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Unions in the Doldrums
April 2007


Those who advocate the marketisation of all public goods and the dissolution of all negotiated settlements in the economy, in the interests of flexibility, are arguing that democracy and social citizenship have gone too far and should be rolled back....The closer societies are to the pure market, we suspect, the more fragmented and harsh they will be. That is why our subject is important!
Andrew Martin and George Ross (1), The Brave New World of European Labor (Berghan Books, New York, 1999), chap. I

Contemporary trends suggest that workers need unions more than at any time since 1945.
John McIlroy (2), Trade Unions in Britain Today (Manchester University Press, 1995), page 400

The creation of a permanently casualised industrial peasantry with little protection and no stake in tbe future cannot be in the interests of organisations or society.
Brian Ward Lilley, Director General, Institute of Personnel Management (London), at the Institute's 1993 conference

Faced with globalisation, workers of all countries - rather than within each country - need to unite.

Workers under pressure

Today, the need for effective trade unionism is strong and urgent. For many years now, the position of workers (and I mean not just the traditional "working class", but most people who work for their living) has been growing more difficult.

In most developed countries, workers' earnings (wages or salaries, pensions and other benefits) have not kept pace with total national income (the sum of all personal incomes) (3). For many people, earnings have failed to benefit from economic growth; for others, earnings have actually fallen, or have been maintained only by working longer hours. Hardly the benefits of rising productivity that economists lead us to expect.

Earnings are only one facet of the problem. Another is the precariousness of employment. For many years now, job stability has deteriorated. Work has become more temporary and less reliable. It is more common than it used to be to lose one's job, and harder to find another. This is an international problem, so obvious and well-known that it needs only a brief mention here.

But it has further-reaching consequences. Those who are worse off than they used to be are not merely the people who, at any given moment, are actually out of work. On the contrary, the growing instability of employment means that most workers are worse off, even when they are working.

For even if the income (real purchasing power) of people at work is no less than it used to be, workers are already poorer if the future continuance of their income has become less likely. That is not just a woolly, impressionistic view of how people feel; it is a mathematically accurate statement.

To understand it better, try a comparison. Suppose that, as from today, because of a change in the business environment, it becomes less likely that a company will be able to maintain its dividends in future years. Then, as from today, the intrinsic value of the company's shares diminishes. Not may diminish in future, but diminishes right now, because dividend prospects have worsened. That can be proved by mathematical calculation - the kind of calculation in which actuaries (like myself) are specialists. The intrinsic value of the shares is down. And, as a retired stockbroker, I can assure you that the market value (share price) will fall too, pretty damn quick. Probability affects value.

By the same argument, the declining probability of continuing future earnings makes workers poorer right now, even if their rates of pay are unchanged.

Another problem is the increasing stressfulness of work. This is due largely to the growing intensity of competition that free-market economists and other pundits never tire of wishing upon us. We must become more competitive in order to hold our own, in international markets, with other countries. They, of course, must likewise become more competitive in order to hold their own with us. The object of all this competition is to prune the prices of everything for the benefit of consumers.

It somehow escapes the notice of those clever economists that we consumers are (or should be) also workers for large parts of our lives. Never mind that! The interest of the worker, they say, must always be subordinated to that of the consumer.

Exorbitant inequalities

Yet another problem is that present economic policies lead to exorbitant inequalities between the top management of large businesses and everyone else. A US Federal Reserve study shows (4) that the average remuneration of chief executives in 2005 was more than 170 times average salaries in their companies, as against 40 times in 1970.

Economists and industrialists are always telling us that harder times for workers in the richer countries are inevitable in a world of increasingly sharp global competition; that we cannot expect to hold on to all yesterday's hard-won gains in the face of today's radical changes. They may even play at being virtuous, arguing (as they delocalise their operations to the Far East) that rich countries must make some sacrifices to allow poorer countries to grow. Such pious chatter might be acceptable if the people at the top showed signs of trimming their own inflated incomes. But there is precious little evidence of that.

Unions: needed yet unwanted

So there are, it would seem, plenty of reasons for workers of all kinds to grab every opportunity to co-operate to reinforce their position and resist being persistently downgraded. Unity is strength, as trade unionists say. But are workers uniting? Not as they once did.

Total union membership (in millions) (5)


* 1991 total for east and west Germany combined. Previous figures for west Germany only.

Why have unions lost so many members, and why are they finding it so hard to attract new members? One hears many explanations.

A favourite is that fewer people today work in big factories, traditionally the unions' prime recruiting ground. It is more difficult to 'organise' workers who are dispersed among numerous small firms, or maybe self-employed, than it was to drum up support at the late British Leyland's lame dinosaurs. But this argument is somewhat weak. John Edmonds (6) observed some years ago that working people should be queuing up to join unions. If they were convinced of the advantages of membership, they would be doing just that; recruitment would not be a problem.

A stronger argument is that unions no longer benefit from closed shops, workplaces where union membership is a precondition of employment. These have been effectively outlawed in Britain by Maggie Thatcher's legislation; in many other countries they are no longer tolerated. Yet, despite the free-market rhetoric that pours ceaselessly in thunderous torrents from the USA, the fact is that union shops, not hugely different from closed shops, are lawful in the majority of American states (7). Needless to say, George W Bush would like to abolish them everywhere; but that would require the consent of Congress, where he stands no chance against Nancy Pelosi.

