2. Trade Unions and Pro-Outsiders Social Policies in Mature Welfare States

The traditional power resource theory considers trade unions, allied with powerful social-democratic parties, to be the main social actors pushing for the introduction of generous social policies (Esping-Andersen, Reference Esping-Andersen1985; Korpi, Reference Korpi1983). In recent decades, however, this reading of the interplay among leftist parties, trade unions and welfare state development has been broadly questioned for not being effective in fully capturing the complex political dynamics at play in a new political economy characterised by international economic integration and globalisation, technological innovation, the shift to a predominantly service-based economy and labour market deregulation (Emmenegger et al., Reference Emmenegger, Häusermann, Palier and Seeleib-Kaiser2012; Rueda Reference Rueda2007). Especially in the Western literature, scholars have argued that trade unions react to this changing political economy context by prioritising the interests of their core members (workers in full-time standard employment) at the expense of outsiders (atypically employed, informal workers and unemployed) (Emmenegger et al., Reference Emmenegger, Häusermann, Palier and Seeleib-Kaiser2012; Palier and Thelen, Reference Palier and Thelen2010; Rueda, Reference Rueda2007).

Recently, however, political economy scholars have sought to problematise this reading of trade union social policy preferences in the post-industrial scenario. Increasingly, theoretical and empirical accounts have highlighted that trade unions may also pursue a pro-outsider strategy by adopting a policy agenda which favours the interest of social groups beyond their core membership (Durazzi, Reference Durazzi2017; Durazzi et al., Reference Durazzi, Fleckenstein and Lee2018; Garay, Reference Garay2017; Gordon, Reference Gordon2015; Naczyk and Seeleib-Kaiser, Reference Naczyk and Seeleib-Kaiser2015). In this paper we aim to contribute to this literature by proposing a mechanism to explain under what conditions traditionally pro-insider trade unions open up their social policy claims to labour market outsiders in democratic regimes. The triggering event, in our understanding, is the onset of an external shock that modifies observed equilibria and thus creates the space for pathbreaking change (Pierson, Reference Pierson2004). However, we also stress that the emergence of an external shock has to be combined with two specific and mutually reinforcing scope conditions. The first is that the external shock should not only break traditional policy-making patterns but also lead to reforms endangering crucial institutional resources of trade unions (see also Durazzi et al., Reference Durazzi, Fleckenstein and Lee2018). Indeed, scholars have already shown that social preferences of unions can be formed in response to organisational interests and the structure of social governance institutions (Davidsson and Emmenegger, Reference Davidsson and Emmenegger2013; Naczyk and Seeleib-Kaiser, Reference Naczyk and Seeleib-Kaiser2015). Trade unions’ institutionalised involvement in social policy governance can be crucial for their political strength because it provides additional legitimation and resources, thus furnishing opportunities for membership recruitment; furthermore, it enables labour organisations to influence the implementation of public policy or even to veto changes in government policies (Streeck and Hassel, Reference Streeck, Hassel, Addison and Schnabel2004). A continued linkage with a political party, which may defend trade unions’ prerogatives and their influence over the policy-making process, could constitute a similarly relevant political resource for labour organisations (Baccaro et al., Reference Baccaro, Hamann and Turner2003; Levitsky and Murillo, Reference Levitsky and Murillo2005). If trade unions lose their favorable institutional position, and/or party-union linkage ceases to exist, or if parties do not guarantee their status anymore, trade unions might have to increase their legitimacy among their non-core membership to regain mobilisation potential and to compensate for the loss of power resources.

The second condition is that new social and/or political actors supporting different social demands, thus endangering trade unions’ primacy as social actors, should emerge. To regain mobilisation potential, trade unions need to be credible as social actors fighting for the weakest members of society. The feasibility of this strategy may be endangered by the presence of competitors, such as social movements and/or radical trade union organisations that support worker mobilisation and who vocally criticise the confederal unions (Choi and Mattoni, Reference Choi and Mattoni2010; Pilati and Perra Reference Pilati and Perra2020), picturing them as actors who serve only their interests and members at the expense of the rest of society. In the absence of a privileged institutional position guaranteeing resources and influence over the policy-making process, rather than ‘competition’ and adversarial relationship, trade unions need the support and cooperation of social movements and/or other organisations outside their rank-and-file to restore their influence (Ibsen and Tapia, Reference Ibsen and Tapia2017). It seems likely that in this situation, traditionally pro-insider trade unions will campaign for pro-outsider proposals to get closer to these actors and secure their own political legitimacy.

