/RP), 1998: Tables 4.1, 4.2, 4.3 (http://www.ilo. org/public/english/dialogue/govlab/publ/97/annex/tab41.htm (42.htm/ 43.htm)); Labour Relations Commission, Labour Relations in Ireland – Industrial Peace. Dublin: The Labour Relations Commission: 2000 (http:// www.lrc.ie/labour_relations_in_ireland/ industrial_peace.htm); J. J. Sexton and P. J. O’Connell (eds), Labour Market Studies: Ireland. Brussels: European Commission, Directorate-General for Employment, Industrial Relations and Social Affairs, December 1996: 96 (Table A5.1); International Labour Organization, LABORSTA (http://laborsta.ilo.org/cgi-bin/ broker.exe). Small discrepencies between these sources do not invalidate the overall trend and figures, which in all cases are derived from the Irish Statistical Bulletin for the years cited.

tripartite national wage fixing had much to do with the steady rise in wages, as the PNR (1987–90), PESP (1991–93), PCW (1994–96) and Partnership 2000 (1997–2000) all averaged pay increases over 2 per cent for both the public and private sectors, with room for additional local increases up to

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2.5 per cent based on market and firm conditions. In most cases these additional increases were awarded, and compliance rates with all of the national wage accords exceeded 80 per cent for the entire period.44 Much of this can be attributed to the positive economic environment of the last decade or so, at least when measured by increases in employment opportunities – the latter rising by 38 per cent in 1989, 41 per cent in 1992, 36 per cent in 1995, 32 per cent in 1999 and 39 per cent in 2000, but most of it unorganised in nature. Despite the ability of trade unions to maintain their membership rates, at least in comparison to the other four countries under investigation, increase their role in policy-making and make wage gains in the process, several trends should concern those interested in the welfare of Irish workers, organised and not. As we have already discussed, the Republic continues to have labour standards that both are minimal and lack institutionalisation. The union movement remains particularly concerned about the fate of lowpaid workers. MANDATE, representing many of these workers, is “extremely concerned with the whole area of atypical work”. Specifically, developments such as the increased use of part-time and temporary contracts have “resulted in a deterioration of the quality of employment”, and despite all the recent moves towards wage centralisation, the union “could not see management embracing a partnership approach” in this sector.45 To give an idea of the impact that low thresholds of labour standards still have on Irish workers, the number of fatal workplace accidents increased from 20 in 1984 to 69 in 1999. By contrast, in Britain despite the anti-unionism of Thatcherism, the number of similar cases dropped from 448 in 1984 to 211 in 1994, the last year for which the ILO reports data for Britain, which, of course, is a much larger country.46

Macroeconomic and social indicators The combination of wage-restraint through “voluntary” centralisation and the adoption of a structural adjustment programme that had more in common with the Australian and Uruguayan heterodox versions than the more radical Chilean and New Zealand ones allowed for a spectacular economy recovery in Ireland after the recession and budget blow-outs of the 1970s and early 1980s. In comparison to our four Southern Hemisphere cases, the crisis of the Irish economy deepened a little later, the effects of which can be measured in the dive in growth rates during the late 1970s and early 1980s. However, due to economic assistance from the EU and the preexisting orientation towards the attraction of foreign investment, which acted as a basis for policy-making during the 1980s, the Irish economy bounced back further and faster (Table 4.6). There is little need to cite the phenomenal growth rates sparked by new multinational investment during this period,

186 Labour Politics in Small Open Democracies Table 4.6

Macroeconomic indicators in Ireland 1975–99 1975–79 1

Average annual growth (%) Average annual change in consumer price index (%)2 Official unemployment (%)3

1980–84

1985–89

1990–94

1995–99

5.0 3.12

2.4 6.6

3.8 2.4

4.4 2.1

9.6 1.66

8.1

11.6

16.9

15.0

9.5

Sources: Calculated from (1) World Bank, World Development Indicators, CD-ROM version, 2002, Annual percentage growth rate based on constant local currency in constant 1995 dollars; (2) LABORSTA database, Table 7A: consumer prices, general indices, 1990 = 100; (3) OECD, Labour Force Statistics, 1974–94, Paris: Organization for Economic Co-operation and Development, 1996 edition, Table II: 333.

because they are so well known. On the political side, Fianna Fáil was credited with the bulk of these trends, overseeing the spectacular recovery of the 1990s and re-securing its place as the natural party of government in the 2002 general elections. So important to policy-makers during the market-oriented shift, inflation stayed low throughout the 1990s, ranging from 2.4 per cent in 1994 to a low of 1.5 per cent in 1997 and a high of 3.4 per cent in 1999. The Irish GDP grew throughout the late 1990s, rising from 5.8 per cent growth in 1994 to a high of 10.7 per cent in 1997 before slipping to 8.4 per cent in 1999, with an average of over 6 per cent for the decade – remarkable by any measure. GNP growth also showed consistent strength, ranging from 6.3 per cent in 1994 to a high of 9.0 per cent in 1997 and 7.4 per cent in 1999. But the Irish miracle has a dark side as well. Structural unemployment and under-employment remain comparatively high, and the increased use of casual, part-time and temporary labour as part of the more global trend in labour market flexibilisation has increased overall employment precariousness and wage dispersion during the last two decades (which many argue was the design). In terms of material standards, real wages in Ireland lag behind those of Europe in general, falling 40 per cent below the European average, with a third of the population on State benefits of some kind. Ireland has the highest number in Europe of full-time employees earning less than half of the median weekly wage. Moreover, over 35 per cent of those living in poverty in Ireland are working poor, that is, people with fulltime jobs.47 Overall, the official number of people living in poverty rose from 28.5 per cent in 1987 to 34.6 per cent in 1994.48 In effect, despite the 9 per cent export-led growth average of the 1990s, Ireland exhibits some of the worst income inequalities in the region, to which has been added graft. A recent report by the British-based Joseph Rowntree Charitable Trust “condemns Ireland as one of the most corrupt and unequal countries in Europe”, something that it claims has cost Ireland

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substantial foreign investment because of its bad international reputation.49 The sum total of these trends is ongoing net emigration, following the traditional Irish way of coping with labour surpluses. A nagging economic problem during the economic shift in Ireland, even if it was somewhat reversed in the late 1990s, has been under- and unemployment. Unemployment was extremely high in the 1970s but after the implementation of the national wage accords began to decline markedly. During the PCW regime, 138,000 jobs were created and under Partnership 2000 another 218,000 were created. Overall, unemployment rates dropped significantly in the 1990s, steadily falling from 14.1 per cent in 1994 to 5.5 per cent in 1999. But under-employment and part-time employment (including workers with multiple jobs) increased, as they did in all of our four Southern Hemisphere cases. While not as dramatic as the increase in part-time work in some of our other cases, the percentage of the workforce employed under such conditions increased from 5.1 in 1986 to 10.2 in 1996.50 Compared to similar attempts in Chile and New Zealand, in particular, the Irish shift from a agro-export to a “knowledge-based” economy has been eased by the intervention of a comparatively activist State in the labour market, but also by the ideological and institutional models borrowed from other member states of the EU. The “trickle-down” benefits of the move towards centralised wage bargaining and social and economic policy co-ordination has been limited by the foreign direct investment-led development model itself. Between 1985 and 1996, total combined public and private consumption declined from 78.2 per cent of GDP, investment declined from 20 to 18.8 per cent, and Ireland’s export surplus rose from 1.9 to 11 per cent. In other words, growth led to increased profits for overseas companies, rather than being either reinvested or redistributed within Ireland to any significant degree.51 We would argue that without deliberate policies to address long-term issues of under-employment, poverty and inequality in the Republic, the promise of economic growth is limited and in constant danger of being reversed when, surely rather than if, the economic boom ends – especially if this impacts the country’s rather fragile attempts at constructing neo-corporatism in the 1990s.

Conclusion The Irish “miracle” is much less a miracle than the result of several conjunctural factors. Its proximity to the European regional market as well as the subsidies and technical advice offered by the EU gave it a structural advantage when adopting market-oriented macroeconomic policies based on the promotion of value-added exports. This allowed for the rapid growth of a high-technology foreign-dominated export sector that took advantage of the relatively low wage yet skilled labour force and strong tax and financial

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incentives to fundamentally re-orient the composition of Irish manufacturing during the last twenty years. Of equal significance, though, is Ireland’s approach towards labour market regulation and labour relations, which bucked the trend of decentralisation seen in Europe and elsewhere during the 1980s and 1990s. Because Ireland, unlike most of its European counterparts as well as our four Southern Hemisphere cases preceding the market-oriented shift, was already operating in a decentralised pluralist or “voluntarist” labour relations framework with independent shop unions as the backbone of the organised labour movement, the only step further in that direction was to decollectivise labour relations altogether – something that to some extent happened in the “new” export sectors. But given the historically high rates of unionisation in Ireland, which hovered around 50 per cent overall and as high as 85 per cent in the public sector, such a move would have brought about the risk of major social unrest and industrial strife in a country with a very small population and a vulnerable economy. The solution was found in the return to national-level concertative wage bargaining, first tripartite in nature but eventually expanding to include representatives of other social groups as well as issues outside of wage standards proper. Although these efforts at neo-corporatist interest intermediation were not as institutionalised as elsewhere in Europe, they nevertheless gradually acquired self-reproducing institutional foundations that allowed for the ongoing renegotiation of wage rates and other matters of socio-economic policy (within the limits set by the market-oriented model). In this measure, the Irish attempt at neo-corporatism was more advanced than the concertative efforts in Australia, Chile and New Zealand during the same time frame, and although not as institutionally robust as in the practice of tripartism in Uruguay, came closer to approximating, and in some measure surpassing it during the latter half of the 1990s.

5 Conclusion: Explaining Cross National Variance in Labour Politics

At present, there is a strong belief amongst policy-makers and academics that nations can somehow “choose” their own development strategies and economic outcomes. In particular, it is proposed that a country’s insertion in the global chain of production is something that can be manufactured or manipulated, rather than something that is dictated by geographical location and natural resource base.1 Our analysis of labour politics in five small open democracies confirms that the ideological programmes, the organisational strategies of key socio-economic groups, and choices between institutional frameworks can make a difference in determining economic success and failure. Yet we have also found that a nation’s location in the world economy does heavily determine outcomes, focusing specifically on the fortunes of organised labour in this case. Contrary to the argument that States have considerable freedom of choice when formulating economic policy in the context of globalisation of production, in the field of labour politics nations such as these have a more circumscribed room for manoeuvre due to their vulnerability to international market trends. Overall, we find that the scope and depth of policy reform, and consequently, the status and welfare of trade unions and their members, is shaped by both external and internal factors, the specifics of which we will elaborate here. For better and worse, policy reform in small open democracies is heavily influenced by the four “I’s”: international economic position, labour movement political insertion, labour market institutions and union ideology. The first of these, international location, has three main features: physical size, geographic position and productive base. These factors limit the choices of policy-makers, and strongly influence how labour fares under conditions of market-oriented reform. Small democracies with incipient economies of scale such as Australia and Chile can adjust more gradually and incrementally to international market shifts because the costs of readjustment can be spread over time and across economic sectors. Lacking the broader attributes of the larger cases, “boutique” economies such as New Zealand and Uruguay are 189

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more deeply affected by external market shifts and ideological trends, and therefore are more likely to adopt orthodox economic reform, sometimes by executive imposition. Proximity to large regional markets as a labour-intensive value-added producer, evident in the case of Ireland and the EU, can mitigate some of the dislocating effects of market-oriented reform and create new employment opportunities. However open market competition from larger neighbours with well-developed economies of scale operating within regional trade regimes with loose enforcement standards, as in the case of Uruguay in Mercosur, can also have a devastating effect on domestic manufacturing, however value-added and labour-intensive it may be. The influence of international economic position passes over a raft of domestic factors before national outcomes in labour politics are determined. In this regard, the three remaining “I”s – institutions, ideology, and political insertion – tend to be bundled together, even if it has been useful to discuss each dimension separately. Ideological outlooks and organisational strategies, on the part of organised labour but also that of the State and business actors, might have historically preceded the incorporation of the union movement into national political life and the establishment of institutions to regulate the labour market, resolve industrial conflict and legitimise organised labour to a greater or lesser extent. But the development of these institutions, along with the pattern of labour’s political insertion as it evolved over time and in each country, cemented and conditioned trade union strategies and ideological frameworks up to the point that the market-oriented shift took place after 1975. In other words, within the limits set by location in the world economy, labour fortunes resulting from the particular pattern of marketdriven reform pursued across the five cases can be explained by the level of ideological and organisational unity resulting in the type of oppositional strategy pursued by each labour movement, which in turn can be explained in large part by the pre-existence of certain institutional frameworks and modes of political insertion. Party-subordinate political insertion combined with heavy doses of State involvement in regulating labour relations serves the union movement badly when labour relations policy reform is guided by market principles. This is in spite of the fact that historically, State and Labour or left-party sponsorship of the union movement has often been necessary for it to achieve the right to exist, let alone achieve incremental material and political gains for its members. State corporatism, in the case of Chile, and “hard” versions of neo-corporatism in Australia and New Zealand can be held responsible for ideologically dividing these labour movements before, during, and after the market-oriented shift. The scope of State intervention in the labour relations system, added to the centralisation of collective bargaining and monopolisation of working class representation, led to these labour movements being dominated by union bureaucracies rather than shop-level interests. More attuned to the needs of political reproduction of a Labour-based

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political party than the material interests of the rank and file, union leaders operated on assumptions of self-preservation and organisational survival. Ideological unity did not obtain between agents and principals, with the logic of the former outweighing the material interests of the latter. Conversely, traditionally decentralised and pluralistically organised unions fared better when collectively defending rank-and-file interests because the relative degree of autonomy and independence of shop unions fostered leadership accountability and ideological unity as well as independence from both the State and political parties. This softened the atomising impact of market-oriented reforms. The long-term consequences of party-subordinate and State-dependent labour insertion can be no better illustrated than by the Chilean and New Zealand cases (Table 5.1). The twist is that in Chile, market-driven structural and labour market reforms were done by a dictatorship over the course of fifteen years in which labour freedoms were few and far between. Labour market flexibilisation occurred under the umbrella of authoritarian social and political rules, and was part of a larger project of class domination after a long period of polarised contestation. Labour legislation was only slightly modified under the elected regime installed in 1990 (due in large measure to the continued presence of authoritarian “enclaves” within business and military elites), even after the election of a Socialist-led coalition in 1999. Belying its image as a thoroughly democratic country, New Zealand copied the Chilean

Table 5.1

Labour politics in five small open democracies Political insertion

Australia

Chile

Institutional framework (preceding shift)

Nature of structural adjustment programme

Party“Hard” neo-corporatist Heterodox subordinate

PartyInclusionary State subordinate corporatist before dictatorship; exclusionary during dictatorship New Zealand Party“Hard” neo-corporatist subordinate Uruguay Independent Pluralist (with some attempt at State corporatism under dictatorship) Ireland Independent Voluntarist and mostly decentralised

Orthodox

Orthodox Heterodox

Heterodox

Labour relations regime (after shift)

Mix of centralised and atomised “individual” bargaining Atomised pluralist

Atomised pluralist (until 2000) Pluralist (more decentralised than previously) Voluntarist, but centralised

192 Labour Politics in Small Open Democracies

model of market-driven labour relations reform, albeit under the aegis of an elected Labour government utilising “hard” neo-corporatist mechanisms of labour movement control before yielding to the atomising pluralist project of a centre-right coalition. Thanks to the ideological moderation, organisational divisions, and cautious strategy of “constructive engagement” adopted by the New Zealand union movement as a consequence of its experiences under the century-old Conciliation and Arbitration legal framework, policy reformers in New Zealand did not have to contend with any major outbursts of labour protest or opposition during the course of the 1980s and 1990s. In this context, Australia is an interesting and somewhat contradictory case. The process of reform here was much more incremental and the model of economic reform itself was much more successful, certainly in comparison to New Zealand. Although the move to pluralise the labour relations regime from above eventually paralleled the efforts in Chile and New Zealand in some respects, this occurred much later in this case (after 1995) and met with less success in destroying the older model. The puzzle here is that the labour movement in Australia was much more defiant in its defence of collective bargaining despite the fact that its labour market institutions, prior to the market-oriented shift, paralleled those of New Zealand to a greater or lesser degree. Part of the explanation for this lies in the fact that Australian unions were able to exercise much more leverage over the Australian Labor Party than were their New Zealand counterparts over the 1984–90 Labour government. This has something to do with Australian political culture, but it also has much to do with the nature of the Australian economy. Unlike New Zealand, and for that matter, Chile, Australian governments were much more concerned with protecting key national industries and maintaining a domestic manufacturing base, rather than shifting to a purely service and niche-product dependent growth strategy. In order words, militant unions remained in mining, manufacturing, construction and transport sectors which had simply been wiped out by the process of economic reform itself in Chile and New Zealand. In essence, Australia’s larger size and more comfortable location in the world chain of production buffered not only its economy, but also its labour movement. In contrast, especially to the Chilean and New Zealand cases, relative autonomy of the labour movement from the State and mainstream political parties, coupled with ideological unity between the base and leadership on material objectives (employment defence and wage stability) allowed organised labour to resist the flexibilisation projects better, even if on the defensive. Long histories of pluralist interest group administration and ideological unity allowed labour unions to better adapt and confront the market-oriented changes in the labour relations partial regime. This was true for both Ireland and Uruguay, although these two countries were very differently impacted by their proximity to large regional markets.

