How Unions Have Changed Over Time in the Developed World

In times long past, unions waged war against employers directly so as to improve the lot of their supporters. They demanded higher wages, shorter working hours and other perks. They would negotiate with employers, aiming to achieve a compromise both parties could live with. If no negotiated settlement seemed possible, they would call for strikes.

Over time, strikes have turned out to be increasingly unpopular. Strikes invariably involve a certain degree of coercion. A strike may for instance easily fail in achieving its objectives if the striking workers are replaced by 'scabs'. Thus the strikers have to limit the ability of outsiders to freely enter into contracts with the struck employer. Also, there may be holdouts among the workers who do not want to go along with the union-ordered strike. These have to be 'persuaded' as well. All these activities by their very nature involve the threat of violence. Strikes are often unpopular with the public as well, depending on how important the industry concerned is to people's daily lives. For instance, travelers ending up stranded somewhere in the middle of nowhere because airline employees go on strike usually don't sympathize with the strikers or their unions.

Even unionized workers themselves are often unhappy with strikes, as they have to forego their salaries during the time of the strike. Unions have therefore changed their focus over time. Instead of pressuring employers directly with the threat of strikes, they have begun trying to influence the political process so as to persuade governments to enact pro-labor legislation. In the course of the past century, governments have as a result increasingly regulated labor markets, in the process implementing many of the demands unions were originally meant to push through. Unions have in the process lost their raison d'etre and their membership has declined precipitously everywhere in the developed world.

Unions have however become fixtures in the political process, in spite of this decline in membership. In many European countries, they continue to enjoy a measure of political power that belies their dwindling support base. In a number of countries their influence is even constitutionally enshrined. In the US, public sector unions have proved to be enormously durable and powerful – they influence political decision-making by either supporting or withdrawing their support from politicians standing for election. The vast political power of California's SEIU is for instance legendary by now.

One country in which unions are also punching way above their weight is France. The situation in France is especially egregious.

 

 

No Members, But Huge Political Clout – A Legacy of Marxism

It is well known by now that France's president Francois Hollande is essentially paralyzed when it comes to implementing meaningful economic reform. It may well be that he has realized what France's problems consist of.  However, as soon as he as much as hints at the possibility that he may actually do something about easing the many restrictions that have made France's labor market one of the most sclerotic in the world, he is immediately confronted with threats from the country's unions. His usual reaction is to back down, or appointing commissions of bureaucrats tasked with 'looking into the matter'. These commissions then waste a lot of time and resources to come up with watered down 'recommendations' that are ultimately destined for file 13 anyway.

A recent report at Reuters informs us about the vast gulf between union membership and the political clout of unions in France. In fact, France's unions are seemingly above the law, as proven again and again by the actions they are getting away with:

 

“In France, taking a person hostage or sequestering them against their will is a crime punishable by up to 20 years in jail. It also happens to be a very effective weapon in French labor disputes. Since 2009, there have been 15 incidents of “boss-napping” and only one resulted in sanctions: 11 postal workers who were fined $2,000 apiece for locking up their managers during a dispute over a change in how the mail is delivered.

Most of the time, it’s the unions who win. That’s certainly the case in the most recent incident, involving a bitter struggle over job losses at a Goodyear tire plant in Amiens. Earlier this month, union officials occupied the factory and sequestered the production manager and head of human resources for 30 hours. After the government intervened, the battle finally ended last week when the company agreed to triple the severance it had offered. Union leader Mickaël Wamen didn’t hide his triumph. “It was a grand and beautiful struggle,” he wrote in a blog post on Jan. 24, announcing details of the settlement.

This type of labor militancy is the exception in Europe today; union power has taken a battering along with the economy in crisis-ridden nations such as Greece and Spain, which were once bastions of organized labor. But it’s not the only characteristic of the French labor scene that is exceptional. Although only 8 percent of French workers actually belong to a union — a tiny proportion by international standards –  French unions wield enormous polially play as big a role in setting social and labor policy as organized labor does in Scandinavia, where 80 percent or more of the workers are union members. “The political influence of French unions is abnormal,” says Radu Vranceanu, research director at ESSEC business school in Paris. “It’s not at all in line with their capacity to mobilize people.”

