Tuesday, 26 January 2010

Will the recession increase trade union density?

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


Michael Burke said...

Rory, no accident that Dara Calleary is looking to lower wages in the hotel, catering and retail sectors by tearing up their JLC wage agreements. They are notoriously under-unionised, low-paid sectors.

Of course, this has nothing to do with international competitiveness; SuperMac's in O'Connell St. is not competing with MacDonald's in Brussels for your €5.

The next logical step is to go after the minmum wage. Mandate and other unions should be given every assistance in their fight against these measures, combining a union drive and campaign of action with the measures you suggest.

Rory O'Farrell said...

RE hotel, catering and retail:

In my experience students engaged in part time work tend to work in precisely these areas. Unknown to many students the Union of Students of Ireland and SIPTU have an agreement that gives students associated membership.

Given that a lot of people (who otherwise would not have) have returned to full time education, I think there is an opportunity for SIPTU to use the universities and ITs as a platform to organise these sectors and students. Perhaps MANDATE could do something similar.

Proposition Joe said...


Of course, this has nothing to do with international competitiveness; SuperMac's in O'Connell St. is not competing with MacDonald's in Brussels for your €5.

Well they're not competing for your fiver, but they are both competing for the tourist dollar along with similar establishments in Paris, Prague & London.

In the sense that their pricing, along with that of travel and accommodation and entertainment, feeds into the calculus people use when deciding where to take their weekend city breaks.


On the chances of Ghent system being adopted in Ireland, I've two words for you: "Jimmy" and "Hoffa" ;)

paul sweeney said...

Correction - of the CSO and Irish Times - not Rory. Irish union density was 36.3% in 2007 - not 31%. The CSO got it seriously wrong and will attempt to correct it in its next module. Congress has more members itself than the CSO total and that excluded a further 33,000 outside Congress. Happily, union density in Dec 2009 had risen and was up to 38.6%, but due to the fall employment. Congress is hoping that the newspaper of record will take a correction (note that their graph contradicts their text!). Otherwise fair articles.

Proposition Joe said...

A fundamental issue for the unions is that there are vast swathes of the new economy for which the traditional union lexicon and modus operandi would be completely alien.

Imagine trying to explain to a group of software engineers how they could pursue a pay claim by refusing to co-operate with the introduction of new technology? It simply would not compute would those guys. They pride themselves on their ability to quickly adapt to new technology. For chrissakes, they even compete with each other to be first to master anything new and shiny.

Similarly with the whole work-to-rule business. People who are used to constant adaptation and evolution of their roles would hoot in derision at anyone suggesting they should refuse to answer phones or use computers.

A response along the lines, "ah, shure we only use those tactics in the public service, we know we wouldn't get away with it anywhere else" would simply feed into the rampant scapegoating agenda.

Michelle O'Sullivan said...

Rory, interesting to note Jens Lind paper about the weakening relationship between unemployment insurance & union membership in Ghent countries. Union density in Sweden, Finland & Denmark fell from 80 something percent in 1990s to 70 something percent in 2000s. Some attribute the decline with more union-independent unemployment funds. Obviously unions in these countries still in better position than Irish unions.

Lind, J. (2009)'The End of the Ghent System as Trade Union Recruitment Machinery?', Industrial Relations Journal, 40, 6: 510-523

Anonymous said...

What are you on about Proposition Joe? The sectors of the economy you are talking about have extremely good management and communication systems within their organisation. It works both ways. Good HRM strategies lead to better owork practices. It is a completely different culture in the high texh private export sector and the civil service (which you are implicitly referring to). So, you are comparing apples and organges to be honest and asking the apple why it wont peel its skin like the orange.

As a private sector worker in a predominantly non unionised firm I can safely conclude that if managment brought in the pays cuts public sector workers are experiencing we would also be working-to-rule. We just wouldnt call it that. You can be damn sure I would not be in my office at 6.30pm finishing up a request by my line manager, nor would she expect me too.

Also, you have a public sector centred analysis what trade union actors actually do. Most trade unions are organised and based in the private sector. The world has moved well beyond your assumption that unions are some how 'anti-change'. A lot of the time it is the union pushing for change against a conservative managment who want to maintain a strict division of labour.

The traditional union lexicon is not alien to most workers losing their job, getting their pay cut. Again, your bias is toward high paid public sector workers (academics etc) and non unionised buy highly renumerated private sector workers (Intel etc). The vast majority of people who sell their labour in the market are in insecure, unrewarding work.

You are arguing against a straw man.

Proposition Joe said...

The sectors of the economy you are talking about have extremely good management and communication systems within their organisation.

My point exactly. People who are used to acting like grownups and being treated as such, are unlikely to impressed by the union antics on display recently.

