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The Decline Of Union Membership

Trade union membership in Australia continues to fall. This could be linked to the greater casualisation of the labour market, on-going economic prosperity or unrelenting optimism about the economic future, which is seeing workers try their luck with workplace negotiations rather than being part of a union that negotiates on the worker’s behalf.

It is also true that the Australian labour market has seen a strong trend to contracting out of employment and outsourcing of roles, which makes it more difficult for unions to attract and retain members, because of the more disparate nature of these workplace arrangements. These workplace changes are occurring in private sector firms and the government, and do not appear to be ending in the near future.

According to data this week from the Australian Bureau of Statistics, trade union membership fell to just 14 percent of employed people in 2014. This is the lowest rate of unionisation recorded and well down on the late 1990s level, which was a little above 25 percent of employed people.

It is worth pointing out that Coalition governments have actively pursued policies designed to undermine union influence. For the Howard Government it was Work Choices while the current Abbott/Turnbull Government established the politically inspired Royal Commission into unions and is aiming to change the laws to remove union representatives from the boards of superannuation funds.

The decline in the unionisation of the labour market has coincided with a number of telling facts. Wages growth has fallen to the lowest rate in approximately 50 years and the level of industrial disputes has fallen to one of the lowest rates recorded.

In other words, current labour market conditions are characterised by low industrial disputation, low wages and low unionisation.

There are many macroeconomic reasons for the slump in wages growth rather than there necessarily being any specific or direct link to the decline in unionisation. One is the unemployment rate, which is currently running close to a 13-year high. This elevated unemployment rate is a legacy of the growth stagnation that has been in place in the aftermath of the global banking and financial crisis. The economy is also weak now because of the sharp fall in commodity prices and the terms of trade that are seeing unemployment skewed high and wages growth skewed lower. Interestingly, the fall in union membership is not specific to Australia, although the decline in other similar industrialised countries is generally less pronounced.

According to the OECD database, in the last 15 years, the proportion of the workforce unionised in Canada has only fallen by just one percentage point to 27 percent. In New Zealand, the fall has been around three percentage points to 19 percent, while the UK has seen a five-point fall to 25 percent. In the US, the share has dropped by just one point to around 11 percent. Recall that over the same timeframe, the fall in Australia has been 11 percentage points to 14 percent.

Clearly, the decline in Australia has been more extreme than in these similar economies, which suggests that unionisation has some correlation with macroeconomic conditions. Despite the current economic soft patch, there has not been a recession for a quarter of a century and, until last year, Australian per capita incomes were among the highest in the world. Why would you have joined a union when times were so wonderfully good?

In the US, UK, New Zealand and Canada, where there have been dogged recessions, escalating unemployment, real wage declines and severe economic malaise, workers may have taken comfort by maintaining their union membership. In Australia, where until recently it was relatively easy to find a job (recall the skills shortage?) and real wages growth had recorded close to two straight decades of expansion, union membership rates free-fell.

It would be silly and unhelpful to suggest that the Australian union movement’s best hope for membership numbers to consolidate and then grow is a recession and significantly higher unemployment. Rather, unions need to show how their work can benefit members in terms of job security, pay, safety and other workplace conditions. If it can do this, it might be able to arrest the decline in membership rates. If not, unionisation may further fall away to the point where the United States will have a higher share of the workforce in a union than Australia in the near future.

Who would ever have thought that?