Why conservatives should support Trade Unions, not cheer their demise


by Chris Dillow    
9:15 am - September 11th 2012

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Trades union membership has fallen to its lowest level since the 1940s. In principle, this should trouble conservatives.

This is because trade unions are an example of non-statist self-reliance, of people organizing to help themselves rather than looking to government.

I say this because of a fact pointed out by Philippe Aghion and colleagues – that there is a strong negative correlation across countries between union membership and minimum wage laws.

Countries with strong unions, such as the Nordic nations, tend to have no minimum wage laws whilst countries with lower union membership, such as Greece or France, have stronger minimum wage legislation.

The UK had no national minimum wage in the 50s and 60s, believing that collective bargaining could better regulate wages. It was only after the collapse in union power that a NMW was enacted.

I suspect that what's true of minimum wages might also be true of other aspects of regulation. Elf n safety laws also increased after the decline of unions.

Unions, then, are an alternative to state intervention.There's a simple reason for this. Workers, naturally, will always want their working standards improved. If they cannot pursue this aim through unionization, they'll do so through politics instead.

But the thing is that collective bargaining is a more efficient way of protecting workers than the law.One reason for this is that the law inflexibly applies to everyone, whereas bargaining allows for workers to accept worse wages or working conditions where it would be prohibitively expensive to improve them. Also, the complexity of the law creates uncertainty which can be worse for business than good working relations with a union.

Tugrowth

These considerations lead me to this chart. Drawn from the OECD and other sources, it plots union density in 1991 (admittedly an arbitrary date) against GDP growth since then.

You can see that there is only a negative correlation between the two because of that Korean outlier.If Korea is excluded, there is a positive correlation (0.25) across the 22 advanced nations in my sample between union density and subsequent growth.Highly unionized Finland and Sweden have done better than less unionized Japan or the US.

This isn't so robust as to suggest that unions are definitely good for growth. But it does mean they aren't obviously bad*.

In this sense, people who want less state intervention and stronger growth should be sympathetic towards unions. So, why aren't Tories mourning their decline? I mean, it's not as if they just blindly hate the working class, is it?  


* There is a strong negative correlation between the change in union density and GDP growth over this time; faster-growing economies have seen bigger falls in union density. But there's an endogeneity issue here. It could be that fast growth is associated with more creative destruction, which sees the decline of unionised workplaces and emergence of more non-unionised ones, whereas a sclerotic economy preserves unionized workplaces.

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About the author
Chris Dillow is a regular contributor and former City economist, now an economics writer. He is also the author of The End of Politics: New Labour and the Folly of Managerialism. Also at: Stumbling and Mumbling
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Reader comments


1. Northern Worker

Clearly unions are a necessity and for a long time I was in the AEU. But eventually it became apparent that politics and fiefdoms were overwhelming the organisation. That’s when I stopped my dues.

Of course I’m talking here about the 70s and things might be different now and unions might again be the altruistic organisation I joined in the 60s. Somehow, I don’t think so.

Then again the Conservatives want people to set up businesses easily and make as much money as possible. This doesn’t fit in with either trade unions or NMW and Health and Safety.

Or it could be that a unionized economy preserves sclerotic workplaces?!

Either way as you say correlation of 0.25 is so weak as to be meaningless.

@ cjcj – the correlation doesn’t prove anything. But it’s not entirely meaningless. I mention it for two reasons. First, to support the theory that there is at least one mechanism through which unions might be good for the economy. (There are of course other possible mechanisms, some positive, some not).
Secondly, it undermines the kneejerk rightist objection that strong unions are bad for growth. If it were the case that strong unions preserve sclerotic workplaces, we’d expect a negative correlation – which we don’t see.
And remember, in the social sciences, correlations are very often low. Evidence is often weak and ambiguous, which is why people so often ignore it.

I think Chris Dillow has misunderstood the nature of conservatism here. Conservatism is fundamentally a doctrine about protecting and enhancing the wealth and power of the wealthy and powerful. Unions are a challenge to the power of managers and business owners.

Libertarians, on the other hand, should support trades unions.

Absolutely.

The right to strike and the right to sack.

Interesting angle. I think the problem is that in the public sector collective bargaining isn’t done on a local basis but more on a national one. Hence the opposition to moving away from national pay scales even though, eg it might give the opportunity for public sector workers in expensive areas of the South East to get more and for employers to offer more to enable them to fill posts. If the Unions did in fact work the way that the article suggests, they’d be easier for non-members to support.

On the other hand, if they work, as they expressly did at times in the 70s and 80s to try to bring down the government, succeeding against one Conservative leader, failing against another who won election on a platform of taming them it is unsurprising that Conservatives are less inclined to see Unions as embodiments of the Big Society.

8. Richard Carey

@5 Richard Gadsden,

“Libertarians, on the other hand, should support trades unions.”

Libertarians should support someone’s right to join a trade union, as much as someone’s right not to join one, the right to strike as well as the right of an employer to replace a striker with someone else who is prepared to work.

Unions serve no purpose…there, lets get it out.

There was an age when the unions were important. In an age where they pushed children down mines to work 12 hour shifts the only method of improving the situation appeared to be by collective action. That however is no longer the case.

The UK has some of the most enshrined and protective employment rights of any developed country. The legislation (in particular the ERA 1996) has given employees the ability to sue for almost any type of dismissal. The tribunals have been opened up to litigants in person. Judges go soft on LiP and will often take proceedings in hand to ensure a fair outcome. There are also a multitude of solicitors firms taking on employment cases on a CFA basis and there are many different charities pursuing employment claims. So again, what purpose do unions serve?

