Reasons For Fall Of Trade Unions Membership Density In Germany, US, UK And Australia:

Introduction:

The trade unions are defined as the organizations which are responsible for stating the interests of its members to the employers (Van & Poguntke, 2014). They are mainly engaged in bargaining for greater wages of employees, improved working conditions, equality of wages, reduction in working hours and for overall protection of rights of employees (Visser, 2011). The unions are making an effort to influence the policy making of the countries related to labor as well (Dunlop, 1950). Trade unions are responsible for provision of voice to the employees in terms of their job (Culpepper & Regan, 2014). These unions can also serve for the fulfillment of psychological functions of the employees and can increase the sense of dignity among the workers.

Currently, the trade unions are facing extensive challenges in their operations due to number of factors including: vulnerability of risk due to political conditions, increase in competition of foreign market, demands of changes in the nature of work (Wallerstein & Western, 2000). Along with this, unions are also facing the problem of adjusting with the climate changes and are facing issues in adapting the requirement of the drastically changing environment (Fairbrother, 2000). All of these challenges are resulting in decline of membership of trade unions (Gallin, 2001). Along with this, the traditional ties of the trade unions with the political parties are also weakening and unions has less influence on the employers due to lower bargaining power and decentralized wage  settings.

Main-Body

Fall of Trade Unions in Germany:

There has been cyclical ups and downs regarding the membership trends in the European Countries, and Germany has also suffered in terms of performance of its inions (Turner et al., 2012). The member ship of the trade unions is Germany is continuously decreasing, which can be seen in the figure 1.

 

Figure 1. Trend of trade union density in Germany

Source: Gesamtmetall (2006).

Of many reasons behind the fall of union density is the rate of inflation and unemployment. It is evident that motivation to employees for joining a union lies in their need of bargaining for greater wages (Palier & Thelen, 2010). Due to higher rate of unemployment and inflation, the employers hold the greater bargaining power. The greater bargaining power of employer is associated with the lower power of the unions are therefore, the membership of the unions also suffers negatively (Mundlak, 2016). It is also of greater importance that unions with higher levels of employment insurance may not suffer from the rate of unemployment and they can increase their membership by limiting the chances to avail benefits of unemployment for the non-members (Hyman, 2005). In Germany he level of unemployment has risen and the dismantled indexation clauses has led to the perception that unions are less effective in their fulfilment of their bargaining roles.

Along with this, the open shop system has also gain significance in the German economy and prevalence of this system has ensured different rights to the employees as a public good (Hassel, 2014). These rights could include; equality of pay, higher amount of wages, favorable working conditions and reduction in working hours. The easy availability of this rights as a public good has lowered the need of units for bargaining of employees rights. Moreover, the membership fee of the unions is making it costly and a common employee would prefer to take a free ride in the system rather than paying for it (Palier & Thelen, 2010). Moreover, of greater significance is the view of social customer theory, which is providing that regardless of free riding concept in the market, reputation of the unions can also contribute to enhance the membership density in trade unions (Fairbrother, 2000). In Germany the reliance of employees on the trade union has not supported by the reputation of the unions and open shop system has caused decline in the density of the unions.

Along with this, the Germany is a high quality export economy and it is requiring from the employers to agree on a moderate level of wage, with an aim of maintaining the peace in the industrialized economy (Dustmann et al., 2014). This has been seen as the strength of the trade unions and weakness of the employers but it was not the case. The companies were not taking the threats of the unions seriously and the trade unions have faced a dilemma and they have to choose between the wage bargaining and loss of sectoral bargaining. This has also contributed negatively in the membership density of the trade unions. It has been provided by the researchers, that among many other integrated economies, unions of Germany were more susceptible of this problem (Visser, 2006). The reason was the heterogeneity among the members of unions and there level of agreements were also different. Moreover, the unions in the Germany were larger than other countries and they were responsible for wage bargaining of many small as well as large companies (Wallerstein & Western, 2000). These firms also differ on their ability to pay and to bear the pressure of trade unions. In this vein, the organizations which are smaller and weaker, became unable to sustain the pressure and they withdraw from the union. The withdrawal of employers from the unions due to blocked differentiation in Germany has caused decrease in the convergence of the unions.