A historical cause of union decline in Britain has been the curious fact that many unions made no effort to keep members on board when they lost their jobs. Indeed, some unions did not permit anyone who was unemployed to remain a member. According to Professor McIlroy (8), unions have singularly failed to retain unemployed members, the biggest ingredient in the haemorrhage of membership. However, today most major unions allow unemployed members to stay on, paying reduced dues or none at all.

Another problem, especially in Britain, is that unions became discredited during their heyday by their sometimes vexatious and counterproductive strategies. Some industries were seriously damaged by frequent strikes and go-slows, which disrupted their business and drove away customers; clearly this did not help to preserve jobs. Some workers found the behaviour of union officials objectionable and saw their efforts as doing more harm than good to members' interests. The arrogant and aggressive conduct of certain unions alienated public opinion.

But, then again, there is the fact that unions with real heft may be more attractive to potential members. There is a divide in the world of labour between co-operative and militant unionism. And this divide reflects a real ambiguity in the relations between labour and capital. Are they partners or enemies? The fact is that they are both.

Since a business needs both labour and capital, one may say that the two are inevitably in partnership; one cannot function without the other. At the same time, capitalists have an interest in maximising their profits by getting labour to work for them as cheaply as possible. That is the basis for delocalisation of work to low-wage countries. To that extent, labour and capital are indeed in conflict.

There are unions which stress the fact of partnership, which are basically co-operative with top management, which avoid extreme actions and foster a peaceful working environment. These are prevalent in Scandinavia and to some extent in the USA. In the ex-Communist countries, unions have historically functioned largely as providers of benefits such as subsidised holidays, and have generally been closer to management then to labour. Workers in (or from) these countries do not perceive unions are being of much help to them in the struggle for better wages and working conditions.

By contrast, the traditionally muscular unions of countries such as Britain and France may hold more attraction. The problem there is the unions' reputation for damaging their own industries by too frequent strikes.

Are they up to the task?

But perhaps the basic weakness of unions today is that, in general, they hardly seem up to the task of confronting the new challenges of global business. They developed to cope with a very different world and are slow to adapt their habits and strategies to today's needs. Change will not be easy.

Historically, as markets expanded, unions had to enlarge their strategic domain to keep workers from being played off against each other, undermining wage and labor standards. Never easy even within national boundaries, it is even more difficult to do when markets transnationalise.
Andrew Martin and George Ross, loc. cit. supra, chap. VIII

Today, there is a serious mismatch between nationally-based unions and the global corporations for which their members work. Gradually, however, cross-border co-operation is developing. This may take the form of links between unions of workers employed in different countries by the same corporation; or of wider forums of collaboration between national unions, such as the European Trade Unions Confederation (ETUC) or the Confédération européenne des syndicats (CES).

Obviously there are areas where international solidarity does not work. If a British company wants to close down its customer service call-centre, replacing it with one in Bangalore, evidently the British unions involved have no incentive to support their Indian counterparts in this matter. However, European or American unions have every incentive to support Indian or Chinese workers in their efforts to improve pay and conditions. For as the gap narrows between Western and Asiatic labour costs, the export of jobs will diminish.

To hold their own in the world of globalisation, unions need to be international in scope. Workers of all countries, unite, so ends the famous manifesto(9); but, from 1848 onwards, it has generally been taken to mean: workers within each country, unite. This motto is of little use in today's world. The original text makes better sense.


1 Andrew Martin, of Minda de Gunzburg Centre for European Studies, Harvard University; George Ross, Hillquit Professor, Brandeis University, Massachusetts.

2 John McIlroy is Professor of Industrial Relations at Keele University, England.

3 Stephen Roach, chief economist at New York investment bank Morgan Stanley, has stated that the proportion of earned incomes (wages/salaries, transfer payments and pensions) to total national income in the USA, eurozone, UK, Japan and Canada fell in 2006 to less than 54%, "a historically low level". See Le Monde, 30 January 2007.

4 Quoted by Eric Leser in Le Monde, 20 June 2006.

5 Figures in the table are taken from Monthly Labor Review, January 2006 (published by the US Government's Bureau of Labor Statistics), from a BLS press release of January 2007, and from Mitgliederstatistik der DGB-Gewerkschaften.

6 Quoted by Robert Taylor in The Future of Trade Unions (Andrew Deutsch, 1994). John Edmonds was then general secretary of the major British union GMB.

7 Pre-entry closed shops are prohibited in the USA by the Taft-Hartley Act of 1947, but "union shops" and "agency shops" are permissible, unless they are ruled out by the laws of individual states. A union shop is a workplace where new employees who are not members of the recognised union can be taken on, but they are obliged to join the union within a fixed period after starting employment. In an agency shop, union membership is not obligatory, but non-members are required to contribute to union funds. At present, union or agency shops are permitted in 27 out of 50 states.

8 John McIlroy, loc. cit. supra, page 405

9 Workers of all countries, unite! is the final sentence of Marx and Engels' Manifesto of the Communist Party (1848). The original German text is: Proletarier aller Länder, vereinigt euch!

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