As a private sector worker in a predominantly non unionised firm I can safely conclude that if managment brought in the pays cuts public sector workers are experiencing we would also be working-to-rule.

Genius strategy there, Anonymous. Your employer's business is going down the tubes so you react by withholding effort, further weakening the company's position. Death spiral results.

In any case, as many on this site are fond of pointing out, as a private sector worker the chances are you won't suffer a pay cut. Rather your employer on encountering financial difficulty is much more likely to cut payroll by reducing headcount, hours and/or non-core payments. The public sector is unusual in that these levers aren't generally available, hence the pressure on core pay.

Most trade unions are organised and based in the private sector.

Of course, the private sector is much larger. But correcting for sector size, a public servant is at least twice as likely to be unionized than their private sector counterpart.

The vast majority of people who sell their labour in the market are in insecure, unrewarding work.


My point though was that there's a not insignificant and growing sector of the workforce, the knowledge economy if you will, which is likely to remain highly resistant to unionization.

Rory O'Farrell said...

@ Proposition Joe

There are several interesting (technical) papers by Stole and Zwiebel that deal with when collective bargaining is to the benefit of workers. In a nutshell when individuals or groups are substitutes they should bargain together. When they are complementary it is in their interest to bargain separately. This explains why pilots and cabin crew tend to be in separate unions, but line workers in a factory tend to be in the same union.

Regarding the knowledge economy, I can't see how this is really fundamentally different in terms of bargaining. In fact the largest part of the 'knowledge economy', academia, has a high union density rate.

You also say to Anonymous "Genius strategy there, Anonymous. Your employer's business is going down the tubes so you react by withholding effort, further weakening the company's position. Death spiral results.
Do you seriously think that firms only try to minimise wages when they are on the edge of bankruptcy? What of Tesco and Boots?

@ Michelle O'Sullivan
Thanks for the reference

Tomaltach said...


You make a good point about Boots and Tesco. I don't think there is any doubt that large multi-national firms are often ruthless in carving back costs. And they have no scrupples when it comes to treating people badly if they think it will increase profits. Indeed that is probably a property of capital in general. Having said that, some nuances have to be noted. One is that we need to differentiate between sectors and job types. If the firms take the view that the kind of labour they need is hard to come by and retain, they adopt policies that make them attractive. They compete for talent that might be in short supply. When that 'culture' becomes the norm, conditions for certain categories of employee, or employees in a certain sector, can be very good.

I worked in a number of large multi-nationals (in Ireland and abroad) in the software sector over the last 15 years or so. In general, when those firms have been highly profitable and optimistic about the future they were quite generous in how they dealt with workers. There were good conditions of employment in general - from pay, to flebility, to pension, to health cover and so on. When the economic fortune of these firms turned dramatically worse, however, they took drastic action. One firm laid off a third of its workers in the French office where I worked, another closed one of its two main offices in Ireland, and a third began layoffs and is currently in a state of official bankruptcy.

When times were good, there was clearly no need, and I certainly detected no desire, for a union in these companies. When things became fairly dire, there was little a union could do. No one I knew said, as their firms shrank or closed, 'I wish we had a union'.

The reasons the multi-nationals I worked for made fairly spectacular gains in the 90s and sometimes through to the middle of the noughties, are often the same reasons why they declined sharply and implemented savage re-structuring. They are, globalisation, liberalisation, and hyper-competition. These conditions often presented these firms with amazing prospects for profit, but, given the inherint volatility that is current now, change is often rapid and daunting. The firm in France that laid off a third of its workers, built an office in Bangalore in 2002. It now employs 2000 workers there. You bet its competitors do the same. The pressure to shift from places like Ireland are very real. And again here, I don't see how much difference a union would make. The forces at play here are complex and overwhelming, and it is difficult to see where to start in terms of achieving some kind of workable stability.

I am not of course arguing that unions are everywhere redundant. But I am giving another reason why workers in certain sectors never had the desire to unionize.

Rory O'Farrell said...

@ Tomaltach

I agree we should differentiate between jobs and sectors.

Using some imperfect data, Wholesale and retail has a density of 21.4% and hotels and restaurants 15.9%. These are sectors that where workers would benefit a lot from organising.

Even when union density in Ireland was at its peak there were still over 30% of employees not in unions for various unions, so I don't think anything fundamental has changed with regard to some workers benefiting more from membership than others. Multinationals have been in Ireland for a long time. In my view the fundamental change is the rate of firm/job creation and destruction.

While there has been a shift away from manufacturing employment, I agree with Des Bishop's description of working in a supermarket at being similar to a factory.
They are both large employers, workers do assembly line type tasks, supermarkets often open 24 hours for customers and/or restacking of shelves.

Proposition Joe said...


