Unions’ Last Stand

This article from the Spring 2020 edition of the IPA Review is written by labour and management historian, Bradley Bowden.

Many myths purport to explain union decline in Australia; myth entrenched in labour history and industrial relations scholarship, as well as the union movement more generally. We are told union decline primarily results from attacks by conservative governments “bent on their destruction”, when the rate of decline has often been steepest under Labor governments. We are told decline commenced in the early 1980s—usually associated with ‘neoliberalism’—when in fact it began in 1948.

To find the real story behind union decline we must trace the sociological factors that not only led to union decline but which also transformed unions into institutions dominated by a new professional class. Thus, while unions claim to speak for society’s battlers, more than 40 per cent of unionists today are managers and professionals, and the propensity to join unions increases with wealth. Although unions retain representation rights for society’s battlers, the fact remains: society’s poorest members are no longer found in much number in union ranks.

THE MYTH OF NEOLIBERALISM

From the early 2000s the practice of placing the blame for union decline on conservative governments has gathered pace. Verity Burgmann recently observed “from the 1970s onwards states rolled out abundant new rules … [of] a neoliberal kind” as part of a “conscious strategy on the part of capital to increase exploitation of labour.” Similarly, Sally McManus, the ACTU’s current secretary, in explaining the motivation for the ACTU’s (failed) Change the Rules campaign, declared in March 2018 that: “Australian workers are ruled by laws” that subject them to “the policies of unmitigated—oppressive—neoliberalism”.

A consideration of the staged process of Australian union decline (see the table on P.38) necessitates, however, a different conclusion. For between 1948 and 1970 the percentage of employees who belonged to a union declined at an annualised rate of 0.69 per cent. After a brief period of recovery associated with a mass influx of white-collar workers, unionism entered a second period of decline (1979-1986) whereby union density fell away at an annualised rate of more than 0.61 per cent. In neither of the periods of decline between 1948 and 1986 can ‘neoliberalism’ be seen as a factor given the commitment of governments of all persuasions to neo-Keynesian policies.

If we can attribute none of the pre-1986 period of decline to anti-union laws or ‘neoliberalism’ and—in all probability—only a percentage of the post-1986 decline to these factors, then what can explain this prolonged process of decline? In this author’s estimation, only one logical explanation presents itself: the gradual disappearance and dispersion of the manual blue-collar working class of factory workers, miners, shearers and seafarers who consistently made up around two-thirds of the Australian workforce between 1880 and the mid-1950s. Due to the effects of technology and, from the 1980s, increasing levels of globalised trade, this class withered away.

Trade unions are increasingly dependent on the support of a small part of the workforce.

In 1954, when unions claimed 62 per cent of the workforce as members, some 61.1 per cent of Australian workers laboured in industrial jobs. By 1981, only 42.75 per cent worked in such occupations, and by 2016 only 21.94 per cent. Significantly, occupational redundancy was paralleled by a process of geographic dispersion, as workers abandoned historic abodes in town centres for newer, more impersonal lives in the outer suburbs.

Source: Bradley Bowden, Simon Blackwood, Catherine Rafferty and Cameron Allan, eds, Work & Strife in Paradise: The History of Labour Relations in Queensland 1859–2009 (Sydney: Federation Press, 2009), Appendix 19, pp. 298–301.
Photo: NTEU/Flickr

As the industrial working class declined, so too did the collectivist institutions that were once integral to its existence inside and outside the workplace: trade unions, socialist and Labor parties inspired by redistributive philosophies, friendly societies, retail cooperatives and various church-based charities.

Since 1996 the comparative strength of trade unions among professional workers in public administration, education and health has not compensated for crumbling support among its historic constituency. Significantly, between 1986 and 2007 the presence or absence of conservative or Labor governments also made little difference to the rate of union decline. Indeed, during the 11 years of Labor rule between 1986 and 1996 union density fell at a sharper rate than over the 12 years of the Howard government. While union density has fallen at a markedly slower rate since 2007 (falling by 4.4 per cent to 14.5 per cent), again it is evident the presence or absence of conservative governments has made little difference.

As blue-collar workers become a rare commodity within the union movement, the ranks of Australia’s unions were more and more comprised of well-paid professionals. By August 2016 those who listed their occupation as “manager” or “professional” (633,200) far exceeded those who indicated they were in either blue-collar work (480,600) or a typically low-paid service, sales or clerical job (455,100).

Significantly, this transformation is not unique to Australia and can even be seen in places such as Canada, held to be far more union friendly. In 2017-18 there was virtually no difference in the occupational composition of Australian, Canadian and US unions. In each case trade unions are increasingly dependent on the support of a relatively small part of the workforce employed in public sector or quasi-public sector areas such as public administration, emergency services, education and health. In the USA, these occupational cohorts make up 61 per cent of unionists. In Australia and Canada, these groups represent 58 per cent and 57.7 per cent of the total, respectively.

The process of union decline was characterised by markedly divergent trends in the private and public sectors from the 1970s. Unlike the old industrial working class, professionals and quasi-professionals in the public sector enjoyed a strengthening occupational position as employment in education and health grew strongly. Sheltered to a considerable degree from market competition, workers in these sectors also benefited from typically being employed by a small number of employers (often state agencies); an employment pattern that facilitated union organising.

