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Accounting for collective action: resource acquisition and mobilization in British unions

11 Apr 2009-Research Papers in Economics (Emerald Group Publishing Limited)-Vol. 16
TL;DR: In this paper, the authors used two data sources to map trends in resource availability for trade unions in Britain, namely subscription income and accumulated assets shown in union accounts and establishment level resources secured from employers and union members.
Abstract: This paper uses two data sources to map trends in resource availability for trade unions in Britain. Union resources exist, on the one hand, in the form of subscription income and accumulated assets shown in union accounts and, on the other, establishment level resources secured from employers and union members. The paper documents a substantial decline in both the forms of union resource across the period 1990–2004 and attempts to explain both the reasons for this decline and its consequences for employee representation in Britain.

Summary (2 min read)

Introduction

  • Requests for permission to reproduce any article or part of the Working Paper should be sent to the editor at the above address.
  • In addition, the WERS dataset has been extensively analyzed up to 1998 (Millward et al, 2000).
  • Sections 4 and 5 present and analyze the data.

1. Literature

  • Trade unions are continuous associations and their ability to sustain themselves depends both on the establishment of effective permanent organization and use of resources (Webb and Webb, 1907).
  • The union influences the former by setting the subscription level.
  • The effective mobilization of collective action requires solution of the two collective action problems, reconciling the competing demands of the administrative and representative logics, rather than optimization of one.
  • In the empirical sections to follow, the authors examine this dynamic relationship.

2. Data

  • The resources available to unions may be described in broad terms as on- and off- balance sheet.
  • The employer inputs are facilities provision in the broadest sense including time off, relevant training, access to office and electronic support and expenses payments to union representatives.
  • British unions are required to make annual financial returns in standardized form to a government body, the Certification Office.
  • The balance between onand off-balance sheet resources is of particular interest.

3. On-Balance Sheet Resources

  • The authors consider the aggregate picture followed by differences between unions.
  • Reduction in numbers has certainly not been associated with improvement in financial resources.
  • Available data show that per capita subscriptions have been for some time a low but fairly stable percentage of average per capita earnings; since 1950 this has been between 0.3 and 0.4% (Willman et al, 1993, p.13.).
  • The importance of these variances must be emphasized: whereas the solvency figures by union tend to vary on an annual basis, the income, expenditure and asset differences are enduring and indicate that among the top TUC affiliates by membership there are differences in income source, pricing and service levels reflecting enduring differences in business models.

4. Off-balance Sheet Resources

  • This section uses WERS data to examine the resources available for union organisation within establishments.
  • The authors take a longer view examining changes since the first survey in 1980, but putting most emphasis on changes in the period 1990-2004.
  • The first is generated through relationships with employers and often underpinned by collective agreement.
  • The authors refer to this as employer support, leaving aside for these purposes whether such resources were offered or 2.
  • The TUC is the umbrella organization to which the majority of independent trade unions in Britain belong.

Union recognition

  • Throughout the WERS series managers who say there are union members at the workplace have been asked whether any unions are recognised for negotiating pay and conditions of employment for any section of the workforce.
  • Union recognition for pay bargaining is the basis for union influence in the workplace.
  • The decline in the 1990s was confined to the private sector and was largely accounted for by the lower rate of union recognition among new workplaces compared with workplaces that closed or shrank below the WERS 25+ employee threshold for survey inclusion.
  • The decline in union recognition since 1998 is therefore largely confined to workplaces with 10-24 employees, leading Kersley et al. (2005, p. 13) to conclude that the continual decline in union recognition rates in the 25+ workplace population ‘appears to have been arrested’.
  • This suggests that the descriptive finding in Table 4 of a rise in recognition in manufacturing since 1998 is accounted for by other factors associated with private manufacturing.

Check-off

  • Managers can support union efforts to maintain their membership base by having a system for deducting union subscriptions from pay, commonly known as ‘check- off’.
  • One possible explanation for this trend is that recognition has risen in private manufacturing but fallen in private services.
  • The multivariate analysis shows that unionised workplaces set up since 1980 are less likely to have on-site representatives than those set up before 1980, an effect that strengthens over time (as indicated by the increasing negative coefficients in the separate year regressions in columns 2-5).

