Research Project: Final Report

M7A1: Research Project: Final Report

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Expert Answer

Reasons for the Trade Union Decline in the Developed Countries

 

INTRODUCTION

Over the past ten years, trade union density and memberships have been on a continuous decline, especially in the United States and the United Kingdom. Several reasons have been proposed as to why there has been a union decline in the developed nations. Some people believe that trade unions themselves are to blame for their decline, while others believe that factors such as globalization and changes in the labor market are the causative agents of the union decline (McIlroy, 1995). There are many internal and external factors that have contributed to the decline in the number of trade unions in the developed nations such as the United States and the United Kingdom. Some of these factors include changes in the labor market, increased complexity of employment structures, globalization, increased complexity of businesses, social changes, and technological changes. In this research, evidence will be sought, through literature review, to determine the main reasons why there is a continuous union decline in the United States and the United Kingdom region. It is important to determine why trade unions are fading away, as this information will be necessary for the determination of the corrective actions and strategies that unions may take to ensure that they grow and avoid membership decline.

EXTERNAL OR MACRO-ECONOMIC FACTORS

There are several external factors that have contributed to labor union decline in the developed nations over the past two decades. These factors include changes in the labor market, developments in the level of business complexity, globalization, social and cultural changes, and technological changes. These external factors and their effects on labor unions are discussed below.

 

Economic and Social Changes

Since the late 1990s, countries such as the United States and the United Kingdom have experienced numerous changes and developments in the labor market. Changes in the labor market have largely contributed to the decline of the activities conducted by labor unions and a decrease in the numbers of workers joining labor unions (McIlroy, 1995). The United Kingdom and the United States have witnessed a continuous decrease in the number of manual labor jobs, especially in the manufacturing industry, over the last two decades. This trend has been the result of a slow rate of growth of the manufacturing industry and a progressive decline in the importance of the manufacturing sector in these regions. Over the years, the importance and the relative size of the manufacturing industry compared to other industries has decreased, resulting in lesser full-time manufacturing jobs in the United States and the United Kingdom (Dundon & Rollinson, 2011). With changes in the industry, the labor market has increasingly gained more flexibility in the United States and the United Kingdom.

The labor market in these regions is highly flexible, as most workers are employed as part-time employees or under zero hour contracts. The number of people who are self-employed has also increased over the past ten years, resulting in a lesser number of people employed by organizations and companies. In both regions, labor unions have the highest density in the manufacturing industry. With a decrease in the size of the manufacturing sector and a decrease in the number of manufacturing jobs, labor unions have declined as a result of lesser members. Labor unions today find it very difficult to acquire new members in the industry sectors that have emerged, such as the service industry. In the United States and the United Kingdom, the service industry has grown tremendously, becoming one of the largest sectors in both regions. The service industry is largely fragmented, which makes it very challenging for labor unions to get new members (Colling & Terry, 2010).

The labor market in both the UK and the United States has been affected by structural unemployment. People who have lost their jobs and engagements in the manufacturing sector are now struggling to find new jobs in different industry sectors, such as the service and technology industry. The problem of structural unemployment is particularly common in regions where the manufacturing sector has largely declined. People previously working in the manufacturing sector find it difficult to find new jobs in the new industry sectors. In many regions in the United States, labor unions are closing operations since there are no members to represent (Dundon & Rollinson, 2011). The labor unions that are still existent in the United States do not have a lot of influence since they have very few members and financial resources. The fragmentation of the service industry and the disorganization of employees in the industry make it difficult for labor unions to recruit new members in the industry sector. The growth of the service industry and an increase in its importance has revolutionized the labor market in the UK and the United States.

In many American companies, part-time jobs and flexible working hours have become the norm. A majority of the workers in America and the UK work under part-time and zero hour contracts (Colling & Terry, 2010). Such work arrangements do not guarantee any regular of fixed pay. For this reason, employers do not have any obligation to give their workers a certain number of paid work hours, which results in little pay. The workers cannot become members of labor unions since they are not permanent employees. Female workers have increased over the past ten years, mostly because women prefer employment in the service industry while men prefer working in manual labor. An increase in the level of migration has also had a toll on labor unions in the United States and the UK. As a result of many workers moving into the United States in pursuit of employment, joining the labor market, the flexibility of the United States labor market continues to increase.

In the United States particularly, several jobs are occupied by immigrants. Because of the large number of immigrants moving into the United States in search of employment, the labor that is available in the country has increased, driving salaries and wages down. The low wages given to employees have led to many people opting to employ themselves, which explains the surge in self-employment. Self-employed people cannot be members of labor unions, contributing to the decline of labor unions. Both the United States and the UK have been experiencing rapid technological developments and improvements in recent years. Technological improvements change the work environment and provide more opportunities for people to open their own businesses (Colling & Terry, 2010). Moreover, several businesses register themselves as sole proprietorships to avoid market regulations and evade high taxation. Increasing self-employment rates results in a reduction in the number of employees that can join labor unions, contributing to the decline of labor unions.

