The Decline of Trade Unions in Britain - Essay Example

Decline of Trade Unions in Britain 2006 Introduction The 1980s was a watershed for industrial relations in Britain. From aggressive collective bargaining powers over the post-war period, trade union strength fell by all the measures of union activity, that is, union density, coverage and proportion of organizations recognizing trade unions. From 53% in 1980, aggregate membership of British employees in trade unions fell to 29% in 1999, amounting to a drop in over five and a half million union members while unions bargaining major agreements with employers fell from 48% in 1980 to 29% in 1995 (Ragoobur, n.d). The number of organizations that recognized trade unions’ bargaining power fell from 64% in 1980 to 42% in 1998 (Millward, et al, 2000). Most researchers agree to the downtrend of union membership in Britain. Machin (2004) commented, “Union decline in Britain has been rapid and relentless over the last twenty years. In the late 1970s over 13 million people – or around 58 percent of employees – were trade union members and over 70 percent of employees’ wages were set by collective bargaining. Since reaching its peak in 1979, unionization (however measured) has fallen relentlessly year on year to the very low levels we see today.” Measures of Union Strength In Industrial Relations studies, union strength is measured by 1) union density, that is the proportion of workers who are union members, 2) union coverage, the proportion of workers whose pays are negotiated by the unions and 3) union recognition, that is the number of establishments that recognize trade unions (Machin, 2000). Although researchers most commonly discuss union density as it is the most visible, union coverage and recognition better reflect the strength of trade unions. Observing data over time, Machin (2000) found that union density was stable at 40-45% over the prolonged post-War period, rising sharply in the 1970s, reaching a peak in 1979. Thereafter, union density fell sharply, at a rate faster than its previous rise. By the 1990s, union density had fallen drastically. To understand why workers were less prone to join unions than earlier, Farber & Saks (1980) studied the individual votes for the National Labor Relations Board. It was found that the perceived benefits from joining unions were inversely related to the intra-firm wage differentials. However, non-wage considerations as well as job security were also considered important determinants. Hence, the changed political environment and concerns over job security threatened the workers’ incentives to join unions. Union coverage and recognition also showed similar decline, with trade unions becoming less effective in negotiating workers’ pays and being recognized as a bargaining organization by less number of establishments. Bell & Pitt (1988) found that only 20 percent of the increase in wages during the 1980s could be attributed to union negotiations, showing limited union coverage. Union coverage differentials were also reported by Andrews, et al (1998), who used panel data on union and non-union wage differentials. The authors postulated that economic recession was partly dampened during 1975 and 1982 by anti-union legislation and the upward trend in wage differentials was the result of decentrialization of collective bargaining. Similarly, union recognition fell by 10 percent over 1984 and 1990 (Beaumaunt & Harris, 1995). Changes in company size and competition resulted in reduced union density, which in turn resulted in union recognition. Brown et al (1998) reported that companies, rather than explicitly derecognizing unions, reduced the breadth of employment contracts thereby reducing the influence of the unions. The industrial relations literature calls this diminishing influence of unions as “individualization” (Brown et al, 2000). Individual employment contracts had been legalized through the Conservative regime. The new Labor government enhanced the process by increasing the reach of individual employment contracts while at the same time enabling collective organization. The traditional form of multi-employer industry-level employment contracts have given way to specific employer bargaining contracts with establishment employees, which include wages as well as work obligations. By the mid-1990s, unions lost much of its influence over not just pay fixations but also over recruitments and manpower planning. Typically, both the management and union representatives have the same perception over workplace negotiations. Unions concern themselves less with workplace environment than earlier, thus resulting in individual norms being set by managements. Political Regimes and Union Strength The diminishing powers of trade unions were a global phenomenon as union density also fell from 23% to 16% in the United States from 1979 to 1989. Yet, the empirical literature on the decline of trade unions through the decades of 1980s and 1990s has been more exhaustive in Britain since collective bargaining earlier was more significant in this country than any other. The Labor Party, in particular, has been dependent on the trade unions since its inception in 1900 and its decline of political power in the mid-80s as well as the changeover to the “New Labor” in the mid-90s have been simultaneous to the shift in fortunes of the trade unions (uk.Encarta/msn.com). While trade union strength, in terms of membership density, coverage and recognition fell through the 1980s, after the defeat of the Labor Party