Slaying the union dragon

The government is planning new legislation to make it harder for workers to strike. But hasn’t that fight already been won? Simon Wilson reports.

The government is planning new legislation to make it harder for workers to strike.But hasn't that fight already been won? Simon Wilson reports.

What is the government proposing?

Nothing specific as yet, and nothing will happen before next May's general election. However, last week in response to Thursday's one-day public-sector strikes over pay and pensions David Cameron announced that the Conservatives would put measures into their election manifesto to make it harder for trade unions to call strikes.

Currently, union leaders can call strikes by majority vote, even if actual turnout is low. The Tories want to set a minimum turnout threshold (as yet unspecified) for a strike to be legal.

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They also want to limit the length of time during which unions can call a strike after a ballot; the National Union of Teachers, for example, called its strike last week on a "continuous" mandate based on a vote two years ago.

This sounds reasonable, doesn't it?

Perhaps, but it would set a punishingly high standard of democracy for unions that doesn't apply, for instance, to MPs (in 2010 not one was elected by 50% of registered voters), or indeed parliament as a whole (which normally runs for five years).

Business Secretary Vince Cable reckons the measures would "undermine basic workers' rights", and any minimum turnouts requirement "would have major implications for other democratic turnouts and elections".

This trenchant opposition from the Lib Dems means there will almost certainly be no new laws restricting the right to strike unless the Conservatives win an overall majority in the next election and even then they might well balk at the potential backlash.

Does the UK still have a union problem?

To judge by last week's well-behaved one-day strike of council workers, teachers, civil servants and firefighters not really. As Brian Groom, veteran industrial correspondent for the FT, notes, it's hard to see why Cameron thinks there is political capital in "slaying the dragon" of union power, when the dragon was so comprehensively slain 30 years ago by Thatcher. Days lost to strikes in the 1970s averaged 13 million.Last year there were fewer than half a million. Union membership has halved from 13 million in 1979 to 6.5 million now.

The public backs the right to strike even in the public sector by a big majority. And union leaders are scarcely the bogeymen they were in the 1970s. Indeed, according to a number of economists and commentators, the UK's problem is not that its unions are too powerful, but that they aren't powerful enough.

What's their argument?

In a nutshell, that widening wealth inequality is damaging to society as a whole not just to the poor and that a stronger labour movement is needed to rebalance the scales. Richard Wilkinson and Kate Pickett, authors of The Spirit Level, a 2010 bestseller on inequality, this month published their first paper directly addressing the role of unions ("The importance of the labour movement in reducing inequality").

They show how in the UK, US and several similar rich countries, inequality fell gradually through the 20th century right up until the 1980s, since when it has ballooned back to the levels of the 1920s.

Is that all about falling union power?

No, but they present other evidence illustrating the link. A survey of 16 nations in the OECD group of rich countries, taken between 1966 and 1994, shows that those with stronger unions (as measured by membership) are less unequal. And a graph of the US between 1918 and 2008 shows an uncannily close relationship between the share of income going to the richest 10% and rates of union membership. As one rises, the other falls.

None of this proves a causal relationship. But it does suggest we should take seriously, for instance, points put forward by the likes of The Guardian's economics editor Larry Elliott. He argues that Britain's decision in the 1970s and 1980s to follow the US model of union-busting laws, rather than the German or Swedish model of working with unions on making labour markets more flexible, now looks like a strategic blunder.

Is it only left-liberals that like unions?

No. Of the 58 unions in the Trades Union Congress, only 15 are affiliated to Labour. Some Tories (notably Robert Halfon MP, who recently wrote a pamphlet on the subject) argue that unions (which are community organisations funded by their members) are the epitome of Burke's "little platoons", or indeed Cameron's "big society".

It was a Tory PM, the Earl of Derby, who first set out to legalise the trade union movement in the 19th century. In 1947, Churchill praised unions as a "pillar of our British society".

As leader, Margaret Thatcher championed the Conservative Trade Unionists organisation. But then she "understood... something that many Tories now forget: there is a huge difference between the militants and the grass-roots members", reckons Halfon. "It's time we Conservatives stopped bashing trade unions and started remembering our roots."

Do unions benefit workers?

In the sense that workers who belong to unions on average earn more than those who don't, the answer is yes. However, the "wage premium" for union workers has been gradually falling for decades it still stood at 18% in 2013, down from 26% in 1995 (though still well-worth-having).

In an age of globalisation, more powerful capital, and a culture of greater individualism, unions unquestionably find it harder to bargain for better rights, wages and working conditions.

For example, data from both the US and Germany show a direct correlation between foreign direct investment and outsourcing on the one hand, and lower union-wage premiums on the other.

Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.   

Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.