Finlayson Op-Ed: Understanding the downward trend in unionization (Troy Media)

The arrival of another Labour Day provided an opportunity to reflect on the place of trade unions in our economy.

The unionization rate – sometimes called union density – measures the share of employees in the workforce who belong to a union.

In B.C., the rate has dropped significantly in recent decades. The trend has persisted through multiple business cycles and provincial governments of different political stripes. Today, about 30 per cent of workers in the province are union members, down from more than 40 per cent in the early 1980s.

Unionization is most common in the public sector. Approximately 77 per cent of public sector employees in British Columbia are covered by collective agreements.

The picture is different in the private sector: union coverage there sits at 17 per cent, down from 24 per cent 20 years ago.

In most industries, union coverage in B.C. is now similar to the national rate. There are a few exceptions: coverage rates in B.C. are higher in the forestry, mining and oil and gas industries, as well as in the transportation and warehousing sector. On the other hand, union density in B.C.’s construction industry is lower than the Canadian average. That partly reflects the sustained growth and large size of the residential construction industry – unions have a smaller market share in residential construction than in other parts of the sector.

Labour leaders often claim that government policy is the key factor influencing union density. But that seems unlikely. The steady growth of employment in service industries and in the high-technology sector goes a long way toward explaining the gradual downward trend in private sector union density.

The fact that small businesses – defined as those with fewer than 50 employees – now account for more than half of private-sector jobs in B.C. also contributes to lower unionization.

Nor should we overlook shifting preferences and attitudes among workers, with many younger ones seemingly less interested in joining a union.

Job creation in the B.C. private sector has been strongly driven by self-employment, smaller businesses and service industries that traditionally are hard for unions to organize.

The professional, scientific and technical services industry, for example, has a unionization rate of just five per cent, yet the total number of employees in this fast-growing sector has jumped by 90 per cent since 1997. Similarly, the number of employees in the business, building and support services industry has risen by 73 per cent since 1997; this sector, too, has a comparatively low unionization rate (around 16 per cent).

Other service industries characterized by below-average union density include retail and wholesale trade (14.5 per cent), financial services (11 per cent) and accommodation and food services (six per cent). These industries have proven to be difficult terrain for unions.

The process of industrial change has also impacted unionization.

Manufacturing provides the starkest example: total manufacturing employment in B.C. has dwindled by 20,000 since 1997, amid the spread of automation and the substitution of capital equipment for labour by manufacturing firms. While overall manufacturing employment decreased by 11 per cent in the last two decades, the number of manufacturing employees who belong to a union slumped by nearly half.

The unionized manufacturing workforce has contracted more quickly than total employment in the sector because jobs have been disappearing in large processing facilities that have invested heavily in capital equipment and automation. At the same time, the number of people employed in smaller non-resource manufacturing businesses has expanded. This segment of the manufacturing sector is harder for unions to organize.

Add it all up and the evidence suggests that structural forces – the process of industrial change, technological innovation, and the increased role of self-employment and small businesses in the labour market – largely account for declining union density in the province’s private sector.

Jock Finlayson is executive vice-president of the Business Council of British Columbia.

As published by Troy Media.