5. Summary and Conclusions

  • The resources available for union organisation exist on the one hand in the form of revenue and assets within the union and, on the other, in the resources provided by members as activists and employers as bargaining partners.
  • The former have been in decline against several available measures for many years and the situation did not obviously get much worse in the 1990’s.
  • It may be that, given the downward trend on ‘off balance sheet’ resource, unions are paying for a higher percentage of total organising activity than in the past.
  • This variance may result from patterns of variance in the decline of off balance sheet resources- i.e. those unions whose balance sheets have fared worse may have had to compensate for more off balance sheet loss.
  • Unfortunately, the authors cannot put these data sets together in the aggregate.

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CEP Discussion Paper No 768
December 2006
Accounting for Collective Action: Resource Acquisition
and Mobilization in British Unions
Paul Willman and Alex Bryson

Abstract
The paper uses two data sources to map trends in resource availability for trade unions in
Britain. Union resources exist on the one hand in the form of subscription income and
accumulated assets shown in union accounts and, on the other, establishment level resources
provided by employers and union members. The paper documents a substantial decline in
both forms of resource across the period 1990 -2004 and attempts to explain both the reasons
for this decline and its consequences for employee representation in Britain.
Keywords: Union membership
JEL Classifications: J3, J31, J50, J51
This paper was produced as part of the Centre’s Labour Markets Programme. The Centre for
Economic Performance is financed by the Economic and Social Research Council.
Acknowledgements
We thank the Regent Street Polytechnic Trust and the Leverhulme Trust for financial
assistance. We acknowledge the Department of Trade and Industry, the Economic and Social
Research Council, the Advisory, Conciliation and Arbitration Service and the Policy Studies
Institute as the originators of the Workplace Employee Relations Survey data, and the Data
Archive at the University of Essex as the distributor of the data.
Paul Willman is Professor of Management, London School of Economics and Alex
Bryson is the Manpower Research Fellow with the Centre for Economic Performance, LSE
and a Principal Research Fellow, Policy Studies Institute, London.
Published by
Centre for Economic Performance
London School of Economics and Political Science
Houghton Street
London WC2A 2AE
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means without the prior permission in writing of
the publisher nor be issued to the public or circulated in any form other than that in which it
is published.
Requests for permission to reproduce any article or part of the Working Paper should be sent
to the editor at the above address.
© P. Willman and A. Bryson, submitted 2006
ISBN 0 7530 1985 X

1
This paper contributes to the debate about the future of unions by examining the resources
available to trade unions to reverse the declines in membership and collective bargaining
coverage experienced in recent years. We use British data to examine change in unions’
resource base and assess the implications of these changes for the future conduct and
performance of unions.
We use the statutory Certification Office returns for union finances, and the
Workplace Employment Relations Survey (WERS) dataset for establishment level changes.
There have been prior analyses in the UK of the former up to 1990 (Willman et al, 1993). In
addition, the WERS dataset has been extensively analyzed up to 1998 (Millward et al, 2000).
This paper adds to the literature by updating these analyses and by bringing both time series
together for the first time to estimate overall union resource levels.
The structure of the paper is as follows. Section 2 reviews relevant literature. Section
3 examines the nature of the resources available to unions and describes the data sets we use.
Sections 4 and 5 present and analyze the data. Section 4 looks at the resources in trade union
accounts and Section 5 looks at those available in workplaces. Section 6 concludes with an
overall assessment.
1. Literature
Trade unions are continuous associations and their ability to sustain themselves depends both
on the establishment of effective permanent organization and use of resources (Webb and
Webb, 1907). They are both representative and administrative organizations and the
relationship between administrative and representative logics appears strongly to influence
effectiveness measures (Child et al, 1973; Fiorito et al, 1995). The tension between
administrative and representative rationales is a central theme in many discussions of union
democracy. However the balance between formal organization and the involvement of
activist representatives is also central to the economics of union organization (Crouch, 1982).
Most unions are both subscription and volunteer organizations. They secure resources
for collective action first by charging membership fees and second by encouraging members
to become activists performing union duties without direct payment by the union. The
balance between the two is an empirical question for any union, and it may vary over time.
Offe and Wiesenthal distinguish between ‘willingness to pay’ and ‘willingness to act’ (1980,
pp. 80-84). The union influences the former by setting the subscription level. ‘Willingness to
act’ also depends on the opportunities offered by the union or by an employer to a
prospective activist. Just as the union may affect the individual’s decision to join by defining
the balance between subscriptions and benefits, so it may affect the incentives to activists by
offering activism opportunities and securing employer support (Turner et al, 2000). A
corollary of this dual nature of union organization is that analysis of union financial systems
reveals only part of the resources available for collective action (Willman et al, 1993).
Trade unions may be seen as using available resources to solve first and second order
collective action problems (Elster, 1989). The first order problem is how to get employees to
join the union. Unions may do this by affecting the payoff matrix faced by individual
members. The members’ payoff matrix depends on the balance between individual
subscriptions and the individual, semi-collective and collective benefits on offer (Pencavel,
1971). This exchange must also make economic sense for the union. Thus, in order to provide
such benefits the union must also solve the second order collective action problem of the
costs of provision of collective organization. If all of the benefits to members (or penalties for
non-membership) are provided by salaried union employees, the costs of organization
become prohibitive. If all such costs fall on all members, the first and second order collective

