Labor Unions Research Paper

1. Unions In The Social Sciences

The literature on unions is vast and extends into several disciplines. In the Marxist and socialist tradition, authors in the late nineteenth and early twentieth centuries debated whether and how unionism might contribute to the overthrow of capitalism or, to the contrary, its stabilization. Democratic reformers like Beatrice and Sidney Webb explored the potential contribution of unionism to the governance of a democratic industrial society. Institutional economists, such as Commons and Perlman in the United States or Brentano in Germany, tried to understand the economic causes and consequences of unionization. Neoclassical economists like Bohm-Bawerk explored the capacity of unions to override market prices and achieve a lasting redistribution of resources, while their successors in the 1960s applied theories of monopolistic competition to analyze the impact of collective bargaining on wages (Chamberlain). Early econometric analyses studied the impact of economic fluctuations on union organization and union activities, including strikes (Ashenfelter). The discipline of industrial relations, which grew after World War II in the US (Dunlop) and Britain (Flanders, Clegg), focused on unions as participants in collective bargaining under the ‘New Deal’ and in the postwar ‘mixed economy.’ Sociologists took an early interest in the transformation of unions into centralized and bureaucratic mass organizations with a staff of full-time officials (Cassau). Postwar American research on union democracy was in particular interested in the sources of communist influence in unions, while macro-sociological studies have investigated the origins of unionism in the context of social protest movements and their integration in the modern nation-state (Tilly). Political sociology and political science display a lasting interest in the role of unions in the polities of industrialized democracies. Economists study the economic effects of unions, in particular with respect to relative factor prices, inflation, productivity, and employment (Freeman and Medoff, Calmfors and Drifill, Soskice). Similar concerns figured prominently in historical-institutionalist research and theory on neo-corporatism in the political economy of advanced European welfare states (Schmitter, Crouch). Labor law has long been concerned with the rights of unions is-ais employers, and with reconciling collective bargaining and collective industrial agreements with civil law and the freedom of trade and contract. Constitutional lawyers, in particular on the European continent, have tried to clarify the status of unions and collective bargaining in relation to the state and public legislation.

2. The Rise Of Unionism In Industrial Countries

Unions emerged in conflict with both economic liberalism and political authoritarianism, striving simultaneously for economic regulation and political freedom. As a result, they were originally treated as conspiracies against free trade, the state, or both. But as unions established themselves as effective labor market cartels, they also became suppliers of labor to those employers willing to deal with them, and in this capacity slowly turned into ‘managers of industrial discontent’ ( Flanders). Similarly, while unions represented the interests of a class opposed to the advance of capitalism, their toleration in the course of democratization contributed to the transformation of liberal into organized capitalism, and was central to the institutionalization of compromise between capital and labor. The integration of unionism and working class collectivism in the institutional framework of modern industrial societies turned unions into legitimate intermediary organizations between their members on the one hand and employers and the state on the other, and transformed class conflict into joint regulation of work and employment. It represents the foremost example of the stabilization of the capitalist economy through democratic politics and institution building.

Early unions saw themselves as democratic organizations of self-help and self-government of workers independent from the feudal or bourgeois pre-democratic state. Often they belonged to broader labor movements that included political parties, consumer cooperatives, mutual assistance funds, educational associations, sports clubs, etc. While unions generally resented interference of the state and the law in their internal organization and activities, they differed widely in structure and ideology. Thus, syndicalist and anarcho-syndicalist unions, which in a number of countries remained significant well into the twentieth century, regarded themselves as constituent units of a direct democracy of producers set to replace both capitalist employers and the bureaucratic apparatus of the modern state. These traditions, which equally opposed capitalism and parliamentary democracy and favored direct action over both collective bargaining and political-electoral lobbying, culminated in the militant council movements of World War I and the revolutions following it, especially in the Soviet Union.

Integration of unions in democratic capitalism, and union recognition by governments and employers, was greatly advanced by the two world wars. Economic mobilization and the governance of the war economy required the collaboration of union leaders, who in many countries came to be co-opted into positions of quasi-public authority. Also, enlisted soldiers had to be promised a better life in a fairer society upon their return from the battlefields, and in defeated countries traditional elites were replaced in the aftermath of war by liberal or socialist governments. Generally, the end of World War I brought political democratization and, precipitated by the threat of socialist revolution, widespread acceptance of collective bargaining. But the first postwar settlement proved fragile in countries like Germany, Japan, Italy, and Spain, where unionism was soon suppressed by authoritarian regimes and replaced with state-controlled mass organizations of workers that were put in charge of administering state social policy. Similarly, in the Soviet Union workers councils were incorporated in a repressive state machinery and unions turned into ‘transmission belts’ from the state to the working class. In the United States, by comparison, the New Deal extended union organizing rights while the Swedish Social-Democratic government of the 1930s and the British war cabinet of the 1940s began to develop the contours of the labor-inclusive Keynesian welfare state of the second postwar settlement after 1945.

