ILO Highlights Global Challenge to Trade Unions

ILO/97/28

Press release | 04 November 1997

ILO/97/28

GENEVA (ILO News) ­ Trade-union membership dropped sharply during the last decade, falling to less than 20 per cent of workers in 48 out of 92 countries surveyed, says the International Labour Office in its annual study of the world's labour markets: World Labour Report 1997-98 (Endnote 1) , released today in Geneva.

The ILO report says that in 1995, roughly 164 million of the world's estimated workforce of 1.3 billion belonged to trade unions. In only 14 of the 92 countries surveyed, did the union membership rate exceed 50 per cent of the national workforce. In all but about 20 countries, membership levels declined during the last decade.

However, the ILO report also says that in spite of the negative trends, the drop in union numbers has not translated into a corresponding drop in influence. In most countries, trade unions have managed to consolidate their strength in core sectors, enlist constituents in emerging sectors and develop new collective bargaining strategies, often on a global scale.

Presenting the study at a press conference in Geneva, ILO Director-General Michel Hansenne suggested the results signalled a major turning point in industrial relations worldwide, but he dismissed the notion of a world-wide decline in trade union power. "Numbers tell only part of the story", said Mr. Hansenne, adding that:

"Where many observers around the world see only decline, I see increased democracy, greater pragmatism and freedom for millions of workers to form representative organizations to engage in collective bargaining with their employers and to participate in decisions affecting society and the workplace."

The report shows that while much of the numerical decline is attributable to such economic factors as reduced public-sector employment, heightened economic competition and a falling share of manufacturing industries in total employment, the dramatic rise or fall of trade union membership is linked to systemic changes in governance or major legislative overhauls in many countries and regions.

For example, in regional terms, the drop in union membership was sharpest in central and eastern European countries, which saw an average decline of almost 36 per cent, much of which resulted from the ending of quasi-obligatory union membership following the breakup of the former Soviet bloc. Unionization rates in Estonia were down 71 per cent, in the Czech Republic by 50 per cent, in Poland by 45 per cent, in Slovakia 40 per cent and Hungary 38 percent. Much of the decline in Germany's unionization rate (20 per cent versus a 16 per cent average in the EU) is attributable to the drop in former East Germany.

In contrast, the largest single increase in trade union membership came in South Africa, which saw unionization rates leap by 130.8 per cent, with most of the increase coming in the post-apartheid era. Some of the other countries which saw unionization rates increase were: Bangladesh (58 per cent), Canada (10.7 per cent), Chile (89 per cent), Republic of Korea (61 per cent), the Philippines (69 per cent), Spain (92 per cent), Thailand (77 per cent) and Zimbabwe (54 per cent).

The report also says that in some cases union membership is repressed for political or investment considerations. Some governments have "adopted a restrictive policy with regard to recognising unions in the hope of attracting foreign investment." In addition, restrictions of various kinds and officially sanctioned, or ignored, anti-union activities remain pervasive in a large number of countries as reflected by the numerous complaints filed each year and examined by the ILO's Committee on Freedom of Association.

The report says that while unions in most countries have moved "towards a less adversarial and more cooperative" approach, trade unions have shown themselves capable of wielding power in times of crisis. In a number of recent industrial and political conflicts, notably in France, Germany and the Republic of Korea, trade unions proved decisive in reaching settlements.

The international activities of trade unions have expanded greatly, leading in a number of high-profile cases multinational corporations (including Nike, The Gap and others) to adopt "codes of conduct" for workers and subcontractors on a global scale. In many non-democratic developing countries, notably Myanmar, Nigeria and Sudan, unions and workers' organizations continue to be in the vanguard of democratic opposition and strong proponents of human rights. Innovative social structures, such as the implementation of works councils in Europe and various "social pacts" (along the lines of those implemented in Ireland and Italy which have boosted growth, restrained inflation and reduced unemployment) owe much of their inspiration to trade unions.

In other countries, such as the United Kingdom, Australia and New Zealand, declines in union membership (of respectively 25, 30 and 55 per cent) resulted partly from the weakening of legislation protecting unions and changes to the institutional recognition accorded to workers' organizations.

Union membership in the United States declined by 21.1 per cent during the last decade, giving the US one of the lowest levels of unionization among industrialized countries. Changes in the composition of the workforce resulting from the introduction of new technologies figure prominently among the causes of this trend.

In Israel, union membership during the period 1985-95 dropped by 76 per cent, mainly because the Government removed health-care from unions and transferred it to the State.

