A defining characteristic of labor markets around the world has been the decline in trade union membership. Despite things like collective bargaining being fundamental to the social model in many countries, union membership has been in gradual decline throughout the world.
A recent study from Bocconi University highlights how unionization rates have declined from around 30% to barely over 10% in the last few decades. The declining membership undermines their attempts at collective bargaining, which matters when it comes to ensuring automation works for all concerned.
Declining membership
The researchers analyzed union membership across a number of European countries over a 20-year period. The results show a clear downward trend, with Italy’s union membership rates approaching those of less unionized countries like France. There are big differences between regions and sectors: union membership ranges from 25% in Trentino-Alto Adige to 7% in Liguria, and from 27% in public education to 6% among domestic workers.
So, what’s causing this steady decline? The researchers argue that the twin factors of automation and globalization have had a big impact on employment in areas, such as manufacturing, where union membership has historically been stronger.
“Besides, entire sectors that have developed thanks to technology, think of gig economy activities, did not exist until a few years ago, and as a result unions are practically absent,” the researchers explain.
They argue that technology is increasingly important in the production process, and this is resulting in a decline in the importance of labor. So, with fewer of the workers that remain in a union, the ability of unions to protect the lot of workers diminishes.
“A strong union is important to protect social cohesion in the face of structural changes in society,” they continue. “Our data tell us that the unionization rate is falling: if this trend is not reversed, Italy risks the lowest levels of union participation in Europe.”
Why unions matter
The importance of unions when it comes to automation was reaffirmed by a second study, from the London School of Economics, which explored the role they can play when companies invest in technology and automation.
The researcher examined the link between the rate of cooperative institutions and the rate of roboticization in industry across 25 OECD countries. Cooperative institutions, such as works councils and sector organizations, aim to balance collective gain and fair distribution. For example, they help with bargaining between capital and labor.
One might think that more of these organizations would slow down automation in industry. However, the study found that they actually promote more industrial automation while also ensuring fairer outcomes for workers.
Getting win-win outcomes
The author says that rates of robot adoption across Europe varies considerably, despite similar levels of economic advancement. In the likes of Germany, for instance, adoption is much higher than in the likes of the UK.
Traditionally, this difference has been explained away by the role institutions, such as trade unions, play in managing industrial relations. It’s a narrative in which the interests of labor and capital are opposed, with unions therefore slowing the pace of automation. An alternative narrative is that high rates of unionization increase the cost of labor and encourage firms to invest in technology instead.
The study found that neither of these narratives is entirely the case, and that high rates of unionization can help to ensure that investments in automation are done in a way that benefits managers and employees alike. This was because the interests of employers and employees were more complementary than previously thought.
Investing in skills
Strong unionization also has benefits in terms of reflecting a willingness of employees to invest time and energy in retraining, which can help them maximize the potential of the new technology.
Previous research has highlighted how company investment in automation tends to result in more, rather than less, employment as those firms grow and therefore increase headcount accordingly. This nonetheless requires a period of transition, however, and this is where unions come into their own.
They can help to ensure that the costs and benefits of automation are spread more equitably between employers and employees. For instance, firms with work councils have often provided employees with guarantees that no redundancies will result from the investment in automation, which in turn makes employees more interested in the benefits that accrue from automation in terms of productivity-linked wage rises.
Sharing the gains
The study suggests that workers in cooperative environments are more likely to share new technologies with management. This cooperation leads to better training and adaptation to new technology, ensuring that workers can effectively use it, which maximizes the firm’s return on investment.
These benefits also appear at a macro level, where collaborative policies help automation thrive. This indicates that automation can benefit both employers and employees when cooperative structures are in place.
This contrasts with more liberal economies, like the U.K. and U.S., where increased automation is often linked to a declining share of economic gains for workers.
Many fears about automation and robotics center on job disruption. The research challenges the idea that conflict is inevitable and shows that automation can benefit workers as well as owners.