The ‘golden age’ of capitalism in the second half of the twentieth century saw the worldwide ascendance of a ‘mature’ type of unionism, centralized at the level of the national state and pursuing economic and social policy goals through collective bargaining and political-electoral lobbying within the confines of capitalism and parliamentary democracy. This development was part of the consolidation of both democratic capitalism and the nation-state in the countries under American hegemony, where legal recognition of unions and free collective bargaining, extensive social welfare provision, a sizeable public sector, and politically guaranteed full employment made possible the coexistence of liberal democracy and the market economy. The normalization of unionism under postwar ‘embedded liberalism’ (Ruggie) coincided with national regulation and standardization of the employment relationship and of the status of wage earners as distinguished from employers and the self-employed, which in turn corresponded to the advance of industrial mass production. Far-reaching legal and political regulation of the labor market, introduced to insulate employment and employment conditions as much as possible from economic fluctuations, stabilized union power. The worldwide outburst of labor militancy in the late 1960s, which took national union leaders by surprise, further added to union power, as governments, still feeling politically constrained to provide for full employment, more than ever depended on union cooperation for restoring economic and political stability.

Economic, political, and social change in the 1980s and 1990s caused a roll-back of unionism in most countries. In the 1980s, the British government proved that elections could be won even with high levels of unemployment. Under the leadership of the post-New Deal United States, governments also found less politically and economically costly ways to combat inflation than ‘social contracts’ with union leaders who had often turned out unable to deliver on their promises of wage moderation. Low inflation and high unemployment coincided with deep industrial restructuring, in response to economic internationalization and a new wave of technological change. Gradually this undermined the Fordist organization of work and the normalized employment relationship unions had helped shape and with which they had learned to live comfortably. Also, the breakdown of Communism in the late 1980s eliminated the systemic opposition to capitalism that had made Western governments willing to make concessions to unions after the two world wars. While private sector unionism has almost disappeared in the world’s leading economy, the United States, it is, however, still firmly entrenched in many European countries, due to strong institutional supports left over from the social compact of the postwar era.

3. Union Organization And Union Growth

The first unions were local protest movements of the ‘working poor.’ In the mid-nineteenth century, they were superseded by formally organized craft unions of skilled workers which thrived particularly in the liberal political environment of early industrializing Britain and America. Commanding considerable market power, craft unions represented their members mainly through economic action. In addition to maintaining sizeable mutual assistance funds, many of them were cartels that unilaterally fixed the price of their members’ services. From the state craft unions did not expect much apart from freedom of organization. While politically liberal, they were socially exclusive. Not only was membership in them reserved to the skilled. To control the labor supply, draft unions also limited apprenticeship training, prevented employers from hiring non-union members for craft jobs (‘pre-entry closed shop’ for specific ‘job territories’), and defended an organization of work that ensured demand for their members’ skills ( job control unionism).

Where craft unions became firmly established, they survived beyond the second wave of unionization at the end of the century, when the growing masses of unskilled factory workers began to get organized. Given the weak market position of their members, the ‘general’ unions that undertook to organize the large factories of the beginning age of mass production had to place their hope on the strength of large numbers. They therefore tried to recruit as many members as possible regardless of skill, although where craft unionism was strong, they mostly remained unions of the unskilled. While craft unions preferred a ‘voluntarist’ mode of operation keeping the state at arm’s length, the new general unions emphasized political action and pressed for social legislation and state intervention in the economy.

In Anglo-America where industrialization and democracy had come early, craft and general unions coexisted well into the twentieth century, with the former deeply influencing the practices and ideologies of the latter. By comparison, in late industrializing countries with authoritarian governments and narrowly limited political and economic opportunities for a market pursuit of collective interests, craft unions were mostly absorbed in inclusive ‘industrial unions’ organized by economic sectors. As these had originated in often-bitter political struggles especially for universal suffrage, their unionism was embedded in universalistic concepts of social and political reform that differed profoundly from craft particularism or American ‘business unionism.’ Frequently the new unions were allied to political parties, especially socialist and Catholic, and while craft unions had been fragmented by skill, industrial unionism was often fragmented by political orientation. Indeed as authoritarian governments had initially denied them the opportunity to represent their members economically, some of the new unions remained for long subordinate to political parties.