To sum up, we claim that the combined challenges (to established institutional resources of trade unions and to their legitimacy as social actors) constitute a relevant incentive to modify well-entrenched positions and extend their claims beyond traditional demands. To determine whether these mechanisms are able to explain trade union preferences in the social policy arena, we shall describe the political process leading the Italian and Argentinian trade unions to modify their traditional claims and to champion policy measures in favour of the outsiders.

3. Trade Unions and the Traditional Pro-Insiders Orientation of the Welfare State in Italy and Argentina

In Italy, the CGIL, along with the other confederal trade unions, contributed to the consolidation of a particular welfare regime supporting the social rights of workers in core economic sectors (in particular, large industrial companies and public employment) (Ferrera et al., Reference Ferrera, Fargion and Jessoula2012). The existence and the lopsided expansion beyond its original scope of the Cassa Integrazione Guadagni (Wage Supplementation Fund, CIG) contribute to explaining trade union choices in the social policy arena (Molina and Rhodes, Reference Molina and Rhodes2007; Sacchi, Reference Sacchi2018). Briefly, the CIG provides the pay of employees affected by suspension of work or shortened hours in specific cases laid down by law. However, and differently from other European countries such as Germany, during the 1960s and 1970s, thanks to particularistic extensions of coverage and the introduction of a special scheme of the CIG, short-time work schemes in Italy were in effect turned into a functional equivalent of a very generous unemployment benefit targeted exclusively to certain categories of workers (Picot, Reference Picot2012; Sacchi et al., Reference Sacchi, Pancaldi and Arisi2011). At the same time, the ordinary unemployment benefit scheme remained comparatively underdeveloped and a pro-outsider minimum income scheme was never introduced; as a result, many outsiders could not rely on any kind of income protection (Jessoula and Alti, Reference Jessoula, Alti and Palier2010).

Relevantly, the CIG gave Italian trade unions a crucial role in the management of labour market arrangements (Regalia and Regini, Reference Regalia, Regini, Ferner and Hyman1998). Payments are granted to groups of workers after an initial request by the employer, consultation with and active support of the unions and approval by different government bodies (from local government to the Ministry of Labour). This procedure, beyond allowing trade unions to claim credit for CIG payments, guaranteed trade union influence over labour market policy and opened the possibility to enter into opaque political exchange dynamics with employers and public authorities (Regalia and Regini, Reference Regalia and Regini2018), thus creating vested interests in its maintenance (Picot, Reference Picot2012). Indeed, in the following decades, trade union opposition towards the introduction of a pro-outsider minimum income scheme is also explained by their fear that this benefit would at least partially replace the existing (largely pro-insider) income protection system, especially the CIG (Natili, Reference Natili2019, p. 73).

Trade unions contributed to building a welfare system developed according to an occupational Bismarckian model in Argentina as well. Called a ‘pioneer’ country by Mesa-Lago (Reference Mesa-Lago1978) because of the early introduction of social insurance schemes, the progressive inclusion of different categories of workers in segmented and occupationally stratified social insurance programmes in the 1970s had already guaranteed an almost universal coverage of ‘insiders’ workers especially in the fields of pensions and health care. At the same time, the absence of non-contributory income protection benefits (with the exception of social pensions, which were nonetheless residual) left important social groups, such as informal workers and the unemployed, outside the protective boundaries of the welfare state.

