Unionization (3)

Cahier spécial : Unionization (3)

Characteristic 3 Unionization

Another important structural element of labour markets is unionization. Unionization has been demonstrated to impede the flexibility of labour markets, a key factor necessary for good labour market performance.

Labour Relations Review found that unionization impedes labour market flexibility by restricting the ability of employers to adjust inputs of their business to changing market conditions.

A large body of empirical research has concluded that unionized firms :

1.      show lower productivity growth,

2.      employment creation,

3.      and profitability than non-unionized firms.

Research and development

Canadian industries, found that unionization rates had an adverse  impact on research and development spending: when an industry moves from being less to more unionized (from 25th to 75th percentile), spending on research and development is predicted to fall by about 40%.

That unionization reduced investment by one fifth compared to the investment rate in a non-union workplace in North America and parts of Europe.

Union members and other workers covered by collective agreements receive, on average, wage premiums over their non-unionized counterparts in developed and developing countries.

Furthermore, the researchers noted that net profits, investment rates (physical capital), and spending on research and development tend to be lower in unionized than in non-unionized firms, even though unionized firms tend to adopt new technology as fast as nonunionized firms.

Employment growth

The US states with high levels of unionization had lower levels of employment growth after recessions.

They also found that the US Right-to-Work states—those that permit workers to choose whether or not they will join and financially support a union—recovered faster.

While it is true that some individual workers have benefited from unions, the aggregate impact of unions is strongly negative.

It is critical, therefore, to measure the extent of unionization, in both the public and private sectors.

It is clear that unions generally reduce labour market flexibility and productivity, and adversely affect the overall efficiency of labour markets.

Average unionized employment

Tables des matières:

1)      Measuring Labour Markets in Canada and the United States 2011 Edition

2)      Public-sector employment (1)

3)      Minimum wages (2)

4)      Unionization (3)

5)      Labour relations laws and conclusion (4)

Source : Measuring Labour Markets in Canada and the United States 2011 Edition, by Amela Karabegović, Alex Gainer, and Niels Veldhui, Fraser Institute, September 2011