They organise strikes, but for what? Many of them complain over pay, however pay terms and possible increases are contained within a contract of employment…which the worker signed. If they are unhappy with it, quit. If you employer has breached a term of the agreement you signed, sue them. It costs barely anything and you can do it yourself without the need for lawyers.

What have these unions become? Quite frankly, state sponsored fat cats. The likes of Crow, Barber, and McCluskey who like to swan around whipping up the prole agaisnt a non existent enemy so they can keep their 150k a year and lunches with government ministers. Workers think they are there to protect them, but really workers are just there so they can have their membership fee extracted out of them.

10. Chaise Guevara

@ 9 Freeman

“If you employer has breached a term of the agreement you signed, sue them. It costs barely anything and you can do it yourself without the need for lawyers.”

This isn’t true. It can cost quite a lot (especially if you count time spent off work, or unable to look for work, because you’re in court), and without lawyers you are a lot less likely to get justice. One thing unions are still good for is providing the support that allows mistreated workers to sue.

@10. Chaise Guevara

No. For all my sins, 25% of my professional career is spent in Employment tribunals representing both Claimants and Respondents.

“This isn’t true. It can cost quite a lot (especially if you count time spent off work, or unable to look for work, because you’re in court), and without lawyers you are a lot less likely to get justice. One thing unions are still good for is providing the support that allows mistreated workers to sue.”

1) 80% of employment cases are dealt with in 1 day. Hardly difficult to get oof work.

2) No one I have ever come across in my experience, ever, has spent 8-9 hours a day looking for work. So one day in court will not harm someones ability to look for work.

3) There are a number of Charities, chief among which is FRU which will provide you with free representation. Further, if you actually do have a claim you will almost always be able to find a solicitor to represent you on a CFA basis.

4)As I explained, where a person represents themselves the judge will take over the advocates role. Further, statistics have shown that there is almost no difference in success rates. People often just prefer counsel because it makes it easier for them.

5) My experience of unions assistance in cases is at best, rubbish. I have found them to be extremely poor at even doing basic tasks such as following up with Claimants.

11

I suppose it would be bad for business if TUs were as strong as they were pre-1980s – long live self-interest.

13. Chaise Guevara

@ 11 Freeman

I’m going to be sensible and give you the benefit of the doubt on this, as you’re obviously better informed than me on the subject. Still, they can be useful. A union at a former workplace at mine used to represent disputing workers both to the managers and then to the courts if needed. Now, I’m sure you’re right and that you can do just as well yourself with charitable support and a bit of gumption. But the point is that an upset or intimidated worker on their own is a lot less likely to have the confidence to seek justice than one with union backing. Apart from anything else, one of the oldest tricks in the book of bad managers is making you think it’s your fault you’ve been passed over, sacked, or mistreated. Bullies can be pretty smart sometimes.

@13. Chaise Guevara

There is an element of truth in that. Unfortunately it works the other way too. I have found that in some cases the unions are in fact the reason that the case has been brought even when it really is a hopeless case. You can often see where there is an ongoing dispute between a union and employer, the union will often stir up employees to take out actions against the employer to try and make the situation more uncomfortable.

I really think its important to consider the cost/benefit of unions however. Certainly there may be some circumstances where a union will be useful, but we must remain resonable as to how much we are going to spend for that small amount of help. Given that trade unions cost the tax payer millions and millions a year I wonder whether the money would better be used back in peoples pockets, along with the union fees they are paying.

15. Chaise Guevara

@ 14 Freeman

“There is an element of truth in that. Unfortunately it works the other way too. I have found that in some cases the unions are in fact the reason that the case has been brought even when it really is a hopeless case.”

One union rep told me that she was representing this guy despite it being hopeless (and him being wrong) because he wanted to go through with it and it was her duty to give him every chance she could, despite her misgivings. Not sure how I feel about that. Seems a waste of everyone’s time, but I’d be pissed off if I’d been paying subs for years, only to be refused help when I needed it.

“You can often see where there is an ongoing dispute between a union and employer, the union will often stir up employees to take out actions against the employer to try and make the situation more uncomfortable.”

Sure, I imagine that happens.

“I really think its important to consider the cost/benefit of unions however.”

Well, people can do that when choosing whether to join. Bearing in mind…

“Given that trade unions cost the tax payer millions and millions a year I wonder whether the money would better be used back in peoples pockets, along with the union fees they are paying.”

…Off the top of my head, I see no justification for unions receiving taxpayer funding. Although I’m open to suggestions.

I think that the Conservatives accept the existence of trade unions, but would very much prefer them to be company Workers Forums and not cross from one company to another. This is not to reduce their effectiveness to the members, but to protect companies from being dragged into disputes that do not affect them.

Conservatives with a capital C, *do* support Trade Unions. It is only Whigs who do not.However we do not, in general, support closed shops – there are a few exceptions: even Mrs Thatcher (whom I regard as a Whig) supported a closed shop for Equity.
Quote “All power tends to corrupt, absolute power tends to corrupt absolutely”. Labour repeatedly proposes absolute power for their union paymasters.
Conservatives support strong unions with OPEN SHOPS
I grew up in a working-class town in the North-east and had to leave when I graduated, thanks to Harold Wilson, in order to get an honest job (I could have used my father’s reputation as a near-genius to get a job which I probably couldn’t do but I was honest and there were no jobs for a moderate Oxbridge maths graduate within a hundred miles). I have suffered the effect of unions several times since then (at one time I expected ASLEF to lead to my death)


Reactions: Twitter, blogs
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