Home > Economics - General > Unions: outdated or needed more than ever?

Unions: outdated or needed more than ever?

January 13th, 2012

Writing in today’s Fin[1], Paul Gollan argues that unions are outmoded and that workers would be better off bargaining directly with their employers. Since it’s paywalled, I’ll quote the passage to which I want to respond

Recent examples of industrial conflicts involving the use of the good faith bargaining provisions demonstrate the difficulty of trying to establish workplace engagement in advancing business and employee objectives under the current Fair Work Act. The recent industrial disputes at Qantas, Cochlear, on the waterfront and at Rio Tinto’s Bell Bay aluminium plant and BHP Billiton’s Queensland coalmines, have reinforced this impression, not only for big business but also for many Australians.

Given the seriousness of these disputes, unions and the Gillard Labor government will need to re-examine their position on workplace reform. Importantly, it seems that unions have failed to understand the difference between unions servicing their members and the broader concept of unionism.

Unionism encapsulated a common ethos of solidarity around a cause that all members could understand and relate to under a working-class banner. While years ago unions were enmeshed in this working-class culture, this is not the case in many workplaces today. They are now seen by workers as some distant, third-party organisation external from the workplace.

There may well be examples where Gollan’s claims are true, but I find it pretty hard to swallow the ones he cites. Does he really think that the employees of firms that haved locked their workers out, like Qantas, Rio Tinto and Patricks, or that have repeatedly ignored pro-union votes like Cochlear, are desperate to negotiate one-to-one with their bosses? Clearly, these firms want to get rid of unions for precisely the same reasons as the workers want to keep them, because they are an obstacle to measures that would raise profits at the expense of the workers.

I find the spurious concern for workers expressed in pieces like this even more annoying than the openly pro-boss position of, say, the Institute of Public Affairs.

fn1. One of the consequences of the separation between editorial and market functions that is part of the newspaper ethos is that, even though I’ve been a contributor to the Fin for nearly 20 years, I’ve never been given access to their online version. I had a fairly good deal for the print version, so I was never willing to pay the exorbitant price they asked. But my deal has run out, and the Fin’s prices have been cut, so now, I can at least copy and paste for fair comment purposes.

Categories: Economics - General Tags:
  1. Sam
    January 13th, 2012 at 19:12 | #1

    The last sentence stops abruptly.

  2. John Quiggin
    January 13th, 2012 at 22:42 | #2

    Fixed now thx

  3. Tom Davies
    January 14th, 2012 at 05:56 | #3

    Rather than “raise profits at the expense of the workers” would it be better to say “… at the expense of current unionized employees”, to avoid giving the impression that the benefit necessarily goes to labour in general?

  4. John Quiggin
    January 14th, 2012 at 07:35 | #4

    Looking at the sharp fall of the wage share in the US, where unionism has declined most steeply, I’m happy to stick with what I’ve written (the same trend is evident here, but not as extreme). It’s pretty clear that workers as a group, including non-union workers, benefit from strong unions.

  5. rog
    January 14th, 2012 at 07:44 | #5

    It’s fairly clear that both employers and employees are not particularly skilled at wage negotiation, as in law the man representing himself has a fool for a client. For workers to enter into some sort of dispute resolution arrangement on an individual basis would clog up the system so on two points there does exist a need for representation on a collective basis. Trade unions tend to have a life of their own and employees may be better off seeking independent representation.

  6. Ikonoclast
    January 14th, 2012 at 10:29 | #6

    Unions are clearly needed. A country without unions ends up with poor wages and few protections for workers, women and young people. Bosses who want to destroy unions want to go back to things like child labour, indentured labour, subsistence wages, high unemployment pools, killing or incarcerating workers and the poor with the army and police and so on. This is what happened historically in the West when workers had few protections. It is what happens now in countries with no unions and no good labour laws. The empirical facts of history speak for themselves.

