trade union membership in uk

7/30/2019 Trade Union Membership in UK

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THE RATIONALITIES OF DECLINE TRADE UNION

MEMBERSHIP IN UK

Abstract:

Trade unions are organizations of workers that seek through collective bargaining

with employers to protect and improve the real incomes of their members; to provide

or improve job security; and to lobby for better working conditions. The choice of

workers to be a member of the trade union is to some extent depends on employers

attitude and behaviour towards unionization. The greater the extent to which an

employer is prepared to recognize a union, the more likely workers to be unionized.

This attitude and behaviour in turn may be affected by government policies andstructural changes in employment in the British labour market such as from

manufacturing to services, from manual to non-manual employment, and from full

time to part time work. This paper tries to discuss initially the reasons why trade

union membership declined. This then followed by a discussion on the impact of

membership decline on trade unions collective bargaining power, financial

wellbeing, workplace recognition, union authority to regulate workplace employment

relationship and training.

Key Words: Trade union, Trade union membership, Multi-unionism, collective

bargaining, Trade union density.

1.0 Introduction

Trade unions are organizations of workers that seek through collective bargaining

with employers to protect and improve the real incomes of their members; to provide

or improve job security; and to lobby for better working conditions. The main

functions of trade unions are to represent their members in an organization and

negotiate with employers on behalf of their members (Freeman and Medoff, 1984).

The functionality and power of trade unions, among other things, depends on their

size in number. Over the last three decades, trade unions memberships have been

falling across most advanced economies. Union membership in UK was 13.2 million

in 1979 and the figure now stands at 7.7 million (Achur, 2010). In Britain, between

1999 and 2009, trade union membership density on average fell by 3.5 and 4.0

percentages in the public and services sectors, respectively (Alex and John, 2010).

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This paper tries to discuss initially the reasons why trade union membership declined.

This then followed by a discussion on the impact of membership decline on trade

unions collective bargaining power, financial wellbeing, workplace recognition,

union authority to regulate workplace employment relationship and training.

2.0 Reasons for Decline in Trade Union Membership

The workplace union representation and collective bargaining are largely voluntary in

Britain. Over the last two decades, there has been a considerable reduction in the

extent of union involvement in workplace regulation (Millward, et al., 2000).

Membership density and recognition for collective barging have fallen by a half sincethe mid 1980s, with just 15 percent of private sector employees now belonging to

unions and 18 percent having their pay set by a collective agreement (Achur, 2010).

The debate over the determinants of trade union membership has gone through a

number of significant developments since Bains et al.s seminal structuralism

thesis of the mid-1970s. Researches so far done on this issue have identified the

following factors as determinant of trade union members decline:

The business Cycle and the change in the composition of workforces and jobs.

Bain and Elsheikh (1976), Bain and Prices (1983), Metcalf (2003), Disney

(1990); Hollinshead, et al., (2003).

The stance of the state and the attitude of employers. Bain and Elsheikh

(1976), Bain and Prices (1983), Metcalf (2003).

The strategic approach and structure of the unions. Metcalf (2003).

2.1 The Business CycleThe business cyclical factors consist of wage growth, inflation and unemployment.

Bain and Price (1983) hypothesized that there is a relationship between the wage rise

in relations to inflation and the tendency to join unions. They suggested that workers

would like to join unions in the periods where the inflation is higher than the increase

in wages in attempt to defend or improve living standards. However, high and rapid

rising of unemployment level have a significant negative impact on union growth,

since unemployed people have little incentive to remain in membership (Bain andPrice, 1983, Disney, 1990). .

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A similar research conducted by Carruth and Disney (1988) using U.K data suggest

that in the short run, union membership increases in line with increase in employment

and prices rises. In the long run, there is an inverse relationship between real wage

and trade union membership. An increase in real wage is accompanied by a decrease

in trade union membership. This explanation reflects the situation in 1980s where a

combination of rising unemployment and high real wage resulted in a decline in trade

union membership (Hollinshead, et al., 2003). The business cycle framework or

reasoning, however, doesnt apply for the situation since 1993 which has been

characterized by a fall in unemployment and union density (Metcalf, 2003)

2.2 Changes in the Composition of Workforces and Jobs

Many scholars have put forward these issues as key factor that explain for declining

membership and density in Britain (Bain and Price, 1983; Disney, 1990). They argue

that the shift of the economys dependency from highly unionized sectors like

manufacturing, mining, utilities and the public sector to a service and private sectors,

and the rise of the female workforce have negatively affect trade union membership.

