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Small business

The trouble with trade unions

January 31, 2014

Jeez, you’d have to really hate being a union rep right about now. Seemingly everywhere you look there are examples of how the union movement’s relevance is plummeting, while its questionable behaviour is ramping up. Just in case you haven’t noticed, here’s a selection: 

  • The alleged involvement of bikie gangs and underworld figures with the CFMEU at Barangaroo.
  • The fight between the AMWU and Toyota, which continues even though Holden and Ford have fled after facing similar battles.
  • The negative influence unions have had on productivity and labour costs at Qantas.
  • The finding that former union boss John Maitland is corrupt over the granting of coal licenses that made him millions.
  • The prospect of a royal commission into the alleged corruption and criminal conduct of key players in several unions.
  • And, of course, needing no explanation, the ongoing saga of Craig Thomson and his former buddy Michael Williamson at the HSU.

Those stories, and others, were brushed off in an op-ed by the ACTU’s Ged Kearney yesterday, as people doing the wrong thing “from time to time”, with the Abbott government embarking on a “trick” purely for political purposes. That may or may not be true, but surely a judicial inquiry would deliver benefits to union members by airing the crap and eventually clearing it out. How could any union leader tasked with protecting workers be against it?

This toxic trend demonstrates the ways in which unions have morphed into the businesses they so despise. What they’ve spent so long opposing – the ruthless and greedy nature of the big corporates – they are now themselves guilty of, which is perhaps a reason why less than one in five people trust them to be their representatives at work.

Unions are unequivocally businesses – some are Big Businesses – selling themselves to potential consumers (industry workers) in return for a service (potential support). They engage in product development and marketing just like any other business, earning substantial revenue while paying their staff generously, much more than the workers they represent. They are, through and through, as much a product of capitalism as the organisations they oppose.

What makes this downfall tragic is that unions have historically been hugely successful at making this country great, significantly lifting the standard of workplaces across Australia. But that standard is now maintained by solid industrial relations legislation and intense competition for quality workers, the combination of which advantages employees irrespective of union involvement. Just because unions were useful in the past doesn’t mean they’re still useful today.

If anything, their existence and characteristic obstinacy are a hindrance to the workers they’re supposed to protect. When unemployment is increasing and the economy is stagnating, it’s essential for labour costs to be relaxed so that employers have an incentive to hire more people. When the situation reverses and the economy is booming, then those costs can rise once again. Unfortunately, trade unions seem to prefer higher wages even if it means fewer people are receiving them.

The economy aside, the irrelevance of trade unions is most evident inside organisations where poor-performing employees are frequently defended by union representatives seeking any opportunity for a contest against a leader. What unions don’t understand is that the poor performer’s colleagues are just as pissed off as the supervisor. Sick of being paid a similar salary for doing twice as much work, they too want the slacker gone.

There’s a great Wizard of Id cartoon that sums this up nicely. One man asks another: “Do you know how to tell when the highway department is on strike?”

“How?” replies his mate.

“Instead of shovels, they lean on placards.”

Are unions still relevant in the modern workplace? Why, or why not?

twitter Follow James Adonis on Twitter  @jamesadonis

263 comments so far

  • With the cost of living rising out of proportion with lower income earner's wages, the role of unions are more important than ever. Anyone can see that the gap between the rich and the poor has widened in Australia in the last 20 years, the upper middle class has grown significantly, while disadvantage and poverty in our own country gets worse. Have a look around you. The union has a large membership, and unfortunately, like and any organisation, there are rats in the ranks. Do not tar all union representatives with the same brush. 99% of them wor tirelessly to achieve better outcomes for Australia's working class. Do you really want to end up like the U.S where the working class live in the edge of poverty?

    Commenter
    MarkF
    Location
    Victoria
    Date and time
    January 31, 2014, 5:34AM
    • How are the unions closing the gap?

      I agree that the disparity between the haves and the have-nots is obscene, harmful, and ultimately unsustainable, but nowhere do I see unions doing anything about it.

      Should wages for "shop-floor" staff be raises to those of the execs, all it will cause is inflation. I don't see unions dragging down the pay of those at the top, I see them paying their own execs huge money in a similar vein.

      Commenter
      SillyKiwiMan
      Location
      Newtown
      Date and time
      January 31, 2014, 8:05AM
    • SillyKiwiMan: Inflation is caused by an increase in the money supply. Increasing wages are a symptom, not cause of inflation.

      The rate of increase in the money supply is around 7%, any worker not getting a 7% raise each year is having their purchasing power eroded and effectively taking a pay cut every year.

      Commenter
      Lee eel
      Location
      Date and time
      January 31, 2014, 10:06AM
    • re Mark,

      When the CIA installed Bob Hawke as Prime Minister the writing was on the wall. The 'prices and incomes accord' and all its hidden nasties was expressly designed to bring down industrial power, bring down the full employment policy and shift incomes and free services away from working people. We have seen American style capitalism growing in Australia every since. High level union officials became corrupted and sold out. The only shining light we see today (or one of the few) is the nurses' federation, which has never sold out to pressure. We need unions based on their model. Every unionist or prospective unionist should study the operations of the nurses to get a pointer to fighting back. Then we can hopefully get more former nursing union members into the parliament to stop the rot.