In related vein, it has been argued by the researchers that Germany has been exposed to centrifugal pressure more than any other countries (Palier & Thelen, 2010). It has also led the lower density of the trade unions in Germany. The reason of this susceptibility to the centrifugal pressure is that the mediation role of the country or state in the conflict resolution is missing. The lack of statutory mediation in ending of the strikes is an issue that is mainly faced by the German trade unions and is affecting the performance of trade unions negatively (Hassel, 2014). This is causing a decline in the membership density of the German trade unions and industrial associations. Moreover, the rescue strategy is missing in the unions of Germany and its showing that there is a need to develop the organized decentralization, which can encompass more leverage for the firms and workers (Van & Poguntke, 2014). The unions of Germany should include the contemporary agendas to overcome the stress related with work family balance and should promote the welfare based on social pacts.

Fall of Trade Unions in US:

The union memberships in the United States has shown drastic decrease since the 1960 and it is continued to decrease in the recent years (Gallup, 2011). The trend can be shown in the figure 2 below. The decline in the union membership density is note able both in public and private sector organizations of US.

Figure 2: Union membership density in US

Source: (Gallup, 2011)

The US Government has initiated many different programs for labor education, which has an aim of educating the labors about the contemporary issues (Baldwin, 2013). Despite of these efforts laid by the Government, the membership of the unions in the US is declining continuously. It has been argued by different scholars, that decline in unionization density is greater in US than any other country (Medoff, 1979). There could be different reasons of this decline in union density. Firstly, the public approval about the union is an important trend that can foster or hinder the membership density of unions (Thelen, 2004). The popularity of the unions in US has largely been affected by the great recession of 2009 and the drastic decline in the union density has bene during this time. It was due the growth in the rate of unemployment which can lead to negatively affect the opinion of public about the unionization. Another important driver of low public approval for unions is the concept of corporatizing. According to this concept, the leadership of the trade association was referred to as bosses and member of the companies were considering the union leader as equally responsibly for of their rights as they were considering their employer. Another reason of lower density of the union membership is the lack of power of the trade unions. It has widely been observed by the researchers that in corporate sector unions are likely to possess less power of bargaining and their threat effect has decreased largely (Van & Poguntke, 2014). The less power of the union is also causing their lower popularity among the public.

Along with this, the Gallup poll survey has provided that most of the American citizens have provided that there is a need to restrict the collective bargaining power of the unions and most of them were using negative phrase when asking about the trade unions (Gallup, 2007). It has bene provided by the researchers that there are some institutional factors that contributing the lower density of the unions in the US. The receptiveness for the unions’ institutional environment is missing. There is neither the Ghent system, nor the centralized collective bargaining (Fairbrother, 2000). The former is associated with the procedure in which unions are kept liable for collective bargaining and payment welfare (Van & Poguntke, 2014). The latter is associated with the granting greater bargaining power to the trade union at national level (Gallin, 2001). In US these institutional reforms are missing and the unions are not receiving any formalized access to prove their efficiency. This is contributing significantly in lowering the membership density in the US.

Moreover, it is also note able that unions were responding negatively to the globalization and of greater significance in the research of the (Klett et al., 2004) which showed that unions were responding negatively to the North American Free Trade Agreement (NAFTA). The opposition of the unions to the internationalization has also created negative perceptions of unions in the minds of the people and it also contributed negatively in the lowering density of union membership. Along with this, an important initiative of the unions was the development of transnational legislations, which were aimed at creation of codes of conduct for the companies. It has been argued by the Thelen, (2004) that unions were not efficiently involved in the monitoring of these legislations and it had a negative impact, as the companies has started using it as the shield against any labors related issue. In this way, it can argued that unions has left a negative impression over the corporations, which has also contributed significantly in reduction of their membership density.

Furthermore, the reliance of the employees is increasing on the Government, and they are directly depending on government for basic protection of their work related rights (Baldwin, 2013). Government is responsible for pension, protection against work and wage related discrimination and improvement for working conditions for the workers. The increasing involvement of Government is causing disruption in the promotion of unions and their member density is falling rapidly. Finally, one of the significant reason for the fall of density among the unions in US is the decentralization of the wage settings, which is depicting that wage rates will be influenced and decided by the employers rather than unions (Dunlop, 1950). This concept has limited the involvement of unions and has significantly lowered the need collecting bargaining power of the unions. Therefore, the results is the decline in the density of membership of the trade unions in US.

The unions of the US has aligned with an aim of overcoming the problem of declining membership density. Three important unions naming; the Teamsters, the Service Employees International, and the United Food and Commercial Workers, has got separated from US labor umbrella group with an aim to improve their density. They have joined change to win coalition with an aim of promoting the bargaining capability (Gallup, 2011). The change to win coalition has been considered as an important initiative by the unions of the United States and it can help in improving the membership density of the unions. Therefore, it can be argued that the conditions of the US unions can improve in the coming years. Along with this, the potential avenue for the growth of trade unions in the US is the prospects of the unions to gain attention of the young workers. One of the survey conducted on the public opinion has shown that young workers in the service sector of the United States has developed positive perceptions about the unions (Thelen, 2004). As the figure 3 below is showing that there is greater support for the unions among the public but still the membership of the unions is quiet lower.

