The insider-outsider politics approach conjectures that unions and social-democratic parties safeguard the interests of insiders and neglect outsiders in labour market reforms. This paper challenges this hypothesis by arguing that the positions taken by these two actors are not always the same. While they may indeed protect insiders, they can also do the opposite. To explain this, the paper argues that (i) when social democratic parties face strong competition from radical left parties, they are more pro-outsider and (ii) as class-oriented unions are less prone to agree with governments, when they are strong unions are less likely to agree with governments to protect insiders. To test the argument, the paper analyses the positions taken by political parties and union confederations during key labour market reforms in Portugal and Spain between 1974 and 2017.

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employment protection legislation,industrial relations,insider-outsider politics,labour market segmentation,social-democratic parties.