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Independent from State or party control and with a significant presence in the socialist Frente Amplio coalition that emerged after the dictatorship to become the biggest opposition bloc in parliament in 1997, Uruguayan unions rose from the ashes of the dictatorship as a united and viable opponent to the market logics proposed by both Colorado and Blanco governments during the last decade and a half. Ideologically united, strategically located, and operating in a pluralist institutional framework with longstanding tripartite bargaining mechanisms, Uruguayan labour had the resources to influence economic and social policy as well as the political system throughout the course of the (ongoing) market-oriented shift. The most dramatic attempt at orthodoxy was undertaken by the centre-left Blanco Party from 1990 to 1994 as part of the opening of MERCOSUR, but unlike its counterparts in Chile and New Zealand, this effort was notable for its failure and subsequent electoral repudiation. Both outcomes were in large measure influenced by organised labour’s staunch defence of its members’ political and economic interests, using the institutional rights and constitutional guarantees offered to it. Even so, it lost members and strategic position as a result of economic re-structuring (particularly the demise of domestic manufacturing), even if it shifted most of the costs of austerity to the unorganised sectors of the Uruguayan population. Ireland had the remarkable advantage of being a very late developing economy in which labour relations were only fully institutionalised in the 1990s with its full entrance into the European market. Ironically, given the prevalent trends of the last twenty years in the field of labour relations, Irish political and economic elites were keen to adopt more centralised, neocorporatist tripartite vehicles for labour market oversight and adjustment. The history of decentralised craft and occupational unionism under a largely pluralist and voluntary pre-industrial labour relations framework that operated relatively free of State interference allowed the Irish labour movement to engage in tripartite concertation with a considerable degree of sectoral autonomy and rank-and-file support. The process of union amalgamation and centralisation of collective bargaining after 1987 always remained attached to the rider of rank-and-file ratification of national wage accords and related concertative agreements – which made enforcement of national wage agreements tenuous in all but the best of times. The power of nationalism as a working class ideology (which has propelled the political fortunes of Fianna Fáil since its creation) helps explain the high degree of voluntary adherence to these agreements since 1987. So do the steady increases in real wages awarded to those covered by the concertative agreements. Admitting the deficiencies of the “Irish model” (principally increasing wage dispersion and dubious health and safety standards), and despite its belated industrialisation, Ireland fared comparatively well in terms of organised labour fortunes within a context of high economic growth mainly because

194 Labour Politics in Small Open Democracies

of its geographical proximity to the EU and the latter’s demands for labourintensive value-added production. These positive economic outcomes were generated by a system of labour politics characterised by a unique pattern of union initial incorporation and political insertion, a mix of centralised and decentralised collective bargaining institutions, and (nationalist rather than class-based) union ideologies, which made for a counter to the labour market flexibilisation strategies of the other cases and most of Europe. In terms of macroeconomic growth, Australia and Chile coped better with the exigencies of globalised market-oriented reform, with strong records of macroeconomic growth and export diversification throughout the period under scrutiny. But from then on the material and political fortunes of organised labour differed due to their dissimilar patterns of initial political incorporation, labour regime institutions and union ideologies (to say nothing of the impact of repression in the latter). The same can be said for New Zealand and Uruguay from a reverse angle: both had a much more constrained range of choice with regard to macroeconomic policy due to their “boutique” vulnerabilities, and thus suffered through long periods of economic stagnation that preceded and followed the market-oriented shift. Yet here also they varied considerably with regard to labour market reform due to the very different histories of incorporation, institutions and union ideology operating in each (Table 5.2). The common denominator of our Southern Hemisphere sample was labour movement retreat to the original defensive position: protection of employment and income standards for organised workers. In all of these countries wage dispersion increased, while union density and overall union

Table 5.2

Collective bargaining structure in five small open democracies

Australia Chile Ireland New Zealand Uruguay

Bargaining levels over past ten years

Dominant bargaining levels over past ten years

Proportion of employees covered by collective agreements 1995 (%)

National/sectorial; company/plant Company/plant National/sectorial; company/plant National/sectorial; company/plant National/sectorial; company/plant

Company

65.0

Company Company

12.7 90.0 (1994)

Company

23.1

National/sectorial*

21.6

* While this level of collective bargaining at the national and sectoral levels was maintained during the mid-1990s, our conclusions from that case study suggest that it is increasingly tending towards company level. Source: Adapted from ILO, World Labour Report 1997–98. Geneva: International Labour Office, Tables 3.1 and 3.2: 246–9.

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membership were halved along with dramatic changes in the organised composition of the labour force. Unions were neither as large, or as encompassing, nor as strategically important (outside of the public sector) as they once were. Rather than maximise material and political gains via economistic or political forms of collective action, under these conditions unions were forced to fend off the ideological offensive of globalised neo-liberalism. This prompted as much an atomising retreat into parochial material defence as it did the horizontal expansion of solidarity networks with other disadvantaged social groups. In other words, union responses were neither necessarily progressive nor necessarily pro-active, but just as likely to be reactionary in nature. More importantly, within the dichotomous pairs, regardless of size or geographic location, what differentiated positive from negative union outcomes (measured as union organisational and material presence within the labour market) were the intervening conditions: ideological unity and prior histories of labour political insertion and institutional incorporation. In Australia and Uruguay the retreat to defence of unionised jobs concentrated on job protection for ideologically committed, party-affiliated, skilled labour cadres. This concentrated group of union members exercised disproportionate influence within the parliamentary and electoral partial regimes because they had strategic weight (teachers, nurses, dockworkers, bank employees) within politically influential unions and voted en masse and uniformly. Thus, the Australian and Uruguayan labour movements successfully exercised political clout to defend this hard-core rank and file in the face of major reforms and structural alterations to their respective economies. Weakened by left-party subordination and histories of State-dependence, Chilean and New Zealand unionists did not. In Ireland the trend was reversed, with unionisation rates in an increasingly important public sector rising to regional record heights, with the overall level of union density also rising to national record levels. Sixty per cent union density, more than double of any of the Southern Hemisphere cases and among the highest in Europe, allowed for the concertative fixing of national wage rates for all but the new export sector. Foreign-owned exporters nevertheless found ample room to negotiate market-favourable wage rates with a skilled labour force unaccustomed to the trickle-down effects of engaging larger regional markets driven by value-added commodity consumption. Here as well, ideological unity and institutional pluralism ran hand-in-hand. Although the partisan affiliations, economic position and specific composition of the Irish labour force differed widely with regards to the Southern Hemisphere sample, the importance of institutions and ideology in determining collective outcomes did not. The difference was that the autonomous pressure group influence of organised labour was exercised directly upon the main political party, Fianna Fáil. Overall, the ability to respond to the atomising effects of market-driven trends was heavily conditioned by domestic political-institutional frameworks

196 Labour Politics in Small Open Democracies

and the ideological features of collective agents. Within the general condition of retreat, retrenchment and reversion to the original defence premise of union collective action, the combination of grassroots political autonomy, pluralist interest intermediation frameworks and ideological unity on the part of the labour movement (regardless of the specific nature of the ideology in question) was the best defence against the more negative features of the market-oriented shifts (particularly declines in the number of unionised jobs, union density and real wages). Conversely, the combination of State corporatism and labour party subordination made unions less able to defend their memberships against the adverse consequences of labour market flexibilisation strategies, which led to their institutional decline. Political autonomy and pluralist bargaining frameworks with national-level concertative macroeconomic co-ordination agencies were especially important in forging union ideological unity, which in turn influenced the way in which unions responded to the market-oriented shifts. Of the internal factors, labour market institutions and union ideology were the most decisive in determining the relative fortunes of organised labour when confronted by market-oriented shifts in macroeconomic policy. The pattern of labour movement political incorporation and insertion and the character of collective bargaining institutions led to short- and long-term labour movement gains before and after the shift. State- or Party-sponsored modes of initial incorporation and corporatist political insertion offered short-term gains under favourable economic conditions or macroeconomic policy (such as welfare statism), but was very disadvantageous after the market-oriented shift was underway, as in Chile and New Zealand. Dependence on Labour or left-party politics within a corporatist framework of interest group intermediation subordinated organised labour to the dictates of the market-oriented reform or facilitated its disarticulation and forced recomposition under atomising pluralist labour legislation. In both cases the rank and file suffered. In Australia, Labor Party subordination was mitigated by the ideological traditions and the strength of collective bargaining traditions in certain industrial sectors, which allowed Australian unions to better confront the move towards labour market flexibilisation even when initiated by their erstwhile political representatives. Relative autonomy from political parties and union ideological unity bolstered the position of the Uruguayan labour movement after the transition to democracy in 1985, which it marshalled effectively through a pluralist institutional apparatus inherited from the pre-authoritarian era. Similarly, the history of institutional pluralism governing collective action and nationalist party-dominated consensus allowed Irish unionism to retain its social presence in spite of the dramatic changes to the Irish economy effected during the last twenty-five years. Broadly speaking, one labour-extrinsic factor (labour market institutions) and one labour-intrinsic factor (ideological unity) were especially important

Conclusion

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in determining the material and organisational fortunes of unions. Ideological unity was more important in decentralised collective bargaining systems with pluralist union representation, where shop-level competition for rankand-file support made honest brokers out of the winners (as in Uruguay and to a lesser extent, Ireland). Monopolistic representation in centralised collective bargaining systems did not require as much ideological unity among the rank and file, but it fostered union bureaucratisation and the subordination of member interests to corporate or political objectives. Beneficial under the State-led development programmes that preceded the market-oriented shift, this form of political insertion proved a serious source of weakness when confronted by projects of labour “flexibilisation”. In most cases, deregulation of labour markets did not mean freedom of unions to operate as they please. Instead, it coupled restrictions on union freedom of action with the easing or lifting of business constraints (for example via restrictive strike legislation and looser capital transfer regulations, respectively). This “bi-frontal” approach extended to the labour market, where the terms and conditions of employment were legally and administratively steered towards the needs of employers. Monopolistically organised labour movements with left-party ties were left in a disadvantaged position when a Left-party government implemented the market shift. It also reduced their room for manoeuvre so long as labour legislation was not altered in their favour, regardless of who was in power. In contrast, pluralist forms of political insertion gave organised labour the ideological and organisational strength to better weather the market storm irrespective of government inclination. The strength of the structural shift and institutional features were more important than political regime or government change in determining the course of labour politics in these countries. The extent to which the structural shift was an orthodox one was dictated more by international economic location and the framework regulating union activities than by union ideological opposition per se, even though this played a clear role when it came to the actual arena of industrial relations reform. In all cases but Uruguay, macroeconomic policy changed before labour legislation was modified along atomising pluralist lines, the sequence in large measure being determined by the character of pre-existing labour relations institutions. In fact, whether done by dictators or centre-left democrats, market-oriented policies and labour market reform found the greatest obstacle not in the unions themselves, but in the institutional frameworks governing the labour relations system. Corporate defence of rank-and-file material interests was determined in most cases by the pre-existing institutional framework rather than the ideological content of the labour movement as a whole. This framework delimited the scope and subjects of collective action as well as the rules governing them. For labour market flexibilisation to occur, institutional reform was often needed as a pre-condition for legal reforms oriented

198 Labour Politics in Small Open Democracies

towards facilitating labour market flexibilisation. These reforms were facilitated by ideological factionalisation within the union movement, which often had root in the ties between organised labour and mainstream centre-left parties. Ideological disunity and political dependence thus eased attempts to weaken union structural and political power – such as it existed. Within the confines of international circumstance, political-institutional factors and ideological unity were the determinants of organised labour’s fortunes in the shift to market steerage of national economies in these small open democracies. This occurred regardless of size, geographic location or political orientation of government. Where the combination of institutions, political relationships, and ideology was favourable to union autonomy and independence, they were more able to cope with the market-oriented shift. Where the institutional and ideological conditions promoted State-dependence or Party-subordination, unions and their members suffered significant blows after the adoption of decentralised bargaining systems. From this we deduce that during times of plenty, organisational symmetry amongst collective agents operating in centralised and State-mediated labour relations systems was the preferred means of securing working class consent to Statecentred economic projects, but proved counter-beneficial to unions when market logics prevailed. In adverse times, when the material threshold of consent was lowered substantially and collective bargaining was legally decentralised, the ideological strength of pluralistically organised unions proved decisive in maintaining union interests even when forced into a general position of retreat and retrenchment. Both corporatist and pluralist approaches to labour politics proved to be time-contingent, double-edged swords, but the corporatist mode allowed for more orthodox market-driven reform under which organised labour suffered greater material and organisational losses. This appears to reaffirm what some feel is obvious: that pluralism in interest group representation is a better way to organise collective interests in a democracy. But in our sample the issue has a twist, as in both cases where pluralism in labour politics has been the institutional norm (Ireland and Uruguay), “volunteerist” union movements based on shop-level representation engaged in occupational and national level neo-corporatist wage bargaining with the State and business. In both instances concertation eventually extended beyond wages alone, and tripartite institutionalisation was deepened after 1987 in Ireland while bilateral concertation between unions and business continued in Uruguay as the main form of collective bargaining even after the State withdrew from negotiations in 1993. Grassroots defence of the shop-based pluralist system was an ongoing ideological foundation of both labour movements in question, which given their influence in electoral politics made alterations to the institutional structure difficult. Adherence to agreements remains voluntary and shop-based, making ideological unity among the relatively dense union membership in both countries crucial for compliance. This was largely the case, and in both countries real wage

Conclusion

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growth continued among organised sectors of the workforce in spite of their very different economic conditions. On the other hand, prior histories with State or “hard” neo-corporatism eased the adoption of forced atomising projects in the labour market because it subordinated rank-and-file interests to union political and bureaucratic rationales tied to Left-party politics. In varying degrees, this occurred in Australia, Chile and New Zealand. Long-held traditions of pluralist labour relations and ideological unity within the union movement offered the best defence against market-oriented reform. Even if not the most economically efficient combination when viewed from a market perspective, it allowed for a more equitable distribution of the costs of reform, at least in terms of shifting some of the burden of austerity off organised labour while allowing for some measure of growth. (Neo-) corporatist labour relations and ideological disunity within the union movement provided a better combination on which to undertake market-driven labour reforms, particularly when imposed by a centre-left government. Whether it provides a good foundation on which to build subordinate group consent to liberal democratic regimes remains to be seen. Whatever the outlook, such are virtues upon which union fortunes are made.

Notes

Preface 1 D. Denoon, Settler Capitalism: The Dynamics of Dependent Development in the Southern Hemisphere. New York: Oxford University Press, 1983. Denoon includes South Africa and Argentina in his discussion. Another cross-national comparison of the Southern Hemisphere that includes Australia, Chile, New Zealand and Uruguay is offered in J. Fogarty, E. Gallo and H. Dieguez. (eds), Argentina y Australia. Buenos Aires: Serie jornadas, Instituto Torcuato Di Tella, 1979. One of the few studies that compare New Zealand and Uruguay as a distinct subset is J. Kirby, “On the Viability of Small Countries: Uruguay and New Zealand Compared”, Journal of Interamerican and World Affairs, V.17, N.3 (August 1975): 259–80. 2 P. McNeills and A. Bollard, From Fiscal Indulgence to Fiscal Repentance: Chile, Ireland, and New Zealand in the 1980s, New Zealand Institute of Economic Research, Working Paper 91/14, Wellington, October 1991. 3 B. Ames, Political Survival, Berkeley: University of California Press, 1987 and N. Bobbio, Democracy and Dictatorship, Minneapolis: University of Minnesota Press, 1989. 4 P. Katzenstein, Small States in World Markets, Ithaca: Cornell University Press, 1985.

