ARE TRADE UNIONS OLD FASHIONED?

Strike picket at the gate of the Volkswagen plant in Brussels, November 2006. Volkswagen was planning to close the whole plant.

A few days ago I heard for the first time a TV interviewer ask president Marc Leemans of the Belgium trade union confederation ACV if the trade union was not what old-fashioned? Of course the President did not agree. The trade union represents the interests of the workers and he knows what this means. As he himself explained, he is from a workers family with seven children. His mother did not have an easy life. Those times must not come back, he said. The interests of workers are therefore in good hands with him. However, this was was not an answer to the question.

In the Netherlands, on the other hand, already some time the trade unions are accused of being old-fashioned. Not by everyone, of course, but still disturbingly often. In short, the criticism is that trade unions are against any change, that they are only interested to represent their members, mostly older workers with a permanent contract and that they have no interest in the problems of youth. Meanwhile, young people are unemployed or have a low paid job without a permanent contract, lower social benefits, have to work longer and probably will have a lower pension. A gap threatens to grow between the older workers and young people. The older generation thinks only of himself, that is the allegation. In stead of solidarity, there is a generational conflict growing.

Meeting of workers of Volkswagen in front of the plant in Brussels, november 2006

The trade unions do not agree with this. They see themselves as progressive, modern, solidary, useful and important for country and people. They still have the status of official national representatives of all workers in the nation. They are the social partners of employers and politics. Their social dialogue led to social peace and political stability, the basis on which the postwar welfare state was built. The welfare state as organized solidarity.

But there were changes, partly due to the success of the welfare state itself. As a result of the welfare state people live longer, this threatens to make pensions based on the pay-as-you-go system priceless. As a result of the on going globalization, traditional industries disappeared like mining, steel, shipbuilding, textile industry etc., precisely those industries on which the sociopolitical power and collectivist solidarity model of trade unionism was based. The demise of traditional smokestack industry was followed by new industries with a growing individualization. Higher and better educated workers, also the result of the welfare state, are less charmed of the collectivistic solidarity model. They want to have part time work, have personal responsibility, if possible they want to change jobs etc. In the meantime the labor market asks for more flexible working hours and contracts, outsourcing, self-employed (millions of self-employed enter the labor market ) followed by privatization, liberalization etc. Globalization brought much turmoil on the labor market.

One of the strikers at the Volkswagen plant in Brussels, november 2006

The trade unions are since then facing two big problems: loss of thousands of members and a rapidly changing labor market as a result of individualization, globalization, liberalization and privatization. You can then try to stop this but then chances are great that you are going to miss the economic link with the world market and before you know you are losing the revenues on which the welfare state is built. More distribution of wealth will probably ease the pain, but not more than that. Economies built only on distribution of wealth, at the end bring poverty. Cuba and North Korea are extreme examples of this phenomenon. Investments are needed, preferably in the private and public sectors. Investments that also create new jobs.

The public debate in the Netherlands in recent years resulted into reforms such as raising the retirement age (within a period of approximately 2 years the pension age will be raised until 67) , a tighter and shorter unemployment insurance more focused on piloting the unemployed into a new job than financial assistance, stricter supervision of social services, limited subsidies for job creation for the disabled and stricter monitoring of care. On top of this, Governments call for more responsibility for a job, own income, health care and so on.

Meeting of the strikers at the Volkswagen plant in Brussels, november 2006

Slowly but surely, the image of the worker in the Netherlands changes from victim into an individual that is responsable for its own life. The welfare state is still there to support the workers when things go wrong but not anymore to take care from the cradle to the grave. For many unions this is like swearing in church, but their traditional power base has been undermined.

No wonder the unions are busy with themselves, looking for an answer to the lost social and political influence. Mergers of trade unions from various sectors is the answer to the loss of members. For example already a few years, the Dutch trade union confederation FNV is reorganizing its structures to bring all unions together under one roof. This means more centralism to give more socio-political body to the social dialogue. But centralism is at odds with individualization. Workers want like consumers more customized services and less imposed collectivist schemes. The mergers are therefore only the beginning of a response to the crises.

Two workers at the trade union meeting of workers of Volkswagen, november 2006

To make matters worse the new century began with an economic disaster of a magnitude that has not been seen since the crisis in the twenties and thirties of the last century. The consequences are now widely reported, but the answer is not yet found. Economists are fighting among themselves about what to do but nobody really knows. Unions are trying to save from the burning socioeconomic house what can be saved with classical solutions for example more money from the Government for all kind of investments which means also making more debts.

The trade unions do not need to be ashamed that they have no ready answers and great difficulty with the reforms, but they may be more open to suggestions. It is not constructive if trade unions do not want to talk about proposals of employers to look for ways the millions of self-employed to integrate in the social security system. The trade unions should also start a dialogue about the possibility for retired workers to continue working after they have reached the age of pensioning. Trade unions that are putting their heels in the sand, give indeed the impression of being old-fashioned.

Man at the solidarity bus is writing a message that begins with "We are not alone"

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.