From Thatcher to Blair: employee choice,

union decline and the revival of the UK Economy… and are there lessons for Canada?

Professor Len Shackleton

Dean, Westminster University Business School

September 25 – 30, 2006

UK in the late 1970s

• Union movement organised over half workforce and bargained for >70%

• Five million in “closed shop”

• Unions politically powerful and had defeated both parties’ attempts at reform

• Slow growth, rising unemployment, rapid inflation – “stagflation”

Thatcher-Major reforms

• Narrowing of the scope of union action – supervised secret ballot strike votes, no sympathetic strikes, no mass picketing

• Unions liable for actions of their members – unofficial strikes eliminated

• Scope of closed shop narrowed, then abolished

• Unions reformed and democratised. Individual members protected

“New Labour” since 1997

• Enhanced employment protection• National Minimum Wage• Working Hours• Parental leave

BUT

• Conservative industrial relations reforms largely untouched, except for union certification procedure

Part One Applications

Accepted

Bargaining Unit Decide

Recognition Without A Ballot

Not Accepted Acceptance Decision Pending

Withdrawn

Bargaining Unit Agreed

Bargaining Unit Outstanding

Withdrawn Application Cancelled*

No Appropriate Bargaining Unit

Ballot Held Ballot Arranged

Ballot Decision Pending

Application Declared Invalid**

Withdrawn

Union Recognised

Union Not Recognised

* In accordance with paragraph 51 of Schedule A1 to the 1992 Act

**Application declared to be invalid following a change in the bargaining unit from the unit proposed by the trade union

502

296 61 8

105 137 5

61 128 5 8 10

81 47

46 2 1

137

Progress of applications to the CAC for union certification: June 6 2000 – March 31 2006

Trade Union Membership 1975-2005Great Britain/UK

(Source: Office of National Statistics)

0

2

4

6

8

10

12

14

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

mill

ion

s

Certif ication Office Membership, GB Labour Force Survey Union Members in Employment, UK

Overall union density, GB and Canada

0

5

10

15

20

25

30

35

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Canada (as% of civilian labour force) Great Britain (as % of all in employment)

Union density – percentage of workforce in unions

Private Sector 2005Great Britain 17.1%Canada 17.9%

Public Sector 2005 Great Britain 58.2%Canada 71.3%

(Sources: Statistics Canada, Office of National Statistics. Employment numbers include self-employed.)

Working days lost through strikes and lockouts, per thousand employees (Sources: Statistics Canada, Office of National Statistics. Some estimated)

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

CANADA UK

Britain today

• Low strike incidence now for many years, especially in private sector

• Decline in union wage “mark-up” over non-union

• Concentration of union membership (14 unions cover 85% of workforce) producing economies of scale and greater professionalism: changed union attitudes

• Unions now no longer major policy players

And the consequences?

• 14 years of continuous growth, majority of years growing faster than OECD as a whole

• Amongst the most competitive of economies in world rankings

• Low unemployment

• High employment

Canadian differences from UK • Union certification procedures • Collective agreements can require forced

payment of dues• Forced membership allowed• Crossing picket line can lead to loss of union

membership, possibly job too; fines allowed by statute in Saskatchewan

• Replacement worker bans or limits in 3 jurisdictions

• Bans on unionised employees crossing picket line in 2 jurisdictions

Differences between Canadian jurisdictions

• Union density – effects of different industrial relations regimes?

• Strike activity between jurisdictions

• Unemployment/employment rates

Shares of Employment and Days Lost through Strikes and Lockouts, by Province

Source: Statistics Canada

0

5

10

15

20

25

30

35

40

45

50

Newfnld &Lab

P ED Isl NovaScotia

New Brun Quebec Ontario Manitoba Saskatch Alberta B Columb

% employment 2005 % days lost 2003-5

Unemployment rate August 2006

Employment rate August 2006

Union Density 2006

Newfoundland & Labrador 15.1 50.5 36.3

Prince Edward Island 10.9 60.9 28.9

Nova Scotia 8.4 57.3 27.5

New Brunswick 9.1 57.3 26.4

Quebec 7.9 60.2 37.0

Ontario 6.4 63.4 26.7

Manitoba 4.5 65.9 34.8

Saskatchewan 5.4 65.7 35.0

Alberta 4.2 70.8 22.4

British Columbia 4.8 62.3 30.2

All data from Statistics Canada

TWO EXTREMES?

Consequences of high unionisation

• Reduced employment growth

• Possible reduction in productivity growth

• “Insiders” gain at expense of “outsiders”

• Public sector unionists represent entrenched interests in favour of higher tax/spending

Canada 2006 is not Britain 1979, but..

• Economic costs of artificially inflated unionisation

• Individual liberties issue about some aspects of IR legislation

• Britain shows that reducing union powers is feasible and can bring benefits – and, once done, few people want to turn back the clock