Abstract
The common feature in many of the reasons for the decline in influence and member numbers of labour unions in Australia and other Western nations is that, employers and employees, due to economic, legislative, and individual reasons, have resorted to engaging with each other.
This unitarist perspective, where both parties (employers-employees) realise the commonality of their goals, has rendered labour unions irrelevant in many contractual and employment-term discussions between employers and workers.
These economic, legislative, and individual reasons for the decline of union densities are discussed in this paper, including why a unitarist approach encompasses, defines, and accommodates these changes most appropriately.
Introduction
Traditionally, labour unions played a key role in ensuring that workers and employees were treated in a fair manner at their diverse places of work.
The Industrial Revolution in the Western world wrought a high number of work opportunities, and the harsh conditions that many workers were subjected to in some industries, especially in manufacturing, created a need for labour unions to negotiate better wages, proper work conditions, and arbitrate disputes between employees and workers (Freeman & Medoff 1984, p.12).
The subsequent decades, after the industrial revolution, saw the relevance and importance of labour unions grow, and their function in ensuring that employees in various work places, in different industries, were not economically exploited, became critical.
However, in the recent past, union density in Australia and other Western economies has been on the decrease and this paper explores the different reasons put forward to explain the declining trend.
Labour Unions in Australia and the Western world continued to register high numbers or at least record steady membership numbers until the mid 1990s, when these numbers began to decline.
Data from the Australian Bureau of Statistics (2011) indicates that, in the past decade, union density has declined from 24.5% in 2001 to 18% by the year 2011 (p.5).
The declining union density in the Western world is because of multiple factors, but ultimately the exact reasons that led to the rise of labour unions are the same for their in recent times – the industrial structure present.
Structural shifts in modern economies whereby traditional industries such as manufacturing are no longer the principal employers, changes in occupational demands, proliferation of small and medium sized firms, and general changes in employment patterns, in both the public and private sectors, have all contributed to the declining union density, in Australia and many Western economies, such as New Zealand.
Additionally, institutional changes brought by labour laws and concerns of different ruling parties, for instance the Australian Labour Party’s drive to privatise most industries, coupled with the decentralization of labour union bargaining structures from 1991 contributed to the decline in union density in Australia in the 1990s (Cooper & Ellem 2008, p.533).
Furthermore, these economic and institutional changes led to a shift in public and employee opinion concerning the importance of labour unions in the work place.
Therefore, with the rise of alternative employment arrangements (Part time vs. Full time, flexible working hours), and increased competition for employment positions, more employers and employees began to negotiate alternative employment terms aside of unions.
The above-mentioned changes in the economic, institutional and individual paradigm shifts that have brought about a decline in union density all point to a “halfway meet” between employees and employers. Labour unions sometimes presume an antagonistic relationship between employees and their employer; a presumption that is growing ever weaker in contemporary times (Peetz 1998, p.24).
Statistics on the decline in union membership for various genders and categories of workers reveal that employees in the private sector, full time employees and casual employees were the most likely categories of employees to ditch union membership – the numbers in these three categories registered faster decline in union density (Australian Bureau of Statistics 2010, p.9).
The common element in these three categories of employees is that, they are the most likely groups to have entered into work contracts after having carefully reviewed their work contractual terms and conditions.
Full time employees, employees in private firms and causal employees are less likely to enter into unions because they are satisfied with the contractual work terms and conditions that they have entered with their employers.
Therefore, the Unitarist perspective, whereby employees and employers are assumed to have shared goals, and conflict is viewed as resulting simply from poor communication, best captures the trend in the decline, in union density, in Australia and other Western economies (Ross & Bamber 2009, p.25).
Workers especially in the private sector are negotiating, or being offered, satisfactory terms of work thus negating the need or relevance for joining labour unions.
Particularly, the Human Relations School of thought, under the Unitarist perspective whereby the emphasis on team development and work balance ensures employee satisfaction and utmost output, encapsulates the trend in most firms in the western world, particularly private firms; therefore, few employees tend to join labour unions due to a general satisfaction with their employment terms.
