A I A S 1

Unions, Lighthouses and he WageIndicators

16 April 2008

Jelle Visser

University of AmsterdamAmsterdam Institute for

Advanced Labour Studies

A I A S 2

Table of Contents

• What Do Unions Do to Wages?• How Do They Do It?• Can They Still Do It Today?• The End of Unions?

– Declining union density– Limited coverage– Decentralisation

• Old Functions – New Instruments• Unions, Lighthouses and

WageIndicators

A I A S 3

What Do Unions Do to Wages?

• Defending the wage standard: – “A fair day’s wages for a fair day’s work” (Friedrich Engels, 1881)

• Maintaining a fairly universal social norm:– “Equal pay for equal work” (Bible?)

• Equalize ‘ex ante’ conditions – Setting standard rates (tied to skill, seniority rather than

performance or profit)

• Monitor and control ‘ex post’ outcomes– Representation in equal pay commissions, tribunals, assessment

practices, job floor control • Sometimes unions are more ambitious...

– “Equal pay for unequal work”

A I A S

How Do They Do It?

• Exchange of information about pay and working conditions is one the oldest union activities

• Often “they have gone beyond this to agitate for equalization of pay” (Clegg, 1970: 265)

• Fairly universal union rule is “insistence on payment according to some standard uniform in application” (Webb & Webb, 1897: 279)

• Method of collective bargaining: wages are not related to all observable characteristics of workers (performance, experience, even skills, etc.) but “to some reference worker or reference job” (Pencavel, 1991: 24O)

A I A S

Can They Still Do It?

• Union Decline (in industrialised world) and absence of unions (in developing countries)

• Extended bargaining coverage is rare (mostly limited to Europe, but not CEE or EK); globally only minority (formal, public employment) covered by collective agreement

• Decentralisation: collective standard becomes minimum standard, with actual pay tied to performance or profits

A I A S

The end of unions? “Generally, there seems to a tendency

towards generational and sectoral encapsulation of trade union membership in a shrinking segment of the economy (Ebbinghaus/Visser 2000)”

“With the decline of the two main milieus supportive of unionization, Fordist industry and the Keynesian public sector, most workers are now employed in settings where they have few contacts if any to union members (Streeck, 2005)”

“The numbers are rising of those who have enough market power to do without collective organization, as well as of those who have too little market power to be capable of it (Streeck, 2005)”

A I A S

Union Densities

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

LMEsCME -North EuropeCME - Cont.EuropeSouth EuropeCEEJapan

A I A S

Union densities ~ 2005

0

10

20

30

40

50

60

70

80

A I A S

Bargaining coverage ~2000

0

10

20

30

40

50

60

70

80

90

100

A I A S

Old functions - new instruments

• The WageIndicator: a new (and more widely available, better accessible) instrument for the oldest union function: exchange of information

• WageIndicator complements second union function: agitation for equal pay

• WageIndicator can substitute (or complement) fourth union function: ‘ex post’ monitoring and control (for instance together with law firms or through ‘class actions’)

• WageIndicator cannot substitute (but perhaps complement) third union function: ‘ex ante’ setting of equal pay and conditions

A I A S

Unions, Lighthouses and WageIndicators

• Lighthouses spread information (light signals)

• They are there for all (public goods)• But not necessarily publicly paid

(voluntary provision, collective action)• A WageIndicator may serve as a

Lighthouse: providing signals to users about the “wage norm” or “standard rate” for particular job, or identifying “pay gaps”

• Like unions, the lighthouse function of the WI requires collective (but not coordinated) action, thus may be easier under difficult conditions.