The puzzle of Australian
union decline
Bruce Western
Department of Sociology
Princeton University
Abstract
In the last 15 years, unionization rates in Australia dropped from more than
50% of the employed labor force to less than 40%-the lowest level of union
organization since the 1930s. In contrast to western European trends,
Australian unions declined while collective bargaining became more centralized
and the Labor Party enjoyed unprecedented electoral success. Changes in the
industrial or occupational structure account for little of the union decline.
Analysis of social survey data suggests that narrowing differences in unionization across occupations and sectors accompany shrinking membership.
Results also show that the gap in union organizing is growing between the
young and middle-aged and workers in small and large firms. These developments are interpreted in the light of shifting institutional, work, and market
conditions in the Australian economy.
In the last 15 years, unionization in Australia dropped by over ten percentage points. Labor force surveys show that in 1976 more than half of all
Australian employees were union members. By 1992, just less than 40% of
Australian workers were in unions, the lowest level since the 1930s (see Bain
and Price 1980: 123). Even the more optimistic figures reported by the
unions themselves-which include retired, unemployed, and nonfinancial
members-show a decline from the mid 1970s (Visser 1991: 101). This
trend is consistent with a widespread tendency to union decline throughout
the advanced capitalist countries. Only two countries in the OECD-Sweden
and Finland-did not record union membership losses in the 1980s (Western
1995).
Despite the ubiquity of labor decline, the Australian pattern poses a
puzzle. In other countries, falling unionization is strongly associated with
changes in labor market and state institutions. Unions typically shrunk
where social democratic governments were kept out of office and where
collective bargaining became more decentralized. Thus the precipitous
decline of British union density is rooted in Conservative Party electoral
success and the emergence of single-tiered enterprise bargaining (Freeman
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32
and Pelletier 1989; Western 1995). In Australia union decline has accompanied the Labor Party’s longstanding domination of federal government and
increasing centralization of collective bargaining through the 1980s.
Figure 1 Scatterplot of changes in union density from 1980-89 against proportion of
left government representation over the same period. The Australian case is indicated
by upper case letters. A robust regression line indicates the trend.
The puzzle of Australian union decline can be seen clearly from Figure 1,
which plots the proportion of cabinet seats occupied by labor or social
democratic parties from 1980 to 1989, against changes in union density over
the same period. Each country is indicated by an abbreviation. The upward
sloping robust regression line (Mosteller and Tukey 1977) indicates that
unions in countries with strong labor or social democratic parties suffered
small organizational losses on average. Australia falls below the line,
indicating that union density declined more than the OECD average given
the strength of the ALP in the 1980s. Indeed, of the countries with successful
left parties, only the organizationally weak French unions did worse than the
Australian.
Even in the local context of past unionization trends, Australian union
density has dropped more than might be expected given recent economic and
political conditions. A conventional business cycle model of Australian union
density does a reasonable job of fitting the steady pattern of Australian
unionization through the postwar period (see Appendix for details). When
estimates from the model are used to predict Australian unionization trends
through the 1980s the model does quite poorly. While the observed time
series indicates union decline, the model predicts strong growth in Australian
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unionization beginning
with the ascent of the ALP in 1983 (Figure 2).
33
Figure 2 Time series of Australian union density, 1951-89. Dashed line before 1980
indicates fitted union density series. After 1980, the dashed line shows the union
density predicted from model estimates.
In the remainder of the paper I investigate a number of theories of union
decline. Using aggregate data from the Australian Bureau of Statistics (ABS),
I begin by examining the argument that unionization is linked to the decline
of manufacturing industries and the growth of white collar occupations.
These structural arguments for Australian union decline fare poorly in light
of aggregate data on the occupational and industrial structure of Australian
unionization. I then move to a more disaggregated analysis of several social
survey data sets, and these reveal several strong patterns. I conclude by
placing these patterns in the context of changing institutional, work, and
market conditions in the Australian economy.