1

Introduction: Methodological and Theoretical Issues

1 World Bank, Sub-Saharan Africa, from Crisis to Sustainable Growth: A Long-term Perspective Study. Washington, DC: International Bank for Reconstruction and Development, 1989: 42–3. This view is expanded for Latin America: “The most serious labour market distortions in Latin America result from government intervention in setting wages; the high costs of dismissal, which reduce flexibility and make a firm’s restructuring difficult and slow; high payroll taxes, which reduce formal employment and inhibit the international competitiveness of local firms; and the nature of labour-management relations, which encourages confrontation and costly settlement procedures.” World Bank, Labour and Economic Reforms in Latin America and the Caribbean. Washington, DC: Regional Perspectives on World Development Report, 1995: 16. 2 P. Barrett, “Labour Policy, Labour-Business Relations and the Transition to Democracy in Chile,” Journal of Latin American Studies, V.33, N.3 (August 2001): 563. Because of the variety and often pejorative meanings given to the term “neo-liberal”, we shall refrain from using it. Instead we speak of market-oriented economic and labour policy reform. 3 It is worth noting here the key differences between Katzenstein’s (1985) set of “small, open democracies”, and our own. Katzenstein’s cases were and are located much closer to the industrial centre of the world economy than ours, and adopted relatively open trade and investment policies in the post-war period. By contrast, economic development in our five cases, and more particularly the four Southern Hemisphere ones, has been State-led and protectionist until the early 1980s (the 1960s in the case of Ireland). This may explain our rather different conclusions. 200

Notes

201

4 A. Przeworski and H. Teune, The Logic of Comparative Social Inquiry, New York: Wiley, 1970. In adopting this terminology, Przeworski and Teune borrow from yet invert John Stuart Mill’s reference to his “method of difference”, in A System of Logic, London: JW Parker, 1843. 5 By A. Lijphart, “The Comparable-Cases Strategy in Comparative Research”, Comparative Political Studies, V.8, N.2 (1975): 158–77; and D. Collier, “The Comparative Method: Two Decades of Change”, in D. Rustow and K. P. Erickson (eds), Comparative Political Dynamics: Global Research Perspectives, New York: Harper Collins, 1991, respectively. Also see P. H. Smith, “The Changing Agenda for Social Science Research in Latin America”, in P. H. Smith (ed.), Latin America in Comparative Perspective: New Approaches to Methods and Analysis. Boulder, CO: Westview Press, 1995: 1–17. 6 This has been a consistent theme of discussions on comparative methodology. See Lijphart 1975. While we have serious doubts about the validity of applying the standards by which to judge quantitative research to qualitative analysis, as these authors do, one of the most detailed elaborations on this theme is given by G. King, R. O. Keohane and S. Verba, Designing Social Inquiry: Scientific Inference in Qualitative Research, Princeton: Princeton University Press, 1994: 128–34. This study urges both variance on the dependent variable and caution against selection on the dependent variable. It also argues that: “Selecting observations for inclusion in a study according to the categories of the key causal explanatory variable causes no inference problems”: 137. This is a recommendation that informs our own work. See G. L. Munck, “Canons of Research Design in Qualitative Analysis”, Studies in Comparative International Development, V.33, N.3 (1998): 18–45, on the strengths and limitations of King, Keohane and Verba’s framework. 7 This point is made particularly well by A. Przeworski, “The Role of Theory in Comparative Politics: A Symposium”, World Politics, V.48, N.1 (1996): 17. “We have this notion of things being ‘comparable’ as if comparability were an intrinsic characteristic of our observations rather than a result of our judgements. A comparison of Sweden and Denmark is acceptable. However, if we compare Sweden with Chile or Kenya with Argentina, we are told that this is not a legitimate operation, that this is like comparing apples and pears. Note that the entire organisation of our discipline – the institutional structure of political science departments, of professional associations, and of the Social Science Research Council – is organised along geographical lines.” 8 The debate between globalisation theorists, “new institutionalists” and “materialinterest” scholars – as well as those who attempt to synthesise or bridge between them – is captured in R. Keohane and H. Milner (eds), Internationalization and Domestic Politics. NY: Cambridge University Press, 1996; and H. Kitschelt, P. Lange, G. Marks and J. D. Stephens (eds), Continuity and Change in Contemporary Capitalism. New York: Cambridge University Press, 1999. A review and application to the Australian and New Zealand cases is found in N. Wailes and G. Ramia, “Globalisation, Institutions and Interests: Comparing Recent Changes in Industrial Relations Policy in Australia and New Zealand”. Unpublished manuscript, University of Sydney and Monash University, 2001. 9 With a population of four million and a GDP of almost 18 billion, we admit that Costa Rica might have been a good choice for case study given our focus. Yet some key differences meant that it did not fully meet our most similar criteria for

202 Notes

10

11

12

13

14 15

16

case selection. Among these were its different colonial and post-colonial experience, its more tenuous tropical export dependency, its lack of full integration into regional market schemes, its continued use of welfare statist policies and as of yet incomplete and piecemeal market-oriented reforms, and because it is much lower on a host of human development indicators (other than life expectancy – seventy-seven years – which is higher than in all of our cases). Although Costa Rica scores similarly high on the UNDP human development index as all of our cases (ranked as a highly developed nation), it was at the bottom of that category (48th out of 50), a full 10 places below the rest. See United Nations, Human Development Index. NY: United Nations Programme for Democratic Promotion, 2002. Portugal would also have made a good candidate for study due to its relative population size, but for the fact that it has a much less developed economic structure or international position than our cases and is not a variant of settler capitalism in any event. In countries such as Slovakia, which is admittedly a small open economy, the simultaneous transition to electoral capitalism from socialist authoritarianism makes issues of comparison too complex for the point being argued. R. B. and D. Collier, “Inducements versus Constraints: Disaggregating Corporatism in Latin America”, American Political Science Review, V.73, N.4 (1979): 967–86; and A. Przeworski, “Democracy as a Contingent Outcome of Conflicts,” in J. Elster and R. Slagstad (eds), Constitutionalism and Democracy. NY: Cambridge University Press, 1987: 59–80. Partial regimes are the network of institutions, mores, rules and social actors (both public and private) engaged in reproducing a core area of political and social life in a given nation-state. National political regimes are made up of several partial regimes, for example, the labour relations partial regime, the legislative partial regime, the partisan partial regime, and so on which together constitute a type of institutional latticework that supports the larger edifice of the national political regime. On partial regimes see P. C. Schmitter, “The Consolidation of Democracy and the Representation of Social Groups”, American Behavioural Scientist, V.35, N.4/5 (1992): 422–50. L. D. O’Connell, “Collective Bargaining in 6 Latin American Countries: Degrees of Autonomy and Decentralisation (Argentina, Brazil, Chile, Mexico, Peru and Uruguay)”. Washington, DC: Inter-American Development Bank, Working Paper 399, May 1999: 4 (ff. 5). A. Marshall, State Labour Market Intervention in Argentina, Chile and Uruguay: Common Model, Different Versions. Geneva: International Labour Organisation, Employment and Training Papers, N.10, 1997: 3–7 (Web version: www.ilo.org/public/english/ employment/strat/publ/etp.10.htm). O’Connell (1999): 6. This point is made in J. Buchanan and R. Callus, Efficiency and Equity at Work: The Need for Labour Market Regulation in Australia, Australian Centre for Industrial Relations Research and Teaching, University of Sydney, Working Paper No. 26, April 1993. For analysis of the current trends in labour market reform in Latin America, see among others A. Bronstein, “Labour Law Reform in Latin America: Between state protection and flexibility”, International Labour Review, V.136, N.1 (Spring 1997): 5–26; A. Bronstein, “Societal change and industrial relations in Latin America: Trends and prospects”, International Labour Review, V.134, N.2 (Summer, 1995): 163–86; A. M. Catalano, “La crisis de la representación en los sindicatos:

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del esencialismo de clase a la función comunicativa”, Nueva Sociedad, N.124 (March–April 1993): 123–33; R. Dombois and L. Pries, “Structural change and trends in the evolution of industrial relations in Latin America: A methodologicalconceptual outline”. Paper presented at the XIII World Congress of Sociology, Bielefeld, July 1994; J. Godio, “Reestructuración del Mercado laboral y la estrategia sindical”, Nueva Sociedad, N.124 (March–April 1993): 105–13; C. M. Padilla, “Los ejes de la reforma laboral”, Nexos, V.20, N.229 (January 1997): 19–21; O. E. Uriarte, “La intervención estatal en las relaciones colectivas de trabajo Latinoamericanas”, Nueva Sociedad, N.128 (November–December 1993): 29–37; and E. Morgado Valenzuela, “Las reformas laborales y su impacto en el funcionamiento del mercado de trabajo”. Santiago: Comisión Económica para Latinoamerica (CEPAL), Serie Reformas Económicas, N.32 (LC/L.1221) July 1999. 17 One interesting aspect of this debate is seen in the slow progress made towards adopting uniform labour standards within the MERCOSUR regional trade bloc comprised of Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associated nations. Although the 1991 Foz de Iguazú agreements that gave birth to MERCOSUR included a working group (SubGrupo 11, later changed to SG10) on labour relations and social security administered by a tripartite committee (Comisión Sociolaboral) made up of union, business and governmental representatives that meet regularly and offer professional advice on how to better integrate the labour relations systems of the regional trade partners, its recommendations have been resisted to varying degrees by most of the actors affected. These recommendations advocate ILO standards as the objective to be achieved (à la OECD model), with the possibility of some concertative approaches towards labour market features and benefit provision added to the mix. Nominally grouped in a regional confederation (the Central Coordinadora de Sindicatos del Cono Sur – CCSCS) in order to co-ordinate national union responses to the elimination of regional trade barriers, most of the union movements affected prefer to retain features of the old labour relations regimes that allow them to negotiate encompassing agreements above the shop-level and to control dues-financed health and benefit networks. For their part business and government officials prefer to retain anti-strike legislation and State powers of union oversight that violate ILO standards. Hence the labour relations side of MERCOSUR has yet to be institutionally consolidated. On this see A. Barbiero and Y. Chalouit, “A declaraçao sociolaboral do Mercosul: avanço na dimensão social?” Brasilia: Universidade de Brasilia, unpublished mss., 1999 and ibidem, “Desafios, estratégias e alianças das centrais sindicais no mercosul”, Brasilia: Universidade de Brasilia, 1999; and T. Vigevani, “Mercosur, Impactos para trabalhadores e sindicatos”, São Paulo, Ltd., 1998, all cited in A. Falero, “Los desafios del movimiento sindical Uruguayo en la construcción de una sociedad civil regional”. www.internet.com.uy/ cerronet.html. 18 On the theme of economic convergence, see R. Boyer, “The Convergence Hypothesis Revisited: Globalisation But Still the Century of Nations?”, in S. Berger and R. Dore (eds), National Diversity and Global Capitalism, Ithaca and London: Cornell University Press, 1996: 29–59. 19 C. Crouch and W. Streeck, “The Future of Capitalist Diversity”, in Political Economy of Modern Capitalism: Mapping Convergence and Diversity, London: Sage, 1997: 1–18. See also C. Crouch, Industrial Relations and European State Traditions, Oxford: Clarendon Press, 1993, which emphasises the historical determinants of difference in policy choice.

204 Notes 20 G. Baglioni, “Industrial Relations in Europe in the 1980s”, in G. Baglioni and C. Crouch (eds), European Industrial Relations: The Challenge of Flexibility, London: Sage, 1990: 10–13; R. Smith, “The convergence/divergence debate in comparative industrial relations”, in M. Rigby, R. Smith and T. Lawlon (eds), European Trade Unions: Change and Response, London and New York: Routledge, 1999: 1–17. 21 W. Streeck, “The Rise and Decline of Neocorporatism”, in L. Ulman, B. Eichengreen and W. T. Dickens (eds), Labour and an Integrated Europe, Washington, DC: The Brookings Institution, 1993: 89. 22 See, for example, European Commission, The Regulation of Working Conditions in the Member States of the European Union, Luxembourg: Office for Official Publications of the European Communities, 1999; and European Commission, Transformation of Labour and the Future of Labour Law in Europe, Luxembourg: Office for Official Publications of the European Communities, 1999. Also D. Buda, “One Course for European Labour Relations?”, in W. Lecher and H. Platzer (eds), European UnionEuropean Industrial Relations?”, London and New York: Routledge, 1998: 36. For an outline of some of the goals and challenges associated with strengthening regional “corporatism” see European Commission, Developing a New Field of Trade Union Activity, Luxembourg: Office for Official Publications of the European Communities, 1996. 23 Barrett (2001): 563. 24 We take inspiration for this approach – however distorted we have rendered it – from J. S. Valenzuela, “Movimientos obreros y sistemas políticos: Un analísis conceptual y tipológico”, Desarrollo Económico, V.23, N.91 (October–December 1983): 339–63, and ibidem, “Labour Movements in the Transition to Democracy: A Framework for Analysis”, Comparative Politics, V.21, N.4 (1989): 445–72. 25 Seymour Martin Lipset, “Radicalism or Reformism: The Sources of Working-class Politics”, American Political Science Review, V.77, N.1 (March 1983): 6. 26 D. Collier and R. B. Collier, Shaping the Political Arena: Critical Junctures, the Labour Movement and Regime Dynamics in Latin America, Princeton: Princeton University Press, 1991. 27 World Bank, Labour and Economic Reforms in Latin America and the Caribbean. Washington, DC: Regional Perspectives on World Development Report, 1995: 22. 28 For a sampling of the literature see J. Barbash, The Elements of Industrial Relations. Madison: University of Wisconsin Press, 1984; and T. Kochan, R. Mckerse and P. Capelli, “Strategic Choice and Industrial Relations Theory”, Industrial Relations, V.22, N.1 (1984). The material bases of class compromise are elaborated by A. Przeworski and M. Wallerstein, “The Structure of Class Conflict under Democratic Capitalism”, American Political Science Review, V.76, N.2 (1982): 215–38. 29 For examples of those who do attempt to build a more comprehensive picture of this, see L. Althusser, “Ideology and Ideological State Apparatuses”, in Lenin and Philosophy and Other Essays, London: New Left Books, 1971: 121–73; M. Barrett, The Politics of Truth, Cambridge: Polity Press, 1991; M. Burawoy, Manufacturing Consent: Changes in the Labour Process under Monopoly Capitalism, Chicago and London: Chicago University Press, 1979; A. Gramsci (ed.), Selections from the Prison Notebooks, and translated by Q. Hoare and G. Nowell Smith, New York: International Publishers, 1971; P. Q. Hirst, On Law and Ideology, London and Basingstoke: Macmillan, 1979; N. Poulantzas, State, Power, Socialism, London: New Left Books, translated by Patrick Camiller, 1978; and G. Therborn, The Ideology of Power and the Power of Ideology, London: Verso, 1980. 30 This avoids the issue of the labour “aristocracy” often mentioned in the Marxist literature (in which organised labour deliberately contracts with political elites to

Notes

31 32

33

34

35

36

37

38

39 40 41

205

divorce its wage rates from the material standards of the population at large in order to help reduce the price of wage goods). We assume here no such deliberation. The literature on the impact of marginal wage rates on benefit provision and other forms of rent-seeking behaviour in capitalist democracies is extensive and constitutes the bulk of public choice literature. Probably the best place to begin is J. Buchanan and G. Tullock, The Calculus of Consent. Ann Arbor: University of Michigan Press, 1962. Lipset (1983): 7. A. Przeworski, “Problems in the Study of the Transition to Democracy”, in G. A. O’Donnell, P. C. Schmitter and L. Whitehead (eds), Transitions from Authoritarian Rule/Prospects for Democracy Part 3: Comparative Aspects. Baltimore: The Johns Hopkins University Press, 1986: esp. 56–63. The obstacles to coherent union strategies posed by labour movement divisions are well known in the dedicated literature. They are even decisive in larger export platforms. For an interesting account of the impact of ideological divisions on one such labour movement, see L. E. Carlile, “Sohyo versus Domei: Competing Labour Movement Strategies in the Era of High Growth in Japan”, Japan Forum, V.6, N.2 (1994): 145–57. This is discussed at some length in Paul G. Buchanan, State, Labour, Capital: Democratizing Class Relations in the Southern Cone, Pittsburgh: University of Pittsburgh Press, 1995, Ch.3. Also see Colin Crouch, Trade Unions: The Logic of Collective Action. London: Fontana Books, 1983; and Claus Offe and Helmut Wiesenthal, “Two Logics of Collective Action”, in Maurice Zeitlin (ed.), Political Power and Social Theory 1. Greenwood, CT: JAI Press, 1980: 69–117. The few Althusserians out there may wonder if this is an integral or formal State. It is the latter, defined as the juridical-administrative and repressive apparatus required to conform the social division of labour to the material dictates of the economic moment. The major features of inclusionary and exclusionary state corporatism as a mixture of inducements and constraints are elaborated in R. B. Collier and D. Collier, “Inducements versus Constraints: Disaggregating ‘Corporatism’”, American Political Science Review, V.43, N.4 (1979): 967–86. The seminal exploration of modern forms of corporatism is P. C. Schmitter, “Still the Century of Corporatism?” Review of Politics, V.36, N.1 (January 1974): 85–121. Also see H. Wiarda, Corporatism and National Development in Latin America. Boulder: Westview Press, 1981 and J. Malloy (ed.), Authoritarianism and Corporatism in Latin America. Pittsburgh: University of Pittsburgh Press, 1977. The term “democratic corporatism” is used by Katzenstein (1985), while neo- or societal corporatism has been extensively scrutinised by Schmitter and others in the sources cited in note 38. On atomising pluralism see P. G. Buchanan and Betts Putnam, “Through the Looking Glass, Darkly: The Neoliberal Hegemonic Project Viewed from the Perspective of Pluralist Labour Relations in the Southern Cone”, Journal of Iberian and Latin American Studies, V.4, N.2 (1998): 101–40. S. Berger (ed.), Organizing Interests in Western Europe. NY: Cambridge University Press, 1981; J. Goldthorpe (ed.), Order and Conflict in Contemporary Capitalism. Oxford: Clarendon Press, 1984; P. C. Schmitter and G. Lehmbruch (eds), Trends Towards Corporatist Intermediation. Beverley Hills: Sage Publications, 1979. As we will see in the Irish case in particular, this simplistic perspective has some serious and obvious limits. Cf. Goldthorpe (1984) and Schmitter and Lehmbruch (1979). Issues of ideological unity and agent–principal relations underpin the entire calculus. The size of unions and firms, their market position, the number and nature

206 Notes of competitors they face and other economic factors also impinge on their approach to institutional forms and bargaining strategies. Even if a crude measure, we nevertheless believe that the ratio of unions to firms (or other employer bargaining agents) provides a simple baseline upon which to view problems of sectoral co-ordination. We suspect that although the specific ratio may differ from country to country, in all cases there is a numerical “dew point” that prompts the shift in sectoral preferences with regards to institutional frameworks and the range of outcomes they delimit. It is beyond the scope of this essay to determine what the “dew point” is in each case. If we define unions as entities that group twenty-five employees or more in collective bargaining and “firms” as employer bargaining agents covering negotiations with unions so defined, then a specific ratio of the former to the latter (say 1:10) will push the pursuit of neo-corporatist institutional frameworks in the labour relations partial regime (since both the State and firms will prefer centralised bargaining). Monopoly of representation is an advantage when bargaining with decentralised agents no matter who exercises the monopoly position; decentralisation of collective agents in the face of a monopolistic representation is disadvantageous regardless of position in production (due to the different levels of sectoral co-ordination achievable); and whether decentralised or centralised, collective bargaining outcomes are theoretically most neutral (or mutually advantageous) when there is organisational symmetry between bargaining agents. All bargaining agents must be either centralised-monopolistic or decentralised-pluralistic in organisation for this to occur. That may not favour economic efficiency and the lowering of the overall wage bill (ostensibly an objective of market-driven economic reform), but it will reduce the level of industrial conflicts and loss of productivity associated with it (ensuring longer term gains). 42 R. Michels, Political Parties. NY: Dover Publications, 1959; V. I. Lenin, “The Fight for the Vanguard Party”, in Selected Works, Vol. 11: The Struggle for the Bolshevik Party 1900–04. London: Lawrence and Wishart, 1936: 3–332; M. Weber, The Protestant Ethos and the Spirit of Capitalism. New York: 1958; ibidem, Economy and Society: An Outline of Interpretative Sociology, 3 Vols. Berkeley: University of California Press, 1968; and M. Olson, The Logic of Collective Action. Cambridge, MA: Harvard University Press, 1965. 43 See Buchanan (1995), Part Two, and Valenzuela (1989).

