No 33: Trade unions and social protection – why the strength of collective organisation matters for social security

Dr Elke Heins explains why strong trade unions often go hand-in-hand with strong social protections.
(Chris Bertram/Creative Commons)

by Elke Heins

The recent strikes in defence of university staff pensions have surprised many with the powerful collective action displayed by members of the University and College Union (UCU). Just as much as the university sector proves an exception to the general decline of trade unions in the UK, it confirms the rule that where unions are strong, social protection is strong. The defined benefit scheme currently in place at universities compares favourably with most private sector pension schemes and, as has been powerfully demonstrated, will be vocally defended if it comes under attack.

This specific sector example from the UK corresponds to a broader picture internationally. In line with Power Resources Theory, empirical studies of welfare state generosity show a positive correlation with the strength of the labour movement, either expressed as the strength of trade union density rates or its correlate, the strength of left parties. Conversely, where trade unions are in decline, it is no coincidence that welfare retrenchment also happens.

Corporatism and the welfare state

The influence of interest groups on social policy is also a key component of a specific model of policy-making, namely Corporatism. The emphasis in this type of policy-making process lies on cooperation and consensus-seeking between trade unions on the one hand and employer organisations on the other (i.e. the social partners). Corporatism grants an institutionalised role in economic and social policy decision-making to highly organised social partners. It implies a ‘social pact’ between organised business and labour in which the acceptance of capitalism is exchanged for full employment and income protection policies.

At first sight, it might seem counterintuitive that strikes are a rarity in countries where unions command considerable bargaining power and strength in membership – e.g. in Austria, at least until recently a model corporatist state, the average strike length per employee per year has famously been counted in seconds. However, it is this very involvement of unions in key political decision-making that leads to a moderation of union politics; unions have to represent large parts of the workforce and not just a highly committed, more radical minority and the high-level involvement in decision-making is based on the necessity to compromise. Engaging employees in decision-making has been a strategy in many industrial relations systems to smooth conflict.

The death of Corporatism in the UK

This ‘postwar consensus’ on the welfare state had its heyday in Western Europe from the 1950s to the 1970s. In the UK it clearly came to an end with Thatcher, whose outspoken anti-union policies deliberately shifted the power towards employers and their lobbying organisations according to a more pluralist model of policy-making. This demise of trade unions has not only weakened the influence of unions on social and economic policy but enabled a wider retrenchment of the welfare state as a whole.

At the same time that union power has been undermined, the labour market has changed dramatically with an increase in flexible and often precarious forms of work. So-called atypical workers are often less unionised and extremely wary of taking strike action due to the very precariousness of their own position (not wanting to risk the prolongation of a fixed-term contract or not being able to afford a docking of their pay while they are on a short-term contract). This creates a vicious cycle – union power is undermined by the inability of organising large parts of the workforce, union weakness results in further labour market flexibilisation and employment insecurity, then to a further increase in the number of atypical and precarious workers who are unlikely to join unions.

Alternative models: union-administered social insurance funds

In some countries, the institutional role that trade unions have had in the welfare state arena through social partnership is particularly large. In Continental Western Europe, welfare is based on a social insurance model and the principle of self-administration, following the logic that whoever pays for welfare will be responsible for administering it. Since social insurance contributions are made jointly by employers and employees, it is mainly their representatives which sit on the board of social insurance funds. The role of the state is mainly that of regulatory oversight and funding of any deficits. Typically these social insurance funds predated the modern welfare state as it was mutual society organisations which first set up social protection systems in case of old age, illness or unemployment for their members. These funds were then incorporated into the modern welfare state.

In the Nordic countries, a particular feature of unemployment insurance is the close connection to the labour movement as a large majority of unemployment funds is organised by trade unions. This so-called Ghent system, in which unemployment benefits are paid out by unions although contributions are heavily subsidised by the state, turned unemployment insurance into a recruitment tool for trade unions. Not surprisingly, trade union density rates in Denmark, Finland and Sweden have been amongst the highest in the world. Also not surprisingly, however, right-wing governments in these countries have tried to weaken the link between unemployment insurance and unions in the past decade with the aim to diminish the power of the labour movement and prepare the ground for cuts to previously generous welfare benefits and high levels of spending. For example, in Sweden, once the beacon of active labour market policy (ALMP), spending on ALMP declined dramatically between the 1980s and 2015.

There are two main messages to take away from this. One is that the effective collective organisation of employees is a prerequisite for influence on the welfare state. The other is that trade union influence on social policy is important to defend significant social rights. The detachment of trade unions from social policy in the UK has been accompanied by a neglect in social policy research of the crucial role these interest groups play beyond wage bargaining and industrial relations in the narrow sense. It is time to bring interest groups back on the social policy agenda if we want to understand how social security, equality and good working conditions can be protected.

Dr Elke Heins is Lecturer in Social Policy at the School of Social and Political Science, University of Edinburgh. She tweets @socpolEdinburgh.