What of Tesco and Boots?

Well I was talking specifically about the knowledge economy (indigenous and FDI-based) as opposed to more pedestrian outfits like Tescos or Boots (where the workers both need and have union representation).

In fact the largest part of the 'knowledge economy', academia, has a high union density rate.

That's a bit of a stretch. Academics, unless they're specifically working in commercialization or spin-outs, wouldn't usually be considered part of the new knowledge economy. Part of the supporting/enabling ecosystem, most definitely, but not part of the core engine of the knowledge economy itself.

Its a matter of organizational culture more than anything else. I'd really find it hard to see the sort of dispute currently unfolding over exam corrections in WIT being replicated in say a software engineering firm or pharma lab. If you're paid too much due to an administrative error, the usual response would be to simply hand the extra money back. Not to refuse to do the work that you've already been overpaid for.

Rory O'Farrell said...

I never worked in an IT firm or pharma lab, so I can't really make much informed comment.

In Sweden some workers, which tend to fit your 'new knowledge economy' profile are union workers but bargain wages individually rather than collectively. To me this seems a little strange, but they may be members for the social security benefits (Ghent system).

Aidan R said...

This is an interesting and timely article. I think the comparative difference you outline between the Irish sytem (residual welfare and minimal involvment of unions or employers in social insurance funds) is of most importance when trying to assess the reason behind decreasing union density. It is also a significant difference in terms of our social welfare, political economic system.

Another issue is the highly fragmented nature of Irelands labour market (as can be witnessed from discussion in the subsequent posts). We have a very diverse labour market, quite different to most EU economies.

The higly profitable foreign owned sectors have quite advanced organisational structures and services that internalise a lot of the benefits trade unions can provide (admitedly, of course, in good times). I think most trade unionists accept this and dont particularly feel the need to unionise this sector.

Of the three countries with Ghent systems that you mention (Finland, Denmark and Sweden) it is really Denmark that is most comparable to Ireland. All are small open market economies but the Danish system (the champion of flexicurity- secure the person not the job) is quite interesting. They have modelled their economy so that they have a flexible labour market (one would assume this will decrease trade union denisty) but high social transfers. Thus, they combine social democracy with market liberalism in a unique way (that is quite different to Sweden).

They have also structurally adapted their public services to become more flexible, a change that was led by the trade unions in negotiation with government. The public sector is seen not as separate to the wider 'competitive private sector' but integral to it. The divide between 'public and private' that has been whipped up over the past 12 months is most unhelpful. Such public attitudes do not exist in most European societies.

But, perhaps there is space for some policy learning for trade unionists and government by examining the Danish system which contains elements that satisfy both of their interests. Some might argue that the context for doing this already exists in the NESC 2005 document: 'The Developmental Welfare' State.

Rory O'Farrell said...

@ Aidan R

I agree that Denmark is the relevant benchmark. The question should not be Boston or Berlin, but between Canberra and Copenhagen.

Denmark is a small open economy, has a population of about 5 million, has few natural resources, agriculture and food are relatively important, it is on the sea, its currency is linked to the Euro, it is neighbouring a far larger economy, its cities were established by the Vikings, and it rains (a lot).

All these apply to Ireland. Of course there are differences (we tend to drink dark beer and they drink blonde beer) but we can learn a lot from their approach that leads to a competitive economy, high wages, low unemployment and social stability.

Aidan R said...

Interestingly,the president of the Union Federation of Danish Workers has called for one "large union" in response to declining membership.

You can read about it here:


James Conran said...

If the unions are to retain the newly unemployed as members in anything more than a nominal sense then given the absence of a Ghent system they will presumably need to provide increased services to them. I don't know what kind or extent of services they currently do provide.

An increased (democratic!) centralisation of power/resources in Congress would also seem necessary to preserve the relevance of the union movement. Besides the standard "strength in unity" reason I would suggest that this could play a part in responding to the end of the "job for life" economy. If workers are making frequent transitions from job to job and in and out of employment then it might be easier to keep them unionised if ICTU (as opposed to SIPTU etc.) membership takes on a less nominal character.

Finally, regarding private sector unionisation, if you are to have a labour market capable of adjusting to macroeconomic shocks of the kind we have suffered you arguably need either an American-style union-free labour market or a Scandanavian-style universal-unionisation model. A midway house means there is enough union power to protect insiders and disrupt the "smooth" working of the labour market, but not enough for the unions to provide a coordinated response (eg wage restraint) as part of a national corporatist bargain. So if everything the critics of the public sector unions say about the damage done to the country by said unions is true (big if obviously), the implication is either a) smash the existing unions or b) we need greater private sector unionisation so that unions don't just protect the insiders but rather take responsibility for the economy as a whole.