in the 1979 elections, till 1997, when the Labor Party came back to power. That is, the Conservative political regime coincided with the decline of trade unions in Britain and the return of the Labor Party marked some turnaround in unions. The Conservative Party issued a number of legislatures that made establishments derecognize unions (Disney, 1995 cited in Blanden, et al, 2006). Interestingly, the decline of trade unions was even reflected on the trend of media coverage. As Manning (2004) found, “Many journalists, including labor correspondents, attribute the decline in industrial journalism as a daily news specialism, to the diminishing newsworthiness of trade unions, as both membership figures and strike rates fall”. This disinterest of the media in industrial relations is symptomatic of the changing times, when trade unions, earlier considered synonymous with the social democratic form of administration was “no longer the central to the news production process as a new form of governmentality emerged” (Manning, 2004). Reversal of Union Decline Metcalf (2004) found that after the prolonged period of decline, union membership rose by 100,000 in 1999 although he was skeptical whether this is symptomatic of rise in union power in terms of employment growth in unionized establishments. Recognizing the significant decline in union membership, Metcalf felt that the growth in union density was more in terms of “marriage of convenience” and the “sword of justice” impact of trade unions would depend in their organizing capabilities. Blanden, et al (2006), too, found some revival of union recognition by establishments and leveling off of the decline of union density since 1997, partly because of legislation of the Employment Relations Act that made recognition of unions mandatory and encouraged voluntary settlements of disputes between unions and establishments and indirectly through the change in political climate, that is the return of the Labor Party. The authors studied a large number of firms across all industries in the private sector in 2002 and found that more firms recognized unions over the period 1997 and 2002 than between 1985 and 1997 while the proportion of firms derecognizing unions was similar in the two time periods. Gall (2004), too, reported similar findings of increased recognition of unions, by a small degree over 1994 to 1998 and more markedly since then as did Dibb, et al (2002), who found less number of establishments considering unions as “damaging” to industrial relations. The public perception of unions have also improved since the Conservative days, when trade unions were thought to be anti-growth. The new environment consider union-establishment relations conducive to growth rather than confrontational, reflecting the change of attitude of the unions and the Labor Party, both sharing a common agenda of industrial relations and business policies. Determinants of Union Strength The empirical literature has attempted to explain the decline of trade unions in Britain through a variety of determinants – from “structural theories” like business cycles, globalization, import competition, industrial composition, firm size, changing gender equations, race and age at workplace and the like, to “political theories” like shift from Keynesianism to conservatism and the “interventionist theories” like recruitment of officers in unions, mergers of unions and recognition of unions by the management of organizations. British scholars and researchers have been debating the factors affecting trade union density even before the decline actually happened. Mason & Bain (1993) reviews the literature beginning from the mid-1970s identifying structural and interventionist theories. No one determinant has, however, been proved to be the major reason for the decline of trade unions in any of the empirical study. Business Cycle - The most typical explanation for the decline of trade unions in Britain has been the business cycle theory. The changing structure of British industry has meant that the traditional industries, like steel, coal, printing, the docks and engineering – particularly car manufacturing - where trade unions were most active have lost their former glory (Schiffers, 2004). Other studies have also found that cyclical variables explain trade union membership in Britain. Analyzing historical data from 1896 to 1984, Carruth & Disney (1988) showing that short and long term cyclical variables explain the rise and fall of union membership in British trade unions. Rise in real income, fall in unemployment rates and growth of white-collar employment together resulted in decline of aggressive union power in the 1980s. Alongside, anti-union legislation and growth of conservative political power in the min-1980s contributed to the undermining of trade unions, particularly in the coalmines where trade unions were particularly militant (Freeman & Pelletier, 1990). Globalization - As business cycle, elements, globalization and import competition are seen to be important causes of the changing face of trade unions in Britain. Ragoobur (n.d) found that as a result of globalization, rising competition from imports have made collective action by trade unions less effective and managements more opposed to trade unions in confrontations. According to this theory, union density declined over the 1980s and 1990s as a result of import competition. In the new political climate since the mid-1990s, the collaboration between unions and managements have been invigorated in the competitive