The Road to Recovery: How effective unions can help rebuild the economy

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The Road to Recovery

How effective unions can help rebuild the economy

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Britain is slowly emerging from the most profound economic crisis since the 1930s. This Touchstone pamphlet argues that unions can play a key role in helping Britain on the road to economic recovery, and argues that unions must prioritise building effective workplace organisation and extending collective bargaining coverage if they wish to realise this potential role. It demonstrates the value that effective unions can bring to long-term employment relations and to both employees and employers, and sets out the case for government and employers to rethink how they engage with unions.

The union effect

Unions exist to represent the interests and concerns of their members individually and collectively. However, this pamphlet summarises the wider potential benefits that unions can bring to workplaces and employers through, for example, efforts to extend employee access to learning and skills; to reduce labour turnover and absenteeism; to make workplaces - and society more broadly - fairer and more equal; and to improve employee engagement.

Effective unions and employment relations

What unions do in the workplaces matters: strong workplace unionism (high membership density, the presence of workplace lay representatives and high bargaining coverage) tends to translate into higher perceptions of union effectiveness on the part of employees.

Union recognition is associated with lower quit rates in both the private and the public sectors. Furthermore, the effect is greater where unions are more effective - that is, where they have higher union density and higher bargaining coverage.

Where unions are strong and effective, they are perceived by management to be more - not less - likely to be beneficial to employers in terms of their willingness to improve workplace performance.

Unions and innovation

In times of recession innovation can be vital to retain a competitive edge in tough market conditions. Although innovation can be good for firms, it may not be perceived by employees as being equally beneficial. Innovation-induced job shake-out may be met with some trepidation by employees, potentially leading to stress and anxiety. Unions and collective bargaining can help reduce the negative perceptions of innovation that may be held by employees.

The way forward

Unions have the potential to play a key role in driving Britain out of the recession. Whether or not they are able to fully realise that potential is dependent on a number of factors.

Most importantly, unions must prioritise building effective workplace organisation. The evidence in this pamphlet is that effective unions are better equipped to represent their members and to make a contribution to long-term employment relations. In particular, unions need to invest more in the recruitment and development of workplace representatives. Workplace representatives are the single most important determinant as to whether or not members and potential members perceive the union as effective at a workplace level. In recent years the proportion of unionised workplaces with workplace representatives has fallen. The TUC and unions should launch a major campaign to increase the number of active workplace union representatives, and explore ways of better supporting reps and extending organisation through collective bargaining.

Employer efforts to support effective unions in the workplace are important. In unionised workplaces, employers should invest in helping the union recruit and train representatives and extend union membership. Such investment could help build better long-term employment relations, reduce quit rates and secure employee support for workplace innovation.

In 2009 the Department for Business, Innovation and Skills published a report by David MacLeod and Nita Clarke looking at employee engagement and its potential benefits for organisations and employees.1 The MacLeod Review opened up an important debate about the value of employee engagement. However, the Review underplayed the actual and potential role of unions in securing effective employee engagement. Representing over a quarter of employees, and negotiating on behalf of more than a third of the workforce, it is essential that unions are placed at the heart of government efforts to implement the recommendations of the Review.

Collective bargaining can bring benefits to both employees and employers. Government should play a more active role in promoting the role of unions and collective bargaining.

More broadly, government and employers need a new understanding of the positive contribution that unions can make to Britain's workplaces and to economic prosperity.

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