The Importance of Unions for Workers
In as much as unions numbers are declining especially in Australia and New Zealand, the importance of unions in championing the causes of the average worker remains relevant even in contemporary work environments. Research indicates that firms whose employees are not unionised have a higher rate of employee turnover/employee dismissal than unionised firms do (Muir & Peetz 2010, p.216).
Additionally, such non-unionised firms are less inclined to carrying out structured measures for dealing with employee grievances (Benson & Brown 2010, p.90). Therefore, despite the decline in union numbers, the purpose and importance of unions in tackling generic employee grievances on behalf of their members remains.
Causes of Union Decline
Structural Shifts in the Economy
The Slow Decline of the Manufacturing and Public Sectors
Traditionally, the Manufacturing and Public sectors have had the most number of employees registered in unions.
The manufacturing industries in developed nations tend to involve large industrial corporations that employ a large number of workers – therefore the increased possibly of conflict between the employer and the employee due to the sheer size of the workforce and a usually unwieldy communication structure in such organizations.
Unions have thus historically been able to recruit members who work for such industrial firms in the manufacturing sector (Godard 2009, p.83).
Additionally, civil servants or employees under federal or local government employment have also been associated with unions due to the usually large number of such government employees – thus the exact reasons that incline workers in manufacturing industries to join unions apply here.
Several structural shifts in the outlook of many economies in the Western world, for instance Australia, the UK, and the US, have seen the gradual re-alignment of the public sector (through the reduction of overall numbers of government workers) and a growth of a robust service sector that competed with the manufacturing sector.
In Australia, throughout the 90s, government policies and regulations encouraged the privatization of numerous government agencies and state-affiliated corporations (Waddoups 2005, p.610). The downsizing of government led to fewer government workers in many western countries; thus, union numbers decreased too.
Incidentally, the government corporations and agencies that were privatised adopted remarkably different employee relation strategies that many times made the employees opt out of joining unions.
Typically, private firms have a comparatively fewer number of unionised employees, and thus the number of union density decreased in Australia partly due to the privatization policies of the Labour Government in the 90s (Falstead & Jewson 1999, p.17).
According to the Australian Bureau of Statistics (2008), the decline in density of private sector employees in unions was fastest throughout the 1990s and in the past decade (p.6).
Changes in Occupational and Employment Patterns
The development of numerous technologies and creation of agricultural, industrial, and office machines that perform tasks that previously had to be done by humans has led to spectacular changes in occupational/job descriptions, and the intensity of work needed to be conducted by human viz. machines and computers.
Due to such advancements, many workers in industrial firms have been either retrenched, work fewer hours, or work on contractual/casual basis. Typically, such occupational changes and change in employment terms signify a decline in the number of workers that can join unions, with many on casual contracts simply opting out of joining unions.
As stated earlier, employees in large firms, or those employed on full term basis are the ones most likely to join unions. Therefore, these changes in occupational patterns and employment terms have contributed to the decline in union numbers, in Australia and other Western countries.
Additionally, the rise of the private sector, with its small and medium-sized firms has negated the need for employees in such firms joining unions. Small and medium sized firms typically have less bureaucratic blocks, and employees are able to have their grievances heard and determined faster when compared with large firms.
Institutional Factors
Decentralization of Bargaining Structures
The 1990s were a pivotal era that re-defined the scope and limitations, and therefore, overall influence of unions in negotiating for wages and other terms for unionised employees. Such changes led to a reduction in union numbers as the previous lustre and allure of unions faded.
In 1991, a ruling by the Australian Industrial Commission, which stated that, Industrial Commissions could only issue rulings based on specified standards and wages (and negotiations would be between single employers and unions only) over which a form of “enterprise bargaining” could be carried out by the unions and employers changed the ability of unions to negotiate for economy-wide changes.
Previously the arbitration of salaries and wages would extend even to non-unionised workers within the specified industry, but this ruling changed this effect, and thus unions were reduced to enterprise bargaining with limited economy-wide influence (Kornfeld 1993, p.120).
Additionally, a number of organizations within firms are springing up to fill the role that was previously played by unions. Ultimately, the role of unions in the traditional sense can be summarised as that of ensuring that the employees gets fair treatment, optimum wages and proper work conditions from the employer.
