Politics matters more than globalisation or technology for unionisation (and equality)

The supposedly universal decline in the power of trade unions is often ascribed to unavoidable or desirable trends such as technological progress or globalisation.

In a short, clear and well-argued paper John Schmitt and Alexandra Mitukiewicz from the CEPR in Washington DC point out, first, that (de)unionisation trends have been very different across the OECD countries. Second, they show that globalisation and technological change are unlikely candidates for explaining this pattern, as broadly all countries were exposed to these forces to similar extents. Thirdly, and most importantly, they classify countries according to a standard ‘worlds of welfare capitalism’-type approach into four groups: social-democratic, conservative-corporatist, liberal and southern European ‘ex-dictatorships’, and show very different trends for these different groups of countries.

Particularly in the case of collective bargaining coverage (the proportion of workers whose wages are determined by collective agreements), it is clear that ‘politics matter’. Coverage has increased in the social-democratic (Nordic) group, declined slightly in conservative-corporatist countries on average, but uniformly and rather sharply in ‘liberal’ countries, including the UK and US. Outcomes in the southern countries are mixed:

Changes in collective bargaining coverage, 1970-2007

The pattern across country groups also applies to changes in trade union density (the proportion of the workforce organised in unions), although it is a little less compelling, with larger overlaps:

Changes in union density, 1970-2007

Work like this shows the power of simple descriptive statistics – if carefully and thoughtfully done – to explode oft-peddled myths. Few social phenomena are inevitable. There are trade-offs, but there are choices.

Some work I did a while back (with Rory O’Farrel) shows, for EU countries, that union density and bargaining coverage, in turn, are positively correlated with various measures of income equality: countries with high density and coverage tend to be more equal. This is partly because union policies actively serve to reduce inequalities. But – as is suggested by the CEPR study – it is also the case that policy frameworks that are conducive to greater equality, most notably the social democratic and in some cases also the conservative-corporatist model of capitalism, also bolster trade unionism.