From the TUC

Love productivity? Then you should #heartunions

11 Feb 2016, by in Economics

It is heartunions week – and perhaps one of the more surprising reasons to love unions is that they are good for productivity. I have an article on this in an e-pamphlet recently published by the IPA ‘Involvement and Productivity – The missing piece of the puzzle?

Productivity has risen up the agenda in recent months, reflecting increasing recognition that tackling the UK’s persistently low levels of productivity is essential to deliver a high-wage, high-investment economy. A government productivity plan was launched by George Osborne and Sajid Javid last summer, and the Chancellor’s Autumn Statement was littered with references to productivity. Yet at the same time the government is engaged in a sustained attack on trade unions through the trade union bill; if this succeeds in weakening unions, as appears to be its aim, the UK’s productivity is likely also to weaken.

The importance of unions to productivity should perhaps come as no surprise. Productivity is defined as output per worker or workhour. Thus workforce skills, organisation and motivation are, along with technology and investment, by definition key to boosting productivity and it is here that unions play a central role.

The means through which strong workplace unions boost productivity all stem from the role of unions in representing the interests of their members collectively and individually within the workplace. At its most simple, unions aid the good management of workplaces, with less time lost to accidents, sickness, stress and staff turnover in unionised workplaces. Lots of evidence on this is set out in my article. This facilitates a more efficient allocation of resources, including working hours, and boosts output per worker.

Where unions negotiate with employers over training, not only are training rates significantly higher, but there is also an impact on the critical area of skills utilisation, with research showing a direct association with higher wages, better job security and improved organisational performance. Union learnings reps have significantly raised levels of training in their workplaces, especially for lower-skilled workers, who have perennially received a lower share of training budgets than their higher-skilled colleagues. This enhances the ability of workers to undertake their current role and is also playing a vital role in boosting the level of skills across the economy as a whole.

Going beyond this is the contribution of unions to innovation and the management of change. Some of the UK’s most successful industries are characterised by close collaboration between unions and employers, which extends beyond terms and conditions and change management to engagement over the improvement of products and processes. This can be seen in the UK motor industry, as noted in a recent article by Professor David Bailey from Aston Business School:

“I would also add in another factor for the industry’s success – the flexibility and hard work of workers and unions in pulling out all the stops to help make the UK a competitive place in which to assemble cars and source components (something the media all too often fails to recognise)”.

Research has found that collective bargaining and workplace and firm-level is positively associated with product innovation. A contributing factor is likely to be the fact that team-working and functional flexibility are more likely to be found in union than non-union workplaces today.

The vital role of unions in providing ‘voice’ for the workforce is especially crucial in the management of change. Staff are much more likely to embrace change and have the motivation and confidence to adapt to changing requirements if they have been involved in discussions on how change will be implemented. Research has shown that managerial innovations are associated with lower worker well-being and job satisfaction – except where workers are covered by a collective bargaining agreement. Thus innovation and change introduced in consultation with unions is more likely to be successful.

Finally, there is the impact on morale and motivation. In addition to the direct effects of union collaboration in the workplace over a whole range of issues and areas, there is a broader impact that arises from people having a greater sense of employment security, enjoying higher wages, and feeling that their interests are better protected than would be the case in most non-unionised workplaces. This engenders greater loyalty, commitment and boosts morale, all of which translate into improved organisational performance.

So, if the government and others love productivity and want to improve it – they should heartunions too.