The main Argentinian trade union, the CGT, contributed to shaping the original configuration of this type of social protection system (Atzeni and Ghigliani, Reference Atzeni, Ghigliani and Phelan2009; Haggard and Kaufman, Reference Haggard and Kaufman2008), although workers’ representatives in Latin America were considerably less powerful than European workers’ organisations (Huber and Stephens, Reference Huber and Stephens2012). This trade union is frequently called ‘Peronist’, a word that, rather than being an ideology, denotes the state-employer domination over organised labour and a strong relationship with Peronist parties (Levitsky, Reference Levitsky2003; Levitsky and Murillo, Reference Levitsky and Murillo2005). It originally included formal workers from core economic sectors, such as construction, metalworking, transportation and services. Informal workers were excluded a priori, while self-employed and unemployed workers were little represented.

CGT choices and preferences have been historically influenced by the operation of the obras sociales, that is, social insurance funds financed by employers and formal workers and run by the trade unions. Through them, unions provide workers with multiple services (including professional education, housing schemes, personal loans, recreation centres, tourism services, etc.) and most relevantly, health care. Being one of the pillars of the country’s health and social security system, obras sociales constitute a significant source of legitimation and power in political exchanges with public authorities (Atzeni and Ghigliani, Reference Atzeni, Ghigliani and Phelan2009). Furthermore, their management constitutes a vital resource for the trade union because their funding largely depends on government reimbursement. Consequently, alongside wage increases, the maintenance of the obras sociales has historically been the main priority for the CGT, rather than expanding the welfare state to protect informal workers and the unemployed (Etchemendy and Collier, Reference Etchemendy and Collier2007; Levitsky and Murillo, Reference Levitsky and Murillo2005).

4. Trade Unions and Welfare State Retrenchment

The institutionalisation of specific welfare arrangements and the organisational interests outlined above shaped trade union reactions to a changing political economy context and to the ‘neoliberal’ turn of the 1980s. With President Carlos Menem’s two terms in office (1989–1994; 1994–1999), Argentina underwent a process of economic restructuration based on neoliberal principles, including the convertibility of the currency to stabilise inflation (i.e. setting the correspondence of one peso to one dollar), while retrenchment occurred in social policy. In particular, pension and healthcare reforms were introduced. However, in both cases the government was obliged to make some concessions to labour organisations (Huber and Stephens, Reference Huber and Stephens2012). Overall, in these policy fields unions were able to defend their status quo – i.e. their role in the management of the obras sociales against the competition of private plans (Niedzwiecki, Reference Niedzwiecki2014). Similarly, guaranteeing the viability of obras sociales became the object of exchange in labour market reforms: for example, it allowed reform of the labour code, with the introduction of some important measures in terms of job flexibility, while leaving the CGT’s organisational resources untouched (Madrid, Reference Madrid2003). In other words, the CGT did not mobilise against the retrenchment of public welfare provisions, and the maintenance of the obras sociales played a significant role in defining the unions’ strategy (Etchemendy and Collier, Reference Etchemendy and Collier2007). Furthermore, the CGT did not push for the introduction of any measure that targeted outsiders (Levitsky, Reference Levitsky2003). Consequently, in this phase, few policies were introduced to counteract the social consequences of these reforms, especially the rise of unemployment and informal employment.

Italy at the beginning of the 1990s also experienced a crisis that was both economic and political. Under the impact of political scandals, the party system disintegrated, while from 1992 until 1995 a period of intense exchange rate instability led to a phase of economic uncertainty and political turmoil, inducing the government to introduce a series of harsh fiscal stabilisation measures (Baccaro and Lim, Reference Baccaro and Lim2007). In this and the following recovery phase, the trade unions performed a crucial role because they were able to negotiate the content of crucial welfare reforms with the governments in office (Molina and Rhodes, Reference Molina and Rhodes2007; Regalia and Regini, Reference Regalia, Regini, Ferner and Hyman1998). In this phase, Italian trade unions used their role in the negotiations for welfare reforms primarily to protect the narrow rights of their constituency (Culpepper and Regan, Reference Culpepper and Regan2014; Simoni, Reference Simoni, Mammone and Veltri2010). In the pension field, the ‘Dini reform’ (Law n. 335/1995), resulting from concertation between a ‘technical’ government and the trade unions, introduced extremely long phasing-in periods for the implementation of the new notional defined contribution system, which basically guaranteed safeguard of the acquired rights of older workers and retirees, i.e. the core trade union membership (Jessoula, Reference Jessoula2009). Similarly, in the area of employment policy, in 1996 the tripartite agreement signed with the new centre-left coalition, later transposed into the ‘Treu reform’, triggered a shift towards a more flexible and deregulated labour market (Berton et al., Reference Berton, Ricchiardi and Sacchi2012). As in many other European countries, the flexibilisation of the labour market was ‘at the margin’; it concerned essentially the newly employed, while dependent workers were not affected by the reform. Furthermore, it was not really accompanied by investments in the security side of the flexicurity triangle (Jessoula and Alti, 2010; Berton et al., Reference Berton, Ricchiardi and Sacchi2012): the income maintenance system was not reformed, and trade unions did not push for measures that would have clearly benefitted labour market outsiders, such as a minimum income scheme (Durazzi, Reference Durazzi2017; Natili, Reference Natili2019).

