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Employee Representation and Trade Unions

Question:

Discuss about the Labour Market Conditions and Policies.

Employee representation is always regarded as the most central concept in the context of industrial relations and trade unions are considered to be the superior form of the employee representation. Between the years 1991 to 2008, the world has experienced huge changes and so does the union density. This paper will elaborate on this context. It shall shed light on what has happened to the union density rates during this period in New Zealand. Furthermore, it shall focus on the possible reasons behind the stagnancy of the density rates after the introduction of the ERA in 2000, notwithstanding that the act has supported for trade unions and specific objective of promoting collective bargaining. Finally, the outcomes that are associated with the decline in collectivism shall be discussed below. It shall end its discussion describing the factors that underlay the decline in private sector union membership and collective bargaining, along with a conclusion to sum up the whole.

Decline in the rate of union density in New Zealand: New Zealand, actually, is a very powerful example of the significance of legislation to the growth of union and now is also the same for the union decline (Schnabel, 2013). The decline in the union membership is significant as because they have the potential to affect the employment, investment, productivity, distribution of the earnings and the overall outputs, for the good or the ill. It is to be noted that declination in the membership of union was not just started within a day. A major slowdown in the global economic growth as well as productivity, along with increased inflation after the oil shocks of 1970s had created an adverse labor market conditions virtually in all the Western countries (Khan, 2014). The two legislation pieces that have almost directly influenced the levels of union membership are the Employment Contracts Act (1991) and the Labor Relations Act (1987). However, it has fallen markedly in the early 1990s. By the May of 1991, there were about 69.1% of fewer unions than that was in the December of 1985 and this was due to the Labor Relation Act that required the unions to consist of minimum 1000 members, where in the previous legislation it was only 30members. The sudden fall in the union membership or union density at the initial two and a half years after the Employment Contracts Act of 1991 had been passed was vigorous in both the private and the non-profit sectors. It was intense among the workers belonging from the secondary labor market. New Zealand has led the way in liberating and releasing the wage bargaining and economy with the introduction the ECA and the reduction in government power on wage bargaining. From the year 1991 to 1994, the union densities in New Zealand fall from 40.8% to 24.1% (Maloney & Savage, 2016).

Decline in the Rate of Union Density in New Zealand

Among the all other countries, it is New Zealand that has undergone a great fall in its union density rate (Wilson et al., 2013). The composition of employment has shifted to the traditionally non-union workers and sectors from the highly unionized ones. Share of the employment in the manufacturing process had dropped down largely throughout the country, whereas the same in the white-collar works was increased, which in turn was producing a labor forces for whom most of the traditional issues in union were very irrelevant. Furthermore, the labor market during this period became greatly internationalized because the trade was liberalized as well as the capital market adapted a more international structure. Since the year 1990, the New Zealand’s economy was turned into more decentralized- the unemployment benefits were completely cut off and the welfare eligibility criteria were made strong and tightened (Morgan, 2013). Furthermore, the Employment Relation legislation (ERA) was passed in order to restructure the relation of the industrial system through eliminating compulsory unionism and national awards.

Factors that made the density rates remain stagnant after the introduction of ERA in 2000: The ERA or the Employment Relations Act of 2000 was regarded as union-friendly and in between the years between 1991 and 2000, membership in unions had increased by 26.5%, but it is to be noted that the level of union density never ever has recovered to its pre-1991 level. In fact, it has declined from the year 2010 and it has faded in the key industries as the employment has gradually grown following the decline of the global financial crisis. The ERA had altered the legislative philosophy which has entirely dominated the 1990s, by providing encouragement to the union membership as well as by encouraging collective bargaining as a positive basis for the employment relationships. There has been also a notable downfall in the coverage of collective bargaining along with numerous density rates and collective agreements dropping away since ERA was introduced. The main reason for this is that under the ECA, large numbers of collective contracts were arranged by informal groupings of the workers who did not define themselves as a part of unions. According to the requirement of ERA, only the registered unions could participate in collective bargaining and this has led to formalize their status as a registered union in order to allow them to continuously negotiate their employment terms and conditions. The major factor that has contributed to the stagnation of the union membership is the attitudes of the employers. The other factors include the inability of the unions in gaining ground on the multi-employer collective agreements, their lack of support and interest and the existence of representation gap. Under the ERA (2000), it was expected that the unions will try to promote industry level or multi employer level collective agreements (Colvin & Darbishire, 2013). However, the things went otherwise. The unions have continuously complained that the things were very difficult for them to establish these agreements as they lack the required power and muscle to do so. Furthermore, they also argued that the prescribed bargaining process was cumbersome and hence, they were unwilling to enter into the multi employer agreements.

Factors That Made the Density Rates Remain Stagnant After the Introduction of ERA in 2000

Factors that underlay the decline in the private sector union membership and collective bargaining: New Zealand has a very colorful and blissful history of industrial relations that are ventured through a wide array of industrial relations system over the last fifty years. There rate of union density in the private sector undergone to the level of 10% (the lowest of all times), after the introduction of ERA (Pursued, 2014). Each of them has provided a character and has given a shape to the collective bargaining in this particular country. There has been an underlying shift away from industrial arrangements and collective bargaining to the individualized and workplace focusing on employment relations in the New Zealand in the past two decades.

