Thursday, February 26, 2009

DENSITY OF TRADE UNION MEMBERSHIP IN OECD 1960-2007

Here (link) is the availible data on density of trade union membership in OECD between 1960 and 2007. The membership in trade unions has been declining. In 1960, in the United States, 30.9 percent of the employees were engaged in trade union activities. In 2007, only 11.6 percent of employees were members of trade unions. Similar trendline occured in the UK, where the peak in trade union membership was 51,8 percent of the employees in 1978. From 1978 to 2007, trade union membership decline significantly. In 2007, it reached 28 percent of the workforce. In Canada, trade union membership was reversed in 1982 when it reached 36,8 percent of employees. In 2007, 29.4 percent of the working population were engaged in trade union activities. Compared to the U.S, trade union membership in Canada remained fairly steady throughout the period.

There is many empirical evidence arguing why trade union membership declined. In the U.S and UK, the reversal in trade union membership began in 1978 while in the U.S, the entire postwar period encountered a declining trend in trade union membership with a marked exception between 1975 and 1979 when Carter administration fostered pro-union policy measures.

In the UK, Thatcher's economic reforms, nicely summarized by Sir Alan Walters (link), aimed at the deregulation of the labor market which set a natural disincentive for union membership and, at the same time, stimulated productivity growth and reduced unit labor cost resulted from an excessive taxation of personal income and levies such as employer social security contributions. In 1978, for instance, the United Kingdom's overall productivity was 69 percent of the U.S productivity, down from 75 percent in 1960. In 1979, the marginal tax rate could reach as high as 98 percent, composed from 83 percent top tax rates and 15 percent tax surcharge on unearned income.

In continental Europe, trade union membership also declined significantly, showing a positive correlation between productivity growth a declining union membership although the continental European trade unions maintained a strong political power in collective bargaining as well as in economic policymaking. Not surprisingly, the output per capita gap between the U.S and Europe widened, starting in 1970s.

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