2

Australia and Chile

1 United Nations Development Programme, Human Development Report 2001. New York and Oxford: Oxford University Press: 141. 2 The literature on the overthrow of Allende and its aftermath is vast. For one of the best analyses, see A. Valenzuela, The Breakdown of Democratic Regimes: Chile. Baltimore: The Johns Hopkins University Press, 1978. 3 For a direct comparison of the Australian and New Zealand cases see M. Bray and P. Walsh, “Different paths to neo-liberalism? Comparing Australia and New Zealand”, Industrial Relations, V.37, N.3 (1998): 358–87. 4 B. Easton and R. Gerritsen, “Economic Reform: Parallels and Divergences”, in F. Castles, R. Gerritsen and Jack Vowles (eds), The Great Experiment: Labour Parties and Public Policy Transformation in Australia and New Zealand. Auckland: Auckland University Press, 1996: 30–1. 5 We are indebted to Peter Aimer for drawing our attention to these particular aspects of the Australian political system.

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6 See G. Williams, Labour Law and the Constitution. Sydney: Federation Press, 1998. 7 On very early trade unionism in Australia see J. Child, Unionism and the Labor Movement. Melbourne: Macmillan, 1971; G. Patmore, Australian Labour History. Melbourne: Longman Cheshire, 1991; J. Hagan, “The Australian Union Movement: Context and Perspective, 1850–1987”, in B. Ford and D. Plowman (eds), Australian Unions: An Industrial Relations Perspective. 2nd edn, Melbourne: Macmillan, 1989: 18–48. 8 R. Markey, “New Unionism in Australia, 1880–1900”, Labour History, N.48 (May 1985): 15–28. 9 M. Hearn and H. Knowles, One Big Union: A History of the Australian Workers Union 1886–1994. Cambridge: Cambridge University Press, 1996. Also see W. G. Spence, Thirty Years in the Life of an Australian Agitator. Sydney and Melbourne: The Worker Trustees, 1909. 10 “Socialism”, leading article in The Hummer, 16 January 1892, quoted in L. G. Churchward (ed.), The Australian Labor Movement, 1850–1907. Melbourne: Cheshire-Lansdowne Press, 1960: 166. 11 R. Archer, “The Unexpected Emergence of Australian Corporatism”, in J. Pekkennen, M. Pohjola, and B. Rowthorn (eds), Social Corporatism: A Superior Economic System? Oxford: Clarendon Press, 1992: 377–417. Australia’s adoption of the Irish Catholic outlaw, Ned Kelly, as a national hero, along with “Waltzing Matilda”, written by the bush poet Banjo Patterson in 1895, as a surrogate national anthem probably best illustrate the “mateship” ethos. 12 The pragmatism and non-threatening nature of the “mateship” basis of worker solidarity was promoted in the following terms: “The idea that a feeling of deadly hostility exists in the minds of the poor towards the wealthy classes is one which in the old countries of Europe is too well justified by apparent facts. . . . But the social condition of this colony is, thank Heaven! widely different. Here, we have no “dangerous class”. The number of paupers bears an insignificant proportion to the mass of the community. Every Australian citizen is interested in defending the just rights of property, and the smallest freeholder will as earnestly maintain those right as the large capitalist who has invested tens of thousands in the soil.” “An Enquiry into the Principles of Representation, a Reprint of Several Letters and Leading Articles from the Argus Newspaper”, Melbourne, 1857, quoted in L. G. Churchward (1960): 39. 13 R. N. Massey, “A Century of Laborism, 1891–1993: An Historical Interpretation”, Labour History, N.66, (May 1994): 45–71. Also see T. Battin, “Keynesianism, Socialism, and Labourism, and The Role of Ideas in Labor Ideology”, in the same volume: 33–43. 14 While this is often referred to as the “Australasian” model, similar legislative frameworks have been adopted in other British colonies with similar patterns of early state intervention in the creation of labour markets. See P. Omojo Omaji, “The State and Industrial Relations: Background to the Adoption of Compulsory Arbitration Law in Australia and Nigeria”, British Journal of Industrial Relations, V.31, N.1 (March 1993): 37–55. 15 S. Macintyre and R. Mitchell, “Introduction”, in S. Macintyre and R. Mitchell (eds), Foundations of Arbitration: The Origins and Effects of Sate Compulsory Arbitration 1890–1914. Melbourne: Oxford University Press, 1989: 1–21. 16 H. Higgins, quoted in B. Creighton and A. Stewart, Labour Law: An Introduction. Sydney: Federation Press, 1994: 256.

208 Notes 17 J. H. Portus, The Development of Australian Trade Union Law. Melbourne: Melbourne University Press, 1958: 203. 18 S. W. Creigh, “Australia’s Strike Record: The International Perspective”, in R. Blandy and J. Niland (eds), Alternatives to Arbitration. Sydney: Allen and Unwin, 1986: 37–51. Also see B. Dabsheck, “The arbitration system since 1967”, in S. Bell and B. Head (eds), State, Economy and Public Policy in Australia. Oxford: Oxford University Press, 1994: 163. 19 Archer (1992): 384–6. 20 From 1904 until the mid-1980s more than 300 separate trade unions were registered across all levels of government, yet this figure would be much higher if official statistics did not already account for the fact that duplication occurred through the registration of the same union in one or more states in addition to registration at the federal level. Alternatively, some unions were always registered at the state level only. However, both types of state-level unions were ultimately counted as individual unions by the law. Thus in 1979 if unions registered at all levels were counted separately the number of individual trade unions would equal 1376. Calculated from Australian Bureau of Statistics, Labour Statistics. Canberra: Commonwealth of Australia, 1979: 126. 21 B. Dabscheck, The Struggle for Australian Industrial Relations. Melbourne: Oxford University Press, 1995: 22–3. 22 A. Boulton, “Government Regulation of the Internal Affairs of Trade Unions”, in K. Cole (ed.) Power, Conflict and Control in Australian Trade Unions. Ringwood: Pelican Books, 1982: 216–36, and M. Dickenson, Democracy in Trade Unions: Studies in Membership, Participation and Control. St. Lucia: University of Queensland Press, 1982: 3–12. Also see Clyde Cameron’s personal defence of the placement of restrictions on the behaviour of trade union leaders in Unions in Crisis. Melbourne: Hill of Content, 1982. Of the new restrictions placed on trade unions during the term of the 1972–75 government: “Arrogance and power always go together and as the rank and file rebelled against industrial betrayal and the open antagonism of their paid servants, there arose a sharper need for harsher rules and more restraints upon the democratic rights of the real union, that is the A.W.U. membership, to exercise any sort of control over paid officials and union policy”: 18. 23 There were 47 separate trades councils in 1972, just prior to the market-oriented shift. Australian Bureau of Statistics, Official Yearbook of Australia. Canberra: Commonwealth of Australia, N.58, 1972. The network of labour organisations was strongest in New South Wales, Queensland and South Australia, non-existent in the Northern Territory and weak in the Australian Capital Territory (ACT). 24 D. Rawson, “The ACTU – Growth Yes, Power No”, in K. Cole (ed.) Power, Conflict and Control in Australian Trade Unions. Ringwood: Pelican Books, 1982: 102. 25 See J. Hagan, The History of the A.C.T.U., Melbourne: Longman Cheshire, 1981. 26 R. M. Martin, Trade Unions in Australia. Harmondsworth: Penguin, second edition, 1980: 1. 27 Australian Bureau of Statistics, Official Yearbook of Australia. Canberra: Commonwealth of Australia, for years cited. 28 See P. A. McGavin, Wages and Whitlam: The Wages Policy of the Whitlam Government. Melbourne: Oxford University Press, 1987, and also M. Rimmer, “Australia: New Wine in Old Bottles”, in B. Bilson, Wage Restraint and the Control of Inflation. New York: St. Martin’s Press, 1987: 107–20 for a discussion of some of the key issues involved.

Notes

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29 G. Singleton, The Accord and the Australian Labour Movement. Melbourne: Melbourne University Press, 1990: 13. 30 Archer (1992): 377–417, argues for the corporatist label. I. Campbell and P. Brosnan, “Labour Market Deregulation in Australia: The Slow Combustion Approach to Workplace Change”, International Review of Applied Economics, V.13, N.3 (1999): 364; and T. Matthews, “Interest Group Politics: Corporatism Without Business?”, in F. G. Castles (ed.), Australia Compared. Sydney: Allen and Unwin, 1991, argue against it on varying grounds. 31 Industrial Relations Act 1988, Part I, Section 3. 32 See G. McCarry, “From Industry to Enterprise, From Award to Agreement: Federal Laws and Workplace Change in Australia”, in D. R. Nolan (ed.), The Australasian Labour Law Reforms. Sydney: Federation Press, 1998: 56–62. 33 Creighton and Stewart (1994): 113. 34 For a comparison of the impact of the Victorian legislation on pay and conditions across different sectors of the workforce see I. Watson, Kennett’s Industrial Relations Legacy: The Impact of Deregulation on Earnings in Victoria. Australian Centre for Industrial Relations Research and Teaching Working Paper, N. 62, University Of Sydney, January 2001. 35 Workplace Relations Act 1996 , Schedule 1, Section 3. 36 P. Reith quoted in R. Naughton, “Sailing into Uncharted Seas: The Role of Unions Under the Workplace Relations Act 1996 (Cth)”, Australian Journal of Labour Law, V.10, N.1 (1997): 112. 37 See Naughton (1997): 112–32 for a summary and discussion of these changes. 38 G. McCarry, “Industrial Action under the Workplace Relations Act 1996 (Cth)”, Australian Journal of Labour Law, V.10, N.1 (1997): 133–57. 39 B. Dabscheck, “Australian Labour Law Reform: Consequences and Prospects”, in D. R. Nolan (ed.), The Australasian Labour Law Reforms. Sydney: Federation Press, 1998. 40 A. Chapman, “Industrial Legislation in 1999”, Journal of Industrial Relations, V.42, N.1 (March 2000): 29–40. 41 On this see T. Bramble, “Australian Union Strategies since 1945”, Labour and Industry, V.11, N.3 (2001): 1–20. 42 See M. Bergmann, “Australian Trade Unionism in 1984”, Journal of Industrial Relations, V.27, N.4 (March 1985): 81–8. 43 Australian Department of Trade, Australia Reconstructed: ACTU/TDC Mission to Western Europe, Canberra: Australian Government Publishing Service, 1987. 44 Department of Trade, Australia Reconstructed (1987): 188. Emphasis in original. Also see S. J. Frenkel (ed.), Union Strategy and Industrial Change. Kensington, NSW: New South Wales University Press, 1997. 45 D. MacDonald, I. Campbell and J. Burgen, “Ten Years of Enterprise Bargaining in Australia: An Introduction”, Labour and Industry, V.12, N.1 (2001): 11. 46 E. M. Davis, “The 1987 ACTU Congress: Reconstructing Australia?”, Journal of Industrial Relations, V.30, N.1 (March 1988): 127. 47 P. Ewer, I. Hampson, C. Lloyd, J. Rainford, S. Rex and S. Meg, Politics and the Accord. Leichhardt: Pluto Press, 1991; R. Lambert, “Globalization and the Erosion of Class Compromise in Contemporary Australia”, Politics and Society, V.28, N.1 (2000): 93–118. 48 See M. A. Jerrard, “‘Dinosaurs’ Are Not Dead: The AMIEU (Qld) and Industrial Relations Change”, Journal of Industrial Relations, V.42, N.1 (March 2000): 5–28. 49 Official Yearbook of Australia. Years cited.

210 Notes 50 Australian Bureau of Statistics, Labour Statistics. Cat. 61010, Canberra: Commonwealth of Australia 1990, table 8.4: 119. 51 B. Pocock, “Trade Unionism in 1997”, Journal of Industrial Relations, V.40, N.1 (1998): 140. 52 Australian Bureau of Statistics, Labour Statistics. 1990, table 8.4: 119. 53 These figures represent all workplaces with 20 or more employees in the sample. A. Morehead, M. Steele, M. Alexander, K. Stephen and L. Duffin, Changes at Work: The 1995 Australian Workplace Industrial Relations Survey. Department of Workplace Relations and Small Business, Sydney: Longman Paul, 1997: 35. 54 Morehead et al. (1997): 140–2. 55 Labour Statistics, 1990 and 1997. 56 Labour Statistics, 1997, table 8.10: 179. 57 Morehead et al. (1997): 207–10. 58 Business Council of Australia, Enterprise Bargaining Units: A Better Way of Working. Report to the Business Council of Australia by the Industrial Relations Study Commission, Melbourne, July 1989. 59 Trade Union Reform: Proceedings of the H. R Nicholls Society. Melbourne: H. R. Nicholls Society, 1987. 60 S. Bell, Ungoverning the Economy: The Political Economy of Australian Economic Policy. Melbourne: Oxford University Press, 1997: 197. 61 See C. McConville, “The Australian Waterfront Dispute 1998”, Politics and Society, V.28, N.3 (2000): 393–412; G. Orr, “Conspiracy on the Waterfront”, Australian Journal of Labour Law, V.11, N.3 (1998): 159–85. 62 B. Yates, “Workplace Relations and Agreement Making in the Australian Public Service”, Australian Journal of Public Administration, V.57, N.2 (1998): 88. 63 ABS, Labour Statistics, 1992, table 8.7: 131, and Official Yearbook of Australia, 1989: 189. 64 Morehead et al. (1997): 210 and 218. 65 N. Wailes and R. D. Lansbury, “Collective bargaining and flexibility: Australia”, ILO/Programme on Strengthening Social Dialogue, unpublished research paper, web version last modified 8 January 2001. 66 J. Buchanan, M. Woodman, S. O’Keefe and B. Ansovska, “Wages Policy and Wage Determination in 1997”, Journal of Industrial Relations, V.40, N.1 (March 1998): 101. 67 Morehead et al. (1997): 205–6. 68 K. Van Barneveld and B. Arsovska, “AWAs’ Changing the Structure of Wages”, Labour and Industry, V.12, N.1 (2001): 86–108. 69 Calculated from Australian Bureau of Statistics, Average Weekly Earnings, Australia 1941–90. Catalogue No. 6350.0, Canberra: Commonwealth of Australia, 1992, table 1: 4. 70 J. Buchanan, S. O’Keeffe, T. Bretherton, B. Arsovska, G. Meagher and K. Heiler, “Wages and Wage Determination in 1999”, Journal of Industrial Relations, V.42, N.1 (March 2000): 116. This report draws mainly on the University of Sydney/ Australian Centre for Industrial Relations Research and Teaching’s ADAM database, which regularly surveys the content of a sample of registered and non-registered workplace agreements. 71 In the Australian context, this might include labourers and other members of a semi-itinerant workforce that had been well organised from the 1890s. One study of this trend finds that the decrease in union density accounts for 30 per cent of variance in earnings amongst male Australians. J. Borland, “Union Effects and

Notes

72 73 74 75 76

77

78 79

80 81 82

83

84

85 86 87

88

211

Earnings Dispersion in Australia, 1986–94”, Canadian International Labour Network/McMaster University, Working Paper 1994. Also see J. Borland, “Earnings Inequality in Australia: Changes, Causes and Consequences”, Economic Record, V.75, N.229 (June 1999): 177–202. Buchanan et al. (1998): 103. Wailes and Lansbury (2001). Buchanan et al. (2000): 116. Wailes and Lansbury (2001), table 1. For example, see J. Baxter, “Will the Employment Conditions of Part-timers in Australia and New Zealand Worsen?”, in J. O’Reilly and C. Fagan (eds), Part-Time Prospects: An International Comparison of Part-time Work in Europe, North America and the Pacific Rim. London and New York: Routledge, 1998: 265–81. See A. Morris and K. Wilson, “An empirical analysis of Australian strike activity: further evidence on the role of the prices and incomes accord”, Economic Record, V.70, N.209 (1994): 183–92. International Labour Organization, LABORSTA database table 9D. Compare this to the New Zealand rates of 172.0 per 1000 in 1988 and 14.18 in 1997. The LABORSTA database, table 9C, reports that the days lost to industrial disputes fell from 433,300 in 1975 to 96,800 in 1997 for the mining and quarrying sector, and from 497,000 to 107,800 for construction over the same period. Organization for Economic Co-operation and Development, OECD Economic Surveys: Australia. Paris: OECD, 2000: 9. J. Quiggan, “Social democracy and market reform in Australia and New Zealand”, Oxford Review of Economic Policy, V.14, N.1 (Spring): 76–96. The dictatorship’s case is made in two extraordinary documents: H. Filippi and H. Millas, Anatomia de un Fracaso: La Experiencia Socialista Chilena. Santiago: Emporesa Editora Zig Zag, SA, 1973 and Libro Blanco del cambio de gobierno en Chile. Santiago: Editorial Lord Cochrane, SA, 1973. Also see B. Loveman and T. M. Davies, Jr. (eds), The Politics of Antipolitics: The Military in Latin America. Wilmington, DE: Scholarly Resources, Inc., 1997: 181–5. The literature on the Chilean economic reforms is extensive, since it considered the exemplar of neo-liberal or monetarist reform in the region (in spite of the collapse of the initial project in 1981–83 and its subsequent substitution with a more “pragmatic” version). Good overviews are provided by S. Edwards and A. C. Edwards, Monetarism and Liberalization: The Chilean Experiment. Cambridge, MA: Ballinger Publishing Company, 1987; and World Bank, Chile: An Economy in Transition. 3 Vols. Washington, DC: 1979. J. Ruiz-Tagle, “Trade Unionism and the State under the Chilean Military Regime”, in E. C. Epstein, Labor Autonomy and the State. Boston: Allen and Unwin, 1989: 78; also P. Drake, Labor Movements and Dictatorships: The Southern Cone in Comparative Perspective. Baltimore: The Johns Hopkins University Press, 1996: 96. Ruiz-Tagle (1989): 78; Drake (1996): 126. Ruiz-Tagle (1989): 79. R. Cortazar, “Derechos Laborales y desarrollo: desafios y tensiones”, in CIEPLAN, Reconstrucción Económica para la Democracia. Santiago: Editorial Acongagua, 1983, cited in G. Campero and R. Cortazar, “Logics of Union Action in Chile”, Kellogg Institute Working Paper, N.85 (October 1985): 6 (Table 2). A. Quevedo and F. Tapia, “El marco de las relaciones laborales durante el régimen military”, Material de Discusión, N.14, Santiago: Centro de Estudios Sociales (CES), (December, 1989), based on INE figures: 11.

