The Decline in Union Density in Australia over the Past 30 Years - Case Study Example

Employment Relations Name Institution Employment Relations The decline in union density in Australia over the past 30-odd years In the 20th century, the trade unions have been a critical factor in the political platform and the labour market in the majority of the industrialized nations. However, in the 21st century, some spectators claim that organized labour looks to going for extinction (Barton, Snell & Fairbrother, 2008). The existence of these Trade Unions and their political and economic influence lies on their capability to nurture and attract loyal membership including other indicators like the mobilizing capability, the stand on the public opinion and bargaining coverage. Therefore, Barton, Snell & Fairbrother (2008) argue that it is vital to recognize which actors determine the stability and the degree of unionization, especially given the decline of stagnation of union density and membership seen in several countries in the recent years. Australia is one of the countries which has witnessed the decline in Union density over the years. Therefore, this essay explains the decline in union density in Australia over the past 30-odd years. It will also evaluate the effectiveness of the strategies of the union to correct this decline. According to Sano & Williamson (2008, p.480), union density is defined as the number of paid employees who are members of trade union and acts as indicator of its strength. It can also be defined as the proportion of eligible employees, which can be applied to show the extent to which the employees are well organized. Nevertheless, the union density just measures the degree of unionization and but shows very little concerning the bargaining power or influence of the unions. Peetz & Bailey (2012, p.54) contended that in the 20th century, the nature of Australian trade unionism emerged as the agreements for the obligatory arbitration and conciliation of the industrial disputes were implemented by Commonwealth and other countries. Strengthened by the regulatory practice, Australia union density did not decline below 40 percent in the period of 1913 to1992, but was generally higher (Leigh, 2005, p.293). The core place of the trade unionism in Australian’s economic health looked immutable. Nonetheless, this idea has turned out to be untenable. As it stands today, the number of union density has gone down tremendously and less than 20% (Griffin, 2007, p.549). Whilst unionism precisely gained from obligatory arbitration, and faced the challenge in equal measures, it is one sided to argue that the increase and sustainability of industrial employment in Australia has been dependent on this industrial regulation system. The Industrial labour was in existence for more than 80 years prior to arbitration law. Its fast growth in the 1900s was attributed to several factors on top of arbitration consist the organizing efforts or the union movement, favorable conditions in labour markets and growth of manufacturing (Nickell, Nunziata & Ochel, 2005, p.3). The reports of declining union density or membership in Australia in the recent years have made an impression that trade unions are a fading entity. However, this argument is turning out to be true. In fact, the Australian union density has dropped significantly in recent years from 49% of employees in the 1980s to nearly 18 percent in 2005 (Bowden, 2011, p.55). Experts give reasons for the drop of union density in Australia include the increase in inequality in earning, labour market factors, structural changes, employer strategies, employer attitude and regulatory environments. As stated, earnings inequalities factor contributed to the falling of union density (Bowden, 2011, p.54). It is also vital to note that trade unions are not merely interested in higher salaries but they are also interested in good pay compression. This takes place via standardized pay programs, and also claims that appeals for the same rise for every employee. Sano& Williamson (2008) stated that the decrease in salary distribution within an organization enables unions to arrange as employees are in a position to make similar case with workers who earn the same income as them. Generally, economists have emphasized on how deunionization contributes to inequality. Studies in the U.S, Britain and Canada have recognized deunionization as a major factor in the development of inequality (Bowden, 2011, p.57). In his studies, Blanchflower (2007, p.6) claimed that Professor Jeff Borland established that 30% of the rise in income between full-time males in the years 1986 and 1994 was achieved through the decline of unionization. If inequality occurs due to globalization or technological change, organizations may find it a bit tricky to fake a coalition that is successful between the highly-paid and low-paid employees. If there are two employees who both have an hourly income of 25 dollars they are in a position to join a union rather than one earns 15 dollars and the other one earns 35 dollars. Structural labour market change is another factor. Worldwide unions have more time for hiring full-time employees in the public sector, large companies and also in the manufacturing sector (Bryson, Ebbinghaus & Visser, 2011, p.99). Some of the changes that are a disadvantage to the unions include the increase of smaller firms, government downsizing them, the increase of the service sector and casualization of the work force. The rising in competition has been the key driver to deunionization prompted by the microeconomic reforms policies, tariffs reduction and a rejuvenation of the Australian Competition and Consumer Commission (Bowden, 2011, p.69). When firms experience oligopoly or monopoly position, there employees may benefit from high salaries. Community and Public Sector Union (2015) posited that Prices always increase in markets where there are no stiff competitions, and in economic perspective this creates “rent”. Employers normally share such rents between themselves and workers. These employers gain high profits compared to employers in a