According to Teicher, Lambert, and O’Rourke, the structural changes wrought by the implementation of the enterprise bargaining ruling by the Australian Industrial Commission does not wholly account for the decline in density of union numbers in Australia and other developed nations such as the US (2006, p.7).
A partial reason for the decline can be attributed to the creation of ad-hoc committees, departments and other such entities within various small and mid-size firms to fill the role previously assigned to unions.
In the present time, many companies have committees consisting of employers and employees that are tasked with ironing out any differences, concerns raised and implementing programmes that promote the welfare of both the employer and the employee.
Furthermore, such organisations are reducing unions to what they term “friendly organizations/societies”, where they provide workers and employees with such services as educational opportunities, insurance coverage options, and advices concerning legal issues that arise/may arise during the duration of employment. Such a trend is true for unions in countries such as Britain as well as Australia.
Privatization in Western Economies, Deregulation under the Labour Party in Australia
The 1990s saw the aggressive pursuit of endeavours aimed at privatization of state corporations by successive Western governments. In Australia, the Labour Party began a series of privatization ventures that saw the government sell its shares in many state corporations and allow for market competition in the provision of services that were previously in the federal and local government domain.
Privatization of state organizations and companies had been successfully carried out in other Western countries such as Britain and New Zealand (Ross & Bamber 2009, p.31). The privatization of the Commonwealth Bank had set the pace, and soon the national airline, Qantas, was privatised.
These privatization ventures served to weaken the force and influence of labour unions, whose substantial membership numbers were in the public sector.
Therefore, these deregulation and privatization measures served not only to reduce the number of union members directly, but acted as the end of the traditional role of labour unions as the recourse for workers in the public sector. Privatisation ensured that the resultant private firms, being small and efficiently managed, easily listened to and acted upon employee complaints.
Deregulation of the Australian Labour Market
Deregulation of the Australian labour market under the Labour Party from the late 1980s into the 90s also served to weaken the role of labour unions, and thus, lead to decline in membership numbers. Unlike other Western nations, the centralised nature of the Australian labour market Employment Relations systems and industrial tribunals ensured that labour unions maintained a centralised (thus influential) role in the negotiation and arbitration of disputes for workers within a specified union’s purview.
(Ross & Bamber 2009, p.32) Various accords between the Australian government under the Labour party and the Australian Council of Trade Unions (ACTU) served to move the Employment Relations angle of the Australian labour market towards a more decentralised and consensus-based system.
Criticism for the centralised nature of the Australian Employment Relations system had begun in the early 1990s from employers, government officials, and employees keen on creating a system that allowed for more direct talks between the employer and employee within the context of prevailing free-market forces; a system that would be akin to those existing in other developed nations.
Western nations such as the US and UK had long decentralised their Employment Relations systems. The passing of the Workplace Relations Act of 1996 further weakened the influence and relevance of the trade unions in Australia (Peetz 1998, p.17).
The Act provided for more individualised negotiations between employers and employees, thus reducing the role of centralised industrial tribunals, through which labour unions exercised their power and influence.
The Conservative coalition that won the 1996 election in Australia was determined to align the Australian Employment Relations system and labour market with those of other Western nations such as the US, which had long liberalised its market and had less centralised Employment Relation systems.
Although the Workplace Relations Act of 1996 had created provisions for workers and employers to engage each other at more individualised levels than was previously possible under Australia’s highly centralised Employment Relations system, the government in 2005 introduced the radical Work Choices Act of 2004 (Teicher, Lambert & O’Rourke 2006, p.63).
This piece of legislation effectively rendered the role of labour unions in negotiating for certain aspects of the worker, such as payment and wage increases, redundant. The Work Choices Act allowed employers to offer work contract for prospective employees, and subsequent employment would only be actualized when the worker signed such a contract.
Effectively this meant that prior to joining employment, the employer and the employee entered into a mutual agreement with provisions covering on most issues that unions traditionally handled on behalf of both parties.
The result of these two legislations, The Workplaces Act of 1996, and the Work Choices Act of 2004, was that the allure, importance and relevance of unions were reduced by default. Workers could enter into individualised contracts with their employers; moreover, industrial tribunals become decentralised, and thus, few workers joined unions, and those already in unions opted out.
