Unionization Levels Based On Politics, Not Globalization

Conventional wisdom says that globalization and technological changes are a key driver to declining rates of unionization in industrialized countries. A new report, “Politics Matter: Changes in Unionization Rates in Rich Countries,

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Conventional wisdom says that globalization and technological changes are a key driver to declining rates of unionization in industrialized countries. A new report, “Politics Matter: Changes in Unionization Rates in Rich Countries, 1960-2010,” released by the Center for Economic and Policy Research (CEPR) shows that conventional wisdom is wrong and that national politics are a much more important factor.

As noted in the above video, falling levels of unionization are directly related to rising income inequality. Of the 21 countries included in the CEPR study, the United States has the lowest rate of union coverage (the percentage of citizens covered by collective bargaining contracts) at 13 percent. A few countries have lower rates of union membership, but they all have higher rates of coverage than the U.S. Only Japan and New Zealand join the U.S. at coverage rates under 30 percent. Nearly half of the countries included in the study had coverage rates over 74 percent, led by Austria at 99 percent.

More details on the full report:

Researchers have offered several explanations for the decline in unionization. Many emphasize that
“globalization” and the technological advances embodied in the “new economy” have made unions
obsolete.

If the decline in unionization is the inevitable response to the twin forces of globalization and
technology, then we would expect unionization rates to follow a similar path in countries subjected
to roughly similar levels of globalization and technology.

Instead, for 21 rich economies, including the United States, what we see over the last five decades is
a wide range of trends in union membership and collective bargaining.

Union coverage (the share of workers whose terms of employment were covered by a collective
bargaining agreement) changed little and even rose slightly in a substantial number of countries,
including the years since 1980.

Union membership (the share of workers who are members of a union) fell in most of the rich
economies, but losses varied substantially from country to country. The United States experienced
membership losses near the middle of the distribution, but started from a 1980 membership rate
that was low by the standard of other rich countries.

These differences across countries exposed to broadly similar levels of globalization and
technological change suggest that these factors do not mechanically determine national levels of
unionization.

The broad national political environment, however, does appear to explain much of the observed
variation in unionization trends.

Countries strongly identified during the postwar period with social democratic parties – Sweden,
Denmark, Norway, and Finland – have generally seen small increases in union coverage and only
small decreases in union membership since 1980.

Over the same period, countries typically described as “liberal market economies” – the United
States, the United Kingdom, Australia, New Zealand, Ireland, Canada, and Japan – have generally
seen sharp drops in union coverage and membership.

Countries in the broad Christian democratic tradition, sometimes referred to as “coordinated market
economies” or “continental market economies” – Germany, Austria, Italy, the Netherlands,

Belgium, France, and Switzerland – typically have had outcomes somewhere in between the social
democratic and liberal market economies, with small drops in union coverage and moderate declines
in union membership.

These patterns are consistent with the view that national politics are a more important determinant
of recent trends in unionization than globalization or technological change.

About Kenneth Quinnell

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