      Commenter
      Michael J.
      Location
      Date and time
      January 31, 2014, 10:25AM
    • Irresponsible Unions make the gap between the rich and the poor wider when they impose wage costs which drive businesses broke and lead to higher unemployment.

      The issue here is responsible unions who work in the genuine interests of their members (which is to have a job with reasonable wages and conditions). When Unions care more about their power than the interests of their members we have a problem. The behavior of unions who would prefer to see a business go broke than compromise on costs is truly disgraceful.

      Such behavior will not lead to a more equal Australia.

      Commenter
      Gramus
      Location
      Date and time
      January 31, 2014, 11:36AM
    • MarkF is basically right. I'm a union Delegate (on my day off, mind you) and James Adonis' comments are both lazy and wrong. Because of the fall in union membership across the workforce, many bosses get away with forcing their workers to take out ABNs and/or pay them cash under the table. The workers get ripped off, the ATO gets ripped off and the boss gets a scared and compliant workforce. Rights in IR legislation are just pieces of paper unless there is a union there to enforce them.

      Adonis says: "Unions are unequivocally businesses – some are Big Businesses – selling themselves to potential consumers (industry workers) in return for a service (potential support)."

      This is dead wrong. A union is the workers, of one or more workplaces, democratically organised to defend their rights and advance their interests. The people at the union office are just staff we hire to facilitate our solidarity. Unionism is about workers supporting each other instead of competing against each other.

      Some of the examples Adonis has mentioned are real problems, but they are the result of the bureaucratisation of the union movement. The solution is for workers to build rank and file movements to take back control of our unions. The current allegations against CFMEU officials, if true, would be grave crimes against their own members, because they involve accusations that officials neglected their members' interests in return for secret commissions. It's in the interests of union members to get to the bottom of this.

      Finally, I agree with Ged Kearney that a Royal Commission is not the answer. Instead, I think that officials accused of corruption should be tried by their members. A Royal Commission would just be an excuse for a government that hates unions to try to crush them.

      Commenter
      Greg Platt
      Location
      Brunswick
      Date and time
      January 31, 2014, 12:10PM
    • No matter how much unions try to bid up the wages of the least skilled workers, those at the top will use that to justify raising their prices. Everything is relative. No amount of union bargaining will result in a wage for the lowest skilled that will make them comfortable because it simply cannot be done. It's a simple fact that a rising tide lifts all boats. Some boats sit higher in the water than others and you cannot equalise this.

      Where the issue is, the lower paid are also the lower skilled. Building on skills is the necessary solution. Skilled tradies can earn as much as GPs and lawyers. This is because it represents the level of skill and talent they bring to the market. This is what unions needs to focus on. Not just thinking that raising the bottom can make it the middle.

      Commenter
      Bender
      Location
      Date and time
      January 31, 2014, 1:46PM
    • One problem with growing inequality of incomes is that this is happening as the economy is dominated more and more by big businesses where executive pay packets skyrocket. This is less likely to happen in small to medium enterprises. The problem here is that unions tend to like the economy being dominated by big businesses, because they have less ability to entrench themselves in smaller businesses. This has resulted in unions lobbying government to implement policies which make it harder for smaller businesses to start up and thrive. In this way, unions have become part of the problem in helping to promote greater inequality.
      Politicians have not helped either, as many of them have links to big business.

      Commenter
      G
      Location
      Date and time
      January 31, 2014, 2:20PM
    • Greg Platt,
      Sorry, but you are totally off the mark.Firstly, Democratically organised, please......Unions are the biggest nepotistic, cronyist family in the world.
      Unions are currently blocking Toyota from asking their employee's to vote (just asking for a vote) on changing their EDA, hence the Union is actually STOPPING the employee's from barganing to save their jobs....So that's awesome, the Union can say We negotiated this great EDA that was never broken, pity that nobody is on that EDA anymore coz they are all unemployed!!!!
      And Union's are Big Business (take a look at their P&L), well that is except they are a protected species (you can't set up a competing Union, it is not allowed) and their Fiduciary Duties don't exist.
      And you can't just leave the policing of Unions to the Police, because if I had a choice between police solving murders or policing Unions I choose the Murders option...
      To solve this, it is very simple, Union Officers must agree to the same level of Fiduciary and Regulatory Duty as Company Directors, and there needs to be Competition opened in the Union sector so employee's can choose which Union fights hardest for them.
      I also don't understand why you are all so scared of a Royal Commision?? Nothing to hide = Nothing to fear...

      Commenter
      The Rock Says
      Location
      Sydney
      Date and time
      January 31, 2014, 3:22PM
    • All I ever hear is unions demanding more and more money, even when companies are losing money, even when the economy is tanking. They can't seem to understand that we need to compete on a global level and that if it's too expensive to pay workers here, companies can just move off-shore. So while unions are organising industrial action, people are losing their jobs. Cost of living rises with increased wages because businesses pass on the higher cost of doing business (ie higher staff costs) to the end consumer one way or the other. So its a vicious cycle. At least in the US living is relatively cheap (besides healthcare but that's a whole other story) and people on average wages can afford a pretty good quality of life.

      Commenter
      T
      Location
      Date and time
      January 31, 2014, 4:31PM

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