On October 17, 1945, three hundred thousand workers marched into downtown Buenos Aires to demand the release of imprisoned Colonel Juan Perón. In the elections of February 1946, the union-organized Labor Party led the political coalition that brought Perón to the presidency. Most workers voted for Perón and taught their children to be Peronist, creating one of the strongest partisan loyalties in Latin America. After all, Perón and the Peronist unions had changed their lives by providing better wages and labor benefits, social security, and even paid vacations in union resorts. Because the labor benefits compensated unions for their previous frustration in dealing with indifferent employers and hostile governments, they identified with Peronism and served as Peronist political machines. In addition to turning unions into key players in the political system, Peronism promoted import substitution industrialization and state-led development, which further reinforced unionization and labor bargaining power.

In 1989, a Peronist candidate, Carlos Menem won the presidential election. During his populist electoral campaign, Menem had promised wage hikes and social justice and threatened not to pay the external debt. However, after his inauguration, he delivered austerity followed by trade liberalization, privatization, and adjustment of the public sector.