Are unions a good deal for workers?

16:00, Feb 07 2014

For the price of a flat white or a bottle of beer each week you could get higher wages, an on-call work advocate,mediator and employment lawyer - in case of emergencies - along with a swag of discounts with participating businesses.

Sound like a good deal?

It's the modern deal promoted by unions.

Early last century New Zealand was one of the most unionised countries in the world, according to Te Ara, the encyclopaedia of New Zealand.

Those days are no more.

For the year ended March 2013 New Zealand had 138 unions with about 370,000 members representing 16.6 per cent of the total employed workforce, according to Companies Office records.

Aside from a blip in 2009 when membership rose 3.9 per cent union membership has been declining and a 2 per cent drop in 2012 saw it fall to its lowest level in five years.

Tellingly, 40 per cent of unions have fewer than 100 members; the median number of members is 136.

The ten largest unions have 79.3 per cent of total union memberships with public sector unions dominating the landscape.

Nurses, teachers, police and public servants in unions number more than 177,000. The "health and community services" industry has the most unionists, 100,357. The education sector is the next largest union group with 86,158.

Outside of the public sector only a few unions have more than a few thousand members at most.

So why would anyone join a union? Is it good value for money?

New Zealand Institute of Economic Research principal economist Shamubeel Eaqub baldly says unions' diminishing size are a good indicator people do not think they are good value.

But First Union (formerly the National Distribution Union) general secretary Robert Reid is at the helm of a growing union.

First Union has more than 29,000 members drawn from a disparate bunch of industries thanks to history - paramedics are members thanks to their roots as transport workers - and mergers like its 2011 amalgamation with Finsec a financial services union.

The manufacturing part of First Union is shrinking because of industry redundancies, Reid says, but the union's presence in retail is growing.

Putting aside the union's gulp of new Finsec members it has grown from 18,000 to 23,000 in the last five years, Reid says.

It is doing this by earning its keep week by week, Reid says.

First members pay anywhere from $2.40 a week to $7.40 depending on how many hours they work or their salary, in line with many other unions.

In return Reid says they will get higher wages and better conditions through the union cornerstone of collective bargaining.

The union provides a safety net in case something happens on the job that leads to disciplinary action, a funeral scheme - $10,000 to your family if you drop dead - and access to a fund to cover striking workers' financial needs or if staff are locked out.

Many unions offer discounts for a raft of services including insurance, banking, healthcare and holiday accommodation.

But is the equation that unions equal higher wages accurate?

Local unions point to figures from the United States Bureau of Labour Statistics which shows union members' median pay for fulltime work in 2013 was $950, $200 more than non-union workers.

Statistics New Zealand does not collect similar information here, but handily Reid has a local example.

First has negotiated a collective agreement for employees of Australian-owned Progressive Enterprises which operates Countdown supermarkets in New Zealand, he says.

Strength in numbers has earned Countdown workers pay rates of "high" $15 an hour to "low" $16 an hour; well above the industry norm according to Reid.

Staff of non-unionised New Zealand co-operative Foodstuffs earn around the minimum wage of $13.75, Reid says.

Foodstuffs North Island general manager of human relations Mark Daldorf says individual member store owners employ staff under terms and conditions appropriate to the communities within which they operate and the relative experience and skill levels of each employee.

"Our member stores adhere to the current adult minimum wage rates ... Having said that, starting rates vary from store-to-store and long-standing, highly skilled employees can, and often do, earn considerably more than market rate," he says.

In this case Reid says the co-operative structure suits the employer rather than the employee but it provides a target rich environment for the union.

Over the last four years First has "marched" on Foodstuffs-operated Pak'nSave. Reid says now most of the supermarket's Auckland stores have union members. And yes, they are now earning about $15 an hour.

"We are hoping to move that through the country this year."

Money is a key motivator for union membership but security of hours is as important, Unite president Gerard Hehir says.

"Earning more is no good if your hours get cut."

He says many of Unite's workers, primarily drawn from restaurants, casinos and call centres, do not have set hours each week. He says getting guaranteed hours can be worth more than 25 cents an hour more to his members.

Belonging to a union is a bit like insurance, Hehir says.

"You pay a fee, you get collective bargaining, benefits and discounts, you pay a little bit each week and if you need help you can get it."

If you fall foul of management the union can come to disciplinary meetings and advocate on your behalf, Hehir says, or if things go really pear-shaped the union can get you a lawyer.

Employment lawyer Susan Hornsby-Geluk says mediation with a lawyer can cost between $3000 and $5000. If a dispute goes to the Employment Relations Authority (ERA) it could cost $10,000 to $15,000.

Even if you are successful getting costs back may be a pipe dream. Hornsby-Geluk says costs awarded do not reflect the true cost to you with a typical award of about $3500.

"You could spend $15,000 and get back $3500."

Hehir says unions focus on "equitable and fair" mediated settlements.

"The problem is not the money it's the time it takes if you go to court."

He says Unite's organisers mediate about 30 hearings per year. Court cases are only a handful.

So lets run some rough numbers. If you were paying $5 per week to the union for 10 years you would have paid $2400 in dues.

Without taking into account any potential increase in wages to offset the costs you would quickly earn back your fees if you were provided with a union-paid lawyer.

If you put that money into a savings account you would still have the cash, and some interest earned, but there would be a shortfall if your case was complex and needed to go the distance to court.

But Hornsby-Geluk says you can represent yourself and the ERA has quite a high degree of self-representation.

"Which is fine but if its complex chances are you will be better off with legal representation."

Say you did not gain any money from collective bargaining and did not make use of the discounts. And you did not need a top gun lawyer.

You could still get a warm feeling from being in a group that cares about its members - perhaps small comfort when you see that money disappear from your pay check each week.

Former log inspector Turei Heurea says people pay their money every week without believing the union is doing something for them.

"But when the crunch comes they are the first ones in there," the Rotorua man says.

For 20 years Heurea worked for Tachikawa Forest Products. First Union negotiated pay rises and bonuses in the good years, Heurea says.

In October 2013 the company went into receivership.

Heurea says the union found out what was going on from the company and kept the workers informed. It offered practical support and talked to Government agencies like Work and Income on his behalf.

That support extended past Heurea and to his wife when she was made redundant too from her job as a practice manager - nothing to do with sawmilling or the union. First negotiated her exit package, he says.

"They could see the struggle of every family affected by Tachikawa and decided to step in. They were awesome."

Unions also engage in wider political issues and campaign about legislation.

First Union is not affiliated to any political party and talks directly to members about what they want to see the union supporting, and saying, publicly, Reid says.

"We have a role in the debate. Low wages is a community issue."

Unite Union points to its success in seeing off youth rates which Hehir says led to a $2 an hour increase for many of its members.

University of Canterbury senior economics lecturer Dr Eric Crampton says youth rates have been good for those with jobs but has locked out many unemployed youth.

In this case a hard fought victory for union members may be negatively impacting other groups.

But not all victories have losers. In the workplace unions say many of the benefits won by them are passed onto the workforce as a whole.

Hooray for all the workers? Not so - in union parlance this is freeloading.

"They just sit there and get the same benefits, they are freeloading off their workmates," Hehir says.

"It does piss you off," Heurea says, "but at the same time without the union the benefits they get just wouldn't happen."

It could be argued the most cost-effective thing to do is to freeload. But the cost could be your popularity in the lunchroom.


Fairfax Media