Date: Tue, 18 Oct 1994 08:43:32 -0900
Reply-To: Forum on Labor in the Global Economy
<[EMAIL PROTECTED]>
From: "Ellen Dannin ([EMAIL PROTECTED])" <[EMAIL PROTECTED]>
Subject: Re: State NZ Unions (fwd)
The enclosed message is from the Pacific Rim Industrial Relations discussion
group. Big things have been happening in New Zealand. In 1991, the
Employment Contracts Act was enacted as part of a package of social
legislation based on concepts made popular at the University of Chicago. The
Kiwis were especially influenced by Professor Richard Epstein at the
University Chicago Law School. The ECA was supposed to have come into
effect 5-1-91 - a date that proved a bit controversial. It was changed to 5-515-
91.
In a nutshell, the ECA provides no role for unions specifically. Its basic
philosophy is freedom of contract. The ideal was bargaining on an individual
basis. It does, however, permit bargaining on a collective basis.
The ECA had a disastrous impact on union membership. Figures (of
course) vary, but it appears that New Zealand union density declined roughly
50% the first year. One heard stories about hordes of applicants lining up for
no-wage jobs.
The ECA is an idea which is being promoted worldwide. Alberta seems to
be leaning in favor last I heard, ditto, the Netherlands.
I asked Raymond Harbridge of University of Victoria at Wellington about his
latest research which seems to show that, despite this inhospitable
environment, unions have stemmed the tide of loss. Here is his response.
Ellen J. Dannin
California Western School of Law
225 Cedar Street
San Diego, CA 92101
---------- Forwarded message ----------
Date: Tue, 18 Oct 1994 12:13:56 +1300
From: [EMAIL PROTECTED]
Subject: Re: State NZ Unions
Part of the real difficulty down here is that the Govt (clever sods that they are)
decided not to collect various types of labour statistics any longer - clearly
official data on unions and union membership and collective bargaining were
the most affected by this decision, but other data which showed things that
maybe weren't ideal to everybody have also been dropped - the most recent
example appears (says he cautiously fearing a law suit) to be that data
reporting income distribution by quintiles will no longer be available by
quintiles in the new Real Wage Index - thus the official data will no longer be
able to be used to show that the rich have got richer and the poor poorer etc.
Anyway, Harbridge and Hince have become de-facto Registrars of Unions and
number crunches and we undertake an annual survey of unions (which in a
country that is really only an slightly overgrown fishing village isn't actually all
that hard). As Ellen points out our most recent data is for the year ended 31
Dec 1993 and this was published in the August issue of the NZJIR (subs
available from Alan Geare at the Management Dept, University of Otago, P O
Box 56, Dunedin) and in our Source book of New Zealand Trade Unions and
Employee Organisations which is 120 pages and available from us for $NZ20
or $A20 (airmail postage included!).
Now that the ads are out of the way - here's the story :
Table 1: Unions, membership and density under the Employment Contracts
Act.
Unions Membership Density(a) Density(b)
May 1991 (1) 80 603,118 63% 52%
Dec 1991 (2) 66 514,325 55% 45%
Dec 1992 (3) 58 428,160 46% 37%
Dec 1993 (4) 67 409,112 43% 34%
Note:
Union membership is reported as full time equivalent union members.
Density(a) is membership as the percentage of the full time workforce as
recorded in the Quarterly Employment Survey (QES) undertaken by Statistics
NZ. The QES reports the number of employees and working owners in
activity units employing 2.5 or more full time equivalent employees.
Density(b) is membership as a percentage of the full time employed workforce
as reported by the Household Labour Force Survey. In reporting density we
have chosen to exclude part time employees from the "workforce" as the
reported union membership represents full time equivalent members.
(1) Department of Labour, unpublished data made available to the authors.
(2) Harbridge and Hince (1993).
(3) Industrial Relations Centre Survey, December, 1992.
(4) Industrial Relations Centre Survey, December, 1993.
My view, correctly reported by Ellen, is that the nadir may have been
reached, that growth may occur, and that the union decline may have
bottomed out. Some reasons for this - well it is linked in part to my
views about collective bargaining coverage. Under the pre ECA system,
unions had 100,000 fewer members than the total number of workers covered
by union negotiated awards and collective agreements. There were many
reasons for this - the main one being that the "system" was post-entry
closed shop and thus membership followed collective bargaining coverage
rather than led it; also unions had no real history of recruitment strategy
- they simply enforced membership as a legal requirement of the collective
bargaining outcome.
By the end of 1993 unions had some 100,000 members more than the number
of employees covered by collective employment negotiations - in other words
many individuals held onto their union membership despite the collapse of
collective bargaining (anyone interested in reading more about this aspect may
care to check out our paper in the latest issue of Relations Industrielles which
Gilson tells me is out but the author's copy hasn't arrived here as yet). The
argument here is quite simple - the collapse in collective bargaining is
absolutely related to the collapse in multi-employer bargaining; multi-employer
bargaining is going to be hard to resurrect from ground zero but when there's
no more to lose the way out is up.
My surveys of collective bargaining are starting to show that (some) employers
who sought to place all employees on individual contracts are now finding the
transaction costs of that very high and are going back (albeit slowly and in a
fragmented way) to collective bargaining. Thus it is expectation that as unions
develop organising strategies to cope with the new environment, and as
employers seek to manage their transaction costs, their will be a small growth
in the number of employees in collective bargains over the next year.
So that's my argument - union membership decline is absolutely linked to the
decline in collective bargaining; the people who now have collective bargains
are (largely) unlikely to lose them in the near future; these people are now
dedicated to their unions in a way they weren't previously.
There's a couple of other ideas worth throwing in - first, the old union
membership numbers may have been artificially high. One of the outcomes of
the rapid process of union mergers that has taken place here over the last 3
years has been the cleaning up of membership records - the deceased have at
last been removed! - so the numbers we report today are more likely to be
"real".
Second, the problem of free-loaders - doesn't go away and many unions here
fail to recognise the significance - many employees get the benefits of a union
negotiated contract without signing the contract and without joining the union.
Good growth potential exists in this area for the smart unions.
Readers interested specifically in the issue of union decline in NZ may be
interested in my paper on "Slimming" where I draw the analogy between the
CA and the HIV/AIDS virus on unions. This paper is to be published in Peter
Boxall's forthcoming (Feb 1995) book to be published by Longmans and called
The Challenge of Human Resource Management: Directions and Debates in
New Zealand, and was presented at the June CIRA Conference - people just
desparate for a copy can email me and I'll send them a copy by POST.
Cheers
PS - I've checked with the staff and we (they) did carry over the totals!
Cheers again
Raymond Harbridge
Associate Professor
Industrial Relations Centre
Victoria University of Wellington
P O Box 600
Wellington
New Zealand
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