Union decline and structural change
Structural change in the advanced capitalist economies has been a leading
explanation of union decline (Visser 1991). Manufacturing industries and
blue collar occupations have historically been strongholds of trade union
membership. Throughout the postwar period the employment share of these
sectors has steadily declined. Service industries and white collar occupations
of unionization, and these sectors have accounted for a
growing proportion of employment in the last 20 years. In the context of
these structural changes, Australian union representatives themselves
attribute a large part of declining unionization to shrinking employment in
manufacturing (Berry and Kitchener 1989). The effects of manufacturing
decline are apparently not confined to Australia as researchers in the United
have lower
rates
Ctntnc nr1l1 n..~...,,~...., ’.r~rlol&dquo; nttrnlm,to ~crlwrvrn mrmmvntmro t~ ~&dquo;’r1’1r&dquo;’&dquo;1r..,1
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34
The structural explanation of Australian union decline can be simply
investigated with a shift-share analysis of rates of union organization by
industry and occupation. What if rates of union organization across
industries had remained constant; could the changing distribution of
employment account for the fall in union organization? The shift-share
analysis examines this question using information about the level of union
membership for the years 1976 and 1992, a period in which union density
dropped by more than 20%. The analysis uses information about the
proportion of union organization, U76k, in the kth industry for 1976, and the
number employed in this industry in 1992, 1 92k* Predicted 1992 union
membership for an industry is then given by Û92k = U76J92k’
Predicted union density given 1976 unionization rates and the 1992
industrial structure of employment is
a92 ~
Lk Ú92k/LkI92k’
If structural
union
union
change in the economy can account for a large proportion of
decline, predicted union density, ~i 921 should be close to the observed
density for 1992.
z
Table 1: Shift-share
analysis of union membership by industry for
1976 and 1992
Note: Following the Australian Standard Industrial Classification, the agriculture industry
category includes agriculture, forestry, fishing and hunting; ’Financial services’ also includes
business and property services; ’Public administration’ Includes defense; and ’Personal services’
includes recreational and other services. Total density is defined as mcmbership as a percentage
of total number of employees. Data source is Australian Bureau of Statistics (1977, 1993).
The results of this analysis for broad industry categories are shown in
Table 1. In 1976, manufacturing and community services contributed nearly
half of all Australian union members, reflecting the large employment share
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35
of these two industries. Union densities in both industries were slightly
higher than the average. The shift-share analysis shows that if manufacturing
unions had organized the same proportion of workers in 1992 as it had
in 1976, union membership in this sector would have declined by about
100 000 workers. This predicted membership loss is purely a function of
declining employment in manufacturing industries. In community servicesan industry dominated by public sector workers-union membership would
have increased by about 340 000 workers if organizing success had stayed
at 1976 levels. Instead, union membership in community services grew by
only 250 000 workers. Where union organization has been low, in wholesale
and retail trades, employment has grown strongly from about 950 000
employees in 1976 to over 130 000 in 1992. If 1976 unionization rates were
maintained in this weakly organized sector, unions would have gained nearly
100 000 new members instead of the 30 000 that were actually recruited.
Indeed, structural change in industry accounts for only 1.5 points in an 11.5
point decline in union density between 1976 and 1992.
Table 1 reveals two further limits to the structural change argument. First,
union densities have declined substantially within industries. Transportation
workers, for example, had a 75% chance of being unionized in 1976, but
were less than 60% likely to be organized six years later. Thus union decline
results not largely from employment growth in low density sectors, but from
declining organizing success in all areas, including the traditional industrial
strongholds. Second, some structural shifts-particularly growth in the highdensity public sector-have helped unions rather than hurt them. This
pattern holds cross-nationally as union densities are highest in countries with
the largest public sectors.
Table 2: Shift-share
analysis by occupation for
1986 and 1992
Following the Australian Standard Classification of Occupations the ’Managers’ category
also includes administrators; ’Salespersons’ includes personal service workers; ’Plant operators’
includes machine operators and drivers; and ’Laborers’ includes related workers. ’Total density’
is defined as membership as a percentage of total number of employees. Data source is
Australian Bureau of Statistics (1993).