  7. Happy Heyoka
    January 14th, 2012 at 11:32 | #7

    As someone who has never been employed in a role where union membership was common, I’m grateful for the wages and conditions that I inherited from the past labour struggles (although who in the world works a 38 hour week these days?)

    I have also worked in a lot of factories with machines that could kill or maim you in a blink of an eye. I don’t think that we should underestimate the improvements in workplace safety because of the union movement.

    I have also witnessed some outright corruption and mind-numbing bureaucratic bullshit from unions – so it can be a mixed bag (on balance, I think the good outweighs the bad).

    Am I alone in thinking that many of the criticisms of “unfair competition” from China could be solved by having a decent labour movement on the ground there? From what I read, it’s pretty far from it’s ideological roots in that regard.

  8. Jill Rush
    January 14th, 2012 at 13:47 | #8

    Lack of union membership is often used as a measure of the validity of unions in general. However church membership is never used to undermine the good works often paid for by taxes that the churches perform. I have never seen the percentage of bosses who belong to their unions (called Chambers of Commerce, Business Councils etc).

    The real measure of unions is that most workers are more than happy to take the advantages of the gains made by unions although they personally wish to keep the money that flows from that representation rather than pay dues. Rather like downloading movies for free off the internet where a benefit is gained without personal cost. It also means that the worker can pretend to the boss that they are not troublesome. ” Oh, no not me boss”.

    Workchoices was not defeated purely on the votes of union members but by the many workers who understand that unionists were defending the workplace rights of everyone who isn’t “special”. Many took the unionists sacrifices quite happily.

    It is intriguing that the writer states “Recent examples of industrial conflicts involving the use of the good faith bargaining provisions demonstrate the difficulty of trying to establish workplace engagement in advancing business and employee objectives under the current Fair Work Act. ” and then goes on to lay the blame on the government and unions despite the industrial sabotage that employers such as Qantas engaged in. If the laws need changing then it isn’t to limit rights to union membership or other long established rights but to ensure that employers engage with their workforce in good faith. He manages to find the right topic but draws conclusions which are ideological rather than evidence based. Pilots wearing ties and making announcements about their working conditions is not even in the same league as grounding an entire workforce at a time to embarass the government and inconvenience the public.

    The final quoted sentence “They are now seen by workers as some distant, third-party organisation external from the workplace.” is wishful thinking as workers may not identify as unionists but still wish to have the unions there to maintain their traditional role against the increasing bullying and lowering of wages that modern managers seem to believe is a requirement of the job.

    Paul Gollan may state that workers are better at negotiating directly but tell that to the pregnant women who would be fired and to the migrants whose English is to limited. It would certainly be a great way to re-introduce unfair remuneration and conditions for many in the workforce.

  9. Catching up
    January 14th, 2012 at 15:03 | #9

    Many see unions, as they see the police force. They have no great love or little respect for, but realise they are necessary.

  10. rog
    January 14th, 2012 at 19:44 | #10

    The problem with unions is that they lack freedom of choice. It’s either their way or the highway. They need to be more customer orientated, be able to demonstrate their advantages, the quality of their service.

  11. jrkrideau
    January 15th, 2012 at 03:56 | #11
  12. jrkrideau
    January 15th, 2012 at 04:08 | #12

    sa@Tom Davies

    I think John’s comment is correct. The example of a unionized environment can have a very salutary effect on organizations that desperately do not want a union.

    Here in Canada, I believe the Stelco/Dofasco situation (steel companies in Hamilton Ontario) illustrates this. As far as I understand it, , roughly speaking, any gain by the unionized employees at Stelco was/is mirrored by gains at Dofasco.

    I suspect one of the reasons I enjoyed reasonable pay and benefits at my non-unionized Crown Corporation was because the (unionized) Civil Service had equivalent salary and benefits and the Crown Corp did NOT want to unionize.

