17/08/2015 - 16:41

Minimal union wages role: report

17/08/2015 - 16:41

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Declining union membership has had no impact on the share of national income earned by employees, according to a report released last week by Castalia Strategic Advisors.

The report, which was undertaken for the Minerals Council of Australia, found little evidence that unionised industries offered higher pay for employees than non-unionised industries.

It found that entrenched union power minimised incentives for union bosses to be effective in delivering the best outcomes for workers.

From 1988, when the Hawke government introduced the Industrial Relations Act, the percentage of employees across the economy with trade union membership fell from around 45 per cent to about 20 per cent today.

However, employee compensation as a share of total income has been virtually unchanged at just more than 50 per cent, despite some minor variability in that time.

There was little correlation between union membership and wage shares of income in specific industries, too, the report showed.

“If trade union use of industrial muscle was effective, we would expect that a greater share of income would be captured for workers in sectors with greater union strength,” the report said.

“The two industries with the highest proportion of wages to return on capital have vastly different union membership.

“The share of income is relatively similar in ‘administrative and support services’ and ‘education and training’ (47 per cent and 49 per cent, respectively), yet union membership is starkly different (6 per cent and 37 per cent, respectively).”

Employees in wholesale trade and in utilities enjoyed similar portions of industry production in wages, despite having dramatically different membership levels.

Part of the discrepancy between industries comes down to the need for staffing compared with the need for capital equipment, with sectors such as mining having high capital costs and needing few staff.

Mining was the industry with highest weekly earnings by a large margin, with employees on individual agreements fairing better than those in collective agreements.

It was a similar situation in industries such as public administration and safety and manufacturing, while workers under collective agreements were better off in construction and rental services.

The broad trend was that individual agreements led to higher weekly wages.

In the past 15 years, weekly earnings for union members had been similar to non-union members, the report found.

Trade union members had achieved 94 per cent income growth over the period, while non-union members has enjoyed income growth of 97 per cent.

 

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