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Unions as a public good

Union members benefit from a pay premium and other advantages resulting from their collective action and voice. But do unions provide a wider benefit to society over and above what they do for their members?

Economists call a situation like this, where the benefits can’t be limited to individuals and can be experienced by many people at once, a ‘public good’. Are unions a public good?

The public seems to think so. A Victoria University survey of randomly selected electors after the 2017 election found that 72 percent agreed with the statement “trade unions are necessary to protect workers”. Similarly, 65 percent were neutral or disagreed with the statement that “trade unions in NZ have too much power”.

Unions are a strong force to reduce inequality. There is a large body of international research on this. They do it partly through collective bargaining but also by advocating effectively for progressive legislation, taxation and social protections. High inequality is bad for society and the economy. Reduced inequality is a benefit shared by the great majority of people.

A related benefit is reducing gender inequities. Unions, often with allies in society, have been the instigators of many of the advances in equal pay and pay equity over the decades, and for policies like paid parental leave and affordable quality child care. These benefit women in paid and unpaid work, along with their families, not only the union members who fought for them.

Pay rises negotiated by unions for their members are likely to lead to rises for other employees. The weakening of collective bargaining and unions has led to weak wage growth, with consequences for debt and economic stability. Maintaining good incomes is important not only for the wellbeing of working people and their families but for a healthy and stable economy.

There is strong evidence that unions improve workplace health and safety where they are present. It is not only union members who benefit from the reduced risks to their safety and health, but everyone in a workplace. Unions also campaign for better health and safety laws and enforcement that benefits all workers.

Unions also act to expose bad employment and health and safety practices, such as zero hour contracts and migrant exploitation, and advocate for legislation and enforcement to prevent it happening in future. These are examples of unions acting as a ‘countervailing power’ against employers abusing their power, and against powerful corporations. In these cases working people, and New Zealand’s reputation, benefit.

Download the full bulletin: CTU Economic Bulletin 214 – October 2019