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.