By Jock Finlayson

A recent report suggesting that two of Canada’s biggest unions are contemplating combining forces highlights the challenges confronting trade unions in today’s unsettled and hyper-competitive economy. The Canadian Auto Workers and the Communications, Energy and Paperworkers Union of Canada are thinking of joining together to bolster their ability to represent the interests of their members.  Should the merger proceed, the combined union would have more than 300,000 members spanning a myriad of industry sectors, but with a particular focus on manufacturing, communications and transportation.

The Meaning Behind the Mergers
This announcement comes on the heels of a number of previous union mergers, including – here in B.C. – the “takeover” of the woodworkers union by the Canadian division of the United Steelworkers of America a few years back.  More mergers are likely.  The strategy makes sense for unions grappling with dwindling memberships, rising operating costs, and forceful efforts by employers to contain their compensation bills.  Just as businesses can reap economic benefits by spreading fixed costs over more employees or customers, unions can gain advantages by bulking up on members and diversifying the industry sectors in which they operate.

The spurt of union mergers comes against the backdrop of a long downtrend in “union density” – the proportion of the workforce belonging to a union.1 Declining density is starkly evident in Canada’s private sector, where by 2010 only 16 per cent of workers held union membership cards.2  Thirty years ago the figure was near 30 per cent.  Total union density has also slumped, driven by a steady loss of unions’ “market share” in the private sector.  In British Columbia, overall union density today is around 30 per cent – falling to less than 20 per cent in the private sector.

Matters of Density and Differentiation
Indeed, when it comes to unions’ presence and overall economic clout, the public and private sectors increasingly resemble two different worlds. In the public sector, unions are deeply entrenched and represent large majorities of employees. Nationally, more than 70 per cent of workers toiling in the broadly defined public sector3 are union members; in BC, the share is even higher.  This compares to density rates of 15-20 per cent in the private sector across the 10 provinces.

However, it’s worth noting that union density does vary significantly within the private sector. In Canada, the most heavily unionized segments of the business community are utilities (61 per cent) and transportation (41 per cent). Private sector industries with particularly low union density rates include retail/wholesale trade (13 per cent), financial services (8 per cent), accommodation and food-services (7 per cent), and professional, scientific and technical services (4 per cent). Construction (30 per cent) and manufacturing (24 per cent) are closer to the economy-wide average in terms of the fraction of the industry’s workforce that is organized.

Looking at union density by occupation rather than by industry, the highest rates of unionization in Canada are found among teachers/college professors, nurses, support and technical personnel in health care, and people employed in protective services. Occupations where union density is low include all areas of management, the professions, finance, positions unique to primary industries, and sales and service occupations in the retail, wholesale, and food and beverage sectors.

In 2010, the average national hourly wage of unionized workers stood at $26.04, compared to about $21 for non-unionized employees. On average, unionized workplaces also tend to provide workers with more generous benefits than the typical non-union organization. Some of these compensation gaps are attributable to varying distributions of unionized employees by industry and by firm size, but academic research shows that a residual “wage premium” still exists for unionized employees. This remains an important selling point for unions seeking to sign up new recruits.

More Challenging Times Ahead
What does the future hold for Canadian unions?  Through mergers, lobbying for changes in labour laws, and improved organizing and marketing efforts, unions are struggling to stem further declines in their relevance within the private sector. In truth they face an uphill battle. Several factors are conspiring to put downward pressure on private sector union density:

• the shift of employment towards service-producing industries (where unions are weaker) and away from manufacturing and other goods-producing sectors (where they tend to be more established);
• the emergence of an increasingly competitive business environment, in which most employers have little or no scope to pass on higher costs to their customers;
• globalization and falling trade barriers, which add to the competitive pressures referenced above;
• the expansion of outsourcing/offshoring, and the erosion of once integrated supply chains in manufacturing and some service industries, both of which have been greatly facilitated by advances in information and communications technologies; and
• the growing role of smaller enterprises as a source of jobs. This trend has undoubtedly contributed to the decline of unions, which have had trouble organizing and servicing smaller workplaces.

1 Sometimes “union density” is defined as the proportion of workers covered by a collective agreement; this tends to be slightly higher than density as defined in the text above.
2 See Statistics Canada, “Unionization 2011,” Perspectives on Labour and Income, October 2011.

Jock Finlayson is the executive vice-president of the Business Council of BC.

(PeopleTalk: Fall 2012)