Rory O'Farrell: On Monday, 25th January, the Irish Times published an article detailing how in 2007 Irish trade union density has continued its downward trend. At the peak of the boom density reached 31 per cent of employees. Should Irish trade unions be worried?
Union density is crucial in maintaining the bargaining power of unions. Member dues pay for the resources of the union. Without a high density in a specific company the threat of strike action is implausible. A low trade union density can lead to allegations that unionised workers are privileged insiders, as can been seen with the scapegoating of public sector workers.
Across Europe, as shown in the ICTWSS database, there has been a general decline in trade union density across Europe. There are three interesting facts however that should receive greater recognition.
1) In Finland, Sweden, and Denmark, countries that use the Ghent system (whereby unions have a roll in administering or paying unemployment benefit), there has not been a strong decline. In fact, in Finland which reintroduced the Ghent system in the 1960s showed a steady increase in union density until the the mid-1990s and now stands at about 71 per cent. Small subsequent decline are related to a weakening of the Ghent system.
2) Another interesting fact (as show for the UK by Willman and Bryson, 2007) is that union density has remained higher in the public sector.
3) In the UK the main reason unions declined was not due to deunionisation, but a failure to organise in new establishments (Machin, 2000).
Many explantions have been put forward for the decline in union density, such as changing composition of industry and globalisation. These can only tell part of the story. In an interesting (though technical) paper by Edgar Preugschat an alternative explanation is given. Since the 1970s there has been an increase in the rate of firm creation and destruction. The days of a ‘job for life’ are over. This affects unions negatively for the following reason. It is costly (in both time and resources) for unions to recruit members. Once a worker joins a union they usually stay in the union while they are still in their job, but leave if they become unemployed. In the past if someone had a job for life, then once successfully recruited the union had a member for life. However, if someone loses their job and leaves the union, when they finally find a new job the union will again have to go through time and effort to recruit the member into the union. Rather than having a member for life the union will repeatedly have to recruit the worker, and there will always be a time lag when the worker has perhaps ‘not gotten round to’ rejoining the union once in employment. Also, once a union has a presence in a firm it is easier for them to recruit members within that firm. However, as the rate of firm creation and destruction increases unions will have to try organise in ‘fresh’ firms which may be hostile to the union organising activity. This places a major drain on the organising effort of unions.
Though union density decreased until 2007, what has happened since? Unfortunately data is hard to come by. However, within individual sectors we can expect net union density to first increase during the recession as union members are more successful at keeping their jobs due to the efforts of their unions (though there has been mixed evidence in the past). The overall effect of the downturn on national union density could be negative if job losses in relatively high density sectors (such as manufacturing or banking) are disproportionate to job losses in the whole economy, but overall I expect union density to at first increase slightly. Once job creation eventually begins union density will fall again as unions will have to make a push to recruit these newly employed workers and organise new firms. As the public sector is not subject to job destruction and creation to the same extent, union density will remain high in the public sector, but decrease in the private sector. This will again leave unions open to scapegoating as ‘vested interest groups’.
While unions will never affect the rate of firm creation they can still counteract its effects on union density. As mentioned before, countries using the Ghent system have maintained high density. One explanation is that unemployed workers usually do not leave the union (as they receive unemployment benefit from the union). Ghent country unions are more likely to have a member for life. While implementing the Ghent system is unlikely in Ireland unions can take measures to keep unemployed members in the union. Unions can offer free membership (rather than reduced rates) to workers who lose their jobs, and also perhaps give some other benefits to maintain their active membership. While this may have short term costs in the long term it would be to the benefit of the union. Having unemployed member with full voting rights, and perhaps even an ‘unemployed members branch’ would also counter allegations of unions representing privileged insiders. Finally, it would make recruitment far easier.
There could be some problems, such as how to deal with a situation where a formerly unemployed SIPTU member gets a job in a firm represented by UNITE. Should that worker leave SIPTU and join UNITE? The ICTU could perhaps maintain a membership database to deal with such issues. Also free membership to unemployed members would be of greater benefit to larger unions (such as SIPTU) or unions whose members, if they become unemployed, are likely to get their next job in a firm represented by the same union.
However, despite any problems, the benefits are great. Hopefully the labour market will have recovered by 2013, and Irish trade unionism will follow quickly behind.
Machin, S., (2000). Union decline in Britain, British Journal of Industrial Relations, 38(4): 631-645.
Willman, P., and Bryson, A., (200). Union Organization in Great Britain, Journal of Labor Research, 28(1):93-115
Dr Rory O'Farrell @r_o_farrell
Rory O'Farrell is an economist lecturing in TU Dublin. He previously worked for the OECD and for NERI.