Note:
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36
Table 2 reports a shift-share analysis for occupations, comparing data
from 1986 and 1992-the most recent data for which consistent occupational codes are available. These results are just as striking. For occupations,
less than 1 point of the 6 point decline in union density between 1986 and
1992 is accounted for by changes in the occupational structure. Here, the
story is similar to the industry analysis. Structural change appears to account
for much less of the decline in unionization than the weakening of occupational effects on the likelihood of union membership. If, say, laborers were
currently organized at 1986 rates, union membership in this occupation
would have grown by more than 30 000 workers instead of declining as it
did, by more than 50 000. Second, some high density occupational groups,
such as professionals, have grown, offsetting the decline in unionization that
might result from other structural changes.
Other research examining the impact of structural change provides
similar results (Peetz 1990). Indeed, a variety of changes in the Australian
labor market, including increases in female participation rates and the
growth of part-time work, fail to provide compelling explanations of
Australian union decline in the 1980s. Taken together, the effects of a variety
of different structural changes-in occupations, industries and female
participation rates-may be cumulative. To assess the impact of these
various sources of unionization we need to examine more disaggregated
data. If structural change accounts for little of the union decline it will also
be useful to move to a more disaggregated analysis that allows estimation of
the effects of industry, occupation, and demographics on the probability of
union
membership.
,
Analysis of social
survey data
disaggregated analysis by examining social
I begin this more
unionization for several different years
survey data
on
through the 1980s. Data from the
National Social Science Survey provide information for 1984, 1986 and
1987. The survey is based on a probability sample of Australian households
and a core survey instrument that provides information on union membership and demographics for each survey year. Although the data cover a
relatively small slice from the period of union decline, analysis of the
covariates of unionization may suggest trends that could be studied with
more extensive data. Following previous research, I estimate the probability
of union membership for a respondent as a logistic function of occupation
and variety variables measuring demographics and job characteristics (see
Hirsch and Addison 1986; Deery and De Cieri 1991; Harris 1993). These
variables are described in Table 3. With the coding scheme outlined in the
table, the intercept term from logistic regression estimates expresses the log
odds of union membership of middle-aged, male, private sector manual
workers in medium-sized firms. The intercept should thus provide a good
indication of the general level of unionization.
Descriptive statistics (Table 4) show that union membership is accurately
measured by the survey data. Union density is slightly higher in the survey
data compared to estimates for the general population, but at least some of
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e
37
this difference is due to restrictions on the sample. For this analysis, I have
excluded farm workers and those over 65, two low density groups that would
lower the rate of union membership in the sample data. Still, the data seem
to generally capture the decline in union membership through the 1980s. In
particular, the six percentage point drop between 1984 and 1987 is consistent with ABS estimates.
Table 3:
Description of variables used
in
analysis of unionization data,
1984-87
-
Table 4:
Descriptive
statistics of data used for
logistic regression analysis
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38
The logistic regression models generally provide a good fit to the data and
the decreasing intercept terms reflect the declining rate of union membership
among male manual workers in the private sector (Table S). The coefficients
describe the gap in unionization between the variable category and the
reference category. For instance, a negative sign for the clerks coefficient
indicates that clerks are less unionized than the reference category, manual
workers, controlling for other variables in the model. Several strong patterns
emerge from the analysis that help us describe the shape of union decline.
First, the occupational coefficients shrink towards 0 over time, indicating
that differences in unionization across occupations gradually diminish. For
instance, in the 1984 sample, manual workers were more than 5 times (e’.64
5.2) as likely to be unionized as sales workers. By 1987, manual workers
were only twice as likely to be unionized. Similarly, the unionization gap
between public and private sector workers had shrunk by about a quarter
between 1984 and 1987. Cross-national research shows that this solidaristic
pattern of union organization is characteristic of countries with highly
centralized bargaining (Western 1994). As industrial relations reform
through the 1980s centralized Australian wage-setting, occupational
differences played a declining role in the likelihood of union membership.
