Are trade unions in terminal decline?

Introduction

Trade unions are organised groups of workers. Their primary objectives are to improve the pecuniary and non-pecuniary conditions of employment among their workers.

Trade unions exist because an individual worker has very little power to influence decisions that are made about his or her job. By joining together with other workers, there is a better chance of having an influence and giving an opinion.

The origin of trade unions can be traced back, at least, to the craft unions formed in the UK during the 19th century. From then union membership grew constantly almost everywhere, though at a different speed, until the 1970s-1980s. Afterwards, membership into trade unions dropped sharply more or less in every developed country, creating a potential gap between participation and representation workers want and the voice they get at their workplace.

Statistical data, whose results will be later illustrated, show that the decline has been considerable. Nevertheless, it is difficult to predict if the decline is terminal or not. By analyzing the role trade unions play and the causes of their decline I will try to give my opinion in this debate.

First of all, a premise is necessary: great divergence is part of the debate over trade unions. Unions face different organizational problems in different parts of the economy. Furthermore, unionization patterns differ remarkably, both in levels and trends, between Europe and the United States, as well as within European countries. Finally, experts have dissimilar opinions about the future of the negotiating between firms and workers and the measures that should be adopted.

Role of trade unions

Before exploring the reasons that brought on the recent decline of trade unions, it is fundamental to briefly summarize the ways in which these institutions affect the micro- and macro- economy.

Some people view labour unions as forms of monopolies that, while benefiting their own members, impose substantial costs on other members of society. In contrast, others view unions as the major means by which working persons have improved their economic status and as important forces behind great social legislation. The latter approach views union formation as “a (second best) optimal behaviour for risk adverse individuals face to market failures or government intervention” (Checchi & Lucifora, 2002).

As always, I think the truth lies in the middle. I also believe that the mix between these two sides of unionism and the impact of unions on economic and political outcomes depends mainly on the environment in which unions operate.

“What Do Unions Do?” by Richard B. Freeman and James L. Medoff offers a detailed description of the effects unions have on the economy and in the course of my essay I will refer mainly to classifications presented in that textbook.

Data

Data and statistics concerning union density (fraction of members of unions over number of workers) and/or union membership (number of members in the union) show a clear pattern: a rise after the First World War until the 70s, and an almost general decline from the mid-70s up until now (Graph 1). However, it should be noted again that differences frequently occur among countries, sectors, etc.

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Graph 1: Union Density in %, Western Europe 1900-1990

The decline is extremely evident when absolute and relative values are compared. Between 1978 and 1998, general employment increased from 110 to 127 million persons (OECD), whereas union membership decreased from 47 to 39 million. Union density dropped from its post war peak of 42.6% in 1978 to 30.8% in 1998, the lowest level since 1945 (Freeman, 2005).  

Density in the US fell from the 1950s through the mid-2000s to reach a 12.5% overall and 7.9% in the private sector in 2005. Density in the UK rose ...

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