In 2016, the last year for which we have Australian figures on private and public sector density, 38.5 per cent of Australian public sector workers (606,500) were unionised. This compares to 9.3 per cent in the private sector (941,100). Even when we look to the private sector we find a disproportionate number are employed as professionals in taxpayer funded businesses: hospitals, schools, colleges and aged care facilities.

Propensity to join a union increases with wealth.

Unions today are increasingly dominated by society’s better-paid. As shown in the graph on P.40, propensity to join a union increases with wealth. Of those earning $1,600-$1,800 per week in August 2016, 22.6 per cent were unionised. Among those paid $2,500-$3,000 per week—the second-highest wage cohort the ABS reports—16.2 per cent were union members. By contrast, among those earning $600-$800 per week only 11.9 per cent were union members. Among the ABS’s worst paid cohort—those earning less than $200 per week—only 3.8 per cent were union members.

The fact that propensity to join now correlates with wealth is reflected in the higher wages received by unionists compared to non-unionists. This gap increased significantly between 2016 and 2018; the gap amounting to 17.5 per cent in 2016 and 21.1 per cent in 2018.

Historically, a union ‘wage premium’ has been attributed to union bargaining. One suspects, however, that rather than union membership causing higher wages, union membership is today caused in many cases by the prior possession of a comparatively high wage. Accordingly, the decision by low wage earners not to join is, one suspects, informed in large part by the belief that union fees are an unaffordable luxury. Union membership can be seen as akin to private medical insurance: a luxury enjoyed by society’s more prosperous to protect them against unforeseen adverse employment outcomes.

WHAT HAPPENED TO PRODUCTIVITY-LINKED BARGAINING?

Given the favour with which productivity-based bargaining was once regarded, the disappearance from discussion of the idea of bargaining to create higher productivity and higher wages is quite extraordinary. When discussed, most notably by bodies such as the Productivity Commission, the pursuit of this idea is typically seen as antipathetic to “imperatives such as fairness and voice”. In part, the pronounced shift in relation to productivity-based bargaining is indicative of the lack of balance and perspective that has more generally characterised the whole discussion of union revitalisation.

Changed attitudes towards productivity are unfortunate.

Marked by a considerable naivety in its original formulations—which constantly saw productivity, unionisation and employer co-operation advancing hand-in-hand—it was perhaps inevitable that an eventual reaction against the effects of productivity bargaining would be associated with dramatic changes in opinion. The ACTU’s Sally McManus declares “productivity goes up but wages do not… Enterprise bargaining is broken”. The changed attitudes towards productivity, which have arguably swung from one extreme to the other, are unfortunate. Across all advanced economies, annual increases in productivity between 2008 and 2016 averaged a mere 0.8 per cent; a level only half that of the previous eight years. This slowdown in global productivity—central to the stagnation in real wages affecting virtually every advanced economy—is now seemingly entrenched in Australia. Without a reversal in such trends, any sustained recovery in real wages or union membership is unlikely.

In trying to understand the current hostility of Australian union leaders to productivity-based bargaining we are once more led towards a sociological explanation. In the 1980s it was the fate of the manufacturing sector that most concerned ACTU officials. Today, in contrast, almost a third of the workforce—and 58 per cent of union members—are found in three sectors: health care and social assistance, education, and public sector. For these workers, taxpayer largesse is far more important than productivity.

DON’T BLAME CONSERVATIVES

The lack of balance and perspective in discussions by labour historians, industrial relations academics, and labour activists more generally is most evident in the association of Australian union decline with conservative governments “bent on their destruction”. The Liberal-National coalition, no doubt, has little affection for unions, and their laws in recent decades have reflected this. But linking intent with outcome and assuming correlation is causation is a different matter. No doubt some, if not most, of the steep fall in union membership between 2005 and 2007—during which period unions shed 215,000 members—was due to the Coalition government’s WorkChoices legislation.

To suggest all of the membership lost was due to this cause would, however, be foolhardy. If the loss in union membership in 2005-07 was solely due to hostile laws we would also expect a recovery when the laws were repealed. This never eventuated. Moreover, the loss incurred under WorkChoices were less than the 225,400 members lost under Labor between 1992 and 1994. Certainly, looking at the longer historical record, it is difficult to distinguish a significant difference in the rate of union decline during the 1986 to 2007 period, or the subsequent 2007 to 2018 period, that we can clearly attribute to political incumbency.

MORE MYTHS: THE GIG ECONOMY AND CONTRACTORS

Another factually unsound explanation is the assertion unions have suffered greatly from a fostering of independent contracting in lieu of traditional employer-employee relationships. According to the ABS, independent contractors represented only 9.88 per cent of the workforce in 2016. The largest cohort was in construction. Even here they represented only 29.7 per cent of the total. Elsewhere, the most numerous group (162,400) was in professional and scientific services. The great bulk of these, one imagines, would be consultants—a group not normally associated with exploitation. In health, as well, the large cohort of contractors (81,900) would in large part comprise consulting medical specialists—another group few would regard as victims of exploitation. The recent emphasis on the so-called ‘gig’ economy as a significant factor is also misplaced. Even if we assume 10 per cent of workers in ‘transport, postal and warehouse’ and 50 per cent of workers in ‘art and recreation’, are in the gig economy—an absurd estimate—this would represent a mere 1.4 per cent of the workforce.

