There are multiple causes of the decline in the proportion of the Australian workforce that is unionised. These include casualization of the workforce, increase in the proportion of the workforce that is engaged as sub-contractors, manufacturing and services moving offshore, trade exposure of unionised enterprises to non-unionised enterprises both abroad and within Australia, increased restrictions on union right of entry and reputational damage to unions resulting from corruption.
But in my view one factor is perhaps more important than all of those listed above. This is the “free loader” problem. The free loader problem stems from the fact that the major benefits unions provide to workers are the wages and conditions that result from enterprise bargaining agreements (EBA’s) and that these benefits accrue to workers who are covered by the EBA whether or not they are members of the union.
Ask yourself these two questions:
- If paying tax was voluntary how many people would pay it?
- How many businesses are successful in charging for services that people can get for free?
If you think that the answer to one or both of these questions is “nil”, then the decline in union membership should not really come as a major surprise to you.
To an extent freeloaders have always been a problem for unions. But it was less of problem when union preference clauses required employers to either specifically appoint unionists to jobs, or at least to advise the union before hand of job vacancies, and to give unionists preference for retention in employment in redundancy situations, ahead of non-unionists.
Union preference clauses were made unlawful on the basis that they discriminated against non-unionists. It is true that they did. But their removal effectively means unionists are now more vulnerable to discrimination.
Freedom of association laws prohibits discrimination on the basis of union membership. But cases are expensive to run and are unlikely to be successful if an employer can come up with some reasonably plausible excuse for treating a union member less favourably than a non-union member. In practice this is not terribly difficult.
The higher level of union membership in the public sector probably reflects an appreciation by public sector workers that a large union is needed to negotiate with a large public sector bureaucracy. But the fact that unionists within the public sector are less likely to suffer discrimination in employment should not be discounted.
After the benefits bestowed through EBAs, the second most important benefit accruing from unionised workplaces is probably enhanced occupational health and safety. This is why high risk occupations such as construction, fire-fighting, police work, ambulance operation tend to have relatively higher rates of union membership than less dangerous workplaces.
Fairfax media outlets recently reported on a draft paper prepared for the ACTU by Chris Walton and Erik Locke. Entitled, “The overdue case for change: a place for unions in modern Australia”. The paper reportedly recommended:
- cut-price membership arrangement which is “unlikely to include bargaining or high level industrial representation” and for which fees might be more like $300-$400 a year compared to the $600 most pay currently;
- leveraging the power of social media to reach individuals, create common interests, conduct on-line campaigns and raise funds through enthusiasm for “issues rather than institutions”.
In my opinion these options are not likely to make much difference to the decline in union membership.
What might make a difference would be reducing the freeloader problem by permitting a capacity for EBA’s to require payment of bargaining fees to unions from non-unionists who benefit from the EBA a union has negotiated. A majority of workers would have to vote for this measure as part of the process of approving the EBA, so that, to this extent, the measure would be democratic.
Coalition legislation, effective from May 2003, prohibited bargaining fee clauses in EBA’s. These laws were passed on the basis that bargaining fees breached freedom of association principles. But the International Labour Organisation policy is that there is no inconsistency between an EBA containing bargaining fee provisions and the principles of freedom of association.
Bargaining fees paid by employees covered by collective agreements who are not union members are provided for in a number of countries, including the United States, Canada, Switzerland, Israel and South Africa. Instead of outlawing bargaining fees, these countries have introduced controls to regulate their application. Restrictions include provisions that prohibit bargaining fees exceeding a “fair share” of the cost of reaching the agreement, requirements that bargaining fees only be spent in ways that benefit all employees at the workplace and provisions for conscientious objectors.
But there appears to be little to no political prospect of bargaining fees being introduced into Australia. They would be vehemently opposed by the Coalition. And they are not supported in Labor’s platform or policies, presumably because Labor believes that they would be electoral poison.
Others can debate (as they endlessly do) whether there should be any, and if so what, change to representation of unions within the structures of the ALP given the decline in the proportion of the workforce that are union members. I think that this debate should consider the following points:
- The proportion of the workforce that are union members is not the same thing as the proportion of the workforce that benefit from unionism;
- If it wanted to, the Coalition could probably pass a law requiring either individual unionists, or a majority vote of all union members, to authorise use of union member’s fees for party political affiliation. Such a law may well be politically saleable. But the Coalition does not want to pass such a law because it sees a political advantage in being able to criticise the link between unions and the ALP. It has no genuine desire for the ALP to be rid of the union link that it so enjoys criticising;
- Unions do bring something very special to the ALP; they tend to be microeconomic experts in relation to their industries. There are certainly advantages in maintaining their unique perspectives within party forums;
- ALP factions undoubtedly coalesce around unions. There are both advantages and disadvantages to the factional system;
- Amending the ALP rules to facilitate a change in the nature of union representation within the ALP is difficult for three reasons. First, unions themselves are likely to exercise their vote in party forums to prevent this. Second coming up with an agreed alternative policy for union representation is difficult. Third, even if an agreed policy alternative was reached, the difficulty in translating this into rules that are practical, and which are not themselves likely to be rorted, should not be underestimated;
- Internally, union structures are in fact quite conservative. Excessive dissent weakens unity, the key ingredient to success for unions. Effective unionism often therefore involves the rank and file mostly endorsing union executive recommendations. There is little turnover in union leadership and delegate structures. The idea that union behaviour within the ALP would significantly change if only union rank and file members, instead of union secretaries, determined union representatives within ALP forums, tends to be exaggerated. Rank and file union members would mostly follow recommendations from the union leadership in relation to the ALP just as they do in relation to their workplaces;
- There is a popular view that unions tend to drag the ALP to the left (however defined). This may be true in some states but it is not true nationally. Anthony Albanese, from the left, won the popular ballot for ALP leader. Bill shorten was elected because of greater support from the parliamentary caucus which is made up of MP’s who attract central pre-selection panel (union influenced) support. Similarly candidates from the left of the party have been relatively successful in ballots for party president, in which unions and union influenced central panels have not had a vote;
- Capitalism has an innate tendency to increase inequality because the average rate of return to capital is higher than the rate of economic growth. This means that the proportion of the overall wealth pie that accrues to capital increases. The demise of unions would further exacerbate this tendency. But neither are unions likely to be able to reverse the overall tendency. The days when unions were able to exert major influence on political outcomes, such as occurred in the New Deal (which did temporarily halt the inequality tendency) seem to be long gone and to be unlikely to return;
- New solutions to the problem of inequality need to be explored. A radical alternative is to change the method by which capital is owned, and by which enterprises operate, by vesting ownership and democratic control of enterprises in those who work in them. Workers should employ management, not vice versa. Workers should replace Boards of Directors and external shareholders. The Spanish multi-national Mondragon is a successful example of this type of enterprise. It runs schools, a university, a bank, a supermarket chain, manufacturing enterprises and high tech research and development. It exports to 140 countries and has assets of over $40 billion. There are wage differentials between management and workers in Mondragon. But the differentials are greatly compressed compared to traditional enterprises. ALP federal MP’s Tim Watts and Claire O’Neill have argued in their book ‘Two Futures’ that unions are the natural leaders for the development of such co-operative enterprises in Australia. This is a nice idea, but is probably incorrect. Unions have no obvious role where workers own and run enterprises. It seems more likely that unions are strongly wedded to the employer- employee model, where the union role to remediate, but never entirely transform, the power differential between workers and management.