Why unions aren't always bad news for employers

When an employer hears that its employees hope to unionise, the news is rarely welcomed. Fears of industrial action, higher wage demands and lengthy collective bargaining can come quickly to mind.

But one academic suggests there are a number of advantages to having employees who are part of a union.

“Sometimes organisations don’t want to hear what employees have to say, sometimes they do,” said Chris F. Wright, associate professor at the University of Sydney.

“But the research indicates that… where employees have voice through the unions, this can lead to more productive work practices, it can lower absenteeism, it can lower turnover, it can lead to innovative ideas from employees to be incorporated into management decisions and practices.”

And this can be good for the companies and the economy as well, he added.

“Unions aren’t something to be scared of and in fact they should be embraced,” Wright said. “There are cases where organisations promote union membership and promote a strong union within their workplace because they recognise these benefits. If a union has to fight to establish a presence in the workplace, that's often a bad start to a collaborative relationship.”

Nordic countries provide insights into union benefits

Over the last few years, Wright has done work looking at Nordic countries, which have higher levels of union membership than Australia. One of the countries is Denmark where 65% of its workforce are members of a union, compared to 12.5% in Australia.

“The thing that's really striking there is that unions have a lot of power, for example, to initiate strikes,” Wright said. “They have union representatives and officials have much more power and much stronger rights to enter into workplaces, to receive training and other resources to help them to do their roles.

“And despite… having power to potentially disrupt what employers do, they largely don't — industrial action in those countries is, generally speaking, low in many years. [In] most years, lower than Australia.”

And that can lead to better pay and conditions for workers, he added.

“Speaking to Danish employers… they're very supportive of these arrangements. And the reason for that is because it allows issues… any problems that might exist at the workplace, to be identified efficiently and dealt with fairly. And to resolve problems before they fester.

“It allows those good ideas that workers may have but may not feel like they're able to say it, to be identified and articulated.”

Collaborative efforts from government

There are efforts in Australia that support collaboration between workers and employers. The Fair Work Commission’s (FWC) initiative called the Collaborative Approaches Program is one example, Wright said, where the Commission provides support to both the employer and employees to help build more cooperative and collaborative working arrangements.

“That has been pretty effective,” he said.

“And there's been some really good case studies that the Fair Work Commission has drawn attention to, where unions and employers have really been able to work together to develop a relationship of constructive engagement whereby both parties work together as partners to ensure that the workplace is governed and managed efficiently and fairly.”

Benefits of unions outweigh bad behaviour

However, some unions have undertaken unlawful behaviour. Earlier this year, the Federal Court fined the Construction, Forestry, Maritime, Mining, and Energy Union (CFMMEU) and six current and former leaders $328,000 for violating right-of-entry laws – when one party failed to follow the legal procedures for entering the other party’s premises.

While Wright admits that there are instances where unions “haven't behaved that constructively,” the evidence suggests, generally speaking, “that unions are not agents of conflict, they're actually agents of cooperative and constructive engagement.”   

But overall, there are definite gains to being a union member.

“There’s a wage premium associated with union membership,” he said. “In Australia and internationally… union members on average receive higher salaries and incomes than non-members. It's largely because of collective bargaining... And enterprise agreements or collective agreements tend to have higher wages than awards or pay arrangements that are negotiate directly with the employer.”

Another advantage for workers is that unions promote healthy democratic workplaces “where people have an opportunity to have a say in the decisions that affect them,” Wright said.

“Unions provide just such a mechanism – whether the company has a supportive and enlightened HR orientation or not – whereby employees can freely, without fear of reprisal, voice and articulate any issues, any problems but also any good ideas that they might have of how things could be better.”