When weak governments confront inclusive trade unions: The politics of protecting labour market outsiders in the age of dualization

Abstract

Some European welfare states protect outsiders from economic uncertainty better than others. Conventional theories attribute this either to the material interests of producer groups or the vote-seeking actions of political parties. By contrast, this article focuses on the interaction between trade unions and governments, drawing on empirical experience in Austria and Sweden. High levels of inclusiveness provide trade unions with a powerful interest in protecting outsiders. Governments, however, have moved towards dualistic policy choices, but when weakened by intra-coalitional divisions or a hung parliament, they retain a political incentive to negotiate political deals with trade unions, and this forces them to compensate outsiders for economic uncertainty.