212 Notes 89 F. Labbé, Distribución del ingreso en la teoria economica: La vision neoclasica y la situación redistributiva de los ingresos en Chile. Santiago: CED, 1986. 90 A. Foxley, “The Neoconservative Economic Experiment in Chile”, in J. Samuel and A. Valenzuela, Military Rule in Chile: Dictatorship and Oppositions. Baltimore: The Johns Hopkins University Press, 1986: 17. 91 On the perspective of the authoritarian economic team, see M. A. Garreton, “Transformación social y refundación política. Notas sobre problemas de la alternativa en el capitalismo autoritario”, Materiales de Discusión, N.12. Santiago: FLACSO, 1981; M. A. Garreton, “Las fuerzas político-sociales y el problema de la democracia en Chile”, El Trimestre Económico, V.48 (1981): 25. 92 G. Campero, “El movimiento sindical Chileno en el Capitalismo Autoritario: Un intento de reflexión y perspectiva”, in M. Barrera and G. Falabella, Sindicatos Bajo Regimenes Militares: Argentina, Brasil y Chile. Santiago: CES Ediciones, 1989: 193–4; and Quevedo and Tapia (1989). 93 On this see T. Moulian, “El Chile Actual y su Secreto”, in Chile 96: Análisis y opinions. Santiago: FLACSO-CHILE, 1997. 94 H. de Petris Green, Historia del Partido Democrático—Posición dentro de la Evolución Política Nacional. Santiago: 1942: 42; cited in R. Alexander, Labor Relations in Argentina, Brazil and Chile. New York: McGraw-Hill, 1962: 267. 95 OIT, Relaciones Laborales en Chile. Montevideo: Ministerio de Trabajo y Seguridad Social, 1995: 27. 96 The claim to a “socialist stripe” is overblown and wrong given that a) it most closely resembled the Fascist labour codes of Mussolini’s Italy even though it was ostensibly inspired by the first three conferences of the International Labour Organization; and b) the short-lived “Socialist Republic” of Colonel Marmaduque Grove did not emerge until June 1932 (and lasted just two weeks). See Alexander (1962) for details. 97 The Communist Party was founded in 1922 as an outgrowth of the Socialist Workers Party founded in 1912. Grove and his supporters founded the Socialist Party in 1933 after splits between Stalinists and Trotskyites in the PC. 98 Alexander (1962): 236–355. 99 Alexander (1962): 258. 100 P. Frias, “La Afiliación Sindical en Chile, 1932–1992”, Economia y Trabajo, V.1, N.2 (July–December 1993): 263–5. 101 Alexander (1962): 258–60. 102 Frias (1993): 269–70 (Chart 5). 103 Ruiz-Tagle (1989): 83. 104 This occurred under the provisions of the infamous “Law in Defence of Democracy”, which was a thinly disguised authoritarian instrument driven by Cold War pressures. 105 G. Campero and R. Cortazar, Logics of Union Action in Chile. Kellogg Institute Working Paper, N.85 (October 1985): 9–21. 106 Alexander (1962): 260. 107 A. Angell, Politics and the Labor Movement in Chile. London: Oxford University Press, 1972. Another good history of Chilean labour in English is provided by C. Bergquist, Labor in Latin America. Stanford: Stanford University Press, 1986: 20–80. 108 A. Valenzuela, The Breakdown of Democratic Regimes: Chile. Baltimore: John Hopkins University Press, 1978. 109 A. Ch. Alegria and C. F. Coloma, “Huelga: Enfoques Teóricos y Efectos Económicos de Distintas Regulaciones”, Pontifica Universdiad Catolica de Chile,

Notes

110

111

112

113 114

115 116

117

118

119 120

121 122 123

213

Instituto de Economia, Documento de Trabajo, N.141 (Enero 1992): 9–11 (tables 4–6). On this see H. A. Landsberger and T. McDaniel, “Hypermobilization in Chile, 1970–73”, World Politics, V.28, N.2 (July 1976): 502–41. Not that the bourgeoisie helped the matter. Instead it behaved as a disloyal political opposition bent on the overthrow of the Allende regime, and had its own right-wing paramilitary squads committing murders and bombings of leftist targets, including the then Commander of the Chilean Army, General Rene Schneider in 1970. An interesting take on US involvement in the anti-Allende campaign is provided by Christopher Hitchens, “The Case Against Henry Kissinger”, Harpers Magazine, February 2001: 53–8. For a more general overview of the course of US-Chilean relations from Allende through the end of the Pinochet regime, see P. Sigmund, The United States and Democracy in Chile. Baltimore: The Johns Hopkins University Press, 1993. On CIA activities in the destabilisation of Chile, see the US Congress, House. Committee on Foreign Affairs. Subcommittee on Inter-American Affairs. United States and Chile during the Allende Years 1970–73. 92nd Cong., 1st Session. Washington, DC: Government Printing Office, 1975; and US Congress, Senate, Select Committee on Intelligence Activities (Church Committee). Intelligence Activities, Vol. 7: Covert Action. 92nd Cong., 1st Session. Washington, DC; Government Printing Office, 1976. Foxley (1986): 14–23. G. Campero, “El Movimiento Sindical Chileno en el Capitalismo Autoritario: Un Intento de Reflexión y Perspectiva”, and Gonzalo Falabella, “La Diversidad en el Movimiento Sindical Chileno Bajo el régimen Militar”, both in Barrera and Falabella (1990). OIT, Relaciones Laborales en el Cono Sur: 120. E. C. Epstein, “Labor and political stability in the new Chilean democracy: Three illusions”, Economia y Trabajo, V.1, N.2 (July–December 1993): 53. The preceding argument on the effectiveness of tripartite concertation in immediate postauthoritarian Chile is heavily influenced by this article. Post-authoritarian divisions between national and shop-level union leaders are remarkably explicated, based on interview survey data, in J. R. Hernandez, “El Movimiento Sindical Chileno en la Transición a la Democracia”, Sur, Centro de Estudios Sociales y Educación, Documento de Trabajo, N.140, Institut fur Sociologie, Universitat Hannover (July 1993). Quevedo and Tapia (1989): 2; and M. Barrera and J. S. Valenzuela, “The Development of Labor Movement Opposition to the Military Regime”, in Valenzuela and Valenzuela (1986): 236. On this see Barrera and Valenzuela (1986): 236–43. Ruiz-Tagle (1989); and Ruiz-Tagle, El Sindicalismo despues del Plan Laboral. Santiago: Programa de Economia y Trabajo, 1985. Also see OIT, Las relaciones laborales en Chile. Madrid: Ministerio de Trabajo y Seguridad Social, Informes Relasur, N.41 (1995): 138–47. OIT, Las relaciones laborales en Chile: 141. As regulated and delimited by Decree (force of law) 1/January 7, 1994. Chile, Ministerio de Trabajo y Previsión Social, Reseña de Actividades. Santiago, Dirección de Trabajo, 2000. Also see R. Blanpain (ed.), International Encyclopaedia for Labor Law and Industrial Relations, V.14. London: Kluwer Law International, 1998.

214 Notes 124 Ministerio de Trabajo y Previsión Social, “Evolución de la Tasa de Sindicalización considerando la fuerza de trabajo asalariada (sector privado sindicalizado). Años 1986–2000”. Dirección de Trabajo, Departamento de Relaciones Laborales; and “Afiliación Global sobre la fuerza de Trabajo Asalariada y Ocupada, 1999”. both n.d. 125 P. Frias, “Sindicatos en la transición: En la busqueda de una nueva identidad”, in J. Ruiz-Tagle and M. Velazquez (eds), Economia y Trabajo en Chile 1993–1994. Santiago: Programa de Economia y Trabajo, 1995. 126 A. Aravena Carrasco, “El sindicalismo en el sector Comercio”, Revista de Economia y Trabajo, N.9 (1999): 65. Also see Relaciones Laborales en Chile: 62–7. Data on union density from the government tends to be slightly higher, usually by one percentage point. See Chile, Ministerio de Trabajo y Previsión Social, “Estadística Sindical”, in Anuario Estadístico. Dirección de Trabajo, Departamento de Relaciones Laborales, for the years cited. 127 Relaciones Laborales en el Cono Sur: 56. Also see Drake (1996): 136–7, and P. Barrett, “Labour Policy, Labour-Business Relations and the Transition to Democracy in Chile”, Journal of Latin American Studies, V.33, N.2 (2001): 569 (Table 1). 128 A. Aravena Carrasco (1999): 66. 129 The best work on workplace authoritarianism in Chile comes from sociologists. See especially the works of J. Stillerman: “Disciplined Workers and Avid Consumers: Neoliberal Policy and the Transformation of Work and Identity among Chilean Metalworkers”, in P. Winn (ed.), Victims of the Chilean Miracle? Chilean Workers and the Neoliberal Model, 1973–1998. Durham: Duke University Press, (forthcoming); “State Power and Industrial Change: Authoritarian Flexibility in the Chilean Brass and Wire Industry, 1973–1998.” Tucson: Center for Latin American Studies, University of Arizona, 2000; and “Mass Society’s Next Frontier? Work, family and Consumption in Contemporary Chilean Working-class Households”, in D. Chalmers et al. (eds), The New Inequality in Latin America, (forthcoming). 130 Camara de Comercio de Santiago, “Deudas de consumo consolidadas por estrato socioecónomico en Chile” (Antecedentes a Diciembre de 1995). December, 1995: 9. Cited in Stillerman, “Disciplined Workers” (manuscript version: 21 and FF.56). 131 Las Relaciones Laborales en Chile. Also see OIT/ILO, Informes Relasur: Las Relaciones Laborales en el Cono Sur. Madrid: Ministerio de Trabajo y Seguridad Social, 1995. 132 For a recent survey see Economia y Trabajo (1999). 133 G. Campero and J. L. Valenzuela, El Movimiento Sindical Chileno y el Capitalismo Autoritario. Santiago: Instituto Latino Americano de Estudios Transnacionales, 1981; O. G. Garreton, “Cambios Estructurales y Movimiento Sindical en Chile”, Material de Discusión, N.10, Centro de Estudios Sociales, March 1989; Quevedo y Tapia (1989); Drake (1996). 134 Ministerio de Trabajo y Previsión Social, “Instrumentos Colectivos 1996–2000,” Santiago: Dirección de Trabajo, Departamento de Relaciones Laborales, n.d; and Frias, “Sindicatos en la Transición: En la busqueda de una nueva identidad” (1995): 61, 63. We are indebted to Edward Epstein for sharing the ministerial documents with us. 135 P. F. Frias, “El Sindicalismo Chileno y su Crisis en la Perspectiva de la Vinculación entre la Política y la Economia”, Economia y Trabajo en Chile, N.7 (June 1998): 104–5 (Charts 1–2, using data from the Ministerio de Trabajo y Previsión Social, Dirección del Trabajo, n.d.).

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136 On this see Stillerman (2000). 137 A. Ch. Alegria and F. C. Coloma, “Huelga: Enfóques teóricos y Efectos Económicos de Distintas Regulaciones”, (1992): 9–11. 138 Data on strikes comes from Alegria and Coloma (1992): 9–11, 44–5; P. Frias (1995): 63 (Chart 5); J. S. Valenzuela and V. Frank, “The Labor Movement and the Return of Democratic Government in Chile”, Latin American Labor News (1992): 9–11; Chile, Ministerio de Trabajo y Previsión Social, Cuadro Comparativo de Huelgas 1995–1999. Santiago: Dirección del Trabajo, Departamento de Relaciones Laborales; and Chile, Ministerio de Trabajo y Previsión Social, Cuadro huelgas terminadas Año 2000. Santiago: Dirección del Trabajo, Departamento Estudios. Figures vary among these sources but are generally in the same range. 139 Data on real wages comes from J. Wilke et al. (ed.), Statistical Abstract of Latin America, V.23. Los Angeles, Center for Latin American Studies, UCLA (1987): 285 (Table 1405); Statistical Abstract of Latin America, V.33. Los Angeles, Center for Latin American Studies, UCLA (1997): Table 1400; Chile, Instituto Nacional de Estadística, “Indice general de remuneraciones Por Hora (Base Abril 1993 = 100), Febrero 2001”, www.ine.cl/ind_mens/11402.htm. Data on unemployment comes from Economic Commission for Latin America and the Caribbean, Social Panorama of Latin America, 1999–2000. NY: United Nations (2001): 96–7 (Figure 111.1 and Table 111.1), as well as the sources cited above. 140 The subject of “survivalist alienation” in Chile and elsewhere is addressed in P.G. Buchanan, “That the Lumpen Should Rule: Vulgar Capitalism in the PostIndustrial Age”, Journal of American and Comparative Cultures, V.23, N.4 (Winter 2000): 1–15. 141 Barrett (2001): 592–3.

3

New Zealand and Uruguay 1 Statistics New Zealand, INFOS dataseries SNBA.S2AZAT. 2 H. Broadhead, State Regulation of Labour and Labour Disputes in New Zealand. Christchurch: Whitcombe and Tombs, 1908: 1. Also see W. P. Reeves, State Experiments in Australia & New Zealand. London: Grant Richards, 1902. According to J. E. Le Rossignol and W. D. Stewart, State Socialism in New Zealand. New York: Thomas Y. Cromwell and Co., 1910: 217, “It is impossible to say who first suggested compulsory arbitration as a remedy for strikes. The thought must have occurred to many minds during the trying times of 1890.” 3 On the politics and policies of the Liberal government see D. Hamer, The New Zealand Liberals: The Years of Power, 1981–1912. Auckland: Auckland University Press, 1988. 4 See E. Olssen, “Some Reflections about the Origins of the “Red” Federation of Labour, 1909–13”, in E. Fry, Common Cause: Essays in Australian and New Zealand Labour History. Wellington and Sydney: Allen and Unwin/Port Nicholson Press, 1986: 27–41. 5 Even though both labour-based parties were grounded in regional rather than national organisations. On the formation of the NZLP see B. Brown, The Rise of New Zealand Labour: A History of the New Zealand Labour Party. Wellington: Price Milburn, 1962; and B. Gustafson, Labour’s Path to Political Independence: The Origins and Establishment of the New Zealand Labour Party 1900–19. Auckland: Auckland University Press/Oxford University Press, 1980.

