This short article of mine has been published today on the Future of Work Hub website: http://www.futureofworkhub.info/allcontent/2015/4/14/power-from-the-people-why-trade-union-decline-should-concern-us-all
Power from the people: why trade union decline should concern us all
Who benefits from trade union decline, and what lessons can we draw from this analysis about the state of the political economy in the United Kingdom?
‘Power from the people’ by established International Monetary Fund (IMF) economists, Florence Jaumotte and Carolina Osorio Buitron, provides an intelligent, robust analysis of the correlation between the reducing size and influence of trade unions as an institution of labour markets in advanced economies, the increasing wealth of the top 10% in these economies, and the shrinking value of wages for low and middle-income earners.
Much of this analysis can be garnered elsewhere. For example, the UK’s Office for National Statistics (ONS) has charted the steep, persistent decline of the value of wages in marked contrast to increasing productivity and overall profitability of private sector business. What is of allied concern though, is what structural factors are at play that catalyse trade union decline, precipitate the increasing precarity of UK workers and have resulted in a profound imbalance in the status of the average UK worker relative to that of corporate power and influence.
Pay
Some economists argue that strong trade unions disrupt ‘market clearing’ influences which normalise and stabilise wages in free market economies. Jaumotte and Buitron unravel this well-worn trope, dismantling also the free market assumption that trade unions are a causal factor of high unemployment:
The empirical support for this hypothesis is not very strong, at least within the range of institutional arrangements observed in advanced economies. For instance, in an Organisation for Economic Co-operation and Development (OECD) review of 17 studies, only 3 found a robust association between union density (or bargaining coverage) and higher overall unemployment. (p.30)
The critically important outcome of the report however, is the finding that:
“lower unionisation is associated with an increase in top income shares in advanced economies during the period 1980–2010, thus challenging preconceptions about the channels through which union density affects income distribution”.
Whilst there have historically been concerns about trade union power and influence, one outcome of their presence in advanced economies following the second world war era onwards, was in the stability of earnings relative to economic growth (see for example, A Booth’s ‘The Economics of the Trade Union’).
The latest collection of essays from the Resolution Foundation focuses on this very issue, albeit with attention to the plight of young workers (and their relative absence from trade union membership) a large proportion of whom increasingly find themselves locked out of the UK economy on the “low road” of poorly paid insecure work and lack of career progression.
Power
The dismantling of trade union power and influence has been a planned-for outcome of sustained implementation of neo-liberal policy agendas from the first Thatcher government of 1979, through the New Labour era and under the current Coalition government.
This loss of influence has had wider implications other than in the arena of pay and reward. As the IMF report suggests, the resulting economic inequality “could also hurt society by allowing top earners to manipulate the economic and political system”.
This arguable manipulation is seen, for example, in the joint report of the House of Commons Scottish Affairs and Business, Innovation and Skills committees, into the collapse of logistics firm Parcel Link on Christmas Day 2014. The firm maintained trading during the run-up to Christmas knowing of impending liquidation and that it was unlikely to be able to afford the minimum period of consultation prior to redundancy let alone notice of contract termination. Due to the complicated way in which City Link was purchased by private equity firm Better Capital, the taxpayer is left with the redundancy bill, and thousands of self-employed drivers are unlikely to see outstanding fees paid.
Complicit in this manipulation, and using the mantra of ‘the fight against red tape’, is the Coalition government who in 2013 introduced fees to pursue a claim through the Employment Tribunal Service for a case like that arising from City Link. To compound the situation of workers like those at City Link, in the year prior to the introduction of fees the Coalition reduced the period during which employers had to consult with unions over mass redundancies. It should be a profound concern that a firm like Better Capital can behave with such arrogant disregard to the welfare of its employed and self-employed staff and face no judicial or governmental penalty as a result.
Dependency
The Conservative Party and parts of the UK media would have us believe that Britain suffers from a ‘dependency culture’ particularly in the context of welfare. We can agree on this, although I contend that the real dependency culture exists in myriad form between parts of the private sector (Better Capital being a case in point) and the state. This dependency culture has found common, contemporary form around, for example, limited liabilities for corporate tax payments, exemptions from employer liabilities towards employees and the increasing scope for significant segments of public services to be awarded to private sector contractors.
Actually, where I would start in accentuating the corporate dependency culture is in the form of the massive subsidy paid from the welfare budget to workers employed across a range of sectors, but particularly retail, catering and hotels/hospitality, where wages are so low, and hours so limited, that they are reliant on welfare to survive. According to Stewart Lansley and Joanna Mack in their book ‘Breadline Britain: the rise of mass poverty’, the ‘British corporate welfare state’ is one where poverty has risen fastest for those families in work, and is overall at a post-war high. I would argue that this is a result of defined corporate strategy to offset the wage bill through welfare payments.
The future of work
The economically insecure, poorly paid women who comprise the majority employed in the social care sector exemplify not only the scandal of the corporate dependency culture, but are also a critically important barometer of where the UK is heading as the country races headlong towards a hardened, structural two-tier economy.
The future of work: Jobs and skills in 2030 from the UK Commission on Employment and Skills (UKCES) is a particularly sobering read in this context. Its main message is this:
If current trends run a steady path, in 2030 the UK workforce will be multi-generational, older, and more international, with women playing a stronger role. While the highly skilled will push for a better work-life balance, many others will experience increasing insecurity of employment and income. As businesses shrink their workforces to a minimum using flexibly employed external service providers to cover shortfalls, a much smaller group of employees will be able to enjoy long-term contracts. (p.5)
A two-tier economy may benefit some, but it will, as now, be at the expense of a large segment of the UK workforce, with dire, complex consequences around issues of social cohesion, health and well-being. Similarly, the on-going toxic debate around immigration in the lead up to (and no doubt thereafter) the general election serves no beneficial purpose to the long-term health of the UK economy.
Whilst the benefits of trade union activity may be subject to ideological dispute, any examination of the future of work in the UK (and across advanced economies as the predicted patterns are similar) should give all of us cause for concern for the future economic and social stability of society and the well-being of the population.
Like it or not, strong trade unions create economic and political correctives essential in the kind of free market economy created by the mainstream political parties. The position of organised labour relative to capital means that it is one of the few, arguably only, civil society actors capable of leveraging concessions from employers and the state.
If you remain unsure as to the value of trade unions, think about the past week, month or year of your life and ask yourself if you, your family or friends benefitted from any of these. Then ask yourself who fought for them and what life must have been like before these: weekend leave, sick leave, sick pay, paid holidays, compensation for injury at work, minimum wage, maternity leave, maternity pay, a pension, a written contract of employment, freedom from discrimination, equal pay between men and women etc. etc.
Ian Manborde is the programme co-ordinator, MA International Labour and Trade Union Studies (ILTUS) at Ruskin College in Oxford.
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