Labor Movements

Global Perspectives

Stephanie Luce

• Publisher: Polity
• Year: 2014
• ISBN:
  9780745682396
• Edition: 1
• Topic: Politik & Internationale Beziehungen
• Subtopic: Arbeits- & industrielle Beziehungen

Fewer than 12 percent of U.S. workers belong to unions, and union membership rates are falling in much of the world. With tremendous growth in inequality within and between countries, steady or indeed rising unemployment and underemployment, and the marked increase in precarious work and migration, can unions still play a role in raising wages and improving work conditions?

This book provides a critical evaluation of labor unions both in the U.S. and globally, examining the factors that have led to the decline of union power and arguing that, despite their challenges, unions still have a vital part to play in the global economy. Stephanie Luce explores the potential sources of power that unions might have, and emerging new strategies and directions for the growth of global labor movements, such as unions, worker centers, informal sector organizations, and worker co-operatives, helping workers resist the impacts of neoliberalism. She shows that unions may in fact be more relevant now than ever.

This important assessment of labor movements in the global economy will be required reading for advanced undergraduates and graduate students of labor studies, political and economic sociology, the sociology of work, and social movements.

1

Introduction

Vignette #1:

When the BJ&B hat factory opened in a free trade zone in the Dominican Republic in 1987, it brought the promise of jobs and a better life for local residents. Over 2,000 workers, primarily women, were hired. But soon, the women realized the jobs came at a cost. Managers were verbally abusive, sometimes threatening physical violence, forcing most workers to work overtime shifts, and firing or refusing to pay workers for small infractions. By the late 1990s, a small group of workers began to organize a union. But when they declared their union in 2001, 20 union supporters were fired. The workers enlisted supporters in the Dominican Republic and abroad, and over the next two years, they waged a campaign against BJ&B. The company asserted that unionization would result in factory closure (Gonzalez 2003; Ross 2004).

The U.S.-based United Students Against Sweatshops launched a campaign against Nike and Reebok, two of the largest purchasers of BJ&B products, urging the companies to pressure the factory owners to recognize the union. After much effort, in 2003, BJ&B agreed to let workers decide whether to form a union, remain neutral during the process, as well as negotiate a contract if that was the workers’ decision. They also agreed to rehire the fired workers. Workers won raises, scholarships, and better working conditions. The victory was hailed as groundbreaking, since unions have had little success organizing workers in the free trade zones of the Dominican Republic or elsewhere (Ross 2004).

But soon after the victory, the large brands began reducing their orders and moving work to cheaper factories in other countries. In February 2007, the brands abruptly ended all orders and BJ&B shut its doors without warning, leaving the workers without jobs and with little recourse (Greenhouse 2010; Dreier 2011). Like so many cases where garment workers have organized, the victory at BJ&B was short-lived. In the end, the factory owner’s dire predictions that work will dry up were not just idle threats (Armbruster-Sandoval 2005).

Vignette #2:

In August 2008, 134 workers at the Stella D’oro bakery in the Bronx, New York went on strike, two weeks after their union contract expired. The company was demanding significant wage and benefit cuts. Stella D’oro was founded in 1932 by a New York family, who grew it to a successful business with 575 employees. In 1992 the family sold the company to Nabisco, which sold it to Kraft, which then sold it to Brynwood Partners, a private equity firm, in 2006. Brynwood obtained over $425,000 in tax abatements from the city to upgrade machinery at the plant, but by 2008, it argued that wages must be cut to retain profits (Jaccarino 2009; Lee 2009).

The workers, members of the Bakery, Confectionery, Tobacco Workers and Grain Millers Local 50, went on strike for the next 10 months. The union filed charges with the National Labor Relations Board (NLRB), one of which claimed that Brynwood had refused to provide the union with a copy of its 2007 financial statement, thereby failing to bargain in good faith. In June 2009 an NLRB judge ruled in favor of the union, and ordered the company to reinstate the workers.

The next week Stella D’oro invited the workers back but within a few weeks announced that it would close the factory and move production elsewhere. Brynwood sold the company to the Lance Corporation, which moved the production to a non-union bakery in Ohio.

Despite a strike, significant community support, favorable court ruling, and media coverage in major newspapers, the union was unable to keep the plant open or maintain the jobs of its members. While the company ended up moving production inside the U.S., the dynamics are indicative of the reduced power that unions have in an era of global capitalism. Whether companies threaten to move overseas or to the neighboring city, they can still use their mobility to break a union. When employers are free to move investments and production with little penalty, what can unions do?

* * *

Just a few decades ago, mainstream economists predicted that increased international trade and the spread of free markets around the globe would lead to new jobs for many and an increased standard of living for all. Noted economist Paul Krugman argued for increased free trade, dismissing those who raised concerns as “silly,” protectionist, or simply wrong (Greider 2013). But while globalization has led to a massive increase in wealth, and an average increase in gross domestic product per capita, a closer look reveals a troubling picture for many of the world’s workers.