    If, as in the USA, you reduce unions to a very minor power group it is easy to demonize them since almost no-one, workers included, actually understand what they do and why.

    The idea of individual workers negotiating with the employer is naive, to say the least. I have not read Gollan’s article but does he really expect an equipment operator for Rio Tinto or an assembly line worker for General Motors to negotiate a more favourable employment package than, perhaps, other equivalent workers?

    I am reminded of the comments of a president of one of the Big Five (?) banks in Canada suggesting that if one needed a student loan to attend university, the applicant should sit down and negotiate a deal with his/her local bank manager. I suppose it’s possible but …
     

  13. Ken Fabian
    January 15th, 2012 at 10:45 | #13

    I found Greg Jericho’s article on The Drum a bit of an eye opener; the perceptions (spin) about related issues of profitability vs wages, working days lost and GDP per hour worked being quite different to the actual data. This point probably deserves mention in the Truth, Truthiness and Balance thread too.

  14. Jill Rush
    January 15th, 2012 at 16:25 | #14

    As Prof Q outlines the less unionism the lower the wages and the poorer the conditions. This is never tackled in the MSM. Also rarely reported are the many unionists in poor countries who are arrested, tortured and imprisoned for lengthy periods. Fiji is the latest example of unionists being treated badly. In fact many on the right will denigrate unionists while failing to explain the exploitation of workers that occurs in their absence. We will have bizarre family murders providing stories but not when those murdered are unionists who have upset authorities. In fact I rarely see any positives explored about union membership although there are a lot of bad practices that are stopped because of union intervention and better wages for workforces where unions are strong.

  15. James Haughton
    January 16th, 2012 at 09:10 | #15

    George Megalogenis had an interesting column in the Weekend Australian (on Jan 7th) in which he pointed out that despite the rollback of Workchoices, the profit share of national income continues to grow and the wage share to shrink under the Gillard Government. To me this suggests that unions have lost much of the influence they had in the Hawke/Keating Accord era.

    “A funny thing happens to economic theory when it is bent to fit the political fetish of the day. Low productivity is assumed to be the fault of the workers because their excess wage claims had been the main reason for stagflation. In the period from the first oil shock in 1973 to the 1982-3 recession, wages accounted for 60 per cent-plus of national income in 20 out of 40 quarters. To place that gouge in context, the wages share had remained below 55 per cent throughout the 1960s… But there is nothing in the recent statistics to suggest that workers are claiming a bigger share of the pie. On the contrary, the much-maligned Gillard government is positively Menziean in the way its regime allocates income between labour and capital. The wages share has been below 54 per cent for the past three years. The latest figure is 52.6 per cent for the September quarter 2011.”

    PS Ken Fabian your link is broken.

  16. Ben
    January 16th, 2012 at 20:56 | #16

    Something I rarely see discussed is multinational unions. Capital went global long ago, but labour did not. In a large multinational company, a single country’s workforce striking has little effect, because the company just uses other national arms of the business to keep things going. There is little love between the workers across borders. In some cases, one country’s workers knows it is losing its jobs to another, and it is hard to get them all organised.

  17. Peter Kirsop
    January 26th, 2012 at 00:34 | #17

    @Ben, that is the problem with America, the unions are so scared of NAFTA and the like that they have all but given up.
    @ Mr Haughton, I think you’d be surprised (And i hope the good Prof has the figures) on the share of national income wages had under Menzies. As I seem to be the token conservative here let me quote RGM (from the Forgotten People )
    I exclude at the other end of the scale the mass of unskilled people, almost invariably well-organized, and with their wages and conditions protected by popular law. What I am excluding them from is my definition of middle class. We cannot exclude them from the problem of social progress, for one of the prime objects of modern social and political policy is to give to them a proper measure of security, and provide the conditions which will enable them to acquire skill and knowledge and individuality”
    You’d be hard pressed to find any ALP member who would voice such comments about labour laws or such aspirations today.

Comments are closed.