Figure 3. Opinion of Public and union membership in US

Source: (Saad, 2009)

It has been argued by the Fairbrother, (2000) that it would be difficult for the US unions to convert this support into the membership. The restructuring of unions is therefore an important task for the unions of the US.

Fall of Membership in Trade Unions of UK:        

The trade unions of the UK falls under the membership of trade union legislation and they have worked under the Government legislation with an aim of bargaining for the rights of employees (Taylor & Bain, 2001). The Government ha restricted the operations of the trade unions by weakening their ability to influence the policies for the welfare of labors (Wills, 2001). Although, the trade unions of UK have contributed significantly in the protection of labor rights but still there are issues with the unions and it has contributed significantly to lower the membership density of the unions (Dundon, 2002). The figure 3 is depicting the pattern of membership density in the UK, which is clearly showing a gradual fall in the membership density.

  

Figure 4. Union membership density in UK

Source: (Beharrell & Philo, 2016)

One of the core factor that is causing decline in the membership density of the UK is decline in centralization of wage settings (Clegg et al., 1985). The centralization of wage settings is derived by the collecting bargaining of the trade unions. The centralization of the wage is the main aspect of the trade unions, which can help the employees in achievement of higher wages (Driffill, 2006). It has been reported by the researchers that decline of level of centralization s note able in United Kingdom and this decentralization of the wage settings is significantly causing the fall in density of member among the trade unions of UK (Ackers, 2015; Beharrell & Philo, 2016). According to micro Marxist approach, decentralization of the wages is due to changes in technology, relaxed working conditions and terms of employment which are not modifiable after signing the contract (Wallerstein & Western, 2000). The concept of flexible specialization is common among the companies of the UK and therefore, it is significantly contributing to reduce the centralization of wages among the UK market.

Another reason behind the failure of trade unions to enhance the level of membership in the UK can be explained with the help of social custom theory (Taylor & Bain, 2001). According to the view of social custom theory, the choice of employees to join the unions depend upon their analysis of the union membership. The social custom theory has provided that most the people join unions because other members of their society have joined the unions. In the present time, the reason behind gradual decline of membership is the inability of the unions to attract the members of the society (Dundon, 2002). The lack of attraction of employees to join the unions is the inability of the unions to deliver quality services to the employees and helping them in protection of their employment rights. Therefore, the decline in bargaining power of the unions in UK can be linked with their inability to influence the employers for employment rights of their members, which is consequently affecting the membership density of the unions in UK.

The unions of the UK have faced drastic fall in their membership density due to various factors including internal as well external threats. Among the external threats, of greater importance is the rate of unemployment (Dundon, 2002). The declining rate of employment in the manufacturing sector has challenged the growth of unions in UK. The manufacturing sector is usually the strongest sector for the unions and declining rate of unemployment in that sector can lower the involvement of unions and can also decrease the membership density in the UK (Ackers, 2015; Beharrell & Philo, 2016). Along with this, the companies in UK have adapted to the changing conditions in the environment and they have offered the relaxing working hours and flexible working conditions to their employees (Hyman, 2005). Due to favorable working environment, the employees are no longer requiring the support of the trade unions. Therefore, the member density of the trade unions is decreasing significantly.

Furthermore, in UK the employers are facing resistance about the need of trade unions and this resistance is driven by the common notion of the European Union countries (Turner et al., 2012). The employers are no more promoting the unions’ role and they are not likely to get influence of the unions in terms of increasing the wage rate (Hyman, 2005). This is also associated with the decentralization of the wage setting and has resulted in the decline of collecting bargaining power. Therefore, the results are drastic for the trade unions and they are losing their membership density gradually. Finally, an important aspect that has been highlighted about the trade unions is that most of the trade unions are dominated by the middle aged members and representation of the young workers is significantly lower (Taylor & Bain, 2001). Most of the active players in the organizational settings are young worker and their lack of interest in the trade unions is significantly limiting the growth of trade unions. Therefore, the number of members in the trade unions is significantly decreasing over the past years.

The trend of the trade unions in the UK and the perception of workers about the trade unions is showing that there is less chance of growth of trade unions in the UK. The main problem of decentralization of wages is likely to be strengthened over time and therefore, the density of members in the trade union is likely to sustain over the larger period of time.    

