Olan McEvoy
Research expert covering the European Union for society, economy, and politics.
Labor unions, or trade unions as they are known in Europe, are organizations of workers formed to represent their own economic interests. Unions may operate at the company, industry, or national level, negotiating on the behalf of their members with the relevant counterparties, such as company management or governments. The core idea behind labor unions is that employees have more power to negotiate when they engage in collective bargaining, that is, binding together with other employees to negotiate as a group, rather than engaging with management individually. In most cases, unions are run by their members paying fees, which cover operational costs, while the business of managing the union is split between permanent staff and the elected 'shop stewards'.
Workers began to organize themselves during the 19th century to push for demands such as higher wages, improved health and safety in the workplace, and fewer working hours, with the achievement of the five day week being one of the most notable victories of the labor movement. After reaching its high point in the period following World War II, the labor movement has suffered setbacks since the economic crises of the 1970s, with unions becoming smaller and less politicized. A wave of union activity has arisen, however, in reaction to the conditions and pay of workers during and in the aftermath of the COVID-19 pandemic.
There are two aspects to this power - unions both have monopoly power, as well as the power of collective voice. Where unions can wield monopoly power, is that they can secure above market-rate wages for their workers, due to having a monopoly over the supply of labor in a certain company or industry. On the other hand, unions express their collective voice when they make issues in the workplace salient by bringing the concerns of their members to the attention of management, or to political authorities. The economic impact of labor unions is keenly debated, with views ranging from that unions cause a general welfare loss due to protecting their members ('insiders') at the cost of outsiders, to the idea that unions spur improvements in productivity and therefore drive economic growth
The United States and the United Kingdom, where trade unions more commonly engaged in a form of 'business unionism' that involved negotiations with individual firms rather than collective bargaining, were the first countries to challenge this model of social partnership, as the Thatcher and Reagan governments which came to power in 1979 and 1980 sought to curb the power of unions and to liberalize their labor markets. As the pressures of globalization mounted throughout the 1980s and 1990s, many countries followed suit, meaning that, by the end of the century, trade union membership was declining across the world, as their institutional privileges were rolled back by liberalizing governments.
Economists have referred to these processes as 'skill-biased technological change' or 'routine-biased technological change', meaning respectively the increase in need for high-skilled and educated workers to accompany new technologies (SBTC) and the reduction in need of workers who perform routine tasks which can be automated with technology (RBTC). Additionally, many workplace concerns such as health & safety issues, parental leave, and workplace discrimination have become more robustly covered by labor law, meaning that workers may rely more on legal procedure than turning to unions to address these issues.
Another prominent trend which is likely to grow in importance in the coming decades is labor organizing in emerging markets. As the wealthy regions of the global north have deindustrialized, the focus of global labor union activity is shifting towards the global south, where workers in manufacturing, agriculture, and resource extraction have sought to organize. The largest emerging economies, sometimes referred to as the BRIICS (Brazil, Russia, India, Indonesia, China, South Africa), boast the most substantial labor movement in the developing world. With manufacturing and other heavy industries growing in the global south, as well as market concentration in sectors such as agriculture, unions are likely to find most of their growth in these regions throughout the twenty-first century.
Workers began to organize themselves during the 19th century to push for demands such as higher wages, improved health and safety in the workplace, and fewer working hours, with the achievement of the five day week being one of the most notable victories of the labor movement. After reaching its high point in the period following World War II, the labor movement has suffered setbacks since the economic crises of the 1970s, with unions becoming smaller and less politicized. A wave of union activity has arisen, however, in reaction to the conditions and pay of workers during and in the aftermath of the COVID-19 pandemic.
What do unions do?
Unions are organizations formed of workers who come together in order to collectively negotiate with employers and other stakeholders, and to represent the interests of their members in disputes. A union may challenge employers through negotiations, strikes, work slowdowns, or political lobbying. The idea behind labor unions is that each individual employee has very little leverage to negotiate over any issue with a business, who wields massive economic power over them as their employer. If these workers come together, however, their leverage increases massively as they have the power to stop a company from working entirely, at least for a period of time.There are two aspects to this power - unions both have monopoly power, as well as the power of collective voice. Where unions can wield monopoly power, is that they can secure above market-rate wages for their workers, due to having a monopoly over the supply of labor in a certain company or industry. On the other hand, unions express their collective voice when they make issues in the workplace salient by bringing the concerns of their members to the attention of management, or to political authorities. The economic impact of labor unions is keenly debated, with views ranging from that unions cause a general welfare loss due to protecting their members ('insiders') at the cost of outsiders, to the idea that unions spur improvements in productivity and therefore drive economic growth
The rise and fall of labor unions in the 20thcentury
While the history of modern trade unions stretches back many centuries in some accounts, the period that saw the greatest trade union activity in advanced industrial countries was the mid-twentieth century. Unions in the post-war period came to occupy a central role in economic governance, working in a tripartite relationship between workers, business owners, and government. This took different forms in different countries, with countries in continental Europe such as France and Germany following a model of conservative corporatism that focused on providing a 'family wage' for the male breadwinners, or in the Nordic countries where strong welfare states were developed alongside the institutionalization of collective bargaining.The United States and the United Kingdom, where trade unions more commonly engaged in a form of 'business unionism' that involved negotiations with individual firms rather than collective bargaining, were the first countries to challenge this model of social partnership, as the Thatcher and Reagan governments which came to power in 1979 and 1980 sought to curb the power of unions and to liberalize their labor markets. As the pressures of globalization mounted throughout the 1980s and 1990s, many countries followed suit, meaning that, by the end of the century, trade union membership was declining across the world, as their institutional privileges were rolled back by liberalizing governments.
Adaptation in the 21st century
Unions today are diminished in size compared to their predecessors during the twentieth century. In many advanced industrial countries, unions have moved from representing the mass of manufacturing workers, to being more prominent in public services sectors such as education, healthcare, and transport. Part of this change reflects the structural transformation of economies which began in the 1970s, as many wealthy countries moved away from manufacturing and heavy industry, and towards an economy based on services, sometimes referred to as the 'knowledge economy'.Economists have referred to these processes as 'skill-biased technological change' or 'routine-biased technological change', meaning respectively the increase in need for high-skilled and educated workers to accompany new technologies (SBTC) and the reduction in need of workers who perform routine tasks which can be automated with technology (RBTC). Additionally, many workplace concerns such as health & safety issues, parental leave, and workplace discrimination have become more robustly covered by labor law, meaning that workers may rely more on legal procedure than turning to unions to address these issues.
The future of labor unions
The return of labor unions has been touted by some economic commentators as a possible solution to increasing wealth and income inequality and the culture of companies prioritizing shareholder value over the interests of workers and other stakeholders. Specifically, unions have been suggested to be key in the 're-coupling' of real wages and productivity, as since the 1970s workers' incomes have stagnated, while productivity has continued to rise rapidly.Another prominent trend which is likely to grow in importance in the coming decades is labor organizing in emerging markets. As the wealthy regions of the global north have deindustrialized, the focus of global labor union activity is shifting towards the global south, where workers in manufacturing, agriculture, and resource extraction have sought to organize. The largest emerging economies, sometimes referred to as the BRIICS (Brazil, Russia, India, Indonesia, China, South Africa), boast the most substantial labor movement in the developing world. With manufacturing and other heavy industries growing in the global south, as well as market concentration in sectors such as agriculture, unions are likely to find most of their growth in these regions throughout the twenty-first century.
