ABSTRACT
Organized labor in Latin America has been a major victim of the debt crisis of the 1980s. This chapter shows that a government faced with a strong and militant union movement had to co-opt that movement or seek to divide and weaken it. The Cruzado Plan was based on a belief that inflation was largely inertial, and that a heterodox shock would dramatically reduce inflationary expectations. While most workers benefited from the Cruzado Plan, a significant number of unions, largely affiliated with the Central Unica dos Trabalhadores, were about to have their contracts renewed, and the sudden wage freeze left them in a disadvantageous position. The chapter focuses on the three large industrial countries of Argentina, Brazil, and Mexico. Throughout the period, there was a widespread perception in Brazil that some form of a social pact would be advantageous.
