The study draws on evidence from South Asia to explore how union partisan ties condition industrial protest in the context of rapid economic change. It argues that unions controlled by major political parties respond to the economic challenges of the postreform period by facilitating institutionalized grievance resolution and encouraging restraint in the collective bargaining arena. By contrast, politically independent unions and those controlled by small parties are more likely to ratchet up militancy and engage in extreme or violent forms of protest. The difference between the protest behavior of major party unions and other types of unions is explained by the fact that major political parties are encompassing organizations that internalize the externalities associated with the protest of their affiliated unions. Using original survey data from four regions in South Asia, the study shows that party encompassment is a better predictor of worker protest than other features of the affiliated party or the union, including whether the party is in or out of power, the ideological orientation of the party, or the degree of union encompassment. The analysis has implications for the policy debate over whether successful economic reform is contingent upon the political exclusion or repression of organized labor.