216 Notes 6 Conventional accounts of early New Zealand political history tend to claim that the development of New Zealand’s welfare state was ‘put on ice’ during the Reform period. However, recent histories dispute this. See D. Thompson, A World Without Welfare: New Zealand’s Colonial Experiment. Auckland: Auckland University Press/Bridget Williams Books, 1998. 7 A. Mitchell, People and Politics in New Zealand. Christchurch: Whitcombe and Tombs, 1969: 191. 8 See B. Gustafson, His Way. Auckland: Auckland University Press, 2000: 262–89 especially. Also see B. Easton, In Stormy Seas: the Post-War New Zealand Economy. Dunedin: University of Otago Press: 73–135. 9 E. Olssen and L. Richardson, “The New Zealand labour movement”, in E. Fry, Common Cause: Essays in Australian and New Zealand Labour History. Wellington and Sydney: Allen and Unwin/Port Nicholson Press, 1986: 1. 10 W. B. Sutch provides a good account of this aspect of the arbitration system. See The Search for Security in New Zealand 1840–1966. Wellington: Oxford University Press, 1966, and also J. Holt, Compulsory Arbitration in New Zealand: The First Forty Years. Auckland: Auckland University Press, 1986. Most notorious of these instances is the protracted 1951 Waterfront Dispute. For a partisan but nonetheless interesting account see J. Barnes, Never a White Flag, T. Bramble (ed.), Wellington: Victoria University Press, 1998. 11 For an elaboration on some of these themes see M. Nolan and P. Walsh, “Labour’s Leg-iron? Assessing Trade Unions and Arbitration in New Zealand”, in P. Walsh (ed.), Trade Unions, Work and Society: The Centenary of the Arbitration System, Palmerston North: Dunmore Press, 1994: 9–37. 12 R. Harbridge argues that this constituted part of an early shift to enterprise bargaining. See R. Harbridge and P. Walsh, The Evolution of Enterprise Bargaining in New Zealand. Industrial Relations Centre, Victoria University at Wellington, Working Paper 1/99, 1999. 13 See New Zealand Treasury, Economic Management. Wellington, July 1984, and New Zealand Treasury, Government Management. Wellington, 1987. These two documents acted as blueprints for Labour’s reform programme. On the influence of Treasury and Business Roundtable thinking on the Fourth Labour Government see B. Easton and R. Gerritsen, “Economic Reform: Parallels and Divergences”, in F. Castles, R. Gerritsen and J. Vowles (eds), The Great Experiment. Auckland: Auckland University Press, 1996: 22–47, B. Easton, “The Troika and the Treasury: The Politics of the Commercialization Policy”, unpublished paper, 23 January 1996, and J. Kelsey, The New Zealand Experiment. Auckland: Auckland University Press, 1995: 15–81. 14 In Fragments of Labour: The Story Behind the Labour Government. Penguin: Auckland, 1989, B. Jesson explains and discusses these ideological tensions within the New Zealand Labour Party. 15 For an overview of the restructuring process see Department of Labour, Blueprint for Change: A Message from the Secretary of Labour. Wellington, 1988. 16 Department of Labour, Post-Election Brief. Wellington, October 1996: 24–62. 17 J. Boston and P. Dalziel, The Decent Society? Essays in Response to National’s Economic and Social Policies. Auckland: Oxford University Press, 1992; Kelsey (1995); and A. Sharp (ed.), Leap into the Dark. Auckland: Auckland University Press, 1994. 18 Quoted from speech to the House of Representatives, Hon Bill Birch, Minister of Labour and State Services, “Economic and Social Initiative”, December 1990. 19 While it is theoretically possible to have individual contracts negotiated by unions, such cases have been rare under the ECA and generally limited to

Notes

20 21 22 23 24

25 26

27

28

29

217

individuals in the public service receiving relatively high salaries in positions of responsibility. For example, secondary school principals who have chosen to remain members of the Post Primary Teachers Association are bound by individual contracts negotiated by that union. The fact that the ECA is framed in the language of contract law points to the fact that the long-term goal of reformers was to remove any special legal significance for labour relations. In fact, the key spokespeople in the National government intended to eventually abolish the Employment Court and channel all labour disputes through the ordinary court system and ordinary contract law. Complaint against the Government of New Zealand presented by the New Zealand Council of Trade Unions (NZCTU) Report No. 295, Case No. 1698. See N. Haworth and S. Hughes, New Zealand and the ILO: Current Debates and Future Directions. Geneva: International Labour Organization, February 1995. See E. Dannin, “Contracting Mediation: The Impact of Different Statutory Regimes”, Hofstra Labor and Employment Law Journal, V.17, N.1 (Fall 1999): 65–113. For a summary and discussion of the ERA see T. Gilbert, A. Scott-Howman, and K. Smith, A Guide to the Employment Relations Act. Wellington: Butterworths, 2000. Many analysts have noted just how unprepared the New Zealand union movement was to deal with the new industrial relations environment, including P. Boxall and P. Haynes, who argue that “the neo-liberal ascendancy in New Zealand has all but eliminated state-dependent, arbitrationist unions”, in “Strategy and Trade Union Effectiveness in a Neo-liberal Environment”, British Journal of Industrial Relations, V.35, N.4 (1997): 586. See also E. Dannin, Working Free: The Origins and Impact of New Zealand’s Employment Contracts Act. Auckland: Auckland University Press: 62–87. “FOL Policy Draft 1987”, Trade Union Directory. New Zealand Federation of Labour, 1987: 117. Methods of calculating union density vary widely and this should be taken into account. In New Zealand, the problem is compounded. Before 1991 data on union membership was collected by the Department of Labour, but ceased to be a legislative requirement after 1991. These figures are from A. Crawford, R. Harbridge and K. Hince, Unions and Union Membership in New Zealand. Industrial Relations Centre, Wellington: Victoria University Press, 1997: 3. Harbridge and Hince conducted a survey of union membership throughout the 1990s which was on the whole comparable with the methods used and data released by the Department of Labour before 1991. All data quoted here relates to the month of December each year. Adding theoretical justification to a developing trend, and perhaps to provide an alternative model to shop-level collective bargaining strategies, the CTU strongly advocated a move towards industry bargaining from the early 1990s. The Engineering, Printing and Manufacturing Union is often singled out as a trade union which embraced the new political and industrial context, aggressively competing for members beyond their traditional areas of coverage. This point is argued, in particular, by B. Easton in his “The Maturation of the Union Movement”, Revised paper to the 1995 Seminar Series of the Department of Political Studies, University of Auckland, 4 August 1995. See R. Harbridge, “Bargaining and the Employment Contracts Act: An Overview”, in R. Harbridge (ed.), Employment Contracts: New Zealand Experiences. Wellington: Victoria University Press, 1993: 31–52. K. Douglas, “President’s Address”, in New Zealand Council of Trade Unions, “Minutes of the Second Biennial Conference”, 7–10 October 1991: 14.

218 Notes 30 New Zealand Council of Trade Unions, “Industrial Relations Reform Campaign Strategy”, in Before and After the Act: Papers prepared for the NZCTU Workshop. 13–14 December 1990: 4–5. 31 This reflects New Zealand’s image of itself as a nation of pragmatic people who are resistant to ‘ideologies’ which they see as rather dangerous foreign products. See H. Gold, “Political Culture: Contemporary Patterns”, in H. Gold (ed.), New Zealand Politics in Perspective. Auckland: Longman Paul, 1992: 38; S. Levine, New Zealand Political System. Sydney: George Allen and Unwin, 1979, 140–50; A. Mitchell (1969). 32 The campaigns that were launched by business groups both in pursuit and defence of the ECA has been documented by Ellen Dannin in “Hail, Market, Full of Grace: Buying and Selling Labor Law Reform”, New Zealand Journal of Industrial Relations, forthcoming. She argues that the Business Roundtable and the Employers’ Federation were successful in changing the terms of debate surrounding the design and implementation of the ECA. 33 See J. J. Linz and A. Stepan, The Breakdown of Democratic Regimes: Crisis, Equilibrium, Breakdown. Baltimore: Johns Hopkins University Press, 1978. Observations made about the behaviour of opposition groups in both the transition to authoritarianism and the consolidation of democratic regimes point to a definition of democracy that revolves around the idea that nobody can get what they want all the time. See A. Przeworski, “Problems in the Study of the Transition to Democracy”, in G. O’Donnell, P. C. Schmitter and L. Whitehead (eds), Transitions from Authoritarian Rule/Prospects for Democracy Part 3: Comparative Perspectives. Baltimore: Johns Hopkins University Press, 1986: 47–62. 34 See P. Dalziel and R. Lattimore, The New Zealand Macroeconomy: A Briefing on the Reforms. Melbourne: Oxford University Press, 1996: 81. 35 See T. Maloney, Five Years After: The New Zealand Labour Market and the Employment Contracts Act. Wellington: Institute of Policy Studies, 1998. 36 R. Harbridge and M. Street, “Labour Market Adjustment and Women in the Service Industry: A Survey”, New Zealand Journal of Industrial Relations, V.20, N.2 (1995): 23–34. Also see I. McAndrew and M. Ballard, “Negotiation and Dictation in Employment Contract Formation in New Zealand”, New Zealand Journal of Industrial Relations. V.20, N.2 (1995): 119–42. 37 See G. Baker, Income Distribution in New Zealand. Wellington: Institute of Policy Studies, Victoria University of Wellington, 1996, for more evidence to this effect. 38 International Labour Organization, Laborsta database, table 9C. 39 J. Sloan, “Ideas about Labour Markets”, The Sir Ron Trotter Lecture 1999. Wellington: New Zealand Business Roundtable, Wellington, 1999: 9 and 20. 40 Data from Statistics New Zealand, INFOS series SNBQ.SX199. 41 OCED statistics, at http://www.oecd.org/public/fugures/2000/english. 42 Dalziel and Lattimore (2001 edition): 136. 43 Official figures report a fall of employment during the recession of the early 1990s followed by a gradual recovery through the mid 1990s. Statistics New Zealand, in its timeseries database sequence EESQ.SFSZ9E2 reports that total filled job across all sectors (in thousands), dropped from 1199.7 in March 1999 to 1166.3 in March 1992, then rose to 1178.1 in March 1993, 1331.5 in 1996 and 1410.2 in 1999. 44 Barker (1996): 56. 45 Macroeconomic data summaries for the dictatorship is available in P. Drake, Labor Movements and Dictatorships: The Southern Cone in Comparative Perspective. Baltimore: Johns Hopkins University Press, 1996: 98–101; H. Handelman,

Notes

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47 48

49

50 51 52

53

54

55 56 57 58

219

“Labor-Industrial Conflict and the Collapse of Democracy in Uruguay,” Journal of Interamerican Studies and World Affairs, V.23, N.4 (1981): 371–94; A. Melgar and W. Cancela, “Concentración del ingreso y desarticulación productiva: Un desafio al proceso de redemocratización”, Revista Mexicana de Sociologia, V.47, N.2 (1985): 215, 219–24; and V. Cobo and J. de Melo, “Lessons from the Southern Cone Reforms”, The World Bank Research Observer, V.2, N.2 (1987): 116–17. A good overview of the Uruguayan transition to democracy can be found in C. G. Gillespie, Negotiating Democracy: Politicians and Generals in Uruguay. Cambridge: Cambridge University Press, 1991; C. G. Gillespie et al., Uruguay y la democracia, 3 Vols. Montevideo: Ediciones de la Banda Oriental (1985) and C. G. Gillespie, “Uruguay’s Transition from Collegial Military-Technocratic Rule”, in G. A. O’Donnell, P. C. Schmitter and L. Whitehead (eds), Transitions from Authoritarian Rule: Latin America. Baltimore: Johns Hopkins University Press (1986): 173–95. Drake (1996): 94–95. A review of the period and its aftermath is available in M. Weinstein, Uruguay: The Politics of Failure. Westport, CT: Greenwood Press (1975). Also see Servicio Páz y Justicia Uruguay, Uruguay nunca más: Informe sobre la violación a los derechos humanos (1972–1985). Montevideo (1989): esp. 25–26. The Tupamaros received considerable help from the Argentine Montoneros urban guerrilla movement, while the Uruguayan military received even more considerate logistical and intelligence assistance from the US and Brazilian militaries. Added to the mix were the long filtered interests of the USSR and Socialist bloc, who were pressing the boundaries of US geographic interests after the failed Czech revolution in 1968 and the morass of the Vietnam conflict. They did so by encouraging irredentist sentiment in the Western Hemisphere (usually through Cuban internationalism) and saw in Chile a potential second bulwark in the Western Hemisphere. In that context the US response to the Uruguayan crisis was visceral and reactive, encouraging militarisation of the conflict via increased US support for the counter-insurgency campaign. For an alternative take on the period, see Costa-Gravas’s movie “State of Siege” (1975). Law 13,720, December 16, 1968. Diario Ofícial, December 19, 1968. On this see Handelman (1981). In spite of their early “Robin Hood” image, the Tupamaros never enjoyed broad social support, and when they attempted to open a second rural front in order to divert the Uruguayan military away from the urban guerrilla campaign they were rapidly located and destroyed (in no small measure because there is very little cover on Uruguay’s fertile grasslands). The concertative or pacted nature of the transition to democracy in Uruguay is analysed in CIESU, 7 enfóques sobre la concertación. Montevideo: Ediciones de la Banda Oriental, 1984. Drake (1996): 98–101 and CEPAL, La evolución de la economia y la política económica en Uruguay en el periodo 1981–1984. New York: United Nations Economic Commission on Latin America: 1985. Buchanan (1995): 256–57. http://freedomhouse.org/survey/2000/reports/county/uruguay.html: 1. The analysis and description of the institutional features of Uruguayan labour administration for this period are taken from Buchanan (1995): 218–19, 223–26. Decree 574, July 12, 1974; Law 14,218-1974 expanded labour administration’s powers of control and oversight. Law 14,791, June 8, 1978, Decree 371, June 30,

220 Notes

59

60 61

62 63

64 65 66

67

68

69 70

1978 and Resolution 991, June 30, 1978 created, specified the functions of and ratified the organisation of the DINACOPRIN, respectively. For the general characteristics of national labour administration under the military regime see E. Heguey Terra, Estudios sobre la administración del trabajo en el Uruguay, 2 Vols. Montevideo: MTSS and Universidad de la Republica, 1979. The use of inducements as opposed to constraints is what most distinguishes the Uruguayan experiment with State corporatism from that of Argentina, Brazil or Chile in the 1970s. On this see Drake (1996): 98–106. The notion of inducements versus constraints is explicated by D. Collier and R. B. Collier, “Inducements versus Constraints: Disaggregating ‘Corporatism’”, American Political Science Review, V.73, N.4 (1979): 967–86. Law 15,137, May 21, 1981 and Decree 513, October 9, 1981. Relaciones del Trabajo en el Uruguay. Geneva: OIT, 1987: 46; and Buchanan (1995): 224–25. The legislation eliminating the Consejos de Salarios is Law 13,720, December 16, 1968. Diario Ofícial, December 19, 1968. A good description of the events surrounding the elimination of the Consejos is found in H. Handelman (1981). Orgánigrama is Spanish for organisational diagram. A hallmark of Latin American regime change is the generation of new orgánigramas. ILO (1987): 85–87, 90. Law 14,409/1943 created the Consejos de Salarios, with subsequent amendments to its scope and responsibilities. See Buchanan (1985): 238–59 for a discussion of the pre-1968 and early history of the Consejos under the democratic regime. A. Przeworski and M. Wallerstein, “Structural Dependence of the State on Capital”, American Political Science Review, V.82, N.1 (1988): 11–31. Buchanan (1995): 237–50. A. Marshall, State Labour Market Intervention in Argentina, Chile and Uruguay: Common Models, Different Versions. Employment and Training Papers 10, Geneva: International Labour Organization, 1997. On the shift in tripartite orientation in Uruguay see J. W. Rosenbaum, J. Ramos Olivera, A. Callorda, G. Gimeno Pelegrin and M. L. Vega Ruiz, “Formas de tripartismo en el Uruguay,” Montevideo: OIT, Informe RELASUR (1995) and ILO, “Las Relaciones Laborales en el Cono Sur”. Madrid: Ministerio de Trabajo y Seguridad Social, Informes RELASUR (1995): 119–20. Among the tripartite agencies in question are the National Social Security Council, National Social Welfare Council, National Health Council, the Supervisory Council of the Fund for Guaranteed Time Served and the Deliberating Council of the Worker’s Protection Fund. The divisions on the left are explicated in R. H. McDonald, “Election Politics and Uruguayan Political Decay”, Inter-American Economic Affairs, V.26, N.1 (Summer 1972): 25–45, and R. H. McDonald, “The Rise of Military Politics in Uruguay, Inter-American Economic Affairs, V.28, N.4 (Spring 1975): 25–43. E. Rodriguez, Democracia y la lucha de clases. Montevideo: Ediciones La Hora, 1985: 20–21, 179. The term “tactical alliance” comes from Rodney Arismendi, Secretary General of the Uruguayan Communist Party upon his return from exile in Moscow after the fall of the dictatorship. See Busqueda, February 26, 1985: 12. This quote and the surrounding analysis is drawn from M. Gargiulo, “El Movimiento Sindical Uruguayo en los 80: Concertación o Confrontación?” in El Sindicalismo Latinoamericano en los 80. Santiago, CLACSO, 1986: 169–71. The term “war of position”

Notes

71

72

73

74

75 76 77 78

79 80

81 82 83

84 85 86 87 88

221

used here refers to the Gramscian notion of peaceful class struggle within the “trenches” of civil and political society. See Prison Notebooks, Q. Hoare and G. N. Smith (eds), New York: International Publishers, 1971: 229–39. A. Cassoni, S. G. Allen and G. J. Labadie, “Unions and Employment in Uruguay”, Washington, DC: Interamerican Development Bank, Latin American Research Network, Working Paper R-392, May 2000: 10. Cassoni et al. (2000): 11,20, 42. Also see M. Rama, “Sindicatos,” in Institucionalidad Laboral y Crecimiento Económico en el Uruguay. Montevideo: Academia de Economia, 1993: 28–31. “Afiliados-Cotizantes y delegados a los Congresos del PIT-CNT (Entre los años 1985–2001)”. Montevideo: Banco de Datos, Facultad de Ciencias Sociales, Universidad Nacional de la Republica. Private memorandum provided to the authors by Juan Andrés Moraes. Montevideo (2001). Also Cassoni et al. (2000): 10, for 1996. Public sector union density went from 42.4 per cent in 1985 to 48.2 per cent in 1987, 50.3 per cent in 1990, 33.8 per cent in 1993, 37.6 per cent in 1996 and 39.8 per cent in 2000. J. M. Rodriguez, B. Cozzano and G. Mazzuchi, La transformación de las relaciones laborales, Uruguay, 1985–2000. Montevideo: Universidad Católica, 2002: Statistical Appendix, Chart C.1. J. Weeks, “Wages, Employment and Worker’s Rights in Latin America, 1970–98”, International Labour Review, V.138, N.2 (1999): table 2. Cassoni et al. (2000): 39–40. ECLAC (1985): 21, table 8, and (1998/89): 85, table VI.1. Weeks (1999): table 2. J. W. Wilke, E. Aleman and J. G. Ortega, Statistical Abstract of Latin America, V.35. Los Angeles: UCLA Latin American Center, 1999. Calculated from ECLAC data; ECLAC, Economic Survey of Latin America and the Caribbean (1998/99): 92. Also see Weeks (1999), Table 3 which shows a ten-point increase in urban real wages for the period 1985–98 (although falling below the 1982 baseline). Weeks maintains that Uruguayan real wages declined by 5.5 per cent during the period 1971–81 (under the dictatorship), declined 3.9 per cent during the period 1981–90 (the period of transition), and rose 1.2 per cent from 1990–98 (the period of market-oriented reform and trade liberalization). See (1999): table 5. Comisión Economica para America Latina y el Caribe, Estudio Económico de America Latina y el Caribe, 1999–2000. Lima: UN/ECLAC (2000): 174. Instituto Nacional de Estadística (Uruguay), Indice Medio de Salarios (IMS), V.2, N.87 (February, 2001): 1–2. In addition, Cassoni et al. (2000: 42) argue that it is doubtful that unions had much effect on consumer choices, which presumably includes price comparisons. Marshall (1997). Cassoni et al. (2000): 42. www.ilo.org/public/spanish/ampro/cinterfor/dbase/necou/ii/index.htm; Programa Modernización de las Relaciones Laborales, Relaciones Laborales en 1998. Montevideo: Universidad Católica, 1999: 1–8; ibidem, Relaciones Laborales en 1999 y tendencias de los ultimos cinco años. Montevideo: Universidad Católica, 2000: 4. Relaciones Laborales en 1998: 4 www.redsegsoc.org.uy/conflictos/N.29, April 2000. www.redsegsoc.org.uy/conflictos/N.29, April 2000. Cassoni et al. (2000): 42. On this see Buchanan (1995): 252–54; ILO (1987): 101–02; and C.H. Filgueria, “Organizaciones sindicales y empresariales ante los programas de estabilización: Uruguay 1985–87”. Paper presented at the “Seminario-Taller Sobre Políticas

