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Why being in a union can be bad for your salary



TRADE unions have lost the power to win bigger pay increases for their members but they still kill off jobs, an influential research group said yesterday.

Firms without them often give bigger rises than those where they have kept their grip, it found. But while unions can no longer promise their members better pay, they do offer a better chance of the sack, the study from the Joseph Rowntree Foundation said.

During the 1990s, it found, firms with high union membership lost jobs while those without unions saw employment grow.
The findings cast a harsh light on the Government's plans to bring in more European﷓inspired laws to help unions gain members and rights. Employers are concerned about EU directives that will require British firms to set up works councils with a say in business decisions.


'Unionised plants more likely to shut'

The report said: The tendency of 20 years ago for union representation to inhibit job growth remains. 'The evidence on annual pay settlements and underlying pay levels suggests the ability of unions to enhance wages and salaries is in long﷓term decline.'

The report was based on the Workplace Employee Relations Survey, which included more than 2,000 managers and 28,000 workers; and on a second survey which checked on personnel managers and more than 800 workers in 1990 and 1998. It concluded that joining a union made nobody better off but was more likely to lose them their job.

'In the economy as a whole, non﷓union workplaces grew on average by 1.4 per cent per annum between 1990 and 1998, whereas unionised workplaces shrank on average by 1.8 per cent, it said.

The researchers, Neil Millward, John Forth and Alex Bryson, added, 'Union recognition restricted the growth of workplaces in the private sector over the 1990s. This negative effect of unions on employment growth was slightly larger in service industries than in manufacturing.'

But in manufacturing, 'unionised plants were on average 15 per cent more likely to close than non﷓union plants'.

On pay, they found that in 1998, in contrast to 20 years ago, 'trade unions did not, on average, negotiate higher pay for the employees they represented, when other factors affecting wage levels were allowed for.

'Pay increases were lower where union negotiations covered most employees, suggesting a long term decline in the ability of unions to enhance pay'.

'If anything, union settlements were smaller than increases given to employees acting on their own.'

However, the researchers said job losses in unionised firms were lower in the service sector where unions were negotiating over both wages
and employment levels.

'Although many of the findings show trade unions in an unfavourable light ﷓ especially in relation to loss of jobs ﷓ these situations are avoidable,' they said.

They claim that involving unions in hiring and firing and decisions on factory closures could prevent job losses and shutdowns.

But Ruth Lea of the Institute of Directors said: 'If the law and union power make it hard to close a factory a company will keep it open. But that won't stop it losing money. And if a factory is not viable, what is the point in keeping it open ?'