However, in contrast to the comparative evidence in which high unionization is positively associated with bargaining centralization (e.g., Freeman
1989; Western 1993), Australian union membership is falling as industrial
relations institutions become dominated by national negotiations. A similar
result can be seen across the division between public and private sector
workers. Between 1984 and 1987 the unionization gap between public and
private sector workers shrunk by about a quarter. Although some analyses
suggest the recent brake on public sector employment growth has fueled
union decline (Berry and Kitchener 1989), the estimates here indicate that
union organization is falling more quickly among state employees than
among private sector workers. As suggested in the shift-share analysis,
occupational and sectoral effects are weakening and converging. The recent
bases of union strength-the public sector and manual occupations-are
=
losing ground.
The results also suggest that two effects have become larger over time.
First, firms with fewer than 10 employees have increasingly lower rates of
unionization compared to medium and large workplaces. The estimates
show that workers in small firms were about a third as likely to be union
members as workers in medium-sized firms in 1984. By 1987, the odds of
unionization for small-firm workers had dropped to about one-fifth of the
odds for workers in larger firms. The negative effect of this trend on
aggregate union density is compounded by evidence for the growing number
of workers in small firms (Table 4).
Second, the results also show that the unionization gap between young
and middle-aged workers has grown through the 1980s. In 1984, results
from the survey data show that there was virtually no difference in the
chances of unionization between young and middle-aged workers once
occupational and job characteristics were controlled. By the late 1980s,
however, young workers were about half as likely~ to be unionized as their
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e
Table 5:
39
Logistic regression analysis of unionization, 1984-87. (Absolute t ratios in
parentheses)
middle-aged counterparts. Due to rising high school retention and high
youth unemployment, the aggregate impact of this effect may be compensated to some degree by falling participation of young workers in the
employed labor force. On the other hand, high youth unemployment may
also be contributing to declining unionization among young workers. I
this issue in the discussion below.
Finally, one interesting null finding is the absence of a clear relationship
between sex and the probability of union membership. Although female
workers on average have lower rates of union membership than men in the
return to
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40
data, this pattern is reversed in subsequent years. Once occupation and
are controlled there is little evidence that women are
characteristics
job
at
lower
rates than men. The low rate of union organization
organized
on
this
evidence, is an artifact of sex segregation in the
among women,
structure.
These
findings are also consistent with the estimates
occupational
of Deery and De Cieri (1991) using 1987 Australian National Election
Survey data.
1984
Discussion
How can the regression results
be placed in the broader context of developin the Australian economy and industrial relations? I offer three broad
conjectures for interpreting these results.
First, as collective bargaining became more centralized in the mid-1980s,
wage and nonwage benefits were compressed and incentives for union
ments
membership became more homogeneous across industries and occupations.
Consequently, strong industrial and occupational differences in unionization
declined. Incentives for membership not only became more homogeneous;
they also weakened with the erosion of over-award bargaining and with the
wage-restraint shown by the ACTU through the mid-1980s (Teicher 1989).
Although moves to more decentralized bargaining began in 1986 with the
work-practices summit, enterprise bargaining remained within the antiinflationary guidelines of the central Accords. The ACTU’s success at
imposing wage discipline on local unions under the Accords may thus
perversely have been a source of union decline. The centralization of
industrial relations followed a merger movement, reducing the number of
unions. The more encompassing unions of the 1980s may be ineffective
instruments for organization because of the increased distance between the
shopfloor and the center of union administration. The weakening wage
advantage of unionized workers, wage compression resulting from the
centralization of Australian industrial relations, and the growing bureaucratization of unions, together provide a plausible institutional basis for the
converging and declining unionization in industries and occupations
revealed in the regression analysis.
This argument also has cross-national implications. In examining the
effect of bargaining centralization on Australian unionization, the appropriate comparative case may not be the celebrated example of Sweden, where
local bargaining remains strong. Instead, the Netherlands of the 1960s may
be more relevant. Under a highly centralized system of industrial relations
in Holland, differences in wages and benefits of union and nonunion
workers were small and local bargaining was weak. This pattern, some commentators claim, drove a steady decline in Dutch union density throughout
the postwar period (Windmuller 1969). For institutional explanations of
unionization this suggests that the degree of centralization may be less
important than the number of levels at which collective bargaining is
conducted. In Australia, where local bargaining activity declined at least
until the late 1980s, centrally orchestrated wage restraint may have reduced
the benefits of, and thus the incentives for, union membership.