competitive economics while also their workers get high wage as compared to workers in a competitive market. When monopoly do not exist no more, there is always a stiff competition in the market hence forcing the management to find ways of reducing costs. This in return puts some pressure on the management to introduce stronger anti-union policies so as to decrease the salary bill. The laws found in the workplace have not enabled unions to represent and to hire employees. In the early 1990s, nearly all Australian cities established laws that were used in the workplace so that the unions could not have any influence on their workers and neither would they manage them (Community and Public Sector Union, 2015). These laws had forbidden the necessary functions of closed shops or unionism. However, they supported statutory contracts of an individual which allowed outcomes that were below the Award minimum while opening up the workforce so as to force many employees into works that were not covered by Award minimum and were not easy to unionize. Laws were changed by the employers groups so as to have rise in profits they made. Due to that it is evident that organizations have gained profits and there is a big difference between the income of the poor and the rich (Griffin & Moors, 2004, p.41). Most managers got a competitive edge through deunionizing of their employees. Since monopoly became scarce and there were introduction of many services and businesses several managers opted for an anti-union policies so as to acquire competitive frame. In the union workplace, they delivered averagely salary outcome of 15 percent unlike non-union workplace (Peetz, 2005, p.7). This in return meant that if the manager did away with the union therefore the worker’s salary would have been reduced. Finally, this gave pressure on good managers who had good relationship with the unions and their workers since they did not want to compete. Currently, the majority of Australians are working in companies which have often had a lower union density. Jobs in usually in the strong union sectors like manufacturing and other public sectors are now being substituted with jobs in the services industries and community-oriented companies which had often been seen to have a lower union density (Community and Public Sector Union, 2015). Jobs being offered on full time basis are now substituted with casual or part-time, and in such modes of employment there are low rates of union membership. In addition, more people now prefer being self-employed, working in small businesses or being contractors, do not perceive union membership being vital. Peetz & Pocock (2009, p.626) stated that numerous employees are taking pleasure in the gains of unions without joining as members. The trade union invests significantly in resources and time into upholding enhancing conditions and minimum standards which is relevant in the labour market. The issues of minimum wages are talked about each year, but few members of the union are paid on the basis of minimum wage since their union movement has bargained for them agreement which lead to award pays (Nickell, Nunziata & Ochel, 2005, p.12). Even in organizations in which trade union movements invest considerable resources and time into negotiation, the company one works for is barred from just registering to such conditions to the members of the union, and the trade union is barred from charging fees to non-members for the negotiation services which they offer. Leigh (2005, p. 294, p.23) claimed that union movements set precedents and run test issues in areas like maternity leave, recreation leave and a wide array of other issues which have become of National standards and apply every employee. The Structural changes within the Australian economy are also cited to be responsible for the decline in the union density (Bray et al., 2014). Griffin & Moors (2004, p.45) reported that Between 1974 and 1981, the number of Australian employees involved in greatly unionized blue-collar employment dropped from 61.2 to 49.6%. The total membership declined in stevedoring and shipping, agriculture, pastoralism, mining, tram transport and rail, and in building and construction. Mechanization describes deeply about this drop. Moving from the steam to the diesel power in railways got rid of the jobs in coal field including the rail ones. In agricultural and water sectors, bulk-loading activities led to reduction of the employment. For instance, Bowden (2011, p.72) affirmed that in Cairns, the number of workers in waterside declined from 516 in 1975 to 98 in 1982. The Union was however saved by the manufacturing sector’s capacity from further decline. The subsequent five years saw a slight of unionized workers by 26.2%. Union density fall also demonstrated calculated anti-union strategies by the employer. This practice first manifested itself in 1985 when union movement suffered devastating defeats in the dispute in Queensland SEQEB, Mudginberri meatworks and in Dollar Sweets, Melbourne (Bowden, 2011, p. 65). Employers in every case were strongly associated with the rising New Right. In 1987, the mining union movement in Robe River underwent a severe blow caused by CRA (Blanchflower, & Bryson, 2009, p.49). The continuing drop of unionized organization in iron ore industry of Western Australian ensued. In the early 1990s, the managers were strongly looking for anti-union strategies in the sectors previously attributed by the collaborative manager union agreement consisting of road transport, meat industry and coal mining. Bowden (2011, p.71) claimed that the integration of the Australian Workplace Agreements offered the managers a powerful new strategy. For instance, at Telstra, workers were pushed to sign the Australian Workplace Agreements. 