Fall of Membership in Trade Unions of Australia:

Although in Australia the unions have enjoyed the greater density benefits for more years as compared to German, UK and US. Still there are some problems that have caused the lower member density among the unions of Australia over the past 30 years (Mundlak, 2016). It is note able that people of Australia were perceiving that unions are holding too much power and it is necessary to limit their power and operations. Therefore, the membership density of the Australian union began to fall from the 1990 and it is still falling at the steady rate, as shown in the figure 4.

Figure 5. Trend of membership density in Australia from 1990 to 2010.

Source: (Donado, 2012)

Of many reasons for the decline in membership density of Australian trade unions, one is the regulation of the Australian Government which is limiting the capacity of the union to recruit the members for facilitation of their operations (Visser, 2006). The workplace laws have been designed by the Government in all states of the Australia with an aim of weakening the impact of the trade unions (Kiel & Nicholson, 2003). The main purpose for the establishment of these workplace laws was to create the level of difficulty for the trade unions to organize their operation by enhancing their workers. The increased difficulty levels have limited the operations of the unions in the closed system. These laws were established for protecting the interests of the employers and has led to huge involvement of statutory resolving the issues of employees.

Along with this, the de-unionizing has been promoted by the employers with an agenda of improving the competition in the market. The competitive advantage was obtained by reducing the interference and influence of unions in the promotion or protection of human rights (Visser, 2006). This trend has also motivated the employers who were having good relationship with unions to minimize the influence of unions, if they want to enter into the competition. This approach was more beneficial for the employers and businesses rather than employees and resulted in significant reduction in the union density in Australia.

One reason of the lower density of the union membership is Australia is the shift of employment from the full time to part workers, and from manufacturing to community based organization is significant (Taylor & Bain, 2001). These sectors of the economy were weak in terms of unionization and it has substantially impacted the trend of unions in the Australia. Similarly the trend of small businesses has also emerged and number of small size organizations were established, which also reduces the power of unions related to collective bargaining. In related vein, the union of the Australia are extensively involved in promotion of their activities to enhance benefits for the workforce. This trend is enabling the nonmember to take the advantages related to collective bargaining equal to the members of unions (Snape et al., 2000). The unions are making substantial efforts to bargain for the wages of the employees under different employers but very negotiations can become successful due to regulations that are limiting the employers to take influence of all the bargaining efforts of the trade unions.

Furthermore, decline of the membership of unions can be explained with the help of monopoly union framework (Driffill, 2006). The framework has provided that it is the responsibility of the trade unions that they should assume the wages unilaterally (Donado, 2012). The Australian employers have made extensive efforts for lowering the level of unions to reduce the monopoly effect from the business. The research is showing that they have successfully influenced the level of involvement of unions and the centralized wage settings has shifted towards the more decentralized settings (Macintyre, 1999). The decentralization notion is unfavorable for the growth of the union and they have significantly lowered the density of the members in the trade unions of Australia. The decentralization wages are negatively related with the potential of union to influence the employers by affecting their collective bargaining power and are causing the fall in the unions’ membership density.

The future prospects for the union in Australia are positive and showing that people of Australia are still believing that there should be active involvement of unions with an aim of bargaining for the rights of employees including: higher wages, favorable working conditions, equality of income. Along with this, the unions in the Australia are continually making efforts for regaining their previous status in the Australia, but it can only be restructured if the Government will relax their regulations about the working of trade unions. Moreover, it is of significant important as well that decentralization wage setting is difficult to reversed by the unions and the according to efficiency wage hypothesis, involvement of unions in the decentralized wage setting remains minimum (Snape et al., 2000).

Conclusion:

The trade unions hold significant importance for their contribution in improvement of working conditions for employees and for bargaining on different issues with the aim of promotion of employment rights of workers. Trade unions hold the position of an intermediary between the employee and the employer. The position of the trade unions has greatly suffered in different countries over the last few years. The fall in the membership density of the unions is an indication of its lower collective bargaining power in different countries. The study has undertaken the reasons for fall in membership density of the trade unions with respect to four countries including; Germany, United States, United Kingdom and Australia. All of the countries have shown drastic fall in the union density over the last years.

Some of the highlighted significant causes of fall in density in four countries include the following: rate of unemployment, regulation to limit the influence of trade unions, decentralization of wage setting, trend of free ride and resistance to the need of trade unions. The reasons are differing among different countries but one of the most common reason is the decentralization of the wage settings. This reason is common among all the countries and it is the main cause of fall in the density of membership of trade unions.

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