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January 15, 2011 / J. Shaw

The Public-sector unions Monster

In the article below, the Economist, will give you a short history of the union movement and explain how public secor unions have to be stripped of their elite, you can’t touch me I have the power attitude if the US economy is to survive. SHAW

THE past 30 years have been dismal ones for the labour movement. In the American private sector trade-union density (ie, the proportion of workers who belong to unions) has fallen from a third in 1979 to just 7% today. In Britain it has dropped from 44% to 15%. Nor is this just an Anglo-Saxon oddity: less than a fifth of workers in the OECD belong to unions.

There is one big exception to this story of decline, however: the public sector. In the Canadian public sector union density has increased from 12% in 1960 to more than 70% today. In America it has increased over the same period from 11% to 36% (see chart). There are now more American workers in unions in the public sector (7.6m) than in the private sector (7.1m), although the private sector employs five times as many people. Union density is now higher in the public sector than it was in the private sector in its glory days, in the 1950s.

Even countries that have seen a dilution of union density in the public sector have seen it stabilise at a much higher level than in the private sector. In Britain density has fallen dramatically from 82% in 1979, but has stabilised at about 56%. Reliable global statistics are hard to come by; but evidence from many countries (including Germany and Japan) suggests that the gap between the public and private sectors is both substantial and growing.

Now that the sovereign-debt crisis is forcing governments to put their houses in order, the growing discrepancy between conditions in the public and private sectors has eroded much of the sympathy public-sector workers might once have enjoyed. This briefing will look at what the future holds for them. But first it will try to answer two questions: how did public-sector unions become so powerful? And what impact has their power had on the way the public sector works?

I’m all right, Jack

Public-sector unions are some of the world’s most powerful interest groups. Many of them have large memberships and comparably large wallets: the American National Education Association, the main teachers’ union, has 3.2m members, an annual budget of over $300m and a vibrant tradition of political activism. But their influence goes much deeper. In many countries unions prop up the left. In Britain Ed Miliband, the leader of the Labour Party, owes his job to trade-union votes. In America Andy Stern, the head of the Service Employees International Union, was the most frequent guest at the White House in the first six months of Barack Obama’s presidency.

Public-sector unions now face the biggest challenge in their history. Governments almost everywhere—particularly in the rich world—are being forced to cut back public spending. Many governments (for example in Ireland, Greece and Spain) are cutting public-sector pay. Others (for example in Japan and America) are freezing it. Greece is increasing the retirement age from 58 to 63 and making it possible to fire public servants. Britain is cutting government departments by as much as a quarter, and is reviewing pensions.

In the United States several rising Republican governors are keen to turn the short-term struggle over pay and benefits into a bigger battle about trade-union power. New Jersey’s Chris Christie (see article) and Minnesota’s Tim Pawlenty have both eagerly taken on the new “privileged class” of public-sector workers. Do the public exist to serve public-sector workers with their high pay and inflated benefits, they ask, or do public-sector workers exist to serve the public?



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