The increase of density among women in the services industry imposes difficulty for

trade unions to organize themselves (Disney, 1990; Hollinshead, et al., 2003). Metcalf

(2003:5) asserts, however, that the change in the composition of the workforce and

employment played a fairly modest role in accounting for the fall in density and

membership in 1980s and 1990s. Evidence from the British Social Attitude Survey

confirms that of 5.5 million losses in membership, in between 1 million and 1.7

million attribute this factor.

2.3. The State Policy and Activities

Metcalf (2003) argue that the state can influence union membership directly and

indirectly. Directly: through its legislation that may hinder or promote union security.

Indirectly: through creating an environment in which employers and union operates.

In 1970s Labour legislation substantially strengthened unionism; and in 1980s

Thatcher legislation shifted the legal balance against unions. Legal reforms

undertaken by the Conservatives created more difficult for unions to organize, to take

industrial action or to form a closed shop (Hollinshead, et al., 2003).

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The magnitude escalated over the last two decades. The state did what it could to

undermine collectivism through successive trenches of industrial relations legislation

which permitted a union to be sued, privatization, contracting-out and the introduction

of performance related pay for its own employees. These state policies and activities

have encouraged for employers to oppose unionization and increased the cost for

trade unions to organize the members (Metcalf, 2003; Hollinshead, et al., 2003,

University of Leicester, 2007).

2.4. The Employers Attitude toward Trade Union

The choice of workers to be a member of the trade union is to some extent depends on

employers attitude and behaviour towards unionization. The greater the extent to

which an employer is prepared to recognize a union, the more likely workers to be

unionized. This attitude and behaviour in turn may be affected by government policies

and structural changes in employment in the British labour market such as from

manufacturing to services, from manual to non-manual employment, and from full

time to part time work (Disney et al., 1995).

In late 1960s and early 1970s, the British legislative framework for union

recognition was favourable. The passing of Health and Safety at Work, EmploymentProtection, and Trade Union and Labour Relations Acts avowed the principles of

union recognition and encouraged employers along this path. In the 1980s industrial

relations legislation, however, impaired union security and encourages employers not

to recognize trade unions (Freeman & Pelletier, 1990).

2.5. The Structures and Policies of the Trade Unions

Disney (1990) argues that trade union policies, structure and strategy affect tradeunion density. Trade union leaders have grate role in the recruitment of members, and

in barging relationship they build with employers and government. Metcalf (2003)

suggest that the unions policies in those regards and structure multifaceted the

problems of a hostile state, resentment from employers and the growth of

individualism. He argued that the structural changes to decentralization and multi-

unionism (i.e. more than one union in the workplace) had weakened the collective

bargaining power of the employees, increased strike record and lowered financial

performance than in similar workplace with just one union.

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Multi-unionism may be a problematic for both employers and trade union. From

employers perspective the existence of multi-unions means dealing multiple

negotiation which increase both time and cost. From the trade union perspective,

inter-union conflict can undermine bargaining tactics and solidarity, or encourage

competition and divisions within an industry and organization (Hollinshead, et al.,

2003).

3.0 The Impact of Decline in Trade Union Membership

The decline in trade unions membership and density might have effect on:

1. their collective bargaining and wage premium

2. their power in the industrial and political setting of the country3. their financial wellbeing

4. Job training and other working conditions.

3.1. Impact on Trade Unions Collective Bargaining and Wage Premium

Most trade unions have as their primarily goal the negotiation of higher wages and

benefits for their members. These goals are usually the most stridently persuaded as it

is generally the most pressing concern of members (Arthur et al., 1986). During,recessionary periods, unions have the goal of at least maintaining their members

level of earnings and preventing erosion of income due to inflation and employer

policy. And during economy boom, they ask wage premium for the members over

those who are not part of the union through unions collective bargaining activities

(Freeman and Medoff, 1984). From the previous section discussion that highlighted to

what extent trade union membership has declined, one may assume that declining

union membership and collective bargaining coverage imply a lower union wage

premium. This of course depends upon whether those instances of union organization

that disappeared were weaker or stronger than average.