Craft unions, while narrowly based and normally small, were highly centralized where their members faced national labor markets. With the rise of the nation-state industrial unions, representing their members through political action for organizational rights, favorable labor law, and social welfare legislation, also developed nationally centralized structures. In principle, these were usable for centralized collective bargaining as well, in solidaristic egalitarian pursuit of nationally standardized wages and employment conditions. However, getting members to support common demands in spite of often widely different situations at their workplaces required strong organizations. While political ideology helped, the capacity of national unions to aggregate the interests of a diverse membership depended in large part on whether employers were supportive of negotiation at national level. In countries with an established craft legacy bargaining remained mostly decentralized and fragmented as industrial unions had to allow their members independent pursuit of sectional interests, on the model of and in competition with skilled unions. Sometimes, especially in the United States, unskilled unions managed to establish rights to ‘job property’ for their members as well and enforced on employers their own version of a closed shop, under which new hires had to join the union within a short period or lose their job (post-entry closed shop).

Union organizational development in the nineteenth and twentieth centuries included the rise of national federations of local and sectoral unions, which occurred in close correspondence with the formation of the modern nation-state and the establishment of liberal democracy. It also involved growing independence of unions, not just from governments but also from friendly political parties, enabling even the industrial unions of the European continent to deal with democratically elected governments of conservative political complexion. Related to this was increasing reliance of unions on collective bargaining with employers as their main mode of operation, with either individual firms or employers associations. This presupposed the elimination of ‘yellow’ company unions controlled by employers as well as recognition of collective bargaining in labor law, for both of which government support was crucial. Collective bargaining, in turn, required that unions established organizational authority over the strike—the collective withdrawal of the labor power of workers from employers—just as political recognition of unions demanded that strikes were called only for economic purposes, abandoning the syndicalist tradition of the ‘general’ political strike. Union organizational development further involved integrating the growing number of white-collar workers, either in separate unions or inside encompassing industrial unions, which followed different trajectories in different countries and generally remained much less successful than the organization of blue-collar industrial workforces.

The literature offers a variety of explanations for the growth and decline of union membership over time and the differences in union density rates between sectors and countries. Unions tend to be strong in the core sectors of export-oriented manufacturing, like metal engineering, in large establishments, and in the public sector, while they are weak in private services and in small firms. But cross-country differences are considerable, and indeed on hardly any parameter of social structure do developed industrial societies differ as much. While in some Scandinavian countries around 80 percent of wage earners are union members, in France and the US density had fallen to about 10 percent by the end of the twentieth century. And while union membership relative to the workforce declined during the 1980s in the United Kingdom and the Netherlands, it increased in Belgium and Finland. Fluctuations in membership over time can also be enormous, as they were in Britain where in the three years between 1920 and 1923, union density declined from 45 to 30 percent.

Econometric studies have found that in the United States and Britain in particular, union density tended to increase with nominal wages and inflation, while it was negatively affected by unemployment and an already high level of unionization (Bain and Elsheikh). However, studies of this sort cannot explain the variation in unionization between countries, or ruptures in historical continuity. Institutionalist approaches take into account that union growth includes the acquisition by unions of recognized status, based on agreements with employers or the state helping unions recruit members (‘union security’). Often such status is gained in exchange for political and economic moderation. Differences in union density then reflect different opportunities for unions to organize and keep members (‘workers don’t organize unions; unions organize workers’). In addition to the closed shop in its many official and unofficial versions—which makes membership compulsory by making access to employment dependent on it—employers may assist unions in collecting their membership subscriptions. Similarly, favorable legislation on union recognition or workplace representation through works councils may improve unions’ ability to recruit. In some countries, like Switzerland, non-members are legally obliged to pay union dues, and in Belgium and Denmark unions administer parts of the public social insurance system, enabling them to discriminate against non-members and thereby create additional incentives to join.

More generally, the organizing problems of unions may be described in terms of generic problems of collective action in the rational pursuit of group interests. Union achievements, like higher wages or favorable social policy legislation, are often collective goods in that they cannot be withheld from workers who have not contributed to their production. Apart from sentiments of fraternal solidarity, there is then little incentive for workers to join a union, even if they find the outcomes of union activities desirable. Indeed, given the risk that others will ‘free-ride,’ members may contribute in vain, as the union may not find enough support to be successful. Like other collective organizations, unions therefore typically offer potential members ‘outside inducements’ (Olson), i.e., benefits other than the collective goods for which they were originally founded, which unlike these can be limited to members (for example, healthcare benefits). They also strive to make membership less voluntary and obligatory, often with the help of the state or the employers.

