Trade unions and the Social Dialogue in the UK A story of decline and change

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1 Trade unions and the Social Dialogue in the UK A story of decline and change The levels of collective bargaining, and consequently collective bargaining structures, in the United Kingdom continue to decline. There is a growing distinction between the public and the private sector in terms of the proportion of workers who are members of trade unions and in terms of those covered by national sectoral agreements rather than at a more local level. There are indications, however, that the pace of this decline has been reduced in recent years. This will be for a number of reasons, including perhaps a greater intervention of the law and state regulation both at national and perhaps at EU level in reinforcing the collective and other rights of workers. The decline in trade union influence and the limiting of social dialogue can be traced back to 1979 with the election of a Conservative Government led By Margaret Thatcher MP. This Government was determined to weaken collective rights and strengthen individual ones. There was to be strict regulation of trade union rules and activities. To achieve this the Government introduced the Employment Act 1980, the Employment Act 1982, the Trade Union Act 1984, the Employment Act 1998, the Employment Act 1990, the Trade Union Reform and Employment Rights Act 1993,. Some of the results of this legislation were (i) to introduce secret ballots into voting on industrial action and other matters; (ii) ended the pre-entry and post entry closed shop (iii) made secondary picketing illegal (iv) introduced a Commissioner on the Rights of Trade Union Members (v) introduced detailed rules on the election of officials (vi) introduced rules on ballots and notice periods prior to industrial action, effectively outlawing unofficial action (vii) imposed tighter rules on political funds used by unions. Many of these measures have been continued by subsequent governments. In some ways attitudes to trade unions have changed significantly over the last 30 plus years and the fact that few people regard them as having too much power today, in contrast to the past, may be a reflection of the government s success in neutering them. In September 1979 some 80 per cent of adults agreed with the statement that trade unions have too much power in Britain today. Even 69 per cent of trade union members agreed with the statement. By 1989 the figures agreeing with the statement were 41 per cent of adults interviewed and just 26 per cent of trade union members. In 2014 the figure had dropped to some 29 per cent of adults who thought that trade unions had too much power. On the other hand some 77 per cent agreed with the statement that trade unions are essential to protect workers interests. 1 I would briefly like to go through some of the characteristics of this decline: firstly, bargaining structures, secondly, what I call the retreat to the public sector, thirdly, the dramatic decline in trade union memberships and, finally, the changing characteristics of trade union members. 1 Ipsos Mori Attitudes to trade unions ; 1

2 Bargaining structures By far the most common form of pay determination is unilateral pay setting by management. Some 70 per cent of workplaces set pay for at least some of their employees using this method. Figures from the Department for Business show that in 2012 only 29.3 per cent of employees were covered by collective bargaining. 2 However, collective bargaining coverage is not even across the economy. In the public sector 63.7 per cent of employees are covered by collective bargaining compared with only 16.1 per cent in the private sector. There is a high correlation between union membership and coverage by collective agreement with over 70 per cent of trade union members covered by such an agreement. Larger employers, those with 50 or more employees, were also much more likely to have entered into collective agreements. Some 41.6 per cent of employees in these larger enterprises were covered by collective agreements, compared to some 15.9 per cent of smaller workplaces. This decline began with the election of the Thatcher Government in 1979 when an attitude of hostility towards trade unions and collective bargaining began. This continued throughout the 1980s and 1990s, so in 1992 the Secretary of State for Employment was able to say that traditional patterns of industrial relations, based on collective bargaining and collective agreements, seem increasingly inappropriate and are in decline. 3 Interestingly the decline is even greater in new enterprises set up during this period. 4 When bargaining occurs in the private sector, it is usually at the company or plant level. National agreements are very much the exception. In the public sector industry wide agreements are more common, although in some parts there is more localised bargaining, such as in the devolution given to different civil service departments to arrange their own pay rates and agreements. 5 Collective agreements do not have to run for a specific period although the most common pattern is that they run for a year. It is reported that figures from the Labour Research Department database of collective agreements indicate that as at March 2013, 91 per cent of the agreements were for 12 months, 4 per cent for 24 months and 1 per cent for 36 months, with the remaining 4 per cent lasting for other periods. 6 The retreat to the public sector As a result of government policy and measures taken to tackle the debt burden, the size of the public sector in the UK has been decreasing. Public sector employment represents some 19 per cent of total employment (some 5.7 million workers), 7 yet it contains some million trade union members compared to some million in the much bigger private sector. Some 56.3 per 2 Trade Union Membership 2012 Statistical Bulletin May 2013 Department for Business, Innovation and Skills. 3 William Brown (1993) The contraction of collective bargaining in Britain BJIR 31:2 June 4 Stephen Machin (2000) Union decline in Britain BJIR 38:4 December L. Fulton (2013) Worker representation in Europe. Labour Research Department and ETUI; 6 See Kingdom/Collective-Bargaining 7 In June 2005 it was just over 20 per cent with 5.8 million workers. 2

