Yahoo Finance UK workers’ pay down £100 a week as unions’ collective bargaining power fades
The decline of trade unions has left workers with little power to negotiate pay increases, with research showing that low levels of worker power are likely to be holding wage levels down by as much as £100 a week.
The Resolution Foundation think tank said firms that are less than 10 years old are a third less likely to recognise unions than those that have been in existence for at least a decade.
This fall in union recognition is feeding through to the decline of collective bargaining – where pay and conditions are negotiated at multi-employer levels – with pay now “overwhelmingly” set at a workplace level.
Last year, just 3% of workers in the private sector had their pay set at a national or industry level, rising to 67% in the public sector.
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“The research draws on work showing that the current lower level of worker power compared to employer power is likely to have marked down wages by between 15% and 25%. And while these figures are imprecise, even a conservative estimate implies a wage loss of almost £100 a week for an average worker,” the think tank said.
While worker power over wage setting has declined, employer power has remained strong. In 2011, employees in around four-in-five workplaces had their pay set by management, up from 70% in 1998.
“Recent rail strikes and warnings of wage spirals and industrial action give the impression that workers have the upper hand as Britain battles with double-digit inflation,” Hannah Slaughter, senior economist at the Resolution Foundation, said.
“In reality, worker power has been in decline for decades, as union membership has fallen and collective bargaining has been replaced by management-set pay settlements.
“These shifts in power between workers and firms have a huge impact on living standards, with lower worker power likely to have reduced average wage levels by as much as £100 a week,” she added.
Membership across trade unions has more than halved from 53% in 1980 to 23% in 2021 and to just 10% among low paid workers in the private sector.
Read more: UK workers have lost £9,200 a year in wages since 2008
“British workers have lost their collective voice. Within one generation, the UK has gone from a country with high union density and centralised bargaining, to one of weak unions and decentralised bargaining. This contributed to sluggish real wage growth and growing wage inequality,” Pawel Bukowski, research fellow at the Centre for Economic Performance, said.
“It is clear that labour market institutions have played an important role in shaping the UK economic inequalities. Growing disparities are not an inevitable consequence of economic development, but can be counteracted by policy choices.”
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