WHY TRADE UNIONS IN RICH COUNTRIES ARE LOSING MEMBERS?

The  figure above and below are coming from the research document “Politics Matter, Changes in Unionization Rates in Rich Countries, 1960 – 2010 from the authors John Schmitt and Alexandra Mitukiewicz, November 2011 published by The Washington Office of the Centre for Economic and Policy Research CEPR.

 

Why trade unions in rich countries are losing members? If we look to the trade union membership in these 21 rich countries we see this trend reflected in the statistics since 1960 until today. (figure 11)

One of the several explanations for the decline of unionization is that ‘globalization’ and the technical advances embodied in the ‘new economy’ have made trade unions obsolete. However, if the decline in unionization is the inevitable response to the twin forces of globalization and technology, then we would expect unionization rates to follow a similar path in countries subjected to roughly similar levels of globalization and technology.  Instead we see over the last five decades a wide range of trends in union membership and collective bargaining, the core activity of trade unions.

Globalisation and technological change?

Union membership (the share of workers who are members of a union) fell in most of the rich economies, but losses varied substantially from country to country as shown in the figure above. Can these differences be explained by differences between levels of globalization and technical change of these countries? 

 

To get an answer on this question the authors compared trade union coverage (the share of workers in a country covered by collective agreements) with export and new technology rates. The authors concluded “Given that all of these countries were at approximately the same level of economic development and all were subjected to the same kinds of pressures from globalization and technological progress, the different trends apparent across the rich economies strongly suggest that more globalization and better technology do not inexorably lead to lower unionization rates.” (page 9)

The broad national political environment

If it is not ‘globalization’ or ‘technological changes’ what else could explain the observed variations in unionization trends? The authors look for an explanation to what they call ‘the broad national political environment’. They define this ‘broad political environment’ with help of a political typology used in the article “Is globalization undermining the welfare state”. ( Navarro, Vicente, John Schmitt and Javier Astudillo, Cambridge Journal of Economics, vol.28,no 1, 2004). The 21 rich countries are divided in “four broad political regimes”:

1.     “Social democratic” with the countries Denmark, Finland, Norway, and Sweden

2.      “continental market” : Austria, Belgium, France, Germany, Italy, the Netherlands, and Switzerland

3.      “liberal market,” by the 19th century and contemporary European usage of the term liberal: Australia, Canada, Ireland, Japan, New Zealand, United Kingdom, and United States

4.     “ex-dictatorships”: Greece, Portugal, Spain

Based on the analysis of the four country groups and the

decline of union membership and union coverage the authors conclude that " National political traditions established in the period 1946 through 1980 have a strong capacity to predict changes in unionization rates from 1980 to the present. Of course, our analysis cannot establish causality, but the data are consistent with the view that national politics are a major determinant of national unionization rates and changes in those rates in recent decades. At the same time, the data contradict the view that a decline in unionization rates is an inevitable implication of “globalization” or technological change.”

This is of course a very general conclusion that still does not explain for example the differences between the trends of unionization in two countries like Belgium and the Netherlands that share to a certain extend the same post war “broad political environment”, a combination of Christian and Social Democratic policy, more or less the same economical standard of living and that are both geographically small countries that since World War II are united in the Benelux together with Luxembourg.

Belgium and the Netherlands

However, trade union decline differs significantly between the two countries. While the Belgium trade unions lost only 2.2% of its members in the period 1960 – 2010, the Dutch trade unions lost 15.8%  or 7 times more than the Belgium trade unions. One of the explanations could be that in Belgium unemployment funds are administrated by the trade unions like in the Scandinavian countries, which is not the case in the Netherlands where unemployment funds are administrated by state institutions. The question is why in Belgium it was decided that public unemployment funds are administrated by trade unions and in the Netherlands this did not happen? 

Conclusion

Based on the examples of these two countries it is likely to conclude that trade union membership is linked directly to the functions trade unions have in the broad social field of a country. The less social functions trade unions have, the less they are needed  because people are protected socially by the national welfare state institutions. But there are still other factors that need to be investigated like for example the rule that only majority unions in an enterprise have the right to sign a collective agreement, or the closed shop system.