3 cent of public sector employees are members of a trade union compared to 14.4 per cent in the private sector. In the public sector 86.4 per cent of workplaces had a trade union presence with almost two thirds of employees (63.7 per cent) pay affected by collective agreement. The overwhelming numbers of agreements are set at the national, usually sectoral, level. In contrast, in the private sector only in some 16.1 per cent of workplaces was employees pay influenced by collective agreements even though over a quarter of workplaces had a trade union presence (28.5 per cent) Also in contrast to the public sector the overwhelming majority of these agreements are set at company or enterprise level. 8 So we can say that the great majority of pay settlements in the public sector are through nationally negotiated collective agreements. In the private sector the norm is for pay to be set unilaterally by management. Of the 10 biggest trade unions in the UK, 5 operate almost exclusively within the public sector and a proportion of the membership of the other biggest 5 unions will also work in this sector. Trade union recognition is the necessary precursor to collective bargaining. The figures are somewhat alarming in that only 16.1 per cent of workplaces in the private sector have a trade union present compared to some 86.4 per cent in the public sector. 9 The decline in trade union membership In the United Kingdom there has been a consistent decline in the size and number of trade unions, resulting in a continuing reduction in the numbers of workplaces and workers who are covered by any collective bargaining structures. Trade unions in the United Kingdom have been declining in both membership and numbers for some considerable time. Membership reached its highest level in 1979 when trade union membership was million people. Within 15 years, by 1994, this figure had fallen to million. The decline has continued, although it does seem to have stabilised in the very recent past with the figure for 2011 being slightly more than 7.2 million members. 10 This decline is even more startling when one looks at how the workforce has increased and changed during the same period. In 1979 the employed workforce consisted of some 25.2 million people, so trade union membership represented a figure of more than 50 per cent. In 2014 the employed workforce had increased to around 30.1 million, so trade union membership now represents less than 25 per cent of the workforce, having been reduced by more than one half in this period. Almost two thirds of workplaces did not have any trade union members (64%). This comprised some 77% of workplaces in the private sector compared to only 7% in the public sector Sonia Pereira (2004) Collective agreements and wages in the New earnings Survey Economic Trends 612 p35 Office for National Statistics 9 All the figures come from Trade Union Membership 2012 Statistical Bulletin May 2013 Department for Business, Innovation and Skills. 10 See annual reports of the Certification Officer 11 See Kersley et al 3

4 Partly in response to this decline in numbers and, I think, partly because of the structural changes that have taken place, trade unions themselves have been going through a process of consolidation. 12 Figures published by the statutory body show that, for example, there were 344 trade unions in By 1998 this figure had fallen to 252 (a drop of more than one quarter). By 2013 this total had fallen further to 166, representing a reduction in numbers of more than 50 per cent in 25 years. Perhaps also of significance is the fact that just the eight biggest unions comprise almost three quarters of the total trade union membership and the two biggest unions have some 40 per cent of the total membership. 13 There is a trade union wage premium, although the reasons for its existence are more complex that just a causal relationship between membership of a union and pay. Probably of more significance is the overall trend of a narrowing of the pay differential, particularly in the private sector. Overall there was a decline in the wage premium between 1995 and 2012 as a result of earnings growth for non-union members being faster than that for union members. In the private sector the wage premium has decreased from 15 to 6 per cent during this period, whilst in the public sector the decrease amounted to 13 per cent (from 30 to 17 per cent). Characteristics of trade union members Inevitably the result of the decline of the traditional manufacturing and construction industries, together with the facts that most new jobs created are in the private sector and that the public sector has a different demographic, the profile of the trade union membership has changed. Age The only age bracket where the proportion of trade union members has increased in recent years is the 65+ years group. 14 All other age groups remained static or declined, although the highest density of trade union memberships takes place during the 50 to 59 years age groups. Some 36.5 per cent of year olds and some 36 per cent of year olds are members, compared to 10.3 per cent of year olds and 18.8 per cent of year olds. It is interesting to note that in a report that I wrote in 2004 I emphasised the contrast between those in their 40s and those in their 20s. All that appears to have happened since is that the 40+ year olds have become 50+ year olds and the proportion now in their 20s who are trade union members has further declined. Feminisation Although the same age tends are apparent in female trade union members as in those for male ones, the proportion of trade union members that are female is decreasing at a slower rate. In 2006 some 27 per cent of men and some 29.6 per cent of women were members; compared to 2012 when the figures were 23.4 per cent and 28.7 per cent. 12 Records of trade unions are kept, in the United Kingdom, by an official known as a Certification Officer. 13 Unite the Union (1,510,026), UNISON (1,317,500), GMB (610,116), RCN (417,821), USDAW (412,441), NUT (386,668), NASUWT (338,668) and PCS (280,547}. 14 For the age group 65-69, some 13.3 per cent were union members in 2003 compared to some 17 per cent in