In the world’s biggest economy – the United States – unemployment, including long-term unemployment, is at levels not seen since the Great Depression of the 1930s. Worse, millions of workers are underemployed in various ways – working part-time when they want to be full-time, or stuck in seasonal and temporary work. A 2012 report found that over half of new college graduates were either unemployed or working in jobs that did not require a college degree (Associated Press 2012).

The picture is similar across much of the world. Since the great recession of 2008, youth unemployment has skyrocketed. Almost 13 percent of young people around the world – 73.8 million people under the age of 25 – are officially unemployed, and the numbers are much worse when we include those who are underemployed or not in the formal economy. For example, 12.7 percent of European youth are not in the labor market or in school as of 2012 (ILO 2013).

It isn’t just young people that are suffering. The International Labor Organization (ILO) found that 197 million people world-wide were without jobs in 2012 – almost 6 percent of the formal labor market. But 39 million people have dropped out of the labor market due to the recession, meaning that unemployment is actually much higher – and the ILO predicts things will only get worse in the coming years. In 2012 part-time employment increased in two-thirds of wealthy countries (ILO 2013).

More disconcerting is the growth of workers in the informal economy and in “precarious employment” or contingent work – people in temporary or seasonal work, or other forms of work with no job security and lack of social protection.¹ Neoclassical economics predicted that as capitalism spread, and economies experienced economic growth, formal employment would rise. Yet in many countries this has not been the case, as the past few decades of economic growth have come hand in hand with an increase in informal employment.

High unemployment and underemployment, and increasing precarity comes alongside stagnant, or even falling, average wages. What is most remarkable is that in many countries, wages have stagnated while labor productivity has increased. For example, between 1999 and 2011, labor productivity grew over twice as fast as wages in wealthy countries (ILO 2013). Figure 1.1 shows that whereas wages and labor productivity moved together in the United States for several decades after World War II, the two began to diverge in the 1970s, resulting in a serious gap. And where the postwar period saw workers maintaining their share of the expanding economic pie, over the past four decades employers have captured the gains from increased productivity.

Even before the global financial meltdown, some analysts noted the alarming trend of stagnant wages. Morgan Stanley economist Stephen Roach wrote in 2007:

The pendulum of economic power is at unsustainable extremes in the developed world. For a broad collection of major industrial economies – the United States, the euro zone, Japan, Canada and the U.K. – the share of economic rewards going to labor stands at a historical low of less than 54% of national income – down from 56% in 2001. Meanwhile, the share going to corporate profits stands at a record high of nearly 16% – a striking increase from the 10% reading five years ago. (Roach 2007)

After the 2008 crisis, things looked even worse. The global labor income share continued to fall in the OECD (Organization for Economic Development and Cooperation) countries as well as most developing countries, as the share of national income going to corporate profits rose – particularly in the financial sector (ILO 2013).

There are some exceptions. China has experienced real wage growth in the last decade, even when controlling for cost of living increases. Real wages went up for salaried workers in India for most years since 2005. The growth in wages and employment in China and India means that absolute poverty has fallen in those countries, and on average, worldwide. But despite these gains, over one-quarter of the world’s workers are living in poverty. In 2012, 397 million workers in developing countries were living in extreme poverty, despite holding a job, and another 472 million were above extreme poverty but did not have enough income to regularly meet their basic needs (ILO 2013).² Furthermore, despite wage growth in China and India, inequality is rising rapidly as the share of national income going to workers is not rising nearly as fast as the share going to corporate profits (ILO 2013). In most countries the wealthy have done well in good times and bad, while workers fall further and further behind. Historically, labor unions have been the primary institution to counter inequality and fight for worker rights, but today they do not appear able to address the crisis. Where are the unions?

Source: The State of Working America, 12th edn., Figure 4U.

Figure 1.1 U.S. Wages and Productivity, 1947–2011

State of the Unions

Unions would seem the natural vehicle to raise wages and improve working conditions, but in most countries, unions have grown weaker over the past few decades. In a 2006 report, the U.S. Bureau of Labor Statistics (BLS) compared union membership and density (the share of wage and salaried workers that belong to unions) data for countries belonging to the OECD (Visser 2006).³ The total number of union members grew in many of the countries in the 1970s and 1980s, but since 1990, those numbers decreased in 18 countries and grew in only six. International union density rates vary dramatically, with as many as 70–80 percent of workers unionized in Denmark, Finland, and Sweden, while as few as 8–15 percent are unionized in France, the United States, Korea, and Poland. According to the BLS study, density rates fell in 20 countries from 1970 to 2003, increasing in only four (Belgium, Denmark, Finland, and Sweden). Table 1.1 shows data for countries from 1999 to the most recent year available, along with the percent difference and the total number of union members. In all but two of 33 countries, union density fell over this period, and fell by almost 4 percentage points for all OECD countries.

There are no comparable statistics for non-OECD countries (sometimes called the “global south”). The New Unionism Network compiled data from the International Trade Union Confederation (ITUC) and U.S. State Department to track union membership since 2000 for 94 countries. This data shows that union membership has increased in 50 of the countries, while declining in only 32. Six countries were relatively stable, and six do not allow unions. This suggests that the phenomenon of declining union power is not as universal as some might believe. Some of the countries that show large percentage growth are those that do not allow independent trade unions, such as China, Syria, and Vietnam. But a number of other countries show substantial increases in union membership. The countries with large growth as well as relatively large union membership include Argentina, Belgium, Brazil, Canada, Egypt, Luxembourg, Nigeria, Singapore, Taiwan, and Turkey. It is clear that union growth was not confined to one particular region.