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41
Second, I also speculate that unions have declined rapidly in small firms
because work in these firms is increasingly organized along flexible lines. In
this scenario, rapid growth in casual employment and turnover in small
firms compared to large has raised union organizing costs. Union membership often provides less to casual workers because they typically are not
eligible for the nonwage benefits that unions can provide, and union
membership is thus relatively expensive. Employers can also credibly use the
threat of unemployment to deter union membership. This argument
extrapolates from international trends that link flexible specialization
production regimes in small firms to declining union strength (Piore and
Sabel 1984; Regini 1987).
Third, declining unionization among young workers compared to the
middle-aged provides a more difficult explanatory task. Standard theories
suggest union membership is less attractive to young workers because they
benefit relatively little from collective agreements with strong seniority
provisions (Hirsch and Addison 1986). Declining union organization among
young workers might thus result from stiffening seniority provisions in the
1980s. Although I do not know of any evidence for this development, the
ACTU by the end of the 1980s had become sensitive to the issue of recruiting
young workers, passing a motion to abolish junior award rates in 1989
(Peetz 1990: 212). An alternative explanation could relate low union
membership to the high risk of unemployment for young workers. As
Australian youth unemployment remains stuck at the top of the league table
of OECD countries, the costs of union membership for young workers
remains high given the severe risk of joblessness. Indeed, cross-national
evidence shows that unionization rates are generally low for those with high
risks of unemployment-young workers and women-except in countries
where unions administer unemployment benefits (Western 1994). A similar
argument can be made for the over-representation of young workers in
casual jobs. Here the risk of unemployment is high and the benefits of union
membership relatively low. If low unionization among young workers was
really reflecting the impact of casual employment, information about
security of job tenure and union membership should be investigated in
subsequent analysis.
In summary, these speculations link Australian union decline to shifting
institutional, work, and market conditions. Centralized bargaining, by
compressing wages across industries and occupations and reducing the
union wage premium has homogenized and reduced incentives for union
membership. The changing organization of work in small firms has raised
the costs of union organizing in a growing sector of the economy. Finally,
high youth unemployment and insecure employment in casual jobs seems
likely to have raised the costs of union membership for young workers.
Unfortunately, the provisional character of this research raises more questions than it answers. Several of the arguments here are based on claims about
trends in union wage effects, the organization of work in small firms and
union membership among the unemployed. Evidence for these trends has not
been systematically reviewed. Moreover, the analysis of survey data covered
only a very short period. Despite these limitations, evidence against the strucDownloaded from jos.sagepub.com at PENNSYLVANIA STATE UNIV on September 12, 2016
42
tural explanations for Australian union decline seems compelling. Successful
efforts by unions to resist membership decline will thus require more than
organizing drives in low density industries. Initiatives on work reorganization, expansion of the levels of wage bargaining and union services, and
union-administered youth training and employment programs also emerge
as possible strategies for arresting the decline of Australian unions.
Appendix: Business cycle analysis
Fitted values and out-of-sample predictions of union density time series from
1960-89 were obtained from a model of first differences in union densities,
Ad, bootstrap standard errors are in parentheses):
Adi = 0.12u~ - 0.11 p~ + 1.481, - 0.09e*, +0.70s~ - 3.97
(0.11) (0.07) (0.45) (0.25) (0.37) (1.85)
R~=0.49
where ti is the unemployment rate, PI is the inflation rate, h is a dummy
variable indicating years of Labor government, et is the rate of growth of the
employed labor force, and s, is log strike volume, the days lost through
industrial disputes per 1000 workers. Given the 1959 union density, a series
of fitted values was built from the model estimates of first differences. A
similar procedure was used, using independent variable information for
1980-89, to generate the out-of-sample predictions.
Note
An earlier version of this paper
the 1994 annual
meetings
Sociological Association, Deakin University.
The reviewers provided helpful comments. Research for this paper was
supported by a grant from Princeton’s Committee on Research in the
Humanities and Social Sciences.
was
presented
at
of The Australian
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