70% of the employees who signed these forms deemed to have resigned from the union movement. The support from the government about the anti-union strategies manifested itself in the dispute at Patrick in 1998 when the non-unionists were used to replace the waterside employees (Bowden, 2011, p.72). Unluckily, the government lost and the trade union movement argument won the day. Effectiveness of the unions' strategies to correct this decline The union embraced the two principal strategies so as to mitigate the density decline. These strategies consist of union rationalization and Fair Work Act of 2009. Bowden (2011, p.71) opined that the first strategy was pronounced in 1987 after witnessing a continuous decline in union density, and it entailed ‘union rationalization’ in which the then unions were urged to merge into 20 effective union movements. Many union perceived the approach as controversial were opposed to it. A several studies could have informed the decision of the union officials and member to decline the proposal (Carter & Cooper, 2002, p.715). A study conducted by Mark Wooden showed a little proof that on union rationalization led to the decline of union. The next ACTU’s organizing works, strategy, had broader appeal. Implemented in 1994, its originality was based in the US and had an organizing model which was created in the late 1990s and early 1980s to strengthen the unionism (Bowden, 2011, p.72). The organizing model became a strong foundation for the revival strategies of the union all over the Anglo-Saxon region in the 1990s. Its proponents claimed union movements had created to their decline through providing free industrial services without returns (Blanchflower & Bryson, 2009, p.53). This form of servicing model has led to membership’s passivity and encouraged members to join. The effectiveness is dependent on a multi-structured approach. This strategy put much emphasis of recruitment of new members and training. A program like Organizing Works was introduced upon which new organizers and official were trained. Members considered to be on the Rank-and-file basis were urged to take up active roles in providing solutions to organizational issues (Bowden, 2011, p.73). The organizing model also emphasized on community engagement. The organizing model strategies provide effective in some sectors such as education. Part of levels of education became the highly unionized sector in 2007 with 38.9% employees being members of a union. Bowden, (2011, p.73) asserted that whilst pre-schools and the school had 47.7% union members, tertiary only had 25.9% members of the union. The situation made some experts argue that tertiary division was “poor” organizers. According to Peetz & Pocock (2009, p.631) The situation, though, was created by the fact that tertiary division had an influx of private providers and practitioners and a considerable rise in contingent employment. Such trend was less seen in primary and post primary education. In addition, under union rationalizing, Australian Council of Trade Unions adopted Service model in 1987. In Australian perspective, service model was carried out by means of a broad scheme of the industrial arbitration and centralized wage fixing (Checchi & Nunziata, 2011), p.143). This practice depended strongly on the capability of the unions to attain employment preference for its members, and closed shops. Another strategy adopted by the government to correct decline of union is the Fair Work act of 2009. This act was come into force when it was enacted by Rudd-Gillard’s government in the mid-2009 (Bray et al., 2014). This strategy was marked by enthusiasm amongst the unionists and a bounce back in the union membership became apparent. Bowden (2011, p.72) contended that by late 2009, the total membership increased from 1,764, 950 in 2008 to 1,845,200. Most growth took place within the public sector in which the union density increased from 41.8 to 46.4%. Heightened by this positive performance, general union density increased from 18.8 to 19.9%, thus presenting labour industry with its first momentous recovery from the mid-1970s. In the late 2010, though, the improvement stagnated due to the earlier mention factors of decline. According to Bray et al., (2014) today, the recovery of union density relies primarily on political strategy and government support. Conclusion In presenting up-to-data statistics of empirical literature, this essay has shed light on current trends of union density in Australia. In its research, the essay has established a declining trend on union density of Australian for more than 30 years; stretching from early 1970s to late mid early 2000s. Various reasons have been presented as the cause of declining including increase in inequality in earning, labour market factors, structural changes, employer strategies, employer attitude and regulatory environments. If the trend is left to continue, the unions are set for oblivion. For Australia, Australian Council of Trade Unions has realized that its revival majorly depends on their actions. For that reason, they have come with strategies which have shown some positive response to renewal of the union. These strategies include union rationalization which adopted by Australian Council of Trade Unions and two approaches, i.e. organizing model and service model. Another strategy adopted by the government but supported by union umbrella body is the Fair Work Act of 2009. From the result positive results and stagnation of Fair work Act of 2009, this paper concludes that union must create strong and sustainable strategies rather than waiting for the government which may not have the interest of employees at heart. References Barton, R., Snell, D., & Fairbrother, P. (2008). Unions in the Twenty-First Century and Beyond: The Multiple Dimensions of Union Renewal. Unions in the Twenty-First Century and Beyond: The Environment, Politics and Education Conference (Melbourne, 17-18 November) Blanchflower, D. G. (2007). International Patterns of Union Membership. British Journal of Industrial Relations, 45, 1-28. Blanchflower, D.G., & Bryson, A. (2009). Trade union decline and the economics of the workplace, in: Brown, W., Bryson, A., Forth, J., Whitfield, K. (eds.). The Evolution of the Modern Workplace, Cambridge, 48-73. Bray, M., Waring, P., & Cooper, R., Macneil, J. (2014). Employment relations: Theory and practice (3rd edn.). Sydney: McGraw-Hill. Bowden, B. 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