TUC general secretary Frances O’Grady
TUC general secretary Frances O’Grady said at a public lecture at the London School of Economics in May that trade unions face major challenges including the decline in manufacturing and the rise of internet-based business including Google and Uber.
She referred to the pay squeeze since 2010 in public sector, where most UK trade unionists work.
Sceptical audience members asked why LSE students should join unions.
Total membership of the 54 TUC-affiliated unions is now 6.2m, less than half the figure reported in 1979.
Trade unions in the US have experienced a similar decline, though this trend is less apparent in France and Germany.
The rise of service industries which now account for more than 80 per cent of employment and output in advanced economies is testing the recruitment capacity of British unions, which mainly originated in industries making tangibles.
Factories employing hundreds and even thousands in a single site were easier for unions to organise than decentralised service offices. The well-defined skills required for operating machinery made it possible for unions to fix wages and working hours with the support of workers that regarded unions as professional associations that also policed training standards and health and safety. Organised skilled workers also could withdraw their labour with confidence that employers had no alternative.
Service workers, in contrast, are often involved in administration and sales tasks where skill substitutability is higher. Sophisticated employers have for decades provided training to service workers rather than relying on union-backed apprenticeship schemes. And the degree of exploitation of workers is less easy to discern in service work than it is in factories and farms because their output is harder to quantify. A coal-face worker and a car production-line worker was acutely conscious of what they were producing both in terms of volume and market value.
Ideology also matters. Today’s service workers include young people with IT skills which are portable. They can work anywhere and see the world is rich with possibilities, even if many of them are no more than fantasies. The reality is most service workers will probably work long hours for many years for salaries that are failing to keep pace with the cost of housing. Many are on insecure fixed-term contracts.
The declining influence of trade unions in the UK and elsewhere is, however, perverse. On average, workers in the UK are more exploited than they have ever been: first, because the number of people selling their labour is greater than it’s ever been. In 1979, around 25m people were employed in the UK. Today, this figure has increased to almost 32m. The increase largely reflects the growing number of women working. And people are working significantly longer hours than they did in 1979.
Corporate profits in 2015 were more than 10 times the figure for 1979. Median household income has increased by less than five times over the same period. The average house price in England and Wales has increased by almost 900 per cent over the same period.
In a nutshell, UK wages have grown half as much profits since 1979 and in real terms buying a house is twice as costly as it was in 1979. Higher real housing prices benefit owners and sellers. They are bad for buyers and renters, which account for about 36 per cent of all householders.
Given that trade unions declare their aim is to defend the living standards of their members and particularly focus on low-income groups that are most likely to be rent-payers, these figures are evidence of systemic failure.
The TUC is campaigning for the UK to remain in the UK. It argues that EU legislation protects workers’ rights and living standards. It’s further evidence of the declining capacity of unions to protect, let alone increase, its members’ living standards at a time of robustly growing corporate profitability.
Economics2030 suggests two approaches that might help workers to get a bigger share of national output. The first step is to recognise that tangible production methods that facilitated trade union recruitment have been replaced permanently. In many ways, trade unions with their layered management structures and powerful central bureaucracy mimic the arrangements that most modern corporations have long abandoned. Organisational structures designed to meet the needs of workers in manufacturing are increasingly redundant. Services tailored for the self-employed and those on short-term contracts are increasingly relevant. The challenge of adapting existing union structures is considerable.
The second is that the distinction between buyers and sellers is disappearing in services. In tangibles, there are transactions. But in services, there are iterative interactions involving individuals that lead to the creation of value that is shared and only partly monetised.
That suggests that unions need to encourage constructive relationships between buyers and sellers at the level of the individual. That means that those using Uber should be encouraged to appreciate the needs of Uber drivers, many of whom are working long hours at or below the minimum wage.
The idea that unions are on the side on consumers in all service interactions is a novel and uncomfortable thought that will test the thinking of union representatives. But these are changing times. Unless unions recognise the scale of the transformation that has already occurred in the UK’s economy and act accordingly, they will go the way of the many manufacturing industries that once employed the majority of unionised workers.
For a short video about the role of labour in service economies, click here.