Thursday, 13 August 2015

Thoughts on Labour Relations

I've been doing a bit of thinking about labour relations in the past and the current situation and thought I'd bounce some things around

1) Unions rose in a time of monopoly employers. Employers treated workers badly, employees didn't have many other options, but what they could do is collectively stop working. And at that time, employers also didn't have many other options but the local workforce, so had to work with the workers, as a group to accept their viewpoint.

2) As industrialisation grew, so did trade unions, peaking in the late 1970s. It could be argued that greater automation reduced the union workforce, but the scale of decline has been far greater than just large factories. It has fallen from 12m to nearly 6m and the remaining trade unionisation is nearly all in the public sector.

3) There's a lot of attribution to Thatcher in smashing the unions, but the fact is that membership of unions continued to fall after she left office, as did strike days. They fell under the Blair years with no new union laws.

4) My hypothesis is that the rise in car ownership changed the relationship between management and workers. If you worked in a factory and didn't like the terms, the factory 5 or 6 miles away was now another option. You could just leave and go work for them instead. At the same time, employers could grab employees from further away with skills. The need for a union to resolve your grievances disappears. And so as more and more people got to own cars, more unionised jobs fell.

5) Unions still exist in the public sector because the employer is generally a monopoly.



Dinero said...

That all makes sense.

On the last point , Unions past , present, and the state sector.

The Current situation is quite different from the past. In a strike they are denying a state service to the population so the population puts pressure on the contemporary government administration , unlike the past where they would be denying profits to the owners in order to put pressure on the management.

JohnM said...

You are missing a complete dimension. Unions arose in a time when many of the functions of the state like welfare and health were entirely private. The union was not just for employee-employer relations. It also collected dues that went into health funds so that if you fell ill you got some money. If you were laid off you got money. If you had an accident you got money (regardless of worker compensation). Unions also did life assurance, burial funds etc. They set up libraries and colleges.

In other words the union served a purposed much wider than "strikes" and "grievances". The irony is that unions created the labour party which nationalised these functions and hence eliminated a big part of the raison d'etre.

The second irony is that dickheads on the left have no idea that things like welfare or libraries can actually be created without a government law. They don't understand the concept of society creating free institutions without a bureaucrat.

Mark Wadsworth said...

Agreed. With the post, with Din's cooment and with John. The point of trade unions is to render themselves unnecessary. Like an army, you win the war, you disband it.

Rich Tee said...

Good comments by Dinero and JohnM.

There is also the general rise in the standard living. The more comfortable people are the less reason they have to get involved in trade unions. This is also why people aren't very political anymore. 100 years ago people really suffered physically, and every generation ended up fighting in a war, so there was a real class struggle going on with genuine outcomes that could be influenced for most people. Trying to influence politicians and society was important to your life prospects in those days but it isn't anymore.

Random said...

There was a good post on this on MNE:
"What actually happens in the cycle is that asset values "appreciate" first, then prices begin rising selectively, e.g. energy, then the commercial and consumer price levels (PPI and CPI) begin to rise, while wages have not begun to keep pace, meaning that the real wage is falling, especially relative to necessities like housing, food, and energy. Finally, after some time wages begin to rise and the central bank steps in to counter inflation expectations. So seldom does the real wage catch up with price level, let alone increasing asset appreciation. Even if assets depreciate in a correction, they are the first to rebound.

So workers get the short end of the stick. But that's not the end of it, because most workers carry debt that is denominated nominally and does not change with changes in price level. So as the real wages declines, workers face a heavier debt burden since they have less left over after spending on necessities. That is, the monthly nut increases faster than income for workers."

Lola said...

All of those factors apply. They are now mostly about extortion and special privileges. The operators who get into power in them - Scargill, Crow etc. are what I call 'O'Briens'. They are happy stomp their hobnail boots onto the faces of mankind, forever'. It's all about power.

Apropos this, I am really enjoying the logical convolutions the Labour Party is going through by trying to condemn Corbyn for being old school socialist (more power to him by the way) yet insist that they can deliver 'socialism' and 'government services' (which I consider and oxymoron). The Labour party is in an existential crisis, and that bodes ill for the Unions who are going to lose their political wing and pretty well all their stealth taxpayer funding if the Tories have their way. Mind you I hold no candles for Toryism, especially the Osborne / Cameron 'officers party' kind.

