The insider-outsider politics approach conjectures that unions and social-democratic parties safeguard the interests of insiders and neglect outsiders in labour market reforms (e.g., Rueda, 2007). They argue that this divide exists because insiders collude with trade unions and social-democratic parties to safeguard their position. The mechanism is as follows: when governments try to deregulate labour regulations, they face opposition from the unions. Because social democratic parties are afraid of losing the electoral support of insiders, they keep the regulation and welfare generosity for insiders but worsen the position of outsiders. This paper challenges this hypothesis by developing an argument which draws on the recent literature that emphasizes the importance of ideology to understand unions' behaviour (e.g., Vlandas and Benassi, 2015; Durazzi, 2017; Marques and Salavisa, 2017; Doellgast et al., 2018). Furthermore, it highlights the role of radical left parties on this process. The paper argues 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. The party constellation plays an important role for social democratic parties; if social democratic parties fear losing support from left voters due to strong radical left parties, they can be more pro-outsider than in a different context (Schwander, 2018: 11). History is crucial to understand the party system in each country. For instance, a revolutionary transition to democracy is often correlated with a political system where radical left parties are strong. As for unions, this is even more complex. The industrial relations literature makes frequent reference to the fact that unions have different strategic orientations (Crouch, 1993; Hyman, 2001). In some European countries, union confederations were linked to Communist parties and were sometimes the most representative confederation. Their strategic goal was to further develop the class struggle, not to safeguard the positions of insiders. To test this argument, the paper compares two case studies, Portugal and Spain between the mid-1970s and 2017. The two countries share a number of similarities. The industrial relations system is historically characterised by the existence of two rival union confederations (one linked to the communists and the other to the socialists); the party systems have various common characteristics (the left is historically split between a socialist party and other radical left parties); and, finally, reforms were made to labour legislation in both countries. However, unlike Portugal, the Spanish socialists (together with its union confederation) implemented one of the most radical two-tier labour market reforms in Europe. It is argued herein that this is due to the different historical circumstances that shaped the preferences of political parties and unions. As explained in the paper, this influenced the preferences of unions and social- democratic parties because it meant there was a different balance of power of the political parties, on the one hand, and the union confederations, on the other.

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