Labour market insecurity and trade union membership: contemporary trends

According to the latest ILO report, World Employment and Social Outlook (2016), 1.5 billion people globally (approximately 46% of total employment) are in vulnerable employment, a situation that usually translates as, at best limited, or frequently non-existent social protection coverage, poor working conditions, and frequently volatile and relatively low earnings. The scale and intensity of the international financial crisis has been pointed out as one of the main factors driving the growth of precarious contracts, low-paid employment (and risk of poverty) and labour market insecurity. The existing evidence also shows that some groups are persistently more exposed to precarious jobs and more economic insecurity (see for example Blossfeld et al., 2005). Labour market insecurity encompasses not only the risk of unemployment and expected duration of unemployment, but also the existence (and level) of unemployment benefits (Hijzen and Menyhert, 2016).

In this context, the opportunities to achieve “decent and productive work, in conditions of freedom, equity, security and human dignity” (Sen, 2000: 120) seem to be under threat for many worldwide. Besides the unequivocal repercussions in terms of income uncertainty and labour market insecurity have impacts on many levels of individual welfare (for example, social relations and mental health), as well as social participation and engagement (and can even help explain political alienation (Verba et al., 1995). From our perspective, at a structural level, this contributes to create a more fragmented and less inclusive democratic economic system.

In its most recent Human Development Report (2015), the United Nations Development Programme focused on labour market insecurity; highlighting a number of serious consequences: the incapacity to earn a livelihood, exposure to hazardous working conditions and lack of adequate social protection.

Figure 1 – Labour market insecurity in OECD countries.

labour_market_insecurity

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There are disturbing trends evident from labour market statistics in many advanced economies of OECD countries (see figure 1). During the period 2009-2013, the populations of several countries, in particular Greece and Spain, were heavily impacted by increases in labour market insecurity – Greece (18.07% in 2010 to 37.6% in 2012); Spain (18.16% in 2010 to 28.5% in 2012) –, in parallel with austerity policies that included large cuts in social protection. However, these trends are not common to all OECD countries. Notably, some northern European countries (e.g. Finland, Germany or Norway) did not experience analogous levels of labour market insecurity.

Figure 2 – Trade union density in OECD countries.

trade_union_density

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Given this scenario, we believe it is important to focus on how membership of trade unions has been evolving in the past decades (figure 2). Reference to figure 2 reveals a mixed picture: despite the overall decrease in the average trade union density in OECD countries, the decline seems to be stabilising after the sharp decrease in the 1980s. However, there are some exceptions among these countries: Belgium, Chile, Norway and Spain.

It is also interesting to note that in the Southern European countries most affected by the Troika’s policy package there are different trends emerging on what concerns trade union membership: an increase in Spain (15.73% in 2007 to 17.47% in 2013); a decrease in Greece (24.51% in 2009 to 21.26 in 2012); and stability in Portugal (20.8% in 2007 and 20.54% in 2013). However, there are also important dimensions that are beyond the scope of this briefing note, namely the variations across economic sectors, individual and job characteristics and public/ private sector divide.

Figure 3 – Average levels of labour market insecurity and trade union density across OECD countries.

correlation

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To conclude, we present a graph combining these two indicators for the period 2009-2013 (figure 3). It is fair to say that there appears to be two distinct groups according to the data: one group composed of countries with low average levels of labour market insecurity and relatively high levels of trade union membership (Belgium, Denmark, Finland, Iceland, Norway and Sweden) and a second group with countries with high levels of labour market insecurity and lower levels of trade union membership (Greece, Hungary, Italy, Poland, Portugal, Slovakia and Spain).

Overall, there is a negative correlation between the two indicators (-.284[1]), contrary to what could be initially expected, given the levels of labour market insecurity. It is crucial that we gain a better understanding of the reasons behind lower levels of trade union membership in countries with high labour market insecurity. In fact, a recent IMF Discussion Note shows compelling evidence of the negative consequences of the weakening of trade unions: “The erosion of labour market institutions is associated with the rise of income inequality […] the decline in unionization is related to the rise of top income shares and less redistribution” (Jaumotte and Buitron, 2015: 4). Different labour market histories and institutional arrangements in each country, alongside new types of integration in the labour market and weak trade unions might help explain why, in crisis-ridden economies many workers are not members of trade unions.

These trends also need to be integrated in broader analyses (labour market dynamics: temporary contracts, underemployment; legislation and rights; employee involvement and participation in the workplace; social partner organisations and employment protection, just to name a few), so that we gain a better understanding of labour market integration and security, as well as employee representation and the role of trade unions in a context of (prolonged) economic turbulence. We argue that this discussion is fundamental to both an understanding of the broader aspects of economic democracy as well as in tackling crucial public policy goals such as reducing inequalities and promoting greater economic resilience.

 

References:

Blossfeld, H., E. Klijzing, M. Mills and Karin Kurz (eds.) (2005) Globalization, uncertainty and youth in society. Abingdon: Routledge.

Eurofound (2015) Developments in working life in Europe: EurWORK annual review 2014. Dublin: Eurofound, accessed online at http://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef1551en.pdf.

Hijzen, A. and B. Menyhert (2016) “Measuring labour market security and assessing its implications for individual well-being”, OECD Social, Employment and Migration Working Papers, No. 175. Paris: OECD, accessed online at http://www.oecd-ilibrary.org/docserver/download/5jm58qvzd6s4.pdf?expires=1461331448&id=id&accname=guest&checksum=AD10DA4A3E0761510C3E20CE7AD9BBD6.

International Labour Organization (2016) World Employment Social Outlook 2016. Geneva: International Labour Office, accessed online at http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_443480.pdf.

Jaumotte, F. and C. Buitron (2015), “Inequality and labour market institutions”. IMF Staff Discussion Notes SDN 15/14, accessed online at https://www.imf.org/external/pubs/ft/sdn/2015/sdn1514.pdf.

Sen, A. (2000) “Work and rights”. International Labour Review 139(2), 119-128.

United Nations Development Programme (2015) Human Development Report 2015. Work for Human Development. New York: UNDP, accessed online at http://hdr.undp.org/sites/default/files/2015_human_development_report.pdf.

Verba, S., K. Schlozman and H. Brady (1995) Voice and Equality: Civic Voluntarism in American Politics. Cambridge, MA: Harvard University Press.

[1] Statistically significant (p<.01).