Trade unions must retrain their sights

Given a few extra quid to invest in your future job security and earning power, what would you do? Start night classes and learn a new skill? Assume early retirement and save fast? Or would you join a trade union and lobby for better workers' rights?

The chances are you won't choose a trade union. Union membership has fallen from a half to a third of the workforce since 1979. Although job insecurity has become a popular refrain for anxious employees, few expect their union to come galloping to their rescue. After all, how can a few employment rights protect anyone from the inexorable forces of new technology and global competition?

Labour's new document on rights at work, launched on Friday, recognises the problem. The proposals for employment rights - including a minimum wage - are couched in terms of "fairness" and "minimum standards" rather than job security. As the document points out: "The best route to job security in the long term is a highly educated and skilled workforce."

For individuals this emphasis on education is clearly right. The unskilled stand a much higher chance of being unemployed, or poorly paid. Pick up a qualification or two, and suddenly your earning power soars. Moreover, the chances for the low-skilled have become worse over the past decade - and prospects are gloomier still.

However, new evidence about the causes of wage inequality and unskilled unemployment seems - at first sight - to suggest that ignoring the potential for trade unions to protect workers may be a mistake. For economists Steve Machin, Annette Ryan and John Van Neenan have found that what they call "institutional change" - including the decline of trade unions and the end of wage councils - may have had a significant impact on the plight of the unskilled.

The economists examined changing wage and work patterns in different industries in four countries: Britain, the US, Denmark and Sweden. They found evidence in every country that recent technological change has raised the value of brain compared to brawn. Just as jobs for well-trained computer operators replace unskilled factory work, those unqualified to do the new jobs are more likely to be out of work or low-paid.

But, as Machin points out, "technology is important, but it isn't the whole story". Technological change is able to explain a remarkable 83 per cent of the increase in wage inequality in Sweden. In Britain, however, things aren't so simple. Here wage inequality and unskilled unemployment have both increased far more than in Sweden - yet technological change can account for only 19 per cent of the change. So if it isn't technological change that's to blame, then what is making the plight of the unskilled in Britain so much worse than elsewhere?

Machin and his colleagues suggest that one explanation could be the decline of unionisation and legislative changes such as the abolition of wage councils. And they found new evidence to back the thesis up: unskilled workers did better during the last decade in industries with higher unionisation levels - both in terms of their relative pay and their employment.

Perhaps - as the economists suggest - unions protect unskilled workers by insisting that they are retrained within the firm rather than sacked in favour of others. Or perhaps they resist the shift towards high-skilled jobs.

Unfortunately it is extremely difficult to be sure: the different effects of technology, skill and unionisation are inevitably intertwined in practice. For example, today's unskilled employees are likely to be part-time, un- unionised women. But it is extremely hard to determine how much of their declining pay is due to the changing nature of unskilled work, the feminisation of the labour force, or their lack of union representation.

It is also possible that the difference between Sweden and Britain is actually to do with skill rather than unionisation after all. Swedish "low-skilled" workers may in fact be far better educated than British "low-skilled" workers. If this is true, it is hardly surprising that fewer unskilled workers are laid off in Sweden - they are easier to retrain than their British counterparts.

Moreover, even if trade unions are responsible for protecting unskilled jobs, they may be simply putting off the dreadful day and preventing the creation of new-skilled, better-paid jobs. Sooner or later those unskilled workers will need help to re-train.

Labour's employment document changed the focus of government in the labour market. Legislation on employment rights is aimed at protecting workers from exploitation and injustice. Security in the labour market, on the other hand, should be provided by helping individuals with the training and education they need to adapt.

If trade unions are to play a role in helping their members earn more and keep their jobs then they need to adapt too. Wise trade unions - such as the AEEU - are already getting in on the reskilling game, providing courses for members to upgrade their skills. Trade unions have played a vital role in the past, protecting the jobs and wages of vulnerable workers. But if they are really to help their members in future they need to return to their origins - building the skills of the craft.