Thus, the social rights of the labour market outsiders have not scored high on the CGIL’s agenda, which has followed the strategy of negotiating for its members rather than mobilising new groups. Over time, this has seriously undermined the legitimacy of trade unions, especially among younger cohorts (Culpepper and Regan, Reference Culpepper and Regan2014), resulting in declining union membershipFootnote ² and even in the creation of new groups in Italian cities, such as San Precario, which, possessing little confidence in unions, organises protests and provides free legal advice to non-standard workers. This, as outlined below, will be relevant to explaining shifting trade union positions in the following decade. Thus, neither in Argentina nor in Italy did crises and welfare retrenchment during the 1990s lead to a strategic reconfiguration of trade union social policy preferences. In what follows, we will outline the reasons that this was the case with the two major crises that hit these countries in 2001 and 2008, respectively.

5. Trade Union Support for Pro-Outsiders Non-Contributory Benefits in Argentina and Italy

Both in Argentina and Italy, trade unions reacted not only defensively to the respective crises, their progressive marginalisation and the emergence of new challengers. In Argentina, the emergence of a second union pushed the CGT to counteract the initiatives carried out by the CTA. Though the CGT did not officially contribute to the FreNaPo, internal tensions peaked, leading a dissident internal faction to support many of the CTA initiatives. Furthermore, the partial loss of legitimacy and the pervasive presence of the CTA had the combined effect of reorienting the CGT’s preferences for outsiders, both during the crisis and in its aftermath. At the end of 2001, in fact, the CGT reacted to the policy proposal of the CTA by asking for the introduction of an unemployment benefit very similar to the one proposed by the FreNaPo, which included both cash transfer and training to aid the unemployed to be reinserted in the labour market. However, a few days later, the government fell, and the Argentinian breakdown prevented any further advancement.

The newly elected president, Eduardo Duhalde (2002–2003), reacting to the crisis, set up a Dialogo Social (Social Dialogue) with the purpose of unifying all social actors. Contrary to the CTA, which adopted a strategy based on mobilisation and the formation of social coalitions, the CGT’s response was more institutional, promoting pro-outsider measures through the parliamentary arena. Under the continuous pressures of social movements and the more institutional pressure of the CGT, the president took the initiative and introduced new programmes (Garay, Reference Garay2017). In particular, the PJJHD, or Plan Jefas y Jefes de Hogares Desocupados (Plan for Heads of Unemployed Households) was established; this was a non-contributory benefit, targeting households with unemployed members, conditional on participation in job-search activities. Despite opposing the neoliberal government and criticising this measure as insufficient, the CGT supported the PJJHD from a ‘philosophical and social point of view’ (Interview 9).

When the Peronist Nestor Kirchner (2003–2007) became president, profound changes occurred in the relationship between the government and trade unions. The competition between the two unions exacerbated. This was also due to the political weakness of the new president; Nestor Kirchner was elected with only 22% of votes, and he needed a strong ally to govern the country. Kirchner’s government initiated a dialogue with some sectors of the CTA with the purpose of reducing mobilisation, but the CGT was soon identified as an ally, having won the competition with the other labour organisation (Armelino, Reference Armelino2011).