In some industrialised countries, the total number of unionised workers decreased only slightly, but the percentage of wage and salary earners in the workforce dipped more sharply. This suggests that large numbers of new entrants to the labour market are not being unionised and that the relative numerical importance of unionised labour is decreasing as a percentage of the workforce in most countries.

For example, in Japan, the number of unionised workers decreased by only about 1%, but the decline of union density was 16% during the last decade; unionised workers now account for only about one-quarter of the Japanese workforce.

The number of unionised workers remained steady in Italy, but the percentage of unionised workers in the labour force decreased by 7% to 44% of the total since the mid-1980s.

The ILO Director-General acknowledged that the decline in overall numbers underscored the fact that "economic openness means coming to terms with change," but insisted that "evidence abounds that the extent of countries' involvement in globalisation is in no way limited by the existence of strong trade unions." In fact, "the benefits of globalisation are likely to be stronger when the social partners are capable of assuring wage earners of a reasonable measure of security in the face of change."

While stressing the vital economic function of trade unions during industrial restructuring, he said that "trade unions continue to play an important role as vehicles of democracy and advocates of social justice, notably by reaching out to women, minorities, consumer groups, the unemployed and the growing numbers of working poor in countries round the world."

Trade Union Membership (1995)

Region

No. of union members
Sub-Saharan Africa

North Africa and Middle East

North America

Central America

South America

Oceania

East and South-East Asia

South Asia

Northern Europe

Western Europe

Southern Europe

Central and Eastern Europe

10,027,000

7,338,000

20,489,000

11,042,000

22,431,000

2,802,000

23,930,000

10,445,000

7,527,000

23,749,000

10,174,000

13,993,000

Total 163,947,000

Pressure to Adapt

The report surveys a vastly different landscape of industrial relations emerging in the global economy, driven more by capital mobility, new methods of production and communication and innovative approaches to human resource development than by traditional collective labour relationships, which it says "are becoming increasingly unstuck."

The report foresees an era of reduced government intervention in economies, greater autonomy for enterprises and increased competition for jobs and investment. It says that coping with the potentially negative social fallout from these trends will be a major challenge for governments, employers and workers alike.

The report highlights the increasing mobility of capital, which means that for enterprises previously limited by national horizons, a variety of options beckon in the global competition for plant and investment, "exit routes really do exist, and they may well increase in years to come."

Since companies now have greater options on locating production, the report says "the cost of labour is back on the table; wages, once taken out of competition (by national or industry-wide collective agreements) are now back in the competitive sphere."

The impact is likely to be greatest on low-paid, low-skilled labour, thus widening social inequalities. The ILO warns that trade competition and capital mobility risk "dividing the workforce" by seeking out and bidding up the wages of highly skilled workers at the expense of the less-skilled, who used to be protected from wage competition.

Employers also face new challenges as a result of reduced government intervention and increased competition:

"In reducing the autonomy of national macroeconomic policy, globalisation enhances a firm's role as the primary engine of wealth and job creation", the report says. However the same forces "erode the shelter in which firms used to operate." Enterprises have responded by transforming how they organise work and production and, in the process "industrial relations structures have come under pressure to adapt."

The most immediate casualties of efforts to promote flexibility and "lean" production have been managers, whose ranks have been dramatically reduced. In the US, for example, "18.6 per cent of all positions phased out since 1988 came from middle management, although middle managers account for only 5-8 per cent of the workforce." In large UK companies, the average number of management layers went from seven to less than five in recent years.

Responsibility has increasingly devolved to the shop floor, with such new methods of organisation as cross-functional teams and multi-skilling, replacing the traditional system of highly segmented jobs and rigid job descriptions that prevailed as recently as the 1980s in the most developed industrial economies.

The ILO report says that "while these new methods offer certain advantages to workers in the form of greater autonomy, responsibility and decisions-making power, the benefits have frequently been offset by higher unemployment, reduced employment security, limited career prospects and a growing number of peripheral workers on casual, temporary or part-time contracts."

Meanwhile, existing industrial relations structures have, in many cases, been augmented or circumvented by new ones, known generically as Human Resource Management (HRM) policies, which deal with such workplace issues as teamwork, training, payment systems and personnel systems, many of which were previously dealt with by collective agreements.

The ILO report says that in unionised enterprises, the use of HRM policies can be interpreted two ways: "either the union facilitates the introduction of these methods, or they are used to counter the influence of unions." In continental Europe and Japan, the transition has done little to disrupt existing labour-management relationships, in contrast to the UK and US where "in the context of a traditionally adversarial collective bargaining culture, this relationship has been more confrontational."