4. Unions As Collective Actors

As intermediary organizations, modern unions represent their members in the labor market, the workplace, and the polity. Depending on their membership, their organizational structures and traditions, and the constraints and opportunities offered by employers and the state, different unions attach different significance to the three arenas and coordinate their activities in them differently.

4.1 Unions In The Labor Market

Unionism, and indeed much of modern labor law, assumes that individual workers are at a disadvantage vis-a-vis employers, and that redress of this imbalance requires that workers combine to face their employer as a collectivity. By regularizing wages and conditions of employment, sometimes also through state legislation, unions try to take wages and conditions out of competition, to make the market more predictable and protect workers’ living conditions from its fluctuations. In this sense, Polanyi regards unionism as an element of the social counter-movement against the ‘satanic mill’ of the ‘self-regulating market’ of early liberalism.

Economists have long debated whether unions can raise wages above market level. Clearly, they can get nominal wage increases that exceed the increase in productivity, which depending on the government’s monetary policy may result in either inflation or unemployment. With respect to the wage structure, in fragmented union systems skilled unions may use their independence to defend wage differentials, causing a wide wage spread between skill groups and industries. Fragmented (‘competitive’) bargaining may also enable well-organized groups of strategically placed unskilled workers to make high relative wage gains, which in turn may result in a ‘leapfrogging’ pattern of general, and potentially inflationary, wage increases. Wage differentials are also high in economies in which unions have little or no influence.

By comparison, industrial or general unions typically entertain an egalitarian ideology and strive to compress wage differentials, raising the wages of their less well-paid members more than those of the others. The result tends to be increased capital intensity and unemployment at the lower end of the labor market. Industrial unions therefore favor extensive training and retraining, funded by employers or the state, to increase the productivity of the less skilled to a level where they can earn the high wages negotiated for them. In favorable circumstances, this may lead to a general upgrading of a country or sector’s production system, in the direction of more skill intensive and less price competitive production.

Since the 1970s, there has been a debate on the relationship between centralization of collective bargaining and various dimensions of macro-economic performance, such as inflation, growth and employment. In the 1970s centralized bargaining by national or industrial unions was believed by many to be more economically beneficial than fragmented bargaining, as it made it more difficult for bargainers to disregard the costs of redistributive bargaining or productivity restraining work rules. Later it was suggested that bargaining agents in a decentralized wage setting system were more likely to be disciplined by market pressures, the problem being intermediate levels of centralization and unions both large enough to override the market, and small enough to be able to externalize the costs of their behavior to society. Statistical analyses have remained inconclusive and suggest that the economic effects of bargaining structures are highly conditional on economic and institutional circumstances.

4.2 Unions In The Workplace

Comparative research suggests that employers are willing to agree to centralized bargaining if this helps them keep unions out of the workplace. Workplace unionism, especially in a craft tradition, detracts from managerial prerogative and may interfere with management attempts to increase productivity. On the other hand, even industrial unions need to be present in the workplace, if only to recruit members, monitor the implementation of collective agreements, and generally insert themselves in the governance of the employment relationship and the ‘wage-effort bargain’ inherent in the labor process. Balancing central and workplace representation, or external and internal union organization, was and is one of the main problems of unionism and industrial relations.

Least of all employers seem to like multi-unionism in the workplace. This has often led to agreement with industrial unions on unified arrangements for plant level workforce representation, like in Italy. In some countries, like the US, single-union representation is established by a legal procedure. In others workplace unionism is merged into institutions of legally based participation, giving works councils elected by the workforce as a whole rights to information, consultation, and co-decision making while ensuring that management has a single counterpart with which to negotiate. While works councils in most countries cannot call strikes, they tend to have close relations with internal and external unions, not least since most of their members are usually also union members.

In a number of Asian countries, unions have evolved into ‘enterprise unions’ that are only loosely federated above enterprise level. This corresponds to an environment of closed internal labor markets and lifetime employment of core workforces. Enterprise unions tend to be highly cooperative with managerial efforts to increase productivity and competitiveness as they represent the close community of fate between their members and the enterprise that employs them. Often their officials are managers whose career is advanced by serving for a time in a union position. Works councils in European countries also tend to cooperate with management. Unlike enterprise unions, however, they exist next to an external union that can call strikes without regard to the competitive position of individual workplaces.

