Why do Austria and the Netherlands, two highly corporatist, coordinated, consensual countries diverge with respect to the involvement of social partners in their Public Employment Service? By comparing and contrasting the competing predictions of the power-resource, employer-centred and social partnership approaches, we identify a key omitted variable that can explain the observed variations: the ability of the social partners to unite on reform positions. We demonstrate that when the social partners are divided, their collective power is reduced and partisan-based policy outcomes become more pronounced. In turn, when the social partners jointly favour a particular outcome, their collective power increases and they can override governmental reform plans, even if the government holds a large legislative majority. These findings highlight the causal importance of power relations between and within the social partners for institutional continuity and change.