The Voices of Constituencies Matter: Legislative and Government Participation of Trade Unions in Wage Policymaking. The Cases of Chile and Uruguay

Why have the centre-left coalitions of two countries like Chile and Uruguay, had different impacts on wage bargaining? This paper offers a political economy approach to understanding the adoption of wage policy and the resulting policy consequences. This work argues that two elements define wage policy outcomes. First, I look at whether government coalitions are embedded with trade unions agendas. Secondly, I argue that legislative participation of trade unions matters for ensuring the implementation of active wage policy. To test these arguments, I analyze the cases of Chile and Uruguay. In the case of Chile, a lower participation of trade unions in left-wing government coalitions limited collective bargaining reforms attempts. Consequently, minimum wages were used as active policies, benefiting low income workers but with no impact on income distribution. On the contrary, in Uruguay, with Frente Amplio in power, a coalition with strong linkage to trade union agendas, both minimum wages and collective bargaining were used actively in a context of a legislative majority with a high presence of trade union-linked legislators. I use a combination of methods to test these arguments. Accordingly, I include electoral and legislative data, semi-structured elite interviews and process tracing to analyze how relevant actors bargained wage policies and their connection to other social policies. This research work contribution is threefold. To the industrial relations literature, it offers a political economy approach for a better understanding of the connections of minimum wages and collective bargaining over time. Second, it improves the existing political economy literature by focusing on the question of the importance of how the embeddedness of constituency has an impact on the expansion of socioeconomic policy. Finally, this work highlights the significance of cross-sectoral action of socioeconomic policies and the role of alternative actors in welfare provision.