It was in this phase that important changes occurred in the social policy platform of the main labour organisation. The CGT, besides regaining its political strength by restoring collective bargaining in favour of registered workers (Etchemendy and Collier, Reference Etchemendy and Collier2007), began actively to advocate for some pro-outsider policies. In the pension field, the Ley de la Jubilación Anticipada (Early Retirement Law), which was considered the measure that ushered in a new era of inclusive pension reforms, was proposed in 2004 by deputies close to the CGT (Interview 9). However, the most significant measure to include outsiders in the pension system was the Moratoria. This measure enabled workers, regardless of the years of paid contributions, to access the contributory pension system because the state paid in advance. Since there was no limit on the contributions that it was possible to anticipate, this policy clearly targeted outsiders. Along with social movements, CGT members supported this pro-outsider benefit (Garay, Reference Garay2017, p. 207) and contributed to its approval in the congress (Interviews 1 - 2 - 9).

This gradual process of social policy expansion continued when Cristina Kirchner became President for the first time, and the Argentinian economic and social context had improved. In 2008, unemployment was around 7%, and mobilisation was also significantly lower. Yet President Kirchner introduced important social policy changes. In particular, in 2009 the AUH was launched. For the first time in Argentina, a non-contributory conditional cash transfer directed to the children of unemployed and informal workers who did not earn a minimum wage was established. It was thus aimed exclusively at covering outsiders because insiders continued to receive contributory family allowances. Significantly, the CGT supported the introduction of the AUH, although it was also financed by funds (the Fondo de Garantía y Sustentabilidad del Régimen Previsional Público de Reparto) mostly devoted to formal workers (Lo Vuolo, Reference Lo Vuolo and Lo Vuolo2013). In a nutshell, a strong leftist government allied with a traditionally pro-insider trade union introduced a social policy that clearly benefitted outsiders. At the same time, the CGT also pushed for the actualisation of other family allowances directed to formal workers.Footnote ⁶

As regards the Italian case, the CGIL also reacted proactively and not just defensively to a changing political environment (Regalia and Regini, Reference Regalia and Regini2018) characterised by political marginalisation and the emergence of challengers. The three main confederations (CGIL, CISL and UIL) resumed their road towards unity and were able to negotiate with a centre-left government expansionary pro-outsider measures. In September 2016, the ‘Poletti-Renzi pension reform’ was introduced, which, although with many limitations, aimed to strengthen equity among different categories of workers, thereby facilitating access to old-age and early retirement pensions for workers with fragmented careers, and reducing the contribution rate for the so-called ‘para-subordinate’ (i.e. non-standard) workers (Jessoula, Reference Jessoula2017). On this occasion, the centre-left government also conceded to trade union pressure to ensure their support in view of the Italian constitutional referendum. More relevantly, trade unions opened up their traditional claims, supporting for the first-time anti-poverty campaigns (Interviews 12 – 14 – 15). In November 2013, on the initiative of the ACLI (Christian Associations of Italian Workers) and Caritas, a wide pro-poor advocacy coalition, the Alliance Against Poverty in Italy was formed, which included the three main Italian trade unions and seventeen major NGOs and charities,Footnote ⁷ marking the first time they actively advocated for the introduction of a national minimum income scheme. Due to both strengthened advocacy and political competition dynamics between the centre-left coalition in government and the Five Star Movement, after years of apathy, the visibility of an anti-poverty pro-outsider minimum income scheme in the Italian political debate grew significantly (Natili, Reference Natili2019). A social safety net was finally introduced in late 2017 in Italy, the Inclusion Income scheme. This followed negotiations between the Paolo Gentiloni Democratic Party government and the Alliance Against Poverty, leading to the joint signature of a memorandum that testifies how the Alliance Against Poverty was a crucial actor in drafting the new measure. In this phase, the CGIL, along with the other confederal trade unions, ‘played a critical role in gaining political traction for the Alliance’s proposal’ (Durazzi et al., Reference Durazzi, Fleckenstein and Lee2018, p. 216), being the actor within the Alliance that was more resourceful and experienced in pressuring the political arena (Interviews 12 and 14).

