For the pessimists, two distinct, albeit interrelated, changes associated with globalization have had a profoundly negative impact on this social group. First, the emergence of truly global multinational corporations, the segmentation of production, and the just-in-time production process have combined to create an increasingly integrated global economy, thus heightening competition between workers in different locales. Corporations can now use the threat of moving production elsewhere, thereby undermining labor’s bargaining power.20 Workers across cases have been caught in a relentless “race to the bottom” of lower wages, lower social spending, and less worker-friendly market regulations.21 Second, many analysts contend that globalization processes have been weakening state sovereignty, thus reducing the scope of economic decision making available to national governments. This has led to the convergence of macroeconomic policies that favor business over labor interests. The pressure toward policy convergence is especially acute in developing countries that have been saddled with foreign debt, which further reduces state decision making autonomy.22 Many students of Eastern European transitions are among the most pessimistic about organized labor’s ability to continue playing a significant role in the contemporary era.23 Among the telling signs of labor’s weakening in this view are dwindling union membership rolls, the decline in the number of labor disputes and strikes, the move away from manufacturing and the growth of the service sector, and the shrinking of enterprise size.24 As posited by the pessimists, we should expect to see a uniform lack of organized labor’s influence on policy making. Yet there is great variation in the four cases examined in this study.
Not all studies of how organized labor has responded to and been affected by the processes of globalization and marketization have been so pessimistic. A number of analyses suggest that social groups, including organized labor, have reacted to these changes in more complex ways. Such studies maintain that the structure of domestic-level institutions and political struggles at the local level continue to influence the shape of macroeconomic, regulatory, tax, and other policies.25
Various institutional factors emerge from these studies as playing a particularly significant role in shaping labor’s response to economic restructuring. For instance, Murillo argues that the ability of labor organizations to affect policy reform varies both across countries and across sectors within countries, depending on “incentives created by partisan loyalties, partisan competition and union competition.”26 Levitsky and Way note that “the strength of the government party, level of union competition, organizational overlap and autonomy of union leaders from party-controlled resources and the rank and file” accounts for government-labor cooperation.27 In a similar vein, Bellin argues that key to understanding labor response is its dependence, both political and financial, on the state as well as the degree of organized labor’s aristocratic position within broader society.28 Burgess sees the explanation for the variation in union support for government policy in the ability of affiliated party leaders to punish disloyal unionists and the degree to which there is a strategic contradiction between loyalty to the party and loyalty to workers among union leaders and locates the sources of variation in union responses in the costs imposed on them by political leadership. Depending on the distribution of these costs, union leaders may choose exit, voice, or loyalty strategies.29 Alexander, by contrast, points to workplace institutions as the crucial explanatory variable of effective labor mobilization when confronted by privatization.30 Finally, Pripstein Posusney argues that workers will oppose government policies when they perceive them as breaking the social contract.31
The present study builds on the insights of these recent works on organized labor responses to economic restructuring, which point us in the direction of domestic-level institutions as key variables to understanding how and with what consequences for state-society relationships international economic pressures are translated into the local context. Pripstein Posusney’s analysis alerts us to the central fact that the existence of corporatist labor institutions should not be equated with organized labor’s inability to shape policies. Studies by Murillo and Burgess provide valuable explanations of particular strategies that organized labor chooses when confronted with market reforms. Murillo goes further and also explores under what conditions these strategies are effective in extracting concessions from the state. However, she sees historical legacies primarily in terms of organized labor’s dependence on the ruling parties and how that dependence shapes union and partisan competition.32 By downplaying other resources that organized labor can draw upon as it seeks to influence policies, this model overestimates the extent to which both kinds of competition weaken labor and lead to “resistance” or “unsuccessful militancy.”33 Polish coal mining unions, for instance, despite high levels of partisan and union competition, retained their ability to affect sectoral restructuring policies. As we shall see, this capacity was a result of resources that organized labor acquired in the pre-reform period.
Furthermore, both Murillo and Burgess limit their analysis to cases where market reforms are initiated by parties with institutional links to organized labor and where the initiation of neoliberal reforms puts strains on these relationships. But in many countries changes in either the regime type or governing party preceded the initiation of market reforms. In this study I explore two questions left unanswered by Burgess and Murillo: First, how does organized labor that used to benefit from a close relationship with a ruling party react to structural adjustment in cases in which the regime has changed? Are these responses different from those of organized labor in which labor-based parties have retained power, and if so how? Second, and more important, are there significant differences in whether organized labor can influence economic reform measures between cases where labor-based parties retained power and where political transitions occurred?
To answer these questions, I emphasize the importance of resources that organized labor can draw upon as it confronts a state undertaking structural reforms. Levitsky, Way, and Bellin note the importance of fiscal autonomy in explaining organized labor’s ability to influence policy reform. In addition to fiscal autonomy from the state I highlight the importance of two other resources in shaping labor’s ability to affect reform policies—legal prerogatives that organized labor had won prior to reform initiation and experiential resources gained from past contentious encounters with the state.
The book is organized as follows: In the following chapter I develop the theoretical framework of the study and explore the linkage between the conflicts over economic restructuring between states and organized labor with the historical patterns of state-labor interaction. Chapter 2 traces the internal dynamics within the Communist parties in Czechoslovakia and Poland from their creation following World War II and the transition to democracy and explores