One cannot see the appeal of Change the Rules in high-wage areas.

The lack of proportion and balance evident in discussions of independent contractors and the ‘gig’ economy is perhaps even more apparent in discussions of ‘neoliberalism’, which increasingly has become the central explanation for union decline not only in Australia but elsewhere. Thus, we are told “in Anglo-Saxon countries … governments and employers” have “turned their backs on unions through neoliberal legislation and union-busting”; that fear of the ‘New Right’ caused Australian unions to accept “a less radical, but nonetheless neoliberal, policy agenda” that caused them great harm. Rarely is the fundamental premise that Australia was launched on a ‘neoliberal’ path by the Hawke-Keating government subject to challenge. For although the Hawke-Keating governments encouraged market liberalisation in some areas, in other domains—superannuation, social welfare, Medicare—they entrenched and extended Keynesian policies. Nor is it often conceded that the greatest beneficiaries of the process of “globalisation” embraced by the Hawke-Keating governments were the new class of professionals (lecturers, teachers, medical staff) who are today the most trenchant critics of ‘neoliberalism’.

If it is impossible to argue the economic and occupational changes accompanying ‘neoliberalism’ have been universally negative for organised labour, it is nevertheless evident this process of change has profoundly affected the areas in which unions have industrial appeal. That the implications of this transformation are poorly understood is indicated by the ACTU’s campaign kit for its Change the Rules policy. Overwhelmingly, this kit appears directed towards society’s battlers, claiming “trickle-down economics has failed to provide secure jobs, or fair wages”. This kit and likeminded strategies suffers from two interrelated problems. First, while casting the current Coalition government as an agent of job insecurity may have political utility, it is difficult to see it being industrially any more successful than were earlier campaigns among society’s low-waged sections. Where low-paid service staff belong to a union—most commonly the SDA—it typically reflects employer-union connivance at the point of hire.

The second problem is that one cannot see the appeal of Change the Rules in high-wage areas, whether in areas where unions are comparatively strong (public administration, education and health) or where they are extremely weak (finance, professional services). Thus, whereas 60 per cent of hospitality workers earn less than $25 per hour, 58.2 per cent of workers in education earn more than $35 per hour. The percentage earning in excess of $35 per hour is even more pronounced in public administration (65.6 per cent), finance (61.5 per cent) and professional services (60.1 per cent). Low-paid workers in these industries—such as teachers’ aides and casual tutors—are a minority. For even in those areas where unions remain strong (health, education, public administration), a comparatively high-paid workforce exists in an environment where most enjoy long-term career and promotion prospects. For such workers there is typically greater financial gain to be had from gaining a promotion than joining a union.

CONCLUSION

In embracing productivity-based bargaining and a competitive market economy in the mid-1980s, ACTU and Labor Party leaders sought more than the reversal of a process of union decline that was by then almost 40 years old. They also aimed to salvage what remained of Labor’s historic constituency: an industrial working class whose core strength lay in mining, power generation and energy-intensive manufacturing.

The Labor Party is tied to a new class of professionals.

In seeking to reorientate the ranks of organised labour towards an increasingly globalised economy, leadership of the Labor Party (Hawke, Keating) and the ACTU (Kelty, Carmichael) saw in the growing numbers of university-educated unionists in health, education and the public sector a key source of support for not only union revitalisation but also economic reform. This was their fatal error, as the process of union decline also involved sociological transformation, producing a new type of unionist who had little sympathy for the goals and aspirations of those employed in the productive economy. By 2018, 58 per cent of Australia’s union membership was found in just three industries: health care and social assistance, education and public administration. Increasingly wedded to a postmodernist ideology constructed around identity politics and opposition to the supposed effects of climate change, union activists drawn from professional and semi-professional occupations are also little concerned with the prosaic issues of productivity enhancement and job protection that concerned union officials in the 1970s and 1980s.

The modern face of unions in Australia: public sector workers on strike in Rockingham, WA.
Photo: CPSU/CSA/Flickr

Rather than supporting the productive expansion of mining and energy-intensive manufacture, this new class of university-educated professionals seeks immediate closure of these industries—thereby bringing it into increasing conflict with the remnants of organised labour’s historic constituency of industrial workers, miners and transport workers. Thus, as the fissures within the ranks of organised labour become ever wider, the survival of unions outside of a comparatively small section of the workforce looks increasingly precarious. This leaves a fundamental question: to whom do traditional blue-collar workers, and poor private-sector service workers, concerned with prosaic bread-and-butter issues, now look to for leadership? For, as the Labor Party becomes increasingly tied to a new class of inner-city professionals, its standing among its historic constituency sinks ever lower.

This article was adapted from ‘Australian Union Transformation and the Challenge for Labour Historians’, Labour History journal, May 2020.