222 Notes

89

90

91

92

93

94

95 96

Antiínflacionarias y Mercado de Trabajo”, PREALC, Santiago, Chile, August 2–4, 1988 (Chart 1); ILO, Relaciones de Trabajo en el Uruguay. Informe de una misión de la Oficina Internacional del Trabajo. Geneva: Labor Management Relations Series, N.66 (1987): 127; ILO, “Seminario subregional sobre relaciones de trabajo (Montevideo 21–24 April, 1987)”. Geneva: Working Document STRAL/1987/ D.1 offset (1987): 13. Official strike data for Uruguay is notoriously sketchy – not even the ILO has figures – because neither the government nor the actors involved are required to report them. Hence most strikes go unreported except in the press and no official documentation exists (since the MTSS has no responsibility to do so). As a result, data on strikes was cobbled together from union sources, internet sites dedicated to labour issues such as Cyber Picket Line (www.cf.ac.uk/ccin/unions) and the US government publication Foreign Labor Trends (Washington, DC: Government Printing Office) for the years cited. Most valuable was the Program in Labor Relations Modernization at the Catholic University of Uruguay, and the data banks of the Faculty of Social Sciences of the Uruguayan National University, which can be accessed at http://fcs1.fcs.edu.uy/pri. B. Cozzano, G. Mazzuchi, J. M. Rodriguez, Las Relaciones Laborales en 1995 y Perspectivas Para 1996. Montevideo: Programa de Modernización de las Relaciones Laborales en el Uruguay, Universidad Católica del Uruguay, January 1996: 2–4, 9. From 1995 onwards, as the economic opening project took hold, wage demands ceded ground to wage defence, then employment defence as the main subject of both collective bargaining and strikes, especially in the private sector. Programa Modernización de las Relaciones Laborales, Relaciones Laborales en el año 2000: tendencias y perspectivas. Montevideo: Universidad Católica, 2000: 1–2. There were 175 strikes in 1996, 138 in 1997 and 137 in 1998. Man-hours lost fell to 1.2 million in 1996, 1.4 million in 1997 and 784.755 in 1998. Programa Modernización de las Relaciones Laborales, Relaciones laborales en 1999 y tendencias de los ultimos cinco años. Montevideo: Universidad Católica, 2000: 3. P. C. Schmitter, “Still the Century of Corporatism?” in P. C. Schmitter and G. Lehmbruch (eds), Trends Towards Corporatist Intermediation. Beverley Hills: Sage Publications, 1979: 15–17. We should point out that in some aspects the interest group intermediation system in Uruguay exhibits characteristics associated with what Schmitter terms “syndicalism”, and in this regard represents more of a hybrid model than a pure type. J. M. Rodriguez, “Efectos de la desregulación, la apertura y la reconversión en las relaciones laborales en Uruguay”, in J. B. Figueiredo (ed.), Las Instituciones Laborales frente a los cambios en America Latina. Geneva: IILS, 1996; Marshall (1997). ECLAC, Economic Survey of Latin America and the Caribbean. New York: United Nations, (1985: 605 table 2, 1993: 473 table 1, 1998/99: 62 table IV.1). Data for 1980–90 is from 1985/93 where 1980 = 100. 1991 data is in constant 1995 pesos, cited in ECLAC (1998/99). Wilke et al., Statistical Abstract of Latin America (1999): 1017–19, using IMF, EIU and OECD data. ECLAC, (1998/99), passim. Also see the Freedom House report cited earlier. A similar description, with data, of Uruguay as an exceptional case of positive socio-economic indicators in a region saddled with inequalities, but which nevertheless manages to deliver a negative spin on its developmental prospects because it has a “bloated” public sector, is offered by the World Bank. See two internet sources: www.worldbank.org/html/extdr/offrep/lac/uy.htm and www.worldbank.org/data/countrydata/aag/ury_aag.pdf.

Notes

4

223

Ireland

1 M. Hechter, Internal Colonialism: The Celtic Fringe in British National Development 1536–1966. Berkeley: University of California Press, 1975. Also see R. Munck, “Globalisation, Development and Labour Strategies: Ireland in Context”, Irish Journal of Sociology, V.9, N.1 (1999): 97–114. “Hybridity” refers to social contexts that exhibit mixtures of pre-modern, modern and post-modern features, and which are “characterized by the intercrossing and sedimentation of these different traditions, social relations and historical times” (99). “Liminality” “indicates the presence of difference: order and disorder, structure and anti-structure, the comprehended and the incomprehensible.” A. Norton, Reflections on Political Identity. New York: Johns Hopkins University Press, 1988: 53. 2 See S. Berger (ed.), Organizing Interests in Western Europe. New York: Cambridge University Press, 1981; and P. C. Schmitter and G. Lehmbruch (eds), Trends Towards Corporatist Intermediation. Beverly Hills: Sage Publications, 1979. 3 See T. Iversen, Contested Economic Institutions: The Politics of Macroeconomics and Wage Bargaining. Cambridge: Cambridge University Press, 1999. 4 J. Visser, cited in P. Auer, Employment Revival in Europe: Labour Market Success in Austria, Denmark, Ireland, and the Netherlands. Geneva: International Labour Organization, 2000: 55. 5 See W. E. J. McCarthy, J. F. O’Brien and V. G. O’Dowd, Wage Inflation and Wage Leadership. Working Paper No.79, The Economic and Social Research Institute, Dublin, April 1975. 6 Labour Relations Commission, “Labour Relations in Ireland- Industrial Peace”, unpublished report, 1999. Statistics reported from Central Statistics Office, Republic of Ireland. 7 For reviews of these attempts to construct corporatist institutions see N. Hardiman, Pay, Politics, and Economic Performance in Ireland 1970–1987. Oxford: Clarendon Press, 1988; and J. K. Jacobsen, Chasing Progress in the Irish Republic. Cambridge: Cambridge University Press, 1994: 133–92. 8 B. Casey and M. Gold, Social Partnership and Economic Performance: The Case of Europe. Cheltenham: Edward Elgar, 2000: 32 and 105. 9 P. Teague, “Pay Determination in the Republic of Ireland: Towards Social Corporatism?”, British Journal of Industrial Relations. V.33, N.2 (1995): 260–3. 10 See P. McNelis and A. Bollard, From Financial Indulgence to Fiscal Repentance: Chile, Ireland, and New Zealand in the 1980’s. Working Paper 91/14, New Zealand Institute of Economic Research, Wellington, October 1991. 11 See J. Wallace and N. Clifford, Collective bargaining and flexibility in Ireland. International Labour Organization, unpublished report, 1998, web version http:// www.ilo.org/public/english. 12 Recent comparative work by Paul Teague, in particular, has placed increased emphasis on the role of European integration in shaping recent developments in Irish industrial relations. See P. Teague and J. McCarthy, “Industrial Relations in the Two Irish Economies”, in A. F. Heath, R. Breen and C. T. Whelan (eds), Ireland North and South: Perspectives from Social Science. The British Academy/Oxford University Press, Oxford: Oxford University Press, 1999: 341–68. 13 K. Marx and F. Engels, Ireland and the Irish Question. New York: International Publishers, 1972, cited in Hechter (1975): 15.

224 Notes 14 D. S. McLernon, “Ireland”, in J. Campbell (ed.), European Labour Unions. Westport, CT: Greenwood Press, 1972: 241–2. 15 See P. B. Ellis, A History of the Irish Working Class. London: Pluto Press, revised edition, 1996, for a detailed account of the issues and personalities involved. 16 D. F. Keogh, “Foundation and Early Years of the Irish TUC 1894–1912”, in D. Nevin (ed.), Trade Union Century. Dublin: Mercier Press, 1994: 19–32. 17 E. O’Malley, “Problems of Industrialisation in Ireland”, Proceedings of the British Academy, V.79, N.1 (1992): 31–52. 18 Munck (1999): 101. 19 Jacobsen (1994): 59. 20 William K. Roche, “The Trend of Unionisation”, in T. V. Murphy and W. K. Roche (eds), Irish Industrial Relations in Practice. Dublin: Oak Tree Press, revised edition, 1997: Table 1, 50. 21 On the dominance of Fianna Fáil, see R. Dunphy, The Making of Fianna Fáil Power in Ireland 1923–1948. Oxford: Clarendon Press, 1995. 22 The apparent contradiction between high levels of both objective and subjective class identity and the absence of a class-based party has puzzled political scientists interested in the Irish case for several decades. Given what we know about the role of populist parties in other parts of the world, particularly Latin America, the apparent contradiction is not so surprising. See P. Mair, “Explaining the Absence of Class Politics in Ireland”, Proceedings of the British Academy, V.79 (1992): 383–410. 23 Jacobsen (1994): 88. 24 On Irish labour politics see William K. Roche, “Pay determination and the Politics of Industrial Relations”, in Murphy and Roche (eds), 1997; and J. J. Sexton, P. J. O’Connell et al., Labour Market Studies: Ireland. Luxembourg: Office for Official Publications of the European Communities. Employment and social affairs, Employment and labour market Series, N.1 (December 1996): 74–6. 25 Munck (1999): 103. 26 N. Hardiman, “The State and Economic Interests: Ireland in Comparative Perspective”, in J. Goldthorpe and C. Whelan (eds), The Development of Industrial Society in Ireland. Oxford: Oxford University Press, 1994: 342. 27 E. O’Conner, “War and Syndicalism 1914–1923”, in D. Nevin (ed.), Trade Union Century. Dublin: Mercier Press (1994): 55. 28 O’Conner (1994): 55–6. 29 The discussion of union participation in national concertative bodies draws heavily from H. Compston, “Union participation in economic policy-making in Austria, Switzerland, the Netherlands, Belgium and Ireland, 1970–1992”, Western European Politics, V.17, N.1 ( January 1994): 130–2. 30 Sexton and O’Connell et al. (1996): 76. 31 Ibid (for 1945, 1980 and 1993); Labour Relations Comission (2002) (www.lrc.ie) for 1999–2001. 32 The impact of multinationals on the ability to organise is a much-debated topic in the study of Irish industrial relations. The consensus appears to be that while there is a clear push towards decollectivisation, the actual extent of individualisation is quite varied across green-field sites and industries. See in particular, W. K. Roche, “The Individualization of Irish Industrial Relations?”, British Journal of Industrial Relations, V.39, N.2 (2001): 183–206; T. Turner, D. D’Art and P. Gunnigle, “US Multinationals: changing the framework of Irish industrial relations?”, Industrial Relations Journal, V.28, N.2 (1997): 92–102.

Notes

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33 Sexton and O’Connell et al. (1996): 70–1. 34 Data on union membership and union numbers from Labour Relations Commission (Ireland), Labour Relations in Ireland – Trade Unions – Trade Union Membership 1980–1999. www.lrc.ie (1999). 35 Labour Relations Commission, Trade Unions with Negotiating Licenses as of 1/01/ 2000 and Labour Relations in Ireland (all figures for 1 January 2000). 36 H. MacNeill, “Management View”, in D. Nevin (ed.), Trade Unions and Change in Irish Society, Thomas Davis Lecture Series, Dublin and Cork: Mercier Press, 1980: 55 and 63. 37 W. E. J. McCarthy, J. F. O’Brien, V. G. Dowd, Wage Inflation and Wage Leadership, The Economic and Social Research Instutite, Working Paper, N.79, Dublin, April 1975: 209–10. 38 www.lrc.ie/labour_relations_in_ireland/employer_associations.htm. 39 D. O’Hearn, “Globalisation, “New Tigers”, and the end of the Developmental State? The Case of the Celtic Tiger”, Politics and Society, V.28, N.1 (2000): 73. 40 T. Turner, D. D’Art and P. Gunnigle, “US Multinationals: changing the framework of Irish industrial relations?”, Industrial Relations Journal, V.28, N.2 (1997): 92. 41 P. J. O’Connell (ed.), Astonishing Success: Economic Growth and the Labour Market in Ireland. Employment and Training Papers, N.44, Geneva: International Labour Organization, 1999: 40. 42 Labour Relations Commission (Ireland), Labour Relations in Ireland – Industrial Disputes Record – Strike Statistics and Trends/Annual Days Lost due to Industrial Action. www.lrc.ie (using data from the Central Statistics Office), 2000 and www.lrc.ie/labour_relations_in_ireland/industrial_pea ce.htm: 1–2; and Labour Relations Studies: Ireland (December 1996): 96 (Table A5.1), using Irish Statistical Bulletin data. 43 Roche (2001): 174. 44 Sexton and O’ Connell et al. (1996): 82–7. 45 MANDATE report, quoted in Wallace and Clifford (1998), part III. 46 LABORSTA, table 8A. 47 All data from Munck (1999): 106, 108 and sources cited therein. Particularly on the issues of poverty and inequality, see Denis O’Hearn, Inside the Celtic Tiger: The Irish Economy and the Asian Model, London: Pluto Press, 1998. 48 O’Hearn (1998): 135. 49 New Zealand Herald, April 6–7, 2002: B11. 50 Calculated from Wallace and Clifford (1998): n.p. 51 O’Hearn 1998: 122–6.

5

Conclusion: Explaining Cross National Variance in Labour Politics

1 P. Evans, Embedded Autonomy: States and Industrial Transformation. Princeton: Princeton University Press, 1995; R. Reich, Work of Nations. New York; A. A. Knopf, 1991; W. Hutton, The State We’re In. Revised edn, London: Vintage, 1996.

