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28 June, 2022

Weekly data: Are trade unions making a comeback?

Strike activity is rising across the world. Does this mean that trade unions – battered and beaten since the 1970s – are making a comeback?

By Ben van der Merwe

The UK is set for a summer of industrial action, the likes of which have not been seen for decades. On 20 June (and for several days afterwards) it was railway workers who left their posts, the largest such strike in more than 30 years. On 27 June, it was criminal barristers. Airline workers and teachers are also expected to hold strike action in the coming months.

The rising tide of industrial conflict isn’t confined to the UK. Recent weeks have seen strikes by airline workers and casino employees in the US, public sector workers in Tunisia and North Macedonia, and health workers in Zimbabwe and Lebanon.

Although their demands are varied and often extend well beyond pay, inflation is a common theme. Year-on-year price increases are expected to reach 9% in the US this summer and 11% in the UK – in both cases, the highest rate in more than 40 years.

With wage increases lagging further and further behind inflation, interest in trade unions has risen substantially on both sides of the Atlantic. According to Investment Monitor’s analysis of Google data, searches for ‘join a trade union’ were up by 10% in both the US and UK in the first six months of 2022, compared with the average level during those same months in the three years before the pandemic.

Faced with rising input costs, a result of the international supply chain crisis and global energy shortage, companies have sought to maintain their margins by raising prices while holding wages constant.

The last time advanced economies faced a sustained energy shortage, in the 1970s, collective bargaining agreements frequently prevented companies from suppressing real wages. In an effort to maintain their margins, many companies consequently raised prices further – resulting in spiralling inflation.

This time, there is little question about whether companies or workers will bear the costs of inflation. Real wages in the UK fell by 3.4% in the year to April 2022, their sharpest drop since modern records began in 2001. In the year to May, real average earnings in the US fell by 3.9%.

Whereas the 1970s marked the apex of trade union power in the US and UK, the trade union movement has now been in decline for more than four decades in both countries. The share of British workers belonging to a trade union has more than halved since the 1970s, while in the US the proportion has fallen by two-thirds.

As a result, fewer and fewer workers have the ability to bargain collectively for anti-inflationary pay rises of the likes seen in the 1970s. Between 2000 and 2019, according to the International Labour Organisation, the share of workers covered by collective bargaining agreements fell from 36% to 27% in the UK and from 14% to 12% in the US.

Labour shortages in both countries offer a favourable window for trade unions to recover their strength, but a long road lies ahead. Until they do so, workers are likely to continue to bear the brunt of price increases.

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