Private Sector

Density

Year

Coverage (000s)

Private Sector (in %)

1990

1995

2000

2004

413.6

247.0

244.8

123.7

48

21

21

10

Table: 1 Density rates and coverage of collective agreements 1990-2004

Source:  (May, Walsh & Kiely, 2014)

Before the introduction of ECA, the bargaining density in the private sector was under 50% (McAndrew, Edgar & Geare, 2013). In the early 1990s, the density fell away but was stabilized to about 21% towards the end of the 1990s. With the same, the number of the collective contracts was reached to 2947 in the year 1999. The main areas where the unions in New Zealand have experienced major losses are in the secondary labor markets in the private sector union membership, where the established unions have battled in order to stay pertinent (Rasmussen, Foster & Coetzee, 2013). According to the recently conducted research, there have been large arrays of explanatory factors, explaining the reduction or decrease in collectivism in New Zealand. Some of such factors include legislative changes, the representation gap due to insufficient union reach, employer resistance, collective agreements of multiple employers, and inability of the unions to secure or safeguard the industries, lack of support, employee unconcern or their lack of interest in context to collective arrangements. Along with these, this is also to be noted that during those period, the number of people employed in the private sector was rapidly increasing, as the emergence of new industries was taking place. This was also contributing to a substantial decline of the unions in the public sector. One of the major factors that have been contributed and are still contributing in the declination of union membership in the private sector is that union are often considered as irrelevant. In their good times, workers do not need the help of the unions for securing an increase in their benefits and wages as everyone profits from the economic prosperity (Harcourt, Lam & Wood, 2014). With the same, in bad times, they think that unions cannot protect their members form the layoffs, tougher working condition, benefit and wage reductions. People in fact, always perceive that union contract will make things and situations worse. Furthermore, union has a very poor public image. People consider union as inefficient and bloated. The stories about mob influence, labor racketeering, bribery etc are few of the most common fares of current days. Apparently, one of the major causes is that most of the people in New Zealand slowly started turning to government at the end of the 20th century. They no more were turning to unions for their basic protections (Castles, De Haas & Miller, 2013). They started relying on the government for their pension problems, discrimination issues, healthcare and the other related benefits, which were primarily and formerly provided by the unions alone.

Factors That Underlay the Decline in Private Sector Union Membership and Collective Bargaining

Conclusion

From the above discussion it can be concluded that the union density rates in New Zealand has undergone a drastic fall since the year 1991. It is one of the major issues that the country’s trade union is facing today. The reasons behind the same have been discussed in the paper in brief. It is to be conclude that decline in the New Zealand union membership is still continuing, despite the efforts of the government to stop the slide. One of the main functions of the unions were to help the workers maximize their salaries and wages but workers now seek the help of government and various other local bodies for the same, leading to the loss in necessity of the unions. Hence, until and unless the labor movement reverses its long-standing downfall or decline, the unions run the danger of their density and membership diminishing into irrelevance.

References:

Castles, S., De Haas, H., & Miller, M. J. (2013). The age of migration: International population movements in the modern world. Palgrave Macmillan.

Colvin, A. J., & Darbishire, O. (2013). Convergence in industrial relations institutions: The emerging Anglo-American model?. ILR Review, 66(5), 1047-1077.

Harcourt, M., Lam, H., & Wood, G. (2014). US union revival, minority unionism and inter-union conflict. Journal of Industrial Relations, 56(5), 653-671.

Khan, M. (2014). The effects of inflation on economic growth and on its macroeconomic determinants (Doctoral dissertation, Université d'Orléans).

Maloney, T., and Savage, J. (2016), “Labour markets and policy”, in A Study of Economic Reform: The Case of New Zealand, edited by B. Silverstone, A. Bollard, and R. Lattimore, Elsevier Science, Amsterdam.

McAndrew, I., Edgar, F., & Geare, A. (2013). The impact of employer ascendancy on collective bargaining style: A review of the New Zealand experience. Economic and Industrial Democracy, 34(1), 45-68.

Morgan, J. (2013). The management of ignorance? The'future-focus' and New Zealand social science teaching. New Zealand Journal of Educational Studies, 48(2), 19.

Pursued, M. R. (2014). Changes in labour market conditions and policies, and their impact on wage inequality during the last decade. Falling Inequality in Latin America: Policy Changes and Lessons, 251.

Rasmussen, E., Foster, B., & Coetzee, B. (2013). Transforming New Zealand employment relations: The role played by employer strategies, behaviours and attitudes.

Schnabel, C. (2013). Union membership and density: Some (not so) stylized facts and challenges. European Journal of Industrial Relations, 19(3), 255-272.

Wilson, S., Spies?Butcher, B., Stebbing, A., & St John, S. (2013). Wage?Earners' Welfare after Economic Reform: Refurbishing, Retrenching or Hollowing Out Social Protection in Australia and New Zealand?. Social Policy & Administration, 47(6), 623-646.

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