environment of threats from import competition in domestic markets and that of job loss due to outsourcing of production and services. Hence, despite the increase in union density and recognition since the mid-1990s, it is unlikely that union coverage, that is, union influence over wage agreements, will increase. Structural economic changes - Other structural changes in the economy over the decades have been seen to have little effect over trade unions in Britain. Although the political climate is seen to be an important determinant of union membership, composition of members in terms of age and gender or change of establishments in terms of size do not play much role in explaining the decline of trade unions since 1979. Machin (2004) compared unions at two time points – 1975 and 2001. He found that although union density declined over the period, proportion of females in unions increased, disproving any effect of increased female employment on trade unions. In 1975, 66 percent of male workers were union members while 40 percent of female workers were so. In 2001, the pattern was reversed, with 30 percent of female and 29 percent of male workers being union members. Educational qualification is also not a sufficiently adequate explanation for the decline of union members since more qualified workers, particularly in the public sector, were members in 2001 that in 1975. Similarly, the hypothesis that larger establishments support strong trade unions is not supported by data. In 2001, there were more unions in larger establishments than there were in 1975. It was, however, seen that older workers tend to become union members than young workers and the average age of workers fell over the period. Industrial structure is an important determinant for union membership. Public administration and specific industries like transport and engineering are more conducive to union membership. Conclusion Thus, the secular downtrend on trade unions in Britain since 1979 to the mid-1990s coincided with the conservative political regime. Anti-union legislation and changes in business cycle, with increased competition and changes in industrial structure, resulted in the decline in collective bargaining by trade unions. Not only did union density show a marked downtrend, union coverage and union recognition was also much lower. The return of the Labor Party in 1997 and legislation for union recognition did result in a plateauing of the downtrend of union density. However, the change is yet to take effect on union coverage. Over the years, the perception of both establishments and unions regarding industrial relations has altered. From a confrontationist approach, the relations are based on a conciliatory behavior, both recognizing the different global political and economic environment. Therefore, there is a marked tendency towards “individualization” of collective bargaining of unions, from the pan-industry, multi-establishment forum to establishment-level employment contracts becoming the norm. Works Cited Andrews, M.J, D.N.F Bell and R Upward, Union Coverage Differentials: Some Estimates for Britain Using the New Earnings Survey Panel Dataset, Oxford Bulletin of Economics and Statistics, Volume 60, Number 1, February 1998 Blanden, Jo, Stephen Machin and John Van Reenen, Have Unions Turned the Corner? New Evidence on Recent Trends in Union Recognition in UK Firms, Working Paper, London School of Economics, 2006 Bell, B.D and M K Pitt, Trade Union Decline and the Distribution of Wages in the UK: Evidence from Kernel Density Estimation, Oxford Bulletin of Economics and Statistics, Volume 60, Number 4, November 1998 Beaumaunt, Philip B and Richard I. D. Harris, Union De-Recognition and Declining Union Density in Britain, Industrial and Labor Relations Review, Vol. 48, No. 3, April, 1995 Brown, William, David Nash, Simon Deakin, Sarah Oxenbridge, The Employment Contract: From Collective Procedures to Individual Rights, ESRC Center for Business Research, University of Cambridge, Working Paper No 171, September 2000 Brown, W, Deakin, S, Hudson, M, Pratten, C and Ryan P, The Individualization of Employment Contracts in Britain, Employment Relations Research Series 4, London: Department of Trade and Industry, 1998 Dibb Lupton Alstop, Industrial Relations Survey, London, Gee, 2002 Farber, Henry S and Daneil H Saks, Why Workers Want Unions: The Role of Relative Wages and Job Characteristics, The Journal of Political Economy, Vol 88 No2 April 1980 Gall, G, Trade Union Recognition in Britain 1995-2002: Turning a Corner, Industrial Relations Journal, 35, 2004 Millward, N, Bryson, A and Forth, J, All Change at Work? British Employment Relations 1980-1998, as portrayed by the Workplace Industrial Relations Survey Series, Routledge, London, 2000 Machin, Stephen, Union Decline in Britain, British Journal of Industrial Relations, 38 2000 Machin, Stephen, Factors of Convergence and Divergence in Union Membership, British Journal of Industrial Relations, 42:3 September 2004 Manning, Paul, Categories of Knowledge and Information Flows: Reasons for the Decline of British Labor and Industrial Correspondents’ Group, Media, Culture & Society, Vol 21, 1999 Metcalf, David, British Unions: Dissolution or Resurgence Revisited, Centre for Economic Performance, London School of Economics, 2004 Ragoobur, Vishal, Import Competition and Trade Union Coverage in UK Manufacturing, http://www.york.ac.uk/res/wpeg/papers/Ragoobur.pdf http://uk.encarta.msn.com/encyclopedia_761563922/Labour_Party_(Great_Britain).html Read More