Workers solidarity, but only for a few

Using a technique known as “shift-share analysis” to test the impact of these factors, Peetz concludes that they accounted for about half of the decline in union numbers for the period between 1982 and 1992, but do not explain much of the drop since then. Because the fall in unionisation has been more rapid in the 1990s than the 1980s, structural change appears to play a fairly minor role in explaining the overall slump in unionisation in the past 25 years. This is consistent with US research, which finds that structural changes were much less important than legal change in the decline of US unions.

Where does this leave unions today? Looking back over the past century, unions can proudly say that they played a substantial role in the two big transformations of the labour market since Federation: the virtual elimination of child labour and the widespread participation of women.

In the current environment, they may point to the higher earnings of workers in union workplaces. Research by Mark Wooden shows that, in workplaces with at least one collective agreement in place, the net union wage effect is in the order of between 12 and 13 per cent. Unions can serve as a bulwark against rising inequality (though, as noted above, inequality may also be eroding unions). Trade unions can also claim to provide important advantages to employers - by creating an environment in which firms have a stronger incentive to train their workers. They may even help create social capital, building bonds of trust and reciprocity in the workplace.

Yet the evidence suggests that union members are voting with their feet, and that other structures are springing up to take their place. The fraction of workplaces with joint consultative committees more than doubled between 1990 and 1995, and the fraction of workplaces with ad hoc employer-employee committees also grew substantially. Needs that were once met only by unions are now handled by new organisations.

Writing on the decline of British unions, John Pencavel notes that unions are relegating themselves to their 19th century role as “friendly societies”, providing services such as insurance, adult learning and legal advice. Such a shift also seems to be occurring in Australia.

With unions on the wane, the Australian labour markets of today are closer to the textbook models of competitive markets than they were in the 1970s. This is chiefly due to a series of legislative changes which make it harder for unions to organise. But it is also due to greater competition in product markets, rising wage inequality and changes in the composition of the labour force. It is highly improbable that any of these changes will be reversed. Although the inexorable decline in membership has slowed a little in recent years, a resurgence of Australian unions seems unlikely.