This article investigates the drivers of trade union choices in the social policy arena in the age of austerity. Against the background of a political economy literature mostly emphasising trade union support for their stronger constituency – i.e. the ‘insiders’ – the article shows the existence of mechanisms potentially inducing trade unions to broaden their demands. Empirically, the study rests on an in-depth comparative analysis of the political process inducing the two largest trade unions in Argentina and Italy, the CGT and the CGIL, to support ‘pro-outsider’ social policy actively. Besides the comparison of two different geographical areas – though not so different in terms of original welfare state configuration – the main contribution of this article is outlining how the combination of dwindling organizational resources and growing competition from social movements and/or new radical unions leads traditionally insider-oriented unions to reach out to new constituencies and advocate expanded redistributive demands.

The rise of flexible employment in advanced democracies has been predominantly studied in the insider-outsider framework of the dualization literature. However, against the background of rising income inequality, it seems questionable to assume that all labor market insiders are equally affected by flexibilization. This paper explores whether flexibilization increases wage inequality among labor market insiders. I argue that flexibilization exposes insiders to a set of wage risks that are concentrated among low- and middle-income insiders, creating downward wage pressure on those insiders. The empirical analysis, covering 22 democracies between 1985 and 2016, finds that the deregulation of non-standard employment is associated with declining wage shares of low-income and middle-income earners, while top earners benefit. These major distributional shifts imply an important qualification of the dualization literature: rather than pitting insiders against outsiders, flexibilization ‘at the margins’ seems to exacerbate divides among insiders.