5 There have been significant increases in the proportion of women trade unionists in the years age bracket from 33 per cent in 2003 to 38.9 per cent in 2012 (for men the figures are 37.7 to 32.9). Similarly in the age bracket the figures have increased from 26.3 per cent to 30.6 per cent (also for men the figures are 33.7 to 29.1). This contrasts with the year olds who have gone from 14.9 per cent to 9.3 per cent and the year olds from 24.3 per cent to 23.4 per cent (men in this bracket have decreased from 20.8 per cent to 14.7 per cent). Other characteristics The ethnic group that has the biggest proportion of trade union members is the Black or Black British group with 27.9 per cent. This compares to the White working population with 26.6 per cent. The Chinese and Other Ethnic group had the lowest proportion with just 17 per cent membership in People with a disability are also more likely to be trade union members (32 per cent compared to 25 per cent of the non-disabled). There is also a relationship between education and trade union membership. About 32 per cent of employees with a university degree or equivalent are members compared to 16 per cent of those with no qualifications. The proportion of permanent employees who were trade union members in 2012 was 27 per cent compared to 15 per cent for temporary employees. Social dialogue Trade unions have multiple roles in the workplace and still have the power to limit the supply of labour to an employer by taking industrial action. They can also give employees a collective voice in dialogue with management and others. It is perhaps a reflection of both the decline of trade unions and of the extensive laws which exist to control the process of taking industrial action that the numbers of disputes in the UK have dropped to quite low numbers, e.g. the number of disputes beginning during the year was 1338 in 1981; this fell to 357 in 1991, 187 in 2001 and, finally, to 139 in A Eurofound study 16 in the UK asked employers and trade union representatives for their views on the nature and quality of the social dialogue. 17 The employers believed that there are many examples of successful social dialogue in the UK and cited the establishment of the Low Pay Commission as a successful example. This is an independent statutory body established by the National Minimum Wage Act 199 to advise the government on the national minimum wage. It has a number of members with a range of employer, employee and academic backgrounds. Other examples given were the right of individuals to request flexible working and the establishment by the UK government of the Women and Work Commission set up to consider the problem of the gender pay gap. The employers organisation concerned was the CBI and it issued a revealing statement to the researchers: 15 Office for National Statistics UK 16 Working Conditions and social dialogue UK 17 Confederation of British Industry and the Trades Union Congress 5

6 Our view is that social partnership is working very well in the UK. We have a voluntary approach and often involve not only the social partners themselves but also other experts, such as academics. CBI members believe that social partnership should be considered on an issue by issue basis; not all issues are appropriate for social partnership. The trade union organisation, the TUC, highlighted some learning, development and training issues as areas where social dialogue can have a significant influence. It is probably true to say that the role of the social partners in the United Kingdom is a limited one, certainly in comparison with other some member states. There are few national agreements and little evidence of any particular status for trade unions in the decision making process of Government. Traditionally collective agreements have not been legally binding, but are regarded as being binding in honour only (section 179 TULRCA ). This has been an approach I think supported by trade unions, suspicious, with some justification, of the intervention of the law into industrial relations. This traditional view has meant that it was for trade unions to strive for recognition and perhaps fight for the right to bargain using industrial action. This, however, is less of a possibility since the introduction of procedures that make the taking of industrial action so difficult. This voluntary nature of collective bargaining has sometimes meant the introduction of alternative representation for employees when bargaining or consultation is required, for example, by European Directives. Thus when an employer is required to consult, for example, by the Transfers Directive, (2001/23/EC) or the Collective Redundancies Directive there is a hierarchy of consultation firstly a trade union, but, if there is no trade union, then employee representatives of various sorts appointed or elected by affected employees for the purpose of the consultation (section 188(1B) TULRCA 1992 and TUPE 19 Regulations 2006). Perversely it may be that it is this voluntarist approach that may have led to the decline in influence of collective bargaining. Perhaps one can argue now that there is a greater need for the law to intervene. Certainly the laws relating from EU directives which require employers to consult with employee representatives have led to the establishment of employee bodies with whom a dialogue can take place. Perhaps when one considers the future of industrial relations in Europe the role of law is critical when it comes to establishing bargaining structures and other means of dialogue between employers and trade unions. The effectiveness of trade unions is succinctly summarised in a report 20 funded by the TUC: First, after a period of relative stability in union density, it is in decline once again. Not only have unions found it increasingly difficult to organize new workplaces, they have also suffered substantial declines in union density in the organized parts of the private and public sectors. Second, collective bargaining coverage appears to be in terminal decline due, in large part, to employers moving away from it as a method for pay determination in the face of intensified product market competition. Third, there is very little 18 Trade Union and Labour Relations Act Transfers of Undertakings (Protection of Employment) Regulations Alex Bryson and John Forth Union Organisation and the Quality of Employment Relations (2010) TUC; 6

7 statutory support for the role of trade unions. In contrast to countries such as France, unions in Britain get little or no financial support from government and they are largely excluded from institutions such as the unemployment insurance system which in other countries provides them with a vital role in institutions which are of profound importance to many workers. Despite a recent innovation in statutory recognition procedures, there is little that unions can do to require employers to allow them access to the workplace for organising purposes. And unions have no rights to require free riders to pay fees for bargaining services. 7