Empirical evidences suggest that the union wage premium in Britain had declined in

magnitude during the 1980s and 1990s. The 10% wage premium enjoyed by union

members in the mid 1990s, declined to 8% between 1997 and 2002, and further fall to

5% in 2009 (Alex and John, 2010 ). There may different explanation for this trend.

For instance, Blanchflower and Bryson (2003) associated the change in wage

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premium with the rise and fall of unemployment over the 1980s and 1990s. The

reason extended by these scholars is that unions may have been more successful than

non-union workers in resisting downward pressure on wages during the downturns.

Bryson and Forth (2006), however, argue that decline in trade union members due to

increase in free-riding has weakening unions power in organization to negotiate for

higher wage.

3.2. Impact on Trade Unions Power

The combination of employees within trade union forms power that would enable

them to have say in the workplace environment as well as in the government. Forming

a trade union, however, doesnt it self guarantee of having power. This depends on the

size of the trade union and the way the leader deploy their resources (Hollinshead,

Nicholls, and Tailby, 2003). Coates (1983) suggests that the extent of trade union

power should be analyzed in wider context that is in relation to the employer and the

machinery of the state such as courts and or policies. Employer and unions have

access to varying sources of power through which they may achieve their goals. There

is a continuous process of power release and testing between the parties. The balance

of the power is in a constant state of flux, and is dependent on a variety of

environmental and organizational factors. The states role is further complicated by

the fact that it is also an employer. Power testing occurs at all levels of anorganization. Power testing also occurs at a macro level, where unions may challenge

the state for example; by demonstrating against increases petrol price or increase in

taxes (Freemen and Medoff, 1984; Hollinshead et al., 2003).

Flander (1970:27) argue that trade union power may have influence in industrial and

political setting of a country. Once they have been recognized by the employer, trade

union power do exist over a range of issues such as working conditions, wages, or the

speed of work. The ability of the unions to negotiate increases above the inflation rate

during the 1970s early 1980s was due to their power at the time.

In theory, trade unions power may have a negative influence on firm performance. If

they could manage wage premium through collective bargaining they would reduce

profitability keeping other things constant. On the other hand, the existence of trade

union power can enhance performance through voice effects which raise labour

productivity and improve managerial decision-making, by acting as an agent for the

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employer in monitoring workers, or in assisting with organizational change (Freeman

and Medoff, 1984). Empirical evidence documented negative effects of trade unions

power and activities on the firms financial performance and this has been put forward

as one cause of union decline (Hirsch, 2008).

In political setting unlike in other countries trade union in Britain set aside the 1960s

and 1970s the periods of corporatism when they were represented on tripartite

bodies along with employers organization and state representation, sought limited

influence over government policy (Hollinshead et al.,2003).

.

Hollinshead et al., (2003:86) has identified the following factors as indicators of trade

union power.1) Union membership in its totality, and membership density.

2) The more or less favourability of the general political and legal climate in

supporting or encouraging trade unions.

3) Employers recognition of trade unions in the workplace and their willingness

to negotiate with unions.

4) The degree of union activities and facilities at workplace level.

5) The general economic and business environment such as the level of

unemployment and the product market conditions.

As it has been discussed in the previous section, since 1980s trade union membership

and density has been declining, the state and employers has been following a policy

that discourage unions, and the trade unions themselves have been changing their

structure and policy. All these factors have produced a less favourable environment

for the trade unions and consequently they have lost to some extent their power over

employers and state. But this does not refer to all trade unions. As Coates (1983)

pointed out not all unions have equal power and strength. Their power depends on the

strategic importance of the members for the industry or the economy as a whole. For

instance, transport workers and workers in the emergency services may have more

power than worker in the other industry. Hence, although generally speaking it could

be say the decline of trade union membership has negatively affect trade unions

power; in some industry trade unions remain powerful (Coates, 1983).

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3.3. Impact on Trade Unions Financial Wellbeing

In Britain, there is no state funding of trade union and thus the ability of the unions to

recruit and retain members is crucial as their survival or functionality depends on that.