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Index

ACTU see Australian Council of Trade Unions Australia Accord process in 37, 38, 43, 44, 50, 52, 100 agent-principle issues 43–7 autonomy of labour movement in 192 historical background 25–7, 27–8 business relations in 47–53 casual/part-time labour in 51–2 class solidarity in 32 collective bargaining in 41, 47–8, 52–3, 196 compulsory arbitration system in 32–4 corporatism in 34, 37 cultural/political conflicts in 30 currency crisis in 37 economic liberalisation in 29 economy 25–6 employee awards/contracts in 38, 44, 45, 49–51 enterprise bargaining in 50, 51 Enterprise Flexibility Agreements in 38, 39 federal/state split of legislative responsibility 29, 39 financial strategy 29 flexibilisation policies in 28, 30, 38, 39, 44, 47, 48, 51–2, 196 growth/productivity in 30 incremental reform in 192 individual bargaining in 50 industrial conflict/strikes in 28, 39, 41–2, 48–9, 52 industrial relations legislation in 38–41, 52 institutional conditioners 37–42 macroeconomic/social indicators 53–5, 194 market-oriented strategies in 28–9, 30, 37–8, 43, 44, 45, 47, 49, 54, 55, 192 mateship ideology in 32, 167, 207(11n, 12n) neo-corporatism in 190, 199

pattern bargaining in 39 political insertion in 31–7, 192 productivity/performance-based payments in 51 protection of industry in 192 push for deregulation in 49–50 second wave industrial relations reform in 42 structural adjustment in 29 trade unions in 28, 30, 31–7, 43–4, 195, 208(20n, 22n, 23n) union amalgamation in 47, 178 union conflict in 44–5 union membership in 45–6, 49, 52 union reform in 48 wage inequalities in 50–1, 210(71n) wage-board system in 33 White Australia immigration policies in 32 Whitlam era 29, 36–7 Australian Council of Trade Unions (ACTU) 30, 35, 36, 37, 43–4, 52, 110 Australian Industrial Relations Commission 38, 41 Australian Labour Party (ALP) 32, 35, 36–7, 38, 42, 44, 93, 95 Australian Workplaces Agreements (AWAs) 41, 49–50, 51 AWAs see Australian Workplaces Agreements Barrett, P. 86 BCE see Business Council of Australia boutique economies 5, 6, 89, 154, 189–90, 194, see also New Zealand Uruguay Business Council of Australia (BCA) 47–8, 111 business–labour relations, and patterns of collective bargaining/industrial conflict 22–3 and State mediation 22 and success of organised labour 22

244

Index case studies comparable-cases strategy 4, 5–6 dichotomous cross-regional pairs 6, 7 most similar approach 4–5, 6, 7 CDT see Confederación Democratica de Trabajadores (Chile) Central Review Committee (Ireland) 159 Central Unica de Trabajadores (Chile) 63, 67, 68, 71, 75, 78 CEPCH see Private Employees Confederation (Chile) Chicago Boys 58 Chile 118, 157 agent-principal issues 77–80 authoritarianism in 70, 79–80, 86, 214(129n) background 27, 55–6 business relations in 80–5 Church/military relations 67 class conflict in 62 collective bargaining in 61, 63, 65, 68, 73, 74, 76, 81–2 cross-sectral/company-specific unions in 82 decline in manufacturing 57 economic crisis in 66–7 flexibilisation policies in 73, 80 individualism/consumer mentality encouraged in 58 institutional conditioners 72–7 Japanese production methods in 78–9 Labour Code in 59, 60, 62, 64, 65, 69, 73, 76, 79–80 labour legislation in 59, 73–7 labour market Darwinism in 74 macroeconomic/social indicators 85–6, 194 market-oriented reform in 56, 58, 59, 158, 196 Marxist/non-Marxist affiliations 62–3 military intrusion in politics 65 official/pro-government unions 68 party-subordinate/State-dependent model 59–61, 63, 67, 70, 71, 72, 87–9, 191, 212(96n) Plan Laboral 73–5, 79, 103 political insertion in 59–72 political role of unions 61 purgative phase 56, 73

245

rank and file political leanings 71–2, 213(117n) rank and file/union split 80 re-emergence of unions in 68–9 rent-seeking behaviours in 58 response to Allende 65–7, 213(111n, 112n) rights/autonomy of unions in 73–4, 76–7 rural population in 64, 77 state corporatism in 190 strength/weakness of unions in 62–4, 73, 86, 87 strikes/protests in 59, 61, 65–6, 67–8, 69, 75, 83–4 structural reform in 56–8, 211(83n) survivalist strategies in 86, 215(140n) top-down devolution 56 tripartite/bipartite agencies in 70–1 types of union allowed in 74 unemployment rates in 84 union membership in 62, 78, 86, 214(126n) union partisan representation in 77–8, 86 wages in 57, 84, 85, 215(139n) worker independence in 74–5 worker participation in management decision-making 74 Chilean Workers Confederation (CTCh) 61–2 CIC see Confederación de la Industria Chilena (Chile) CIF see Construction Industry Federation (Ireland) CII see Confederation of Irish Industry class conflict 8, 18 CNC see Central Review Committee (Ireland) CNS see Cordinadora Nacional Sindical (Chile) CNT see Comando Nacional de Trabajadores (Chile) National Worker’s Command (Uruguay) Comando Nacional de Trabajadores (Chile) 69 Commission on Productivity, Prices and Income (Uruguay) 124, 132, 134, 145 Conciliation and Arbitration Act (Australia, 1904) 33, 38

246 Index Confederación de la Industria Chilena (Chile) 75, 81 Confederación Democratica de Trabajadores (Chile) 67, 68, 69 Confederation of Irish Industry (CII) 180 Construction Industry Federation (Ireland) 180 Copper Workers Confederation (Chile) 67 COPRIN see Commission on Productivity, Prices and Income (Uruguay) Cordinadora Nacional Sindical (Chile) 67 corporatism inclusionary/exclusionary 18–19 tri-partite neo- 19–20 CPC see national (Chilean) business federation CTC see Copper Workers Confederation (Chile) CTCh see Chilean Workers Confederation CUT see Central Unica de Trabajadores (Chile) Dabscheck, B. 41 DINACOPRIN see Directorate of Productivity, Income and Price (Uruguay) Directorate of Productivity Income and Price (Uruguay) 132–3, 145, 219(58n) E-LC see Employer-Labour Conference (Ireland) Easton, B. 29 ECA see Employment Contracts Act (New Zealand, 1991) Employer-Labour Conference (Ireland) 173, 174–5, 179 Employment Contracts Act (New Zealand, 1991) 102–4, 105, 109, 111, 112, 114, 116, 216(19n), 218(32n) Employment Relations Act (New Zealand) 105–6 ERA see Employment Relations Act (New Zealand) European Union (EU) 10–11, 156, 160

Federation of Irish Employers (FIE) 179–80 FIE see Federation of Irish Employers FUT see United Workers Front (Chile) Gerritsen, R. 29 globalisation 9–10, 189, 194 implications of 10–11 and location of country 23, 189–90 pressures of 11–12 IBEC see Irish Business Economic Council Irish Business Employers Confederation IC & A Act see Industrial Conciliation and Arbitration Act (New Zealand, 1894) ICFTU see International Confederation of Free Trade Unions ICTU see Irish Confederation of Trade Unions Irish Congress of Trade Unions IDA see Industrial Development Authority (Ireland) ILO see International Labour Organisation Industrial Conciliation and Arbitration Act (New Zealand, 1894) 93, 96, 97, 98, 99 Industrial Development Authority (Ireland) 172 industrial relations 11, 12–13, 24 and collective bargaining 13, 16–17, 19, 21, 22–3 divide and conquer approaches 19 models of 157 pluralism 19 strike data 16, 17 Industrial Relations Acts (Australia, 1988/1993) 38–9, 45, 47 institutional conditioners 4, 6–7, 8, 14, 15, 21–3, see also individual countries eg Australia International Confederation of Free Trade Unions (ICFTU) 62 International Labour Organization (ILO) 76–7, 103–4, 125, 182 IPU see Irish Pharmaceutical Union Ireland agent-principal issues 175–9 anti-British sentiment in 165–6

Index background 155–6 bipartite negotiations in 170 British model of trade unionism in 169 business relations 179–85 class identity in 164, 168, 224(22n) collective bargaining in 159, 172, 179, 183, 194 and commitment to European integration 162–3, 223(12n) composition of union movement in 176–7 concertative arrangements in 171, 173, 179, 188 constraints on unions in 170 deficiencies in Irish economic model 193–4 dispute-resolution bodies in 173 economic recovery in 185–6, 187–8 effect of reforms on 156 EU subsidies for 160 firms/unions ratio 181 flexibilisation strategies in 162, 181–2, 186 foreign investment in 158, 169, 181–2, 186–7 hybrid condition of 156, 223(1n) impact of multinationals on 177, 224(32n) import-substitution-industrialisation (ISI) in 155, 158, 167, 168 institutional conditioners in 169–75 labour standards in 185 labour union subordination in 163–4 lack of institutionalisation in 160–1 legislation in 170, 172–4 macroeconomic/social indicators 185–7 manufacturing in 167 market-oriented policy in 161–2, 168–9, 186, 188 national, regional, global determinants of labour relations regime 157–63 National Understanding agreements in 159 nationalism, populism, Catholicism in 168 neo-corporatism in 156, 157, 160, 171, 193 origins of trade unions in 164–7 Partnership 2000 programme 159–60

247

political affiliations of unions in 162, 168, 196 political insertion in 158, 163–9 positive outlook for unions in 183–5 poverty/inequalities in 186, 187 pre-Fordist mode of 167 response to the Depression 166–7 social movement unionism in 171–2 strikes in 158, 169, 182–3, 184 tripartite negotiations in 159, 160, 162, 172, 173 unemployment in 186 union amalgamation in 178–9, 193 union autonomy in 168 union membership in 167, 175–6, 177–8, 225(34n) union participation in socio-economic policy in 170–1, 224(29n) wage agreements in 158, 159, 160, 161, 172–3, 180, 182, 183–5, 186, 193 Irish Business Economic Council 162 Irish Business Employers Confederation 180–1 Irish Confederation of Trade Unions (ICTU) 160, 169, 171, 175, 179, 180 Irish Hotels Federation 180–1 Irish National Organisation of the Unemployed (INOU) 159 Irish National Teachers Organisation (INTO) 178 Irish Nurses Organisation (INO) 178 Irish Pharmaceutical Union (IPU) 180 Irish Trade Union Congress (ITUC) 162, 166 Irish Transport and General Workers’ Union (ITGWU) 165, 170 ITGWU see Irish Transport and General Workers’ Union ITUC see Irish Trade Union Congress Jacobsen, J.K.

167

labour market 1–2 and ability of employers to hire/fire personnel 9 and deregulation 10, 197 effect of reform on working class 12–13 European example 10–11 flexibility of 2, 3, 8–10, 11, 12, 14, 18, 197–8

248 Index labour market – Continued globalisation aspects 9–10 institutional convergence vs continuing divergence debate 10–12 institutional framework 4, 8, 14, 15 Irish experience 2 reform of 3–4, 12–13, 24, 199 social divisions 2 state role in 2–3 structural shifts 12, 13 tripartite bargaining 2 wages 17, 18, 194, 198–9 labour politics 3 as analytic lens 7–16 institutional conditioners 6–7, 21–3 interest-driven explanations 6–7 partial regime 18 and the State 18–21 Labour Relations Act (New Zealand, 1987) 100 Labour Relations Commission (Ireland) 173–4 LRC see Labour Relations Commission (Ireland) labour movement see labour unions and trade unions labour unions see trade unions MacDonald, D. 44 MANDATE see Union of Retail, Bar and Administrative Workers (Ireland) Manufacturing, Science and Finance Union (Ireland) 178 Marx, K. 163 MERCOSUR 128, 129, 130, 141, 144, 145, 147, 148, 152, 153, 154, 190, 193 micro economy 5–6 Ministry of Labour and Social Security (Uruguay) 131, 135, 222(88n) MSFU see Manufacturing, Science and Finance Union (Ireland) MTSS see Ministry of Labour and Social Security (Uruguay) national (Chilean) business federation (CPC) 70, 71 National Economic and Social Council (Ireland) 171

National Industrial Economic Council (Ireland) 170–1 National Worker’s Command (Uruguay) 139–40, see also PIT-CNT (Uruguay) NESC see National Economic and Social Council (Ireland) New Zealand 25, 30, 32, 41, 54, 157, 167 agent-principal issues 106–11 agricultural dependency 90–1 alienation of unions in 95 arbitration system in 98–9, 101, 102, 105–6, 112, 113, 117, 216(10n) background 89, 90–2 bargaining agents in 105 as boutique economy 89, 115 business relations 111–16 collapse/amalgamation of unions in 108 collective bargaining in 108, 112, 113 cultural/political tensions in 91 decentralisation of unions 92 Department of Labour (DOL) in 101 economic liberalisation in 28 flexibilisation of labour market in 103, 113 formation of union movement in 92–3, 94 gender discrimination in 101 image of itself 218(31n) Immigration Service in 101 increased State interventionism in 99 industrial relations in 33, 34 Industrial Relations Service in 101 institutional conditioners 96–106, 117 labour deregulation in 108–9, 111 legislation in 92–3, 96–7, 100–1, 102–3, 112 majoritarian/unitary government in 29 market-oriented reform in 26, 90–1, 100, 101–6, 111, 196 neo-corporatism in 190, 199 neoliberal reform in 91–2 Occupational Health and Safety (OSH) in 101 party-dependence by labour movement 117, 191–2 personalist/inward-looking nature of union politics in 110

Index political insertion in 92–6, 154, 191–2, 216(6n) and principle of voluntary unionism 103 Red Federation in 93 reduction in labour rights in 103–4 registering of unions in 97–8 State/corporatist model 96, 101 strikes in 93, 114, 148 structural adjustment programme in 92 unemployment in 113, 116, 218(43n) union amalgamation in 178 union membership in 96–7, 100, 107–8, 117–18, 217(26n, 27n) union support for Labour government 106–7 wages/award system in 113 Waterfront Lockout (1951) 97–8, 216(10n) weakness of unions in 110–11 welfare system in 92, 94, 102, 105, 116 zero-sum approach to labour relations in 112 New Zealand Business Roundtable 111 New Zealand Council of Trade Unions (NZCTU) 103–4, 108–10 New Zealand Labour Party (NZLP) 94–5, 110 New Zealand Trade Union Federation (TUF) 110–11 Nichols (H.R.) Society 48 NIEC see National Industrial Economic Council (Ireland) NZCTU see New Zealand Council of Trade Unions NZLP see New Zealand Labour Party Olssen, E. 96 PESP see Programme for Economic and Social Progress (Ireland) PIT-CNT (Uruguay) 126, 127, 130, 131, 133, 134, 141–2, 147, 150, 153 Plenario Intersindical de Trabajadores (PIT) 126 PNR see Programme for National Recovery (Ireland)

249

policy reform 189 impact of 1 internal/external factors 1–2 small countries as exemplars of 1–4 political insertion 14, 15–16, 18, 190–4, 195, 196, see also individual countries eg Australia PPF see Programme for Prosperity and Fairness (Ireland) Private Employees Confederation (Chile) 67 Programme for Economic and Social Progress (Ireland) 159 Programme for National Recovery (Ireland) 159 Programme for Prosperity and Fairness (Ireland) 160 Republic of Ireland see Ireland Richardson, L. 96 Services, Industrial, Professional and Technical Union (Ireland) 178 settler capitalism 2 SFA see Small Firms Association (Ireland) SFADCO see Shannon Free Airport Development Authority Shannon Free Airport Development Authority (SFADCO) 172 SIMI see Society of the Irish Motor Industry SIPTU see Services, Industrial, Professional and Technical Union (Ireland) Sloan, J. 114 Small Firms Association (Ireland) 181 small, open economies 5, 6, 152, 189, 200(3n) Society of the Irish Motor Industry (SIMI) 180 State, and formulation of policy 189 and regime survivability 7 role of 24 State-labour relations 2–3, 24 assumptions concerning 19–20 authoritarian legacies 21 collective bargaining 21 dialogue, demand, concession 18 inclusionary/exclusionary corporatism 18–19, 20 interaction with employers 18, 19

250 Index State-labour relations – Continued political affiliations/representation 18 power/control balance 21 and trade unions 20–1 and tri-partite neo-corporatism 19–20 withdrawal of labour 21–2 Teague, P. 161 Technical Engineering and Electrical Union (Ireland) 178 TEEU see Technical Engineering and Electrical Union (Ireland) Trade Practices Act (Australia, 1974) 39 trade unions 15–16, 195–6 see Labour Unions ability to defend membership 13–14 bargaining power 13, 22–3 capitalist reactions to 20–1 defensive position of 194–5 effect of labour market reform on 12–13 and ideological unity 197 ideological/organisational unity 14–15, 197 leadership role 18 legal protections 2–3 and material consent 16–17 membership of 157, 195 monopolistically-organised 197 and notions of citizenship 18 objective position of movement 13 pluralism in 198–9 as political actors 16–23 political insertion 14, 15–16 and pro-business governments 20 rank and file relationships 18, 23 relationship with workers 23 and securing of consent 8 and the State 20–1, 24 strikes 21–2 success of 13–14 volunteerist movements 198 weak/strong aspects 20 and working class consent 16, 18, see also individual countries eg Australia TUF see New Zealand Trade Union Federation Tupamaros 124, 125, 128, 219(49n, 52n)

Union of Retail, Bar and Administrative Workers (Ireland) 178, 185 United Workers Front (Chile) 68 Uruguay, agent-principal issues 137–45 autonomy/independence of unions 131–2, 139, 196 background 89–90, 118–19 bipartite/tripartite negotiations in 135–7, 138, 146, 147, 220(67n) as boutique economy 89, 134, 154 business relations 145–51 business/company unions 132, 133 capital/union tactical alliance 141, 220(70n) changes in political system 123–4, 127–31 class divisions in 121 Club Naval agreements 127 collective bargaining in 120, 121–2, 125, 131, 134, 135, 136–7, 145, 146–7, 150 Concertación Nacional Programmática (CONAPRO) 127–8, 133, 135 Consejos 147 Consejos de Salarios 133–4, 135, 220(61n, 63n) decrease in State interventions 135–7 economic impact of dictators on 119 effect of military regime in 125–6 employment in 119, 152, 218(43n) entry into MERCOSUR 128, 129, 130 expansion of role of State 120–1 growth in union movement 137 Import Substitution Industrialisation (ISI) in 120, 122 increased State intervention in 134 influence of Cuban revolution on 123 institutional changes in unions 138 institutional conditioners 131–7 labour administration in 131–2, 133–4, 136–7, 146–7 labour flexibility in 147 legislation in 124, 132, 133, 145, 219(58n) macroeconomic/social indicators 151–2, 222(96n) market-oriented reform in 125–6, 152

Index Marxist domination of union leadership in 141 material standards/political stability in 153 militant/pragmatic nature of unions 137–8, 139, 140 occupational/federation-wide contracts in 146 and opening up of domestic market 125, 128 origins of union mobilisation in 119–20, 122 political affiliations of unions 138–9 political insertion in 119–31, 154 reduction in State interventions 146 repression of unions in 118, 125, 128 retrenchment of corporate role in 129 social stability in 130 State corporatist framework in 132–4 strikes in 127, 129, 130, 136, 147–51, 152, 153, 222(88n, 90n, 91n)

251

support for outlawed union leadership 132–3 Swiss-style collegiate executive established in 120 and transition to democracy 119, 126–31, 219(46n, 53n) tripartite/bipartite negotiations in 121, 122–3, 124, 128, 193 unemployment levels in 129, 143 union membership in 139, 141–3, 153 use of inducements in 132, 220(59n) wages in 119, 143–5, 147, 152–3, 221(78n) Waterfront Disputes (Australia, New Zealand) 45, 97–8, 216(10n) Workplace Relations Act (Australia, 1996) 40–2, 48, 49 WRA see Workplace Relations Act (Australia, 1996)