So once the state sector shrinks massively, which it has to and will, you'll see unions reduced to a rump.

They'll probably try and reinvent themselves as service providers. Fat chance.

Andrew S. Mooney said...

One thing that is missing from this list is the issue, separate from the idea of management and labour, of the deliberate concentration of industrial assets under state ownership. The idea that mass car ownership changed the relationship between management and employer isn't as big as it seems, if it is considered that if the factory down the road is also owned by the government, the ability to get a job with comparable pay and conditions is potentially deliberately restricted.

In the airline industry, there is the system of seniority, which is used to deter pilots from simply decamping to a different airline that is offering more money. "Seniority" is literally the idea that upon the date that you joined the company you take a number, and anyone with a lower number is senior to you, and those who are higher are your juniors. Seniority determines routes, work schedules and ultimately pay, and never changes ever, no matter how hard you work. The only way to obtain extra status is through retirements. Many Asian companies operate this way to ensure worker loyalty. It naturally leads to timeserving on massive scale, but if done right sees workplace stability.

It is easy to see how in nationalized industries, seniority systems and deliberately awkward hiring practices would serve to stop migrant labour, and workers bargaining for higher pay and perks by threatening to quit on mass because the company down the road is offering more money. That is factor #1 on the list, but on a national scale completely negating the effect of mass vehicle ownership.

The only difference would lie in if foreign ownership of factories is permitted, as in, if you didn't like working for British Leyland you went to work for Ford or Vauxhall, or later, Nissan or Toyota. In that case, they can offer more competitive working conditions and can't be nationalized.

Foreign ownership also affects say, the railways - All the equipment is now either built abroad or built in factories with foreign owners - we see it in aircraft procurement, where by 1970 there were just two companies each producing engines and fuselages and movement between the two effectively forbidden, but also sectors like mining and the oil industry, where in the absence of foreign ownership, the workforces were unionised accordingly.

The problem with this is if left to run rampant it potentially leads to there being no serious industrial policy at all, which is what we see in the electricity sector, and would explain the loss of capital intensive industries and the "British" car industry as it exists today: As in, all of the profits wind up in North America, Japan and in the case of Jaguar-LandRover, in the hands of the Tata group of India.

The Stigler said...

Great comments, all.

Dinero - yes.
JohnM - yes, you're right. The Mechanic's Institute in Swindon (and elsewhere) was a place for people to get education, healthcare and so forth and was the basis of the NHS. But Bevan didn't understand that it worked because it was private.
Mark - and unions did a great deal to improve working lives. But we all, if we have marketable skills, do that today.
RichTee - I liken politics to say, evolution. A hundred years of debate about evolution vs creationism and evolution won out. Most scientists argue about and research the more detailed mechanisms of evolution. In the same way, grown-up politics today, across the western world, is about shades of neoliberalism. Republicans, Democrats, Conservative, Labour, Christian Democrat.. they're all variations of neoliberals. The Corbynites are like the creationists of politics. They reject all the data and instead view their cause as religious.
Lola - Yes. Labour is really stuck because the unions are powerful in the party, but unlike in say, the 1970s, no longer have much representation. And based on my comment to RichTee - as politics is over and normal people don't join parties so much, the more lunatic types tend to take over.

The Stigler said...

Andrew S Mooney,

Those points you make about the old nationalised industries are true. The main reason why unions are against privatisation in the NHS is, I suspect, that they know that the unions will disappear.

But trade unionism went far beyond the state-owned industries. In Northamptonshire you had unions for the footwear manufacturers, for example.

JJ said...


Can't agree with the car hypothesis.

Union membership went up by 2.9 million between 1968 and 1979. I doubt there was a corresponding decrease in car usage/ownership.

Many union dominated industries no longer exist or have been reconfigured. For example the NUM had around 300,000 members in 1974 and now has around 2,000, that decline had nothing to do with the car.

Your point about mobility only really rings true for small relatively isolated towns. After all wasn't unionisation high in our major cities (where an historically larger share of the population lived) too?