The dramatic fall in trade union membership, and trade union density over the last

two decades represented a crisis for trade unions (Alex and John, 2010).

a) Employment. On average, employment in a unionised workplace falls 3% more

than in a similar non-union workplace (Metcalf, 2003). The percentage of all

employees who have never been a union member doubled between 1980s and 1990s

as a result of a decline employer and government support for union membership. This

trend continued to rise in the past and by 2006-2008, half of all employees were never

members (Alex and John, 2010).This may suggest that workers have less incentive to

join unions. If this trend continues, it would have serious implication for future

membership levels and financial performance of the unions.

b) Free Riders. According to Metcalf and Fernie (2005) of the total 8.7 millionworkers covered by collective bargaining, 3.3 million of these are free riders. This

share is raising, which constitutes another danger sign for trade unions since they are

incurring the costs of representing such workers in pay negotiations but receive nopayment for this service in the form membership subscriptions.

Considering the above two facts, it may be assumed that the trade unions are in

financial difficulties. However, this is the not the case. Using the data from the

Certification Officer, Alex and John (2010) examined trade unions financial position

over the period of 2000-2008. The figures below shows, the total income (the dashed

line) of the trade unions slightly exceed their total expenditure (the dotted line) in

periods 2000 and 2001. In between 2002 and 2003 they were almost equal. Since

2004, however, their financial position has been improved by increasing revenue

whilst keeping expenditures under control. According to Alex and John (2010), half

of the extra income has come in the form increase in the membership fee from 90

pound per annum to 100 pounds, and the remaining probably from disposal of

duplicated assets after mergers. This finding proved that despite the continued decline

in membership, the trade unions financial position remains healthy (Alex and John,

2010).

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Figure 1: Trade Unions Financial Resources, 2000-2008

Source: Alex and John (2010:11)

3.4. Impact on Job Training and Other Working Condition

Trade union recognition and their power may have effect on the extent to which

employees are provided with training and the amount of training. The potentional

union effect on workplace training provision has been examined in different periods.

Using 1998 Workplace Employment Relations Survey (WERS) Bonhiem and Booth

(1998) had statistically analyzed the relationship between trade union activity and

training in the British workplace. This survey was conducted during the early days of

the first Labour government when there was positive climate for trade union

activities. The result showed the levels of training incidence were higher in union

recognized. Statistical analysis of Hoque and Bacon (2006) was using the data from

the same survey, however, contested Bonhiem and Booths (1998) finding. They

found no relationship between the presences of trade union recognized workplace and

training incidence.

As a continuation of the previous studies in 2007 Stuart and Robinson conducted a

comprehensive research using the 2004 authoritative WERS dataset that explored the

relationship between trade union representation and training activity in British

workplace. They found positive relationship. Union recognition makes difference in

terms of the extent to which employees receiving training, or not, and the amount of

training that is received. The result documented that where the trade unions are

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recognized and negotiate over training, employees are 23.9 per cent more likely t

report having received some training and 4.1 per cent more likely to report receiving

10 or more days training (Stuart and Robinson, 2007:4).

Although there is no research that show a relationship between a decline in trade

union density and training incidence, one can infer that conclusion from previous

discussions. If trade union recognition by employers had been declining over the last

decades, their ability to negotiate collectively over training obviously has been

declined.

4.0 Conclusion

The main objective of trade unions is to maintain and improve workers terms and

conditions of members of the union through collective bargaining with employers.

Their success depends on their barging power and this in turn depends on the trade

union density. The last three decades trade union membership and density had

decreased. Scholars factored the business cycle, change in the composition of

workforces and jobs, unfavourable stance of the state against trade union, negative

attitude of employers towards trade union, and the strategic approach and structure of

the unions as explanatory factors for the decline of trade union membership and

density. What ever could be the reason; this trend has made unions in majority

settings weaker now than in the past. The wage premium they were enjoying has

declined from 10% in mid 1990s to 5% in 2009; and their power to influence in the

industrial and political setting of a country has diminished. Despite this trend,

however, the trade unions financial position now looks healthier. This doesnt mean,

nevertheless, their position as a union is strong. Unless they have turned up the trade

union membership and density, their long term survival will be questioned. To this

end, either there should be an increases in employment in unionized sectors of the

economy relative to non-unionized employment or unions should re-organize

themselves in a manner that appeal to both employers and potential members. This

may involve adopting partnership with employers and providing better services to

individual union members.

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