Therefore, privatisation of state firms and deregulation measures undertaken by countries such as Australia contributed to the decline in union numbers. Having had a historically robust and powerful labour union movement, Australia was one of the last countries after many western nations to deregulate its labour market and privatise state firms.
Employers, Individuals and Public Opinion
The decline in union numbers has been accompanied by changing public opinion concerning the importance of unions to employees. The privatisation measures and deregulation pursuits of western governments over different eras served to create free-market contexts that negated the need for workers to belong to unions.
An increasingly higher number of workers were being hired on contractual and casual basis. The employment terms for engagements, on contractual and casual basis for employees, meant that workers rarely joined or felt the need to join unions.
The fall in union density numbers, in Australia and Western countries since the 1980s, has been commensurate with shifting employment and contractual patterns. Data from the Australian Bureau of Statistics indicates that reduction in union numbers is fastest among workers in the private sector and casual workers, due to the reasons given above (2009, p.5).
Towards A Unitarist Labour Market
All the above-defined causes of decline in density of union numbers, in Australia and other Western nations, have been wrought by an almost inherent drive towards Unitarist labour markets and Employment Relations.
The structural shifts in the economy, the institutional factors and the concerns of employers, governments and individuals that have led to the decline in density of labour unions in Australia and other Western nations have all served to create a need for an Employment Relations System that leans towards Unitarianism.
Structural shifts in the economy that brought about a decline in the manufacturing and public sectors led to the growth of small and medium firms that engaged employees at a more individualistic level, similar to that envisioned in a unitarist perspective of Employment Relations.
Similarly, the decentralization of bargaining structures under the institutional causes of the decline in union density numbers led to individualised contractual relations between employers and employees – a tenet of the unitarist perspective of Employment Relations.
Therefore, a unitarist approach in Employment Relations provides the most appropriate encapsulation of concerns from both the employer and the employee in the absence of unions.
These economic, legislative, and individual reasons for the decline of union densities in Australia and other western nations spells the end of the traditional role of unions as arbitrative entities in employment relations.
I think that in light of the economic, legislative, and individual changes in the labour markets of western nations, union densities will continue to decline into the near future. The individual shift in approach to employment by workers and employers is the most important factor in the decline in union numbers.
These personal preferences of employees and employers indicate a wider societal and nationwide independence from the grip of unions. Accordingly, unions should endeavour to provide other services to workers besides arbitration, such as educational needs and insurance if they are to remain relevant.
Conclusion
The decline in union densities, in Australia and other Western nations, is irreversible. The contemporary industrial and market outlooks of these countries makes the need for the traditional arbitration and advocacy role of unions irrelevant Trends in globalisation and other market changes indicate a likely further drive away from the historical role of union as third party entities in relations between employers and employees (Bray, Waring & Cooper 2011, p.405).
The impact of globalisation on trade and trade patterns, human resources and labour will further drive the relationship between employers and employees away from third party entities such as labour unions and even committees and department performing similar tasks.
Increased technological expertise is likely to produce workers and employees needing little or no supervision; thus, ultimately creating a substantial number of self-employed and self-sufficient workers. Presently, the practice of outsourcing jobs and labour by developed nations in developing nations creates another front in labour relations where unions cannot step into due to the multinational nature of outsourcing.
Therefore, the role of labour unions in contemporary and future labour relations is almost nonexistent. Employers and employees have slowly bridged the gap that was previously filled by labour unions in most Western nations.
A unitarist approach, where the goals of the employer and the employee are more closely merged through pre-employment contracts and negotiations, defines the future of Employment Relations of most Western economies.
Recommendations
The shift in both opinion and practice in many organizations, where labour unions are seeing their role diminish, calls for a change in strategy by unions, employers, and employees. As discussed in this paper, the role of unions may have to change to that of an advisory body, which offers workers’ services such as insurance, training, and career advice.
Such roles will make unions remain relevant to the twenty-first century labour market where the traditional role of unions, as arbitration and advocacy bodies, has been rendered unviable. Employers and employees, on the other hand, will need to engage more with each other.
Moreover, contract negotiations and work terms agreed will have to be to the satisfaction of both parties, in order to pre-empt future disagreements and needs for re-negotiation.
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