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Under what conditions can unions successfully regulate precarious employment? We compare the divergent trajectories of collective bargaining on agency work in the Italian and German metal sectors from the late 1990s. We explain the differences by the interaction between trade unions’ institutional and associational power resources, mediated by employers’ divide-and-rule strategies and by union strategies to (re)build a unitary front. In both countries, the liberalization of agency work allowed employers to exploit labour divides, undermining unions’ associational power and preventing labour from negotiating effectively. However, while Italian unions remained ‘trapped’ in the vicious circle between weak legislation and fragmented labour, German unions were able to overcome their internal divides. The different degree of success depended on the nature of the divides within the labour movements.

Explaining divergent bargaining outcomes for agency workers: The role of labour divides and labour market reforms