2
action problems collapse onto each other. Activism is the normal second order solution.
Hirschman (1970; p. 82) has argued that activism is based on the existence of a set of
individuals for whom the benefits of involvement are the sum of, rather than the difference
between, effort and outcome (i.e. enjoyment of activism enters the individual utility
function), but the issue still arises that the union must provide incentives and opportunities
both in the form of involvement opportunities and employer support. Loss of either results in
a fall in activist supply (Turner et al, 2000).
The effective mobilization of collective action requires solution of the two collective
action problems, reconciling the competing demands of the administrative and representative
logics, rather than optimization of one. Over time, the balance between the two resource
acquisition strategies may change, with implications for the effectiveness of union
organization. In the empirical sections to follow, we examine this dynamic relationship.
2. Data
The resources available to unions may be described in broad terms as on- and off- balance
sheet. The on-balance sheet resources are those that appear in trade union financial reports
and returns. In most cases they consist of subscription income, investment and other income,
and assets including equity and bond holdings and property. Much union expenditure is on
staff, who in turn constitute a major resource. The off-balance sheet resources are
predominantly uncosted (by unions) inputs from employers and members. The employer
inputs are facilities provision in the broadest sense including time off, relevant training,
access to office and electronic support and expenses payments to union representatives. The
member inputs embrace all unpaid (by the union) inputs of time and effort on union activity.
It is worth noting that in volume terms the greater part of this off balance sheet resource is
likely to come from a relatively small minority of members and that member inputs will
depend to some degree on employer inputs. These resources quite closely correspond to
outcomes from members’ willingness to pay and willingness to act respectively.
British unions are required to make annual financial returns in standardized form to a
government body, the Certification Office. The requirement has existed in approximately its
current form since 1906. The data have been analyzed extensively for the period 1945-1990
(Roberts, 1954; Latta, 1970; Willman et al, 1993). National unions are required to submit
details of income, expenditure and assets including all held in local branches in standardized
form accompanied by an audited set of accounts
1
. There are penalties for non-compliance and
a full return is normal. The data enter the public domain. It is thus possible to build up a full
aggregate picture of on balance sheet resources.
There is no continuous series for off balance sheet resource but a picture of union
resources at five points in time can be built up from the WERS establishment level surveys.
After weighting, these are nationally representative surveys for workplaces with 25 or more
employees containing rich data on workplace practices and any union activity taken from the
manager responsible for human resources at the workplace.
Using the above broad approach and data sources it is possible to build up a picture of
current resource deployment and changes in resources over time. The balance between on-
and off-balance sheet resources is of particular interest. It may be possible to generate
substantial organizing resource by considering policies towards off-balance sheet resource.
1
The full requirements are specified in the Annual Reports of the Certification Office.

