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The Impact of Industrial Relations Legislation on British Union Density

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  • Richard Freeman
  • Jeffrey Pelletier

Abstract

The unionized share of the work force changed markedly in the United Kingdom between the 1970s and 1980s. In the 1970s density rose steadily, making the United Kingdom the most heavily organized large OECD country. In the 1980s, by contrast, density fell by 1.4 percentage points per annum -- a faster drop than in the rapidly de-unionizing U.S. or in Japan. What explains this turnaround - the severe recession of the 1980s? Shifts in the composition of employment from unionized manufacturing to services? The Thatcher government's industrial relations legislation? In this paper we investigate these questions with a quantitative analysis of 1945-1986 changes in British union density. In contrast to studies that concentrate on cyclical determinants of unionism (Bain and Elshiekh, Carruth and Disney, Booth (1983)) we focus on industrial relations legislation. We develop an index of the favorableness of labor laws to unionism and relate it to changes in density in time series regressions that control for inflation, unemployment, and the manufacturing share of employment, among other variables. As a further test, we develop an analogous labor law index for Ireland, whose industrial relations system is similar to the U.K.'s and which experienced a similar severe 1980s recession but which did not pass new laws to weaken unions, and contrast changes in density between the countries with differences in industrial relations law. Our major finding is that the Thatcher government's labor laws caused much of the 1980s fall in British union density. We present the evidence for this claim in three stages. Section 1 lays out the facts of changing union density in the U.K. and Ireland and examines structural explanations of the U.K. changes. Section 2 discusses the 1980s U.K. labor laws and develops an index of their likely impact on unionism. Section 3 presents our econometric analysis of the U.K. time series data.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3167.

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Date of creation: Nov 1989
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Publication status: published as British Journal of Industrial Relations, Vol. 28, No. 2, pp. 141-164, (July 1990).
Handle: RePEc:nbr:nberwo:3167

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Cited by:
  1. Westermark, A., 1999. "A Model of Union Formation," Papers, Uppsala - Working Paper Series 1999:8, Uppsala - Working Paper Series.
  2. Bruno Chiarini & Massimo Giannini, 2000. "A Model Of Union Behaviour And Benefits Under Uncertainty - Did Thatcher'S Benefits Policy Increase Employment And Reduce Union Power?," Working Papers, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy 5_2000, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
  3. Addison, John T. & Siebert, W. Stanley, 2002. "Changes in Collective Bargaining in the U.K," IZA Discussion Papers 562, Institute for the Study of Labor (IZA).
  4. Daniele Checchi & Claudio Lucifora, 2002. "Unions and labour market institutions in Europe," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 17(35), pages 361-408, October.
  5. Daniele Checchi, 2000. "Time series evidence on union densities in European countries," Departmental Working Papers, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano 2000-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  6. Pencavel, John, 2003. "The Surprising Retreat of Union Britain," IZA Discussion Papers 818, Institute for the Study of Labor (IZA).
  7. Erasmus Kristoffer Kersting, 2008. "The 1980s Recession in the UK: A Business Cycle Accounting Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 179-191, January.
  8. Gustav A. Horn & Heike Joebges & Torsten Niechoj & Christian R. Proaño & Simon Sturn & Silke Tober & Achim Truger & Till van Treeck, 2009. "Von der Finanzkrise zur Weltwirtschaftskrise (I)," IMK Report, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 38-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  9. Alex Bryson & Rafael Gomez, 2003. "Why have workers stopped joining unions?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 20022, London School of Economics and Political Science, LSE Library.
  10. S Johnson, 1999. "Automatic Certification or Mandatory Representation Votes? How the Choice of Union Recognition Procedure Affects Union Certification Success," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp139, ESRC Centre for Business Research.
  11. Blanchflower, David G., 2006. "A Cross-Country Study of Union Membership," IZA Discussion Papers 2016, Institute for the Study of Labor (IZA).
  12. Stephen Drinkwater & Peter Ingram, 2003. "Have industrial relations in the UK really improved?," School of Economics Discussion Papers, School of Economics, University of Surrey 0903, School of Economics, University of Surrey.

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