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      Clearly, a variety of factors affect the ability of governments to implement privatization programs. The process of company valuation often proves technically difficult and politically challenging; private investors prove less willing to purchase companies offered for sale; and the politically thorny issue of foreign ownership of previously state-owned firms can affect the pace and methods of privatization, as can the global economic climate, to name just a few factors. Nonetheless, drawing on official documents; media accounts; and interviews with policy makers, union leaders, international observers, and local analysts, it is possible to assess the degree to which organized labor’s actions influenced and shaped the dynamics of public sector reform implementation.

      While unions in all four cases examined here wanted to see public sector restructuring programs modified, they did not always seek to block reform measures. In fact, initially unions were fairly supportive of aspects of the economic reform programs. In Mexico, for example, unions were concerned about the high rate of inflation and believed that addressing this problem would benefit their rank-and-file members. Polish unions, disillusioned with the centrally planned economy and the inefficiencies of state firms, were initially eager to see them reformed. Among Egyptian labor leaders, despite concerns about threats to job security that public sector restructuring posed, there was a willingness to accept market mechanisms provided that their introduction was accompanied by other changes, for example, the creation of unemployment insurance and job-retraining programs similar to those in existence in Western Europe.

      Polish unions pursued a wide variety of strategies in their efforts to modify government privatization design proposals. They made alliances with parliamentarians and presented an alternative privatization program for consideration at the same time as the government sent its proposal to the parliament. They also appealed to the public for support. The Czech unions, by contrast, concentrated on lobbying parliamentarians and presenting alternative proposals, while largely eschewing strategies aimed at attracting broader popular support for their cause. Mexican and Egyptian unions, functioning within an authoritarian environment, pursued very different strategies, concentrated primarily on the direct lobbying of government officials as the design of the privatization program was being considered.

      During the implementation phase, Polish unions again pursued a variety of strategies. In the first years of reform, most unions and workers’ councils supported sales of their companies, although they substantially modified the types of privatization methods employed. Later, as economic conditions deteriorated, unions moved more firmly to oppose the implementation of sales and fought for additional concessions. Czech unions looked to strikes and demonstrations as a means of putting their demands on the government agenda. Mexican unions, taking another approach, engaged in strategies to modify the program. While the official labor confederation concentrated primarily on lobbying government officials and occasionally staging demonstrations, the independent unions turned to strikes and protest actions. In Egypt, factory-level unions also sought to influence the implementation of the privatization program at particular companies through staging protests and strikes, while the confederation leadership concentrated on lobbying government officials and negotiating legislation whose passage was directly tied to progress in the implementation of the divestiture plan.

Organized labor is, however, not a unitary actor. Union leadership and the rank and file often have different preferences during times of economic transition. This can create profound tensions within labor organizations. Such differences exist both in democratic and authoritarian contexts and can have various consequences. In Poland, for instance, the differences between the leadership of Solidarity and the rank and file resulted in the union’s varying and sometimes contradictory responses to economic restructuring and over time contributed to the decline in its membership.¹ Likewise in Egypt the policies pursued by the leadership of the ETUC created much opposition among the rank and file. The lack of internal accountability within the confederation and the inability of the rank and file to elect different representatives pushed them to engage in protest actions that confederation leaders did not sanction and often opposed. These actions, while not supported by the ETUC, nonetheless gave the organization a useful chip in bargaining and negotiating with the regime. Similar tensions between the rank and file and the official unions’ leadership were also evident in Mexico, where the lower levels of the union hierarchy were prepared to be more vocal and active in their opposition to the proposed reform measures than were those in the CTM leadership. Chapters 4, 5, and 6 will explore in greater detail how these internal union dynamics shaped labor response to the privatization program.

It is this initial complexity of labor response to market reforms that was underestimated by early students of restructuring efforts. This divergence of expected and actual response stems from a number of sources. First, as Kingstone points out in his analysis of the role of Brazilian business in the country’s economic restructuring program, “Economic crisis that usually precedes major reform programs can radically alter how business and other interest groups view their stakes in reform. Economic crisis leaves business much more open to policy innovation because they perceive the status quo as untenable.”² Second, deep crisis can also make people more willing to take risks in anticipation of potential, if not guaranteed, payoffs.³ Third, periods of reform are characterized by deep uncertainty. It is often difficult to anticipate who the winners of the reforms will be.⁴ The difficulty of identifying winners of reforms means that those who are likely to benefit from the changes cannot mobilize in support of these changes and provide valuable coalition partners to the reforming political elites. However, the identity of losers is less ambiguous, and they are therefore expected to mobilize in order to prevent those reform measures that are likely to cause deterioration in their economic position.⁵ One of the reasons why labor was expected to block reform efforts was that organized labor was seen as one of the likely losers of the reforms.

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