 

(emphasis added)

Hollande's recently announced 'responsibility pact', which aims to improve France's disastrous unemployment situation by measures designed to increase labor productivity (details remain elusive thus far) has predictably been met with hostility by the unions. Notably, this has happened even before Hollande deigned to reveal any of the concrete measures his latest plan entails.

 

“ Employers’ groups  are sounding cautiously optimistic, but union reaction has ranged from skeptical to downright hostile. In a sign of their influence and central policy role, the pact needs not only the sign-off of the major unions, but also their active participation in creating it.

Thierry Lapaon, who heads the CGT union that is both the largest and the most militant of the five officially recognized labor groups, described Hollande’s plans as “the negation of politics” and said the French president is “completely out of tune” with the expectation of ordinary people. Another union boss, Jean-Claude Mailly of Force Ouvrière (FO), has said he sees the policy as “ineffective and even dangerous.” At the Jan. 27 meeting, in the office of Prime Minister Jean-Marc Ayrault, Mailly openly stated his opposition.”

 

(emphasis added)

It is amazing that France's union bosses are still getting away with pronouncing such views practically unchallenged considering the country's catastrophic employment situation. It should be clear that such high rates of unemployment are the direct result of government intervention in the labor market – there would be no involuntary unemployment in an unhampered market economy as long as labor remains a scarce resource.

 


 

france-unemployment-rateFrance's unemployment rate – the country suffers from enormous institutionalized unemployment as a result of government interference with the labor market – via tradingeconomics, click to enlarge.

 

 

So why are France's unions so powerful in spite of having lost 80% of their membership from its peak? It turns out that this is a legacy of Marxism. The French Communist Party was once upon a time a powerful political force. It gradually lost its political power due to internal rifts between its hardline pro-Stalinist and  'democratic' factions and suffered an especially steep decline after the complete bankruptcy of the Soviet system was finally revealed for all to see with the collapse of communism in the early 1990s.

However, during the time when it still enjoyed political influence, the French Communist Party managed to enshrine the political and financial clout of unions in the laws of the land. Perhaps not surprisingly, it also turns out that the most militant and powerful unions are those representing public employees:

 

“Given their relatively small size, how does organized French labor wield so much clout? The answer is largely historical. After the Second World War, Communist-inspired officials played a key role in re-establishing social and economic life, and put in place structures that have allowed unions to maintain their official roles despite a steep decline in membership. Since the immediate post-war years, the proportion of French workers who are union members has dropped by 80 percent, according to a study by Insee, the national statistics office.

[…]

The unions’ role today in negotiating unemployment insurance and other social issues ensures their continued financing, as they receive government funding from taxes and levies on top of dwindling union dues. Unions also benefit handsomely from regulations under which all companies with more than 50 workers must give a percentage of their payroll to an official “comité d’entreprise” or works council, which represents local workers in national negotiations. In the case of big nationalized enterprises such as the utility behemoth EDF, these employer-generated dues amount to more than $700 million per year.

The difficulty of winning union support for far-reaching economic reforms has tripped many a previous government; organized labor’s main power base is in the public sector, including transportation workers. In the past, unions have effectively mobilized against such issues as changing the retirement system, at times bringing the nation literally to a standstill. But the unions are also Hollande’s natural constituency, and may be reluctant to mount too fierce an opposition to his latest initiative. As for Hollande, the last thing he now needs is a knock-down fight with labor, so he is likely to stick with his track record in office so far, and backtrack rather than provoke.”

 

(emphasis added)

There you have it: Hollande is widely expected to 'backtrack rather than provoke', which perfectly describes his record in office hitherto. Amazingly, the State itself largely funds the unions  – and yet, it still proves to be unable to effectively restrain them.