Still, growth in members did not translate to increases in union density in all cases, suggesting that unions are not keeping pace with a growing workforce. In addition to membership decline in some global south countries and most in the global north, union power measured in other ways suggests unions have become much weaker. Historical alliances between political parties and trade unions are fraying or have been severed entirely in a host of countries, including Spain, England, Argentina, South Africa, and Sweden. In the past decade, labor-backed parties have come into power in many countries and instituted reforms that undercut union power or benefits.

Some measures suggest there is also a drop in public support for unions. In the U.S., Gallup polls show public support for unions is at near historic lows in the post-World War II era, with just 52 percent of those polled saying they approve of unions (Jones 2012). Some Canadian polls suggest that the public trusts management more than labor unions (Hébert 2012).

Many argue that unions have outlived their usefulness, if they were ever useful. In the global economy, the argument goes, companies engage in cut-throat competition with others from around the world. They do not have the luxury to pay higher wages than competitors in low-wage countries like China, and they cannot compete if they have to provide generous benefits. The global economy is fast-paced and fickle, and employers need to be flexible when faced with the demands of the market. Against this new reality, unions artificially inflate the price of labor and erect rigid work rules that stifle employers’ ability to hire and fire when needed.

Table 1.1 Union Density Rates and Total Union Members, OECD Countries

Source: OECD Stat Extracts. Data for union density and union members are for the most recent year available.

Furthermore, in emerging economies, much of the workforce operates in the informal sector, where individuals are afforded few, if any, legal protections and often lack a formal employer. The trade union model, resting on collective bargaining agreements and industry standards, does not apply to workers who are technically self-employed, often working from home.

But the fall in wages, and marked rise in inequality within and between countries, could also suggest that unions are more necessary than ever. It may be that the dynamics of a globalized economy introduce new challenges and obstacles for unions, but that does not make them irrelevant.

Indeed, survey data suggests that many workers still want to join a union. The Worker Representation Survey, conducted by Harvard economist Richard Freeman, shows the proportion of workers in the United States who want a union increased from the mid-1980s to 1995, and again by 2005, when a majority of workers indicated that they would join a union if they could, and over three-quarters of workers said they would like some form of representation in the workplace (Freeman 2007). While there is less research on this question in other countries, existing studies suggest the results are similar. Charlwood (2003) found that about 40 percent of non-union British workers overall, and 50 percent of manual workers, would likely join a union if given the option. Bryson (1999) found similar results for Canadian workers. Givan and Hipp (2012) analyzed survey data from 24 countries and found that, on average, workers have a positive perception of unions’ ability to improve working conditions.

Unions may be one of the only institutions capable of correcting the great imbalances in today’s global economy. Even some conservative analysts see that the growing inequality between wealthy and poor creates an unstable situation, a risk for massive unrest, and weak aggregate demand (Roach 2007; Blodget 2012). In 2002, the World Bank released a report reviewing over 1,000 studies on collective bargaining and economic outcomes, and concluded that while union density seems to have no correlation with most economic indicators, it does have a negative relationship to wage inequality and dispersion. In other words, countries with higher union density have lower wage inequality. They also found that while greater collective bargaining coverage alone can correlate with higher unemployment, countries with highly coordinated collective bargaining (such as the Scandinavian countries) are more likely to have lower unemployment and less persistent periods of unemployment, as well as stronger productivity growth (Aidt and Tzannatos 2002).⁴

This decline in wages, employment conditions, and union power are not just the outcome of a global economic crisis. Rather, they represent a longer-term trend connected with the rise of neoliberalism: a set of policies that promote free trade, deregulation, privatization, downsized government, liberalized financial markets, and fiscal austerity. These policies are driven by an economic and political philosophy that is based on a belief that “free markets” are efficient and desirable, and that governments should prioritize policies that promote expansion of markets and individual property rights, and de-emphasize government programs and democratic collective institutions, such as unions. Neoliberals argue that when investors and employers are free to pursue maximum profit, the world as a whole will benefit. They see unions as a major barrier to profit maximization.

While globalization itself it not new, neoliberalism (what some call corporate globalization) gained prominence in the last several decades. In the mid-twentieth century, the labor movement grew strong in many countries because governments regulated everything from trade to labor standards, creating restrictions on what employers and investors could do. With the ascendance of neoliberalism, governments have transformed their regulatory functions, dismantling many rules and practices that leant power to workers and unions while reregulating in a way to give more freedom to employers. Globalization itself is not a problem for unions, but neoliberalism is.

In this book, I argue that unions are still necessary in the global economy. Despite major challenges for union effectiveness and even survival, the labor movement must find a way to adapt in order to provide a voice for billions of working people who otherwise have little power and few resources. By most metric...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Content
• Acknowledgments
• 1. Introduction
• Part I: Background
• Part II: Union Response
• Notes
• References
• Index