The economic effects of different forms of workplace unionism are still being debated. For some time, decentralized unionism and workplace bargaining were associated with high strike rates whereas centralized and politically influential unions, like those in Scandinavia, were found to be highly effective without much recourse to strikes. Especially where distributive wage bargaining is moved to the national or industrial level, or where distributive conflict is suspended by jointly faced competitive market pressures, workplace representation was shown to enhance efficiency, among other things by enabling workers to voice complaints as an alternative to quitting. The same effect has been attributed to works councils. By comparison, in countries with adversarial industrial relations traditions, external labor markets, decentralized wage bargaining, freedom of workplace unions to call strikes, and a history of craft unionism and restrictive practices, workplace unionism came to be regarded in the 1960s and 1970s as a source of inefficiency. Here employers began to devise their own structures of workplace cooperation and ‘worker involvement,’ in the context of the developing practice of ‘human resource management,’ which often but not necessarily presupposes or aims at a ‘union-free environment.’

4.3 Unions In The Polity

In most European countries, the rise of unionism was closely intertwined with nation-building and state formation. T. H. Marshal regards unionism as a step in the evolution from civil, to political, to social rights of citizenship, with unions using political rights to collective organization in the pursuit of social rights, albeit in the civil sphere of the marketplace and through freely negotiated—collective—contracts (‘industrial citizenship’). As early repression of unions gave way to inclusion in shared public spaces (Crouch), unions became firmly integrated in the social and political order of the Western European nationstate, especially under the second postwar settlement after 1945.

The high point of union inclusion in advanced industrial countries was the ‘neo-corporatist’ period of the 1970s and early 1980s. Especially in countries with a tradition of political unionism and centralized collective bargaining, unions were able to get major concessions from governments and employers in ‘political exchange’ for wage restraint, which in turn was to enable governments to protect full employment with Keynesian means without having to accept excessive rates of inflation (‘incomes policies’). Among the concessions gained by unions in this period were legislation on union recognition and access to the workplace; various other forms of ‘union security’; legal extension of collective agreements to all firms in an industry; higher social security and public pension benefits; and industrial democracy legislation. Neocorporatism was more likely to work where governments were of a social democratic complexion; but most conservative governments were also eager not to antagonize the unions. The more politically powerful unions became under corporatist arrangements, the lower as a rule was the strike rate as strong unions were able to get in the political arena what others had to struggle for, with uncertain event, in the industrial arena.

The historically close involvement of union movements with their respective nation-states explains to a large extent why unions and collective bargaining have so far resisted economic pressures for institutional convergence. In fact, the structure of unionism and its status inside its institutional context are an important dimension distinguishing between the different ‘models of capitalism’ that have attracted attention in the 1990s. The lasting symbiosis between union movements and national states also accounts in large parts for the weakness of international unionism. Such weakness is found even in the European Union, where in spite of deep economic integration national unions have remained highly distinctive in their organizational structures and modus operandi, and are jealously guarding their independence.

5. The Prospects Of Unionism Today

Much of the literature on unions in the early 1960s observed and predicted a decline of unionism in leading industrial societies. In most Western countries, with the notable exception of the United States where union decline continued unabated, this was contradicted by the ‘hot autumns’ of 1968 and 1969, which were followed by a sharp reversal of membership losses and by unprecedented influence of unions in politics. In the 1990s, however, union membership and power were again declining worldwide. With the American private economy on the way to effective deunionization, the British government in the 1980s attacked unions’ legal and institutional supports, with considerable success. Outside the Anglo-American world, union influence was weakened by the end of politically guaranteed full employment combined with intensified international competition, while the growing importance of the service sector and the ‘knowledge economy’ and the rise of a more diverse and better educated workforce made it more difficult for unions to recruit new members. Even where institutional conditions remained unchanged, unionism tended to be increasingly confined to the traditional sectors of the economy, which have long been shrinking in size and importance.

In their history unions have become deeply involved in the functional and social integration of the modern nation-state: in the national standardization of employment practices, the organization of redistributive solidarity at national level, and the political governance of the national economy. The decay of the second postwar settlement coincides with strong market pressures for more flexible modes of governance, less political interference, and internationalization of economic transactions. It is not clear whether and how unions, and indeed the nation-state itself, will find a response to the de-nationalization of the global economy. With their membership aging, unions may become defenders of an industrial employment and social security regime that no longer fits the needs of the rising post-industrial sector of the workforce. Being unattractive to the winners of structural change in the highly skilled and female segments of the labor force, unions also seem less than successful in organizing the new underclass of low-paid service workers, many of them immigrants, that has been growing for some time in many industrial societies.

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