3
3. On-Balance Sheet Resources
We consider the aggregate picture followed by differences between unions.
(i) Aggregate Picture
In the Britain, there is a long history of decline in the number of unions (Buchanan 1981),
which predates by decades the decline in membership beginning in 1979. There is a shorter
history of decline – at least since the mid 1950’s – in financial resources such as reserves and
solvency, also predating membership loss. In fact, the rapid expansion of union membership
in the 1970’s was associated with substantial reductions in union reserves (Willman et al,
1993, p. 13).
Table 1 presents Certification Office data on membership, the number of unions and
financial measures in the aggregate for the UK for the more recent period 1990-2004. UK
trade union membership is highly concentrated but there remain large numbers of relatively
small unions. The largest unions in 2004 are the progeny by merger of the largest in 1980.
New unions have formed but in this period none has grown to be large (i.e. over 100,000
members). Since many mergers have resulted in conglomerate unions with overlapping job
territories (Willman, 1996; Bryson et al, 2004), it is possible that the fall in the number of
unions has reduced congestion without reducing competition; i.e. although the number of
choices a prospective member has of unions to join (or employers of unions to recognize) has
declined, choice, and therefore competition for members, persists within a shrinking resource
base.
Reduction in numbers has certainly not been associated with improvement in financial
resources. Solvency, i.e. the margin of total income over total expenditure, averaged 1.03
across the period; the average for the period 1950-70 was 1. 4 and that for the membership-
loss decade of the 1980’s was 1.09. Similarly, reserves, expressed as multiples of annual
expenditure, are at historic lows averaging 1.12 across this period compared with an average
of 3.55 in the years from 1950-70 and 1.28 for the 1980s. The substantial volume of net exit
from the union sector and the merger activity of the 1990’s is not associated with
improvements in resource availability and indeed the union movement which is seeking to
revitalize itself in the early part of the 21
st
century following substantial membership loss in
the late 20
th
century is financially weaker on these measures than it has been for at least 50
years.
Table 2 looks at a number of per capita (i.e. per member) measures across the period
1990-2004. Data for subscription income, expenditure, and net funds per capita are shown as
an index based to 1990. All show a nominal increase across the period. Available data show
that per capita subscriptions have been for some time a low but fairly stable percentage of
average per capita earnings; since 1950 this has been between 0.3 and 0.4% (Willman et al,
1993, p.13.). There are also data for the post-war period to show consistent increases in real
expenditure independent of membership changes (Willman et al, 1993. p.11).
The key points from the Table are as follows. First, subscriptions per capita have
grown faster than average earnings across the period, albeit from a low base. However,
increases in expenditure per capita are greater than both price and earnings increases, and this
despite the reduction in the number of unions through merger activity. The FTSE figure in the
final column is for illustration since in the absence of a breakdown of aggregate union assets
by asset category its relevance may be questioned. However, it is worth noting that aggregate
equity returns in the 1990’s were greater than growth in union funds and that union assets per
capita were insulated from the equity market crash of 2001.

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  • ...Section 6 concludes with an overall assessment....

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"Accounting for collective action: r..." refers background in this paper

  • ...Trade unions may be seen as using available resources to solve first and second order collective action problems (Elster, 1989)....

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TL;DR: Based on the primary analysis of the 2004 Workplace Employment Relations Survey (WERS 2004), the authors provides a descriptive mapping of employment relations, examining the principal features of the structures, practices and outcomes of workplace employment relations.
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TL;DR: The origins of trade unionism can be traced back to the 1799-1825 period of the Irish Industrial Revolution and the 1843-1860 period of trade unions as discussed by the authors.
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Frequently Asked Questions (2)
Q1. What are the future works in "Accounting for collective action: resource acquisition and mobilization in british unions" ?

If this is the case then the authors must look for further explanations of the rising cost of dealing with union members. This requires further research. There may be several reasons ; one may be that the decentralization of bargaining in the public sector where the majority of union members are has generated higher workloads in service provision ( Bach and Given, 2004 ). Unfortunately, the authors can not put these data sets together in the aggregate. 

The paper uses two data sources to map trends in resource availability for trade unions in Britain. Union resources exist on the one hand in the form of subscription income and accumulated assets shown in union accounts and, on the other, establishment level resources provided by employers and union members. The paper documents a substantial decline in both forms of resource across the period 1990 -2004 and attempts to explain both the reasons for this decline and its consequences for employee representation in Britain.