Trade Unions and the Economy: 1870-2000

Published by EH.NET (August 2001)

Derek H. Aldcroft and Michael J. Oliver, Trade Unions and the Economy:

1870-2000. Aldershot, Hampshire and Burlington, VT: Ashgate Publishing,

2000. xiii + 222 pp. $79.95 (hardback), ISBN: 1-85928-370-5.

Reviewed for EH.NET by Sharon Otoo, School of Management, Royal Holloway,

University of London.

The authors of Trade Unions and the Economy are Derek H. Aldcroft, who

is Research Professor in Economic History at the Manchester Metropolitan

University and Michael J. Oliver, an Associate Professor of Economics at Bates

College, Maine. This book is one of a series of Modern Economic and Social

History publications by Ashgate, of which Aldcroft is also General Editor. It

focuses on how trade unions have affected aspects of the UK economy and

business performance. The authors argue that there has been very little

continuous study of the effects of union activities in terms of economic

performance, and therefore this study is a contribution towards filling “the

gap in the literature” (p. xiii). The end result is a clearly written and

accessible monograph, which will be of interest to students and academics in

the fields of Economic History, Industrial Relations and Management Studies.

The first and last chapters of Trade Unions and the Economy, simply

entitled “Introduction” and “Conclusion,” are less than five pages each and

provide a concise overview and summary of the contents and subject matter of

the book. The remaining four chapters are divided into eras: Chapter 1 deals

with the rise of the mass trade union movement from 1870 until 1914, Chapter 2

focuses on trade unions between the years 1914 and 1951, Chapter 3 discusses

the peak of labor power in the 1950s to 1970s and Chapter 4 looks at the union

movement in the years after 1979. After weighing up the evidence, the authors

conclude that “on balance” union presence “has exerted a negative influence on

the economy” (p. 178).

This finding is supported by evidence from the four chapters that form the

bulk of the book. In “The Rise of a Mass Trade Union Movement 1870-1914” the

authors examine the growth, structure and spread of early British trade

unions, before turning to look at “the most overt and frequently used weapon”

(p. 10) — namely the strike. Restrictive practices were also used by workers.

These “tended to slow down progress and had an adverse effect on efficiency”

(p. 16). Resistance to mechanization and technical change, new work methods

and payments systems, and demarcation disputes were the main reasons for this

form of industrial action. In this chapter, the authors provide a series of

short case studies on events in particular industries during this era,

focusing on Shipbuilding, Engineering, Iron and Steel, Boots and Shoes, Cotton

Textiles and Coal. By way of example, the authors argue that in the

shipbuilding industry, rigid demarcation lines and the operation of a closed

shop made it difficult for employers to adopt new work methods and manning

ratios, and this had a negative impact on industrial efficiency. Moreover,

Aldcroft and Oliver demonstrate that unions were not particularly successful

in raising labors’ income share, or indeed securing any major improvements in

working conditions between 1870-1914.

The chapter “Trade Unions in War and Peace 1914-1951” begins with a fresh

examination of the membership and growth of British trade unions. The graph on

page 47 shows how both union membership and union density fluctuate, rising

during World War One and again, just before and during World War Two, and

declining after World War One. At its highest point during this period,

membership was at approximately nine million and density was around 55

percent. This contrasts greatly with the former period, in which union

membership and density were both still comparatively small. During the First

World War, trade unions were afforded “greater recognition on behalf of the

government and a more favourable response by employers” (85). The unions were

able to use labor shortages during this period to their advantage, and the

authors demonstrate how “the growth of collective bargaining and the

persistence of a craft mentality, provided the essential ingredients for

unions to damage the UK’s competitive position and to affect adversely the

investment, innovation, productivity growth and the cost structure of

industry” (pp. 86-87). The areas the authors focus on in particular are the

creation of wage rigidity — particularly through wage differentials —

payment systems and conditions of work, and industrial disputes. Although,

during the 1914-1951 period, labor gains were very good in comparison to the

previous period, Aldcroft and Oliver argue that “it is the post-1951 period

where more genuine concerns need to be expressed about the capacity of

organised labour to damage the state of the economy” (p. 86).