Support for a minimum income was not the only change in the bargaining platform of Italian trade unions. In particular, in 2016 the CGIL launched a campaign for a ‘Charter of Universal Labour Rights’, invoking the granting of social rights to all workers independently of the type of employment contract, after being able to obtain over one million signatures to support the measure. In April 2017, it also proposed the introduction of the pensione di garanzia (pension guarantee), whose main aim is to ensure pension adequacy for young precarious workers with discontinuous careers (Raitano, Reference Raitano2017). These initiatives had limited results, also because the CGIL did not come together with the other trade unions and/or other movements on these issues and remained isolated. Notwithstanding, these initiatives clearly outline that, with respect to the previous decades, in the late 2010s the CGIL’s demands significantly changed, and they began to emphasise the need to expand the borders of the Italian social protection system to protect those furthest away from the labour market.

6. Explaining Changing Trade Unions Social Policy Preferences in Italy and Argentina

This paper has aimed to show the reasons inducing trade unions to adopt pro-outsider social policies when facing a dilemma regarding which workers to represent in the distributive struggle generated by an insider-based welfare state structure. Our empirical reconstructions of the Argentinian and Italian cases provide theoretically relevant insights in this regard.

Clearly, in Argentina the institutionalization and consolidation of democratic political dynamics was crucial, as they provided the conditions for the emergence of new socio-political actors, for political exchange dynamics between governments and interest groups and ultimately for welfare expansions (Huber and Stephens, Reference Huber and Stephens2012). Under democratic rule, crises and external challenges constituted in both cases an important trigger of change in the trade unions’ strategies. The economic depression that culminated with the 2001 crisis in Argentina and the onset of the Great Recession in Italy engendered two mechanisms that played a significant role in explaining this outcome: trade unions’ crucial organisational and political resources were questioned, and new socio-political challengers emerged.

However, these factors played out quite differently in the two cases. In Argentina, between 1999 and 2002, governments struck many blows to the power of trade unions, but the CGT was able to mobilise efficiently, in particular against government efforts to question its monopoly in the organisation of the obras sociales. However, this focus on organisational resources had a significant cost: the compliance of the CGT with some neoliberal reforms to defend resources considered vital to the organisation’s survival led to the formation of a new trade union, the CTA. The latter, to compete with the former and to ensure itself a ‘space of action’, mobilised the increasingly numerous outsiders, and introduced new demands in the political arena through the formation of the FreNaPo. This new mobilisation strategy finally resulted in greater support for pro-outsider policies in both trade unions. In fact, along with the economic crisis, the emergence of a new labour organisation constituted a challenge also for the CGT, which reacted by broadening its requests.

In the Italian case, the onset of the most important economic crisis since the end of World War II constituted a watershed for the labour movement, because its traditional institutional resources were challenged even more profoundly than in the Argentinian case. In fact, the Great Recession led to the simultaneous demise of the role of trade unions in the management of labour market arrangements through the CIG, and the breakup of the traditional alliance with the main party of the centre-left, the Democratic Party. Also, trade union political legitimacy was questioned during the crisis. While labour organisations mobilised reluctantly, other social groups and political movements reacted against austerity and supported the outsiders by advocating for the introduction of a guaranteed minimum income. Furthermore, there arose a new political party, the Five Star Movement, that openly claimed to have no relations with the traditional labour movement. It wanted to represent the ‘forgotten’ of the previous decades, partly by supporting the introduction of a clearly pro-outsider social policy benefit, the citizenship income.

This ‘perfect storm’ led, similarly to the Argentinian case, to a change of strategy in the social policy arena, to regain visibility and influence over the policy-making process. This was particularly evident in the case of the CGIL. Trade unions consented to participate in the Alliance Against Poverty; in the few occasions the centre-left government was willing, it negotiated the adoption of pro-outsider measures. In the end, a traditionally pro-insider social policy platform gave way to more pro-outsider-oriented social policy proposals, especially in the field of income protection benefits for the working-age population.