Fall in trade union membership linked to rising share of income going to top 1%
New IPPR research finds close links between declining trade unions and higher levels of inequality
The fall of trade union membership has contributed to a massive rise in inequality, with a higher share of income going to the top 1% of earners, according to a new report for the IPPR Commission on Economic Justice.
As union membership increased in the last century, there was a significant fall in inequality. However, as membership has declined since 1979, so inequality has risen to levels not seen for nearly a century. Additionally, countries that have higher rates of collective bargaining have lower levels of inequality; and within firms where there is a trade union present, pay inequality is less.
The new IPPR report is unveiled at a crucial time for trade unions as the TUC marks its 150th anniversary, while new figures show that the proportion of employees who are a member of a union has fallen to an all-time low.
Government should take action to reverse the decline in union membership and collective bargaining in order to increase wages and tackle inequality, the IPPR report says.
Through aggregating the power of working people, trade unions help them to win a fairer share of the wealth they help generate, and ensure that the wealth is shared more equally. Through doing so, trade unions can support stronger and more sustainable growth, benefiting the economy and workers.
Since 1979 – the year Margaret Thatcher came to power – the proportion of employees who are trade union members has fallen by half. The proportion of workers who are covered by a collective agreement has fallen by two-thirds – the largest fall among advanced economies.
Union membership is lowest among those who could benefit most; low-skilled, low-paid workers who lack power in the labour market – are the least likely to be members. Membership has become heavily concentrated in the public sector, just 13.5 per cent of employees in the private sector are members, and unions are almost completely absent in many low-pay industries.
With nearly 3 million union members set to retire in the next two decades, and with the movement struggling to recruit younger workers, union membership is set to decline further still.
IPPR have called for radical action to reverse the decline in collective bargaining and union membership in order to reduce inequality and boost wages. The report calls for:
- A Minister of State for Labour to be appointed with a target of doubling the proportion of workers covered by collective agreement to 50 per cent by 2030
- Mandatory sectoral collective bargaining to raise pay in low-productivity sectors, and a lower threshold for unions to achieve recognition at an employer-level.
- A Right of Access – based on the New Zealand model – under which unions would be entitled to access workplaces to recruit members, as well as a digital right of access.
- A Right to Join, with employers required to inform all workers of their right to join a trade union on starting employment, with the right to opt in to membership and have union subs deducted from payroll.
- Building on the success of pensions auto-enrolment, government should pilot auto-enrolment into trade unions for workers in the gig economy in order to tackle low pay and exploitation.
- A WorkerTech Innovation Fund to support unions to harness digital technology. Worth £10 million over five years, this should be funded by a surcharge on employer compensation payments in employment tribunals.
Reacting to the report, Frances O’Grady, General Secretary of the TUC, said:
"If we want to live in a more equal Britain, we have to get more people into unions – and unions into more workplaces.
“Extending collective bargaining would improve workers' pay, conditions and voice at work. And get them get a fairer share of the wealth they create.
"If Theresa May is serious about “protecting and enhancing” workers' rights she must allow unions the right to go into every workplace.
"Unions know we face a challenge. That’s why this week we marked our 150th anniversary by launching our new digital pilot, WorkSmart. We're determined to bring collective organising to a new generation of young workers."
Joe Dromey, Senior Research Fellow at IPPR and author of the report said:
“In recent years, we have seen trade union membership fall by half, and collective bargaining coverage fall by two thirds. At the same time, we have seen inequality rocket. Over the last four decades, the share of income going to the top 1% has nearly tripled.
“Inequality is the scourge of modern times. If we want to tackle inequality – and if we want to improve productivity, pay and job quality – then we need stronger unions and a renaissance in collective bargaining.”
Florri Burton 07867 388895 / 020 7470 6154 / [email protected]
The report’s author, Joe Dromey, is available for interview.
The full report Power to the People: How stronger unions can deliver economic justice can be found at: http://www.ippr.org/research/publications/power-to-the-people
Figure 1.4 (below) : New analysis by IPPR of relationship between trade union membership and income share of top 1% of earners.
IPPR is the UK’s pre-eminent progressive think tank. Our mission is to open up opportunity, power and prosperity to everyone through conducting rigorous research and generating big ideas. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence.
The IPPR Commission on Economic Justice is a landmark initiative to rethink economic policy for post-Brexit Britain. The Commission brings together leading figures from across society to examine the challenges facing the UK economy and make practical recommendations for reform. Its Interim Report, Time for Change: A New Vision for the British Economy, was published in September 2017. Its final report will be published in September.