According to the ILO analysis, the architecture of future industrial relations will be largely determined by how employers and workers resolve the tension between cooperation-based policies underpinning most human resource strategies and traditional enterprise-based industrial relations involving unions and collective bargaining. In ILO's view, the two need to be "complementary," without undermining the role of trade unions, who frequently have to intervene when problems remain immune to direct, cooperation-based solutions or involve social issues that go beyond the boundaries of the enterprise.

New Strategies for Employers and Unions

The report says that in many cases decisions taken by unions have compounded the difficulties they face and these need to be addressed. For example, loss of revenue caused by declining membership has led to numerous mergers among unions seeking to streamline their operations. The larger unions emerging from this process may have sometimes lost touch with their grass roots.

In addition, unions have usually remained focused on workers in mass production in very large enterprises, thus ignoring the increasing numbers of workers employed in small and medium sized enterprises (SMEs), in services or in unconventional employment circumstances, such as part-time, informal and home workers. Employers organisations have made similar oversights, notably in failing to organise SMEs or informal-sector employers.

To address these and other shortcomings, unions and employer organisations are developing new strategies, including:

Provisions of new services ­ For unions and employers alike this includes supplementary social benefits, advisory services, development of professional communications programmes, job networks etc..

Recruiting new members ­ For unions this includes women, young people, workers in SMEs, informal sector employees (i.e. those working outside the bounds of the formal economy, which in some poor regions of the world could account for 80 per cent of all workers) and the unemployed. For employers this means SMEs and informal sector employers.

Expansion of international cooperation ­ In spite of legal barriers and cultural differences, trade unions are increasingly developing their international ties, notably by participation in international fora, confederations and by increased direct contacts of trade unionists with counterparts overseas, notably those employed by multinational corporations. Employers organisations are seeking to create integrated service networks offering training, legal advice and strategic planning to ever larger networks of employers, especially SMEs, on a regional basis.

Forging new alliances ­ Grass roots organisations, including NGOs and consumer groups that share the same objectives and employer and trade union organisations are an increasingly important resource in such complex international areas as human rights, trade policy, environment and development.

Union membership as a percentage of wage and salary earners

Trade Union Density

(1995)

Change in Trade Union Density

(1985-1995)

AFRICA

Egypt 38.8%

South Africa 40.9%

AMERICAS

Argentina 38.7%

Brazil 43.5%

Canada 37.4%

Cuba 70.2%

Mexico * 42.8%

United States 14.2%

Venezuela 17.1%

ASIA

Indonesia 3.4%

Japan 24.0%

Korea, Rep. of 12.7%

Malaysia 13.4%

Philippines 38.2%

Thailand 4.2%

OCEANIA

Australia 35.2%

New Zealand 24.3%

EUROPE

Austria 41.2%

Denmark 80.1%

Finland 79.3%

France 9.1%

Germany 28.9%

Greece 24.3%

Hungary 60.0%

Iceland 83.3%

Israel 23.0%

Italy 44.1%

Malta 65.1%

Netherlands 25.6%

Poland 33.8%

Portugal 25.6%

Spain 18.6%

Sweden 91.1%

Switzerland 22.5%

United Kingdom 32.9%


*Mexico: 1991

AFRICA

Egypt -9.1%

South Africa 130.8%

AMERICAS

Argentina -42.6%

Canada 1.8%

Costa Rica -43.0%

Cuba -29.8%

Mexico ** -28.2%

United States -21.1%

Venezuela -42.6%

ASIA

Japan -16.7%

Korea, Rep. of 2.4%

Philippines 84.9%

Singapore -18.1%

Thailand -2.5%

OCEANIA

Australia -29.6%

New Zealand -55.1%

EUROPE

Austria -19.2%

Czech Rep. -44.3%

Denmark 2.3%

Finland 16.1%

France -37.2%

Germany -17.6%

Greece -33.8%

Hungary -25.3%

Iceland 6.3%

Israel -77.0%

Italy -7.4%

Malta 35.8%

Netherlands -11.0%

Norway 3.6%

Poland -42.5%

Portugal -50.2%

Spain 62.1%

Sweden 8.7%

Switzerland -21.7%

United Kingdom -27.7%


** Mexico: 1989-1991

Endnote 1:

World Labour Report 1997-98. Industrial Relations, Democracy and Social Stability. International Labour Office, Geneva, 1997. ISBN 92-2-110331-5. Price: 45 Swiss francs.

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