Whither the Trade Unions?

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Jock Finlayson

The trade union movement in Canada, as in many other industrial countries, is in decline.1 Unions find themselves grappling with pressures arising from rapid economic and technological change, heightened global competition, and shifts in business practices, employment patterns and social attitudes. The result is stagnation in unions' overall membership numbers and an erosion of their market power within the broader economy.

Statistics Canada's latest update on union membership tells the story. Today, only 30.1 percent of paid workers belong to unions (see table 1), down from 33 percent in the early 1990s. Outside of the public sector, "union density" is much lower: 18.2 percent. (In the United States, union density in the business sector is just 10 percent.) If the swelling ranks of Canada's 2.4 million self-employed are added to the mix, it turns out that trade unions now represent just 14.6 percent of all Canadians who earn their livelihoods in the private market economy.

The picture is similar in British Columbia, despite concerted efforts by the province's NDP government to encourage the growth of unions since its election in late 1991. Measured on an economy-wide basis, union density in BC has fallen markedly since the early 1970s (see Figure 1), although it remains a bit higher than the national average. In the private sector, union influence has faded even more dramatically. By mid-1999, only 22 percent of paid private sector workers in BC belonged to trade unions. Tellingly, four of the five biggest unions in BC - and five of the top ten - represent mainly public sector employees (see table 2).

Sources of decline

A number of trends have conspired to bring about a decline in union density, particularly in the private sector.

The most important is changes in the distribution of employment by industry. Arguably, the single biggest problem facing organized labour is the relentless expansion of service jobs coupled with dwindling employment in resource industries and heavy manufacturing - sectors where unions are well entrenched. Union density varies widely by industry. The sectors of the economy which have enjoyed robust employment growth over the past decade have union density ratios well below the economy-wide average. Examples include business and professional services, retail and wholesale trade, financial services, scientific and technical services, and accommodation and food. Conversely, most of the industries in which unions enjoy a strong presence have experienced weak or even negative employment growth.

In Canada, net job creation is now heavily concentrated in service industries. Services account for upwards of 70 percent of Canadian GDP and for about three-quarters of paid employment. Except for transportation, public administration, and a few largely government-provided services (e.g., health care and education), unions have failed to make major inroads into the service sector.

A second trend that is hurting unions is the migration of jobs toward smaller firms. Compared to larger enterprises, small companies are harder for unions to organize and much costlier to service. International data show a strong, positive correlation between unionization and average plant size. Understandably, unions find it easier to organize a single, 500-person operation than ten separate plants each having 50 workers.

Of the 11.9 million paid workers in Canada, 8 million - fully 67 percent - toil in organizations with fewer than 100 workers. Most of these are non-union operations and are likely to stay that way. Only 12 percent of the 4.1 million Canadians employed in the smallest organizations - those with fewer than 20 employees - are union members (and it should be noted that many of these smaller organizations are actually part of the public sector). Fuelled by out-sourcing and the opportunities provided by new technologies, small business and self-employment are on the rise. Smaller firms are where the prospects for future job growth are most promising - a fact that bodes ill for unions.

The steadily increasing share of the labour force composed of "knowledge workers" also works to the disadvantage of unions. Knowledge workers often have little or no experience with, or affinity for unions. Compared to the labour force as a whole, they tend to have more education, higher incomes, more fluid career paths, and a greater appetite for both risk-taking and self-directed work. Outside of the broadly defined public sector, unions have had limited success organizing knowledge workers. High tech manufacturing, for example, has proven to be largely barren ground for trade union organizers, even in pro-union jurisdictions like BC.

Finally, the deregulation of key sectors of the Canadian economy, such as transportation and telecommunications, and the adoption of freer trade within North America and at the global level, have also served to undermine the power of trade unions. Unions have discovered that it is considerably harder to extract economic rents when barriers to entry are falling, import competition is growing, and domestic firms are exposed to ever more-intense competition.

Conclusion

Although they are far from paralyzed in the face of the structural forces reshaping the economic landscape, the future for unions does not look particularly promising. Organized labour in Canada is likely to become progressively more concentrated in the "non-market" sector of the economy - government administration, health care, education, and social service - while its presence continues to diminish within the business community. Unions can be expected to resist this by aggressively seeking to organize in "non-traditional" industries, but their efforts are unlikely to reverse the trends seen in recent decades.

Looking ahead, a combination of above-average employment growth in service industries and small business, the ongoing process of restructuring and out-sourcing by larger organizations, and mounting global competition is likely to push union density among Canada's paid private sector work force below the 15 percent mark within the first few years of the this century.

Note

1. An earlier and somewhat shorter version of this article appeared in the National Post on October 30, 1999.

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