 


 

hollande_2228619bHollande: what can you do?

(Photo credit: AP)

 


 

A Taboo Subject

Attempts by previous governments to reduce the political power of the unions in France have all failed. The last such (halfhearted and overly cautious) attempt was undertaken by Holllande's predecessor Nicolas Sarkozy, to no avail. It turns out that certain aspects of the situation may not even be discussed for fear of a union backlash:

BLOCK

“Can the system be changed, or will French unions continue to hold a disproportionate amount of power relative to their membership? Nicolas Sarkozy, the former French president, tried to tweak the system slightly in 2008, giving unions different rights in company negotiations depending on whether more than 10 percent of the workforce of that company supported it. But so far, says Prof. Vranceanu, no government has dared to raise the bigger question of why organizations that represent so few people should have such a big say in national affairs. “It’s a taboo issue,” Vranceanu says. What it does, above all, is encourage labor militancy. And given the unions’ clout, not even the government wants to risk being taken hostage.”

END BLOCK (emphasis added)

So, questioning the power of the unions is considered a 'taboo issue' in France. This is a bit reminiscent of the boundaries of 'acceptable discourse' that have been imposed by the mainstream press on the topic of central banks (you are 'allowed' to criticize their concrete plans and offer alternative plans and ideas, but expressing doubt over whether they should exist at all, or openly attacking them as central planning organizations that are directly responsible for the economy's plight is generally considered 'beyond the pale'). What will it take for France to finally tackle this problem?

 

Conclusion:

It may well require an even more profound economic crisis to finally break the spell under which the French body politic finds itself with regard to the country's unions. Perhaps it is time for someone to remember the example set by Margaret Thatcher when she decided to join the fray against Arthur Scargill's militant miner union. It was a difficult decision and could easily have turned out to be a political miscalculation. However, she knew that this confrontation was necessary if the principles she stood for were to mean anything. At the time, the UK had become a second-rate economy, almost completely destroyed after decades of socialism enjoying free rein. Thatcher managed to rescue the economy from the abyss and the UK today still enjoys the fruits of her resolute disengagement from socialist failure. However, it took a major economic crisis before the public and political will to implement meaningful change was galvanized. It seems likely that France will have to go through a similar process.

 


 

CGT demo

Demonstration led by the confédération générale du travail (CGT), one of the five major French trade union confederations.

(Photo credit: cgt.fr)

 


 

 

 

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2 Responses to “The Power of France’s Unions”

  • Vess:

    A couple of curious facts:

    1) In Iceland, every worker is required by law to be a member of some union. Yep, I kid you not. It was particularly funny for me, because I work in a rather bizarre field – computer anti-virus research. The number of people there who were competent in my field could probably be counted on the fingers of one hand (and you’s have fingers left to spare) and, of course, we didn’t have a union all for ourselves. So, for ten years I had to be a member of the union of virologists (those who work with live, biological viruses), just in order to satisfy the law. I even regularly got their bulletin – which I couldn’t read, because I don’t speak Icelandic. :-)

    2) There is something I owe, to a certain degree, to the French Communist Party. It’s my knowledge of French. :-) Many years ago, it had a publication for kids – a comics magazine, called “Pif”. It was a very nice one – no propaganda whatsoever, just fun. So, when I was a kid, my grandmother (who had graduated in France in physics and chemistry at the Sorbonne under such illustrous teachers like Marie Currie and the mathematician Langevin) used to buy this magazine for me, read it aloud (in French) and then translate what she had just read into my language. Since I was of an age when things are easily remembered and the memorizing process was aided by the graphic illustrations, I involuntarily remembered which words mean what in French. Because of this I can read French freely, I can understand spoken French pretty well – although I can’t speak it myself and I can’t write in it, since I’ve never had a formal education in the language. (Besides, French spelling is so hard that even native French speakers have problems learning it.)

  • No6:

    People simply don’t appreciate the benefits of an economic crash.

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