Chapter 3, entitled “The Zenith of Labour Power 1950-1970s” depicts a period,

which the authors identify as being “labour’s finest hour” (p. 88). Union

membership and density grew fairly steadily between the years 1938 and 1979,

peaking at 13,447,000 and 55.4 per cent respectively. This seems to have

corresponded with a rising trend in strike activity in the same period,

although when put in an historical context or compared with other countries,

Britain’s strike record is actually relatively good. However, the actual

impact of British strike activity on the economy was negative. Not only were

large-scale strike actions disruptive to production and economically damaging,

but small-scale stoppages also had negative consequences and unofficial strike

action earned affected suppliers and exporters bad reputations. Restrictive

practices and work rules were found to be probably even more of an impediment

to long-term efficiency and structural change than strikes. During this

period, the system of industrial relations changed such that a two-tier system

of collective bargaining emerged, where the authority of management and

national union officers was undermined by a shift of power to the shop floor.

This two-tier system was not conducive to increased efficiency through the

removal of restrictive practices.

The penultimate chapter “The Unions in Retreat 1979-2000” discusses the effect

of the Conservatives’ legislative program, which dismantled many of the

pre-1979 collective structures and employment regulations. Initially a good

overview of the literature, which attempts to explain the reason for union

density decline in this period, is given. Many reasons are identified,

including growing unemployment, the rise in the number of women in the

workforce, the increase in part-time work, the growth of white-collar workers

and the expansion of the service industry. Moreover the increasing trend

towards smaller workplace sizes also negatively affected unionization. In an

examination of the legislation introduced by the Conservatives, the authors

argue: “The regulatory approach adopted by the Conservatives sought to provide

a framework which would balance the rights of employers and managers on the

one hand, and the rights of employees and unions on the other. Conservative

policy did not seek to abolish or outlaw the unions; policy-makers saw the

issue more in terms of choice, albeit regulated choice (p. 145, original

emphasis).”

The post-1979 reforms focused on the following main areas: the coverage of

collective bargaining and trade union recognition, the closed shop and

industrial action. In the same period there was growing wage inequality and

there was no change in the labor share of total income. The period of the

Labour government is briefly addressed also. Tony Blair is quoted twice as

stating during the 1997 election campaign, that New Labour would be committed

to maintaining the main elements of the 1980s industrial relations

legislation. However, according to Aldcroft and Oliver, the main lesson to be

learnt from this period is that while many of the Conservative reforms

addressed some of the deficiencies in the UK economy, some aspects of their

industrial relations strategy were more controversial and may arguably have

had a negative effect on the UK economy in the twentieth century.

In previous studies, other researchers (for example Freeman and Medoff, 1984)

have concluded that unionism per se, does not guarantee either good or poor

performance of an economy or business. It was found that the quality of the

relationship between unions and business was the determining factor. Although

Aldcroft and Oliver do state in the first chapter that they cannot “for

reasons of space, write a full account of the management side in a volume

which deals specifically with the impact on unions” (p. 4), a more balanced

argument focusing on aspects of the relationship between unions and

businesses, may have yielded further interesting revelations. It is also

noticeable that Aldcroft and Oliver equate “strong” union activity and

“powerful” unions with “adversarialism.” However, “union strength” and “power”

are concepts that are not specifically defined by the authors. The use of

strike action, for example, does not necessarily demonstrate that a union is

strong. Moreover, there are isolated examples in the book where the authors

quote studies which show that management itself had displayed significant

failings, and that organized labor was a help rather than a hindrance. For

example a Ministry of Labour report (1967) concluded that overmanning stemmed

more from managerial weakness than from union recalcitrance, whereas Turner et

al (1967) highlighted the constructive role of the shop stewards in the motor

industry in sorting out grievances, preventing spontaneous strikes and

maintaining the flow of production (p. 114).

Aldcroft and Oliver write in the conclusion of chapter 3 “it is true that

there are plenty of gaps in our knowledge as to how union activity affected

economic variables, either directly, and even more so indirectly” (p. 132).

This is perhaps the most important statement of the book. There is still

insufficient evidence to prove that British trade unions did have a negative

effect on the British economy, although with this book, the authors attempt to

show just that. Perhaps they do not succeed, but Trade Unions and the

Economy: 1870-2000 still provides a very useful introductory guide to the

literature and background of British trade unions and their interaction with

UK businesses and the British economy.

References: Freeman, R.B. and J. L. Medoff, What Do Unions Do?, New

York: Basic Books, 1984. Ministry of Labour, Efficient Use of Manpower,

London: HMSO, 1967. Turner H.A., G. Clack, and G. Roberts, Labour Relations

in the Motor Industry, London: Allen & Unwin, 1967.

Sharon Otoo is a doctoral research student of the School of Management, Royal

Holloway, University of London. Her current research is on organizational

restructuring and its effect on trade unions in the British and Australian

telecommunications industries.