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Shock: World Bank backs trade unions!

Unions good for the economy

Martin Lawrence.

A new World Bank study has found countries where strong unions bargain direct with employers tend to have lower unemployment and less income inequality than other countries.

The study, Unions and Collective Bargaining: Economic Effects in a Global Environment, follows the World Bank's recent decision to begin regular dialogues with the world trade union movement alongside the International Monetary Fund.

This was welcomed by the general secretary of the International Confederation of Free Trade Unions (ICFTU), Guy Ryder, speaking at this week's ICFTU International women's conference in Melbourne.

"Our trade unions have been cast in the role of obstacles, self-interested distorters of the market, part of the problem, enemies of solution. The World Bank has been one of those peddling this sort of stuff, with some enthusiasm too ... (but) it has found that trade unions are good for the economy and good for their members," Ryder said.

In the study, conducted by the bank's social protection unit, union members and workers covered by collective agreements, were found to be better paid, work fewer hours, have more training and better job tenure. This was found to apply across developing and industrialised countries.

Unionised workers in the US had the biggest pay differential between them and non-unionised workers for an industrialised country, with union members earning an average wage 15 per cent higher than non-members.

While the study found highly unionised firms often suffered more temporary lay offs than other firms, high unionisation rates were found to be conducive to less economic inequality and better economic performance.

This occurred in countries with what the World Bank termed "highly co-ordinated collective bargaining" between a small group of large union confederations and employers.

"Workers, employers and governments can use collective bargaining at the national level to provide insurance against shocks arising from international markets," the report found.

Director of social protection at the World Bank, Robert Holzmann, said in firms with good industrial relations, high union membership increased productivity.

But even though the World Bank said global labour standards were becoming increasingly important, it stopped short of drawing a causal link between those countries which had adopted high labour standards and those with good economic performance.

The keynote speaker at the ICFTU's Melbourne conference, New Zealand Prime Minister Helen Clark, called for labour and other standards designed to eliminate exploitation of people and the environment.

"Economic globalisation is an area crying out for fair rules to be applied to it," she said.

Clark was addressing an audience of 300 delegates from 90 countries at the conference, designed to highlight the role of women in trade unions and the benefits of unions to women.

The World Bank study did find union membership led to lower wage differentials between men and women.


This article is reproduced from the Ethical Investor Magazine.


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