Trade unions can demonstrate relevance

A few weeks ago, I wrote about the relevance (or otherwise) of trade unions in the UK workplace. This was commenting about a lengthy article in the Financial Times that included interviews with a number of former trade union officials who had made the switch, so to speak, to the 'other side,' taking management jobs with companies.

In a comment to that post, Stuart Bruce pointed out the examples of two UK trade unions who have taken a practical approach to the realities of change in many industries and have modernized themselves, especially this example:

[...] Community now does what it says and is focused on supporting communities in areas that have been hit by the decline of traditional manufacturing industries. This even includes working in partnership with "employers" to bring new jobs into those areas.

Stuart's comment added some good balance to my post, illustrating that in many areas of the labour movement in the UK, some good things are happening today to the mutual benefit of employer, employee and union, and thus local communities.

Yesterday I read a story from BBC News, focused on painful changes required to reshape Germany's business and industrial landscape, regarding a situation in Germany where a trade union played an instrumental role in, literally, rescuing an entire community.

The story concerns a plan by Grohe Water Technology to cut 3,200 jobs from its German workforce of about 4,500 and move production to China.

According to a representative of the IG Metall union quoted in the BBC report, this would have ended Grohe's industrial production in Germany and dealt a devastating blow to the people of the town of Hemer in north-west Germany, where the company is headquartered, who have even named their town square 'Grohe Platz.'

The story has some major complications (political, with a general election soon in Germany; recommendations on the closure from the McKinsey management consulting firm; plus the ownership of Grohe being two foreign private equity firms) and you can read the full details of that in the BBC report.

What I found most interesting was the successful outcome resulting from the key role the union played and how they played it:

[...] Rather than launching industrial action, IG Metall proposed a compromise - accepting almost 1,000 job cuts and one factory closure, in return for fresh investment at remaining German factories to secure future employment. Grohe - wary of negative publicity - swiftly took the union's recommendations onboard and sorted out the dispute internally.

There was praise for IG Metall's efforts in the dispute and the union's membership, which had been slipping steadily for years, was given a much needed fillip. "It is always difficult to call it a victory when several hundred jobs are lost, but compared with the alternative it was a victory," insists [regional IG Metall union representative Joerg] Weigand.

Relevance indeed in the face of some hard reality.

Comments

[Andrew Marritt]

The BBC report makes interesting reading though I'm not sure the Union's actions are in themselves remarkable. Unions, if the economics labour market literature is to be believed, will act to protect those inside the organisation at the expense of those outside. Given this sort of situation their preferred action will be to reduce employees to protect the wages of the employees left. From what I can see this is the approach that IG Metall took.

Whilst this type of action is obviously good - potentially in the short term - for the firm's current workers it is bad for those people who could have been employed in the Chinese factories. One could argue that it has a neutral effect overall - one group's gains are equal to another group's potential losses. More likely is that Gröhe is going to be less efficient because of this & that the whole 'system' suffers a loss. If Gröhe become less able to compete because of this decision then it may be a relatively short-term decision.

Good, well run unions and a healthy relationship between unions and management does have relevancy however it should be understood that the motivation of any union is to protect income. Protecting the insiders (union members still working therefore still paying fees) at the expense of outsiders is one of the more effective ways of doing this.