Legal and Political Changes

The laws and politics of a country affect all the activities that go on in that country, including the operations and structure of the industrial sectors in the country. Changes in the political and legal arenas have affected labor unions in developed countries. In the United Kingdom, for instance, various policies by the government have negatively affected labor unions in the recent past. Legislations such as banning of secondary picketing and ending closed shops have adversely affected labor unions in the United Kingdom (Freeman & Pelletier, 1990). The Conservative Party, which was in power since 1979, reduced government borrowing, taxation, and public expenditure, while deregulating the economy in order to free up the labor market in the UK. The powers of labor unions were reduced through legislation which undermined collectivism while advocating for individualism.

The government in the UK has over the years continued to restrict the powers of labor unions, giving employers more power over workers. Even the Labour Party which took power in 1997 failed to make any changes in the legislation that negatively affected labor unions, after promising to do so. All the governments that have come to power after the Labour Party have continued to increase the powers of employers while discouraging collectivism in the workplace (Freeman & Pelletier, 1990), adversely affecting labor unions.

Changes in Employer Strategies

In addition to the changes in the political, economic, and legal factors, employers in the developed countries have changed their employee and business management strategies, affecting labor union operations. The adoption and implementation of new human relations practices and work organization forms have been linked to the significant labor union decline in several countries, including the United States (Machin & Wood, 2004). Changes in work and employee management, otherwise referred to as human resources management practices (HRM practices) have been experienced since the 1980s. the styles of management of business and employees have revolutionized the relationship between the employees and their employers. Changes in HRM, such as the increased representation of workers and focus on better communication between workers and management, have changed how employees view management, affecting their willingness to join labor unions in many countries.

The adoption of HRM practices has resulted in employees becoming more comfortable with their employers, boosting the unwillingness to join workers’ unions (Fiorito, 2001). For example, the private sector in the United States has greatly evolved from pluralism to being unitary. Both the public and the private sector have implemented HRM practices, improving the relationship between employees and employers and discouraging employee collectivism. Management experts view the adoption of modern HRM practices as the reason why the relationship between employers and employees has greatly improved, with the needs of both parties being adequately addressed (Fiorito, 2001).

Human resource management practices provide employers with an opportunity to achieve improved performance and efficiency while guaranteeing the security and job satisfaction of employees. HRM practices offer employees better remuneration while benefitting managers and business owners through improved employee performance and work efficiency. If human resource management practices provide a better chance at achieving employee satisfaction compared to joining labor unions, then they eliminate the need for labor union support, a concept commonly referred to as the HRM-labor union substitution. HRM practices have eliminated the need for unionism since this need largely stems from employee dissatisfaction. Employees start to view labor unions as redundant, as they already get satisfaction in the workplace through improved HRM practices (Fiorito, 2001). The United States has experienced increased adoption of HRM practices in the organization, including policies and practices such as working as a team, better pay, increased involvement, open communication, increased commitment, flexible job descriptions, and better working conditions.

A majority of the HRM practices adopted by firms in the United States largely focus on communication, worker representation, work design, work skills acquisition, employee appraisal, training of employees, compensation, control of internal employee practices, and employee wellness (Machin & Wood, 2004). All these concerns used to be the major issues advocated for by labor unions before the adoption of HRM practices. The role played by labor unions has, therefore, been fulfilled by the improved HRM practices. When organizations are able to provide better salaries, employee representation, fair promotion and recruitment, job security, and employee skills training, the dissatisfaction of employees is evaded, eliminating the need for unionism (Belfield & Heywood, 2004). The employees are not driven to join labor unions or get involved in union activity.

INTERNAL FACTORS

Even though the employer strategies and the legal, political, and economic factors have contributed to labor union decline in developed countries, a number of internal factors have also contributed to the decline. Some of these internal factors are discussed below.

Low Union Pro-activity and Decline in Activism

The purpose of labor unions is basically to represent workers and to fight for their rights. Changes in the labor market, globalization, and technological advances have largely eroded this role. Increasing the flexibility of the labor market has made it difficult for unions to represent employees (Hyman, 1999). Several companies have become globalized, utilizing strategies such as acquisitions and other strategic alliances to expand markets. Workers are being substituted with technology and machines, increasing the rate of unemployment and reducing job security. Labor laws have been abandoned due to the globalization of the labor market, making it difficult for unions to proceed with their activities. With lower memberships, labor unions have little power and few resources, which have resulted in decreased pro-activity (Bryson & Gomez, 2005). Globalization has made it impossible for unions to control work arrangements since unions only have power within the country. The activity of labor unions has, therefore, declined in the developed countries.

With little or no activity, labor unions have lost their relevance, especially with the introduction of improved HRM practices that are able to meet the needs of both the employees and the employer. Companies continue to realize the importance of HRM practices and that they result in the mutual benefit of the company and the employees. Organizations continue to implement these practices in order to establish healthy relationships with their employees. since there is no longer the need for representation by unions, unions stopped reminding employees the importance of being a member of a workers’ union (Allen, 2010), which has largely contributed to the union decline.

