Unions good for economy and
says World Bank
WASHINGTON, D.C. – In a move that has surprised many union
leaders and activists, the notoriously conservative World Bank released a report
in February saying that labour unions are good for the economy.
Based on more than a thousand studies of the effects of
labour unions and collective bargaining on the performance of national
economies, the Bank report found that workers who belong to trade unions earn
higher wages, work fewer hours, receive more training, and have longer job
tenure on average than their non-unionized counterparts.
High rates of unionization also lead to lower inequality of
earnings, especially for women and minority groups, says the report, entitled
‘Unions and Collective Bargaining: Economic Effects in a Global Environment.’
But unionization is not just good for individual workers –
the study also found that countries fare better economically if large numbers of
workers belong to trade unions.
More specifically, the study shows that high unionization
rates are associated with lower unemployment and inflation, higher productivity,
and speedier adjustments to economic shocks.
"Good industrial relations between labour and business
can lead to a more stable and productive economy," says Mamphela Ramphele,
the World Bank’s managing director, who unveiled the report at the Bank’s
headquarters in Washington, D.C.
"Coordination among social partners can promote better
investment climates while also fostering a fairer distribution of output."
The report, which resulted in part from a dialogue over
recent years between the International Labour Organization (ILO) in Geneva, the
Brussels-based International Confederation of Free Trade Unions (ICFTU) and the
Bank, comes amid ongoing debate about the impact of globalization, or the
increasing integration of national economies around the world, on social welfare
"Labour standards are now a prominent item on the
international agenda and are likely to stay there for a long time to come,"
said Zafiris Tzannatos, the report’s lead author. "[They] can no longer
be the concern of just individual governments but also of the entire
Globalization skeptics have expressed concern that countries
that adopt lower labour standards and ban independent labour unions gain unfair
advantage in attracting foreign investment over those with higher standards and
strong unions. Some have charged that the Bank itself, in urging reforms in poor
countries that are designed to attract foreign investment, has actually
contributed to this process and weakened union activities in many countries.
The report also found that countries with highly-coordinated
collective bargaining tend to be associated with lower and less persistent
unemployment, lower earning inequality, and fewer and shorter strikes than
uncoordinated ones. In contrast, fragmented unionism and many different union
confederations within a national economy or sector are often associated with
higher inflation and jobless rates.
Such positive assessments were greeted with enthusiasm by
ICFTU’s General Secretary Guy Ryder who called on the Bank "to translate
these important findings into policy, which may involve a significant shift
"In contrast to the worker-friendly statements at the
global level," he said, "country-level Bank staff still routinely
advise governments to, in effect, violate the core labour standards by making
access to unionization and collective bargaining more difficult."