The inability of Unions to Adapt to Industry Changes

Labor unions have been unable to adapt to the changes in the labor market, including an increase in the number of women in employment, changes in employment arrangements and terms, and a decrease in the size of the manufacturing sector (Bryson et al., 2011). The level of activism ought to have been increased and the strategy used to unionize new members changed to suit female workers. The concerns of female workers and employees working under part-time contracts should have been addressed by labor unions to encourage membership (Ndiritu, 2015). Labor unions find it challenging to convince employees to join them since the factors that established a need for unionism have been eliminated by HRM practices. Labor unions need to re-strategize in order to accommodate the new industry sectors and the individualism in the labor market. They should also try to diversify their business model in order to remain relevant where employees do not need representation.

Organizational Structure Problems

In the United States and the UK, labor unions are largely institutionalized, which makes it difficult for them to transition from the traditional structure of organization into a new structure that can effectively accommodate the changes being experienced by the labor market (Schnabel, 2013). An increase in immigrants, for example, is one of the major changes that labor unions encounter today. Trade unions should adapt their structure and strategy to allow the establishment of a good relationship with immigrant employees. labor unions may negotiate better work conditions and pay for immigrant employees (Ndiritu, 2015). The traditional structure of labor unions should be done away with to enable more efficient operation and adaptability to market changes.

DISCUSSION AND CONCLUSION

The labor market and the world economy are changing day by day. In order for labor unions to survive and acquire new members, they need to adapt to the changes in their internal and external environments. Labor unions enable employees to enjoy luxuries such as working for a maximum of eight hours a day. They play an important role in the establishment of good working conditions. It is through labor unions that the prosperity of the middle-class in the United States was achieved. A decline in the labor union density should serve as a warning of the impending danger of the return of wealth inequality in the country. The old strategy of getting bargaining power through threatening to strike cannot work with the current industries. Labor unions need to come up with better strategies to adapt to the globalized organizations and the changes in the external environment, in order to remain effective and to maintain their relevance to the employees in industries such as the service industry.

In a labor market that is globalized, it is very difficult to keep companies in one country. The definition of an employer has been changed by new companies using models such as the franchise-based business model. The role of a labor union is to minimize the bargaining inequality between the employee and the employer, giving the workers a feeling of dignity and agency. Labor unions neutralize the forces of globalization. With decreasing union membership, labor unions need to evolve in terms of structure and worker governance, in order to survive. They should adopt new models of operation. For instance, labor unions may start allowing employees to negotiate directly with the management. They may also acquire control over welfare payments such as unemployment compensation. With such arrangements, workers will remain in labor unions and employers will have more control over who they hire and how they manage their businesses.

Labor unions need to realize that the world is changing. In order to adapt to changes such as technological improvement and globalization, labor unions may change their strategies for marketing and activism. For example, labor unions should take advantage of social media platforms to market themselves in order to acquire new members. They may also introduce a lifetime membership model in order to allow workers with jobs that are not permanent to remain members, even when they change occupations and employers. Labor unions also need to build strong partnerships and increase employee engagement if they wish to survive. The employee has become well-informed and should be treated as such. By adapting to the changes in the world, labor unions will rise and grow towards the future.

References

McIlroy, J. (1995). Trade unions in Britain today. Manchester University Press.

Colling, T., & Terry, M. (Eds.). (2010). Industrial relations: Theory and practice. John Wiley & Sons.

Dundon, T., & Rollinson, D. (2011). Understanding employment relations. McGraw-Hill Higher Education.

Freeman, R., & Pelletier, J. (1990). The impact of industrial relations legislation on British union density. British Journal of Industrial Relations, 28(2), 141-164.

Fiorito, J. (2001). Human resource management practices and worker desires for union representation. Journal of Labor Research, 22(2), 335-354.

Machin, S., & Wood, S. (2004). Looking for HRM/union substitution: evidence from British workplaces. Centre for Economic Performance, London School of Economics and Political Science.

Belfield, C. R., & Heywood, J. S. (2004). Do HRM practices influence the desire for unionization? Evidence across workers, workplaces, and co-workers for Great Britain. Journal of Labor Research, 25(2), 279-299.

Hyman, R. (1999). Imagined solidarities: can trade unions resist globalization? Globalization and labour relations, 94-115.

Bryson, A., & Gomez, R. (2005). Why have workers stopped joining unions? The rise in never‐membership in Britain. British Journal of Industrial Relations, 43(1), 67-92.

Bryson, A., Ebbinghaus, B., & Visser, J. (2011). Introduction: Causes, consequences and cures of union decline. European Journal of Industrial Relations, 17(2), 97-105.

Allen, K. (2010). The trade unions: from partnership to crisis. Irish Journal of Sociology, 18(2), 22-37.

Ndiritu, G. (2015). Challenges Facing Trade Unions in the Modern Society: “THE CURRENT EXODUS”.

Schnabel, C. (2013). Union membership and density: Some (not so) stylized facts and challenges. European Journal of Industrial Relations, 19(3), 255-272.

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