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Union And Women

The major purposes of this paper are, first, to examine the impacts of collective bargaining on labour market outcomes for women workers in Canada, specifically with respect to pay, benefits coverage, the incidence of low pay and the extent of earnings inequality, and, second, to suggest ways in which positive impacts could be extended via the expansion of collective bargaining coverage. This part of the paper briefly reviews the literature on the impacts of collective bargaining on earnings, low pay, and earnings inequality, and Part II provides some background description of the labour market position of Canadian working women.

Particular attention is paid to the situation of the majority of women who continue to work in lower paid, often insecure and part-time, clerical, sales, and service jobs. The central conclusion of the empirical analysis in Part III, mainly based on data from Statistics Canada’s 1995 Survey of Working Arrangements, is that collective bargaining coverage, controlling for other factors, has significant positive impacts in terms of raising pay and access to benefits, and in terms of reducing the incidence of low pay among women workers.

However, the level of collective bargaining coverage for women is very low in precisely those sectors of the economy where women in low paid and insecure jobs are most concentrated, namely in private services and in smaller enterprises. Promoting better labour market outcomes for women workers accordingly requires a major extension of collective bargaining. Part IV of the paper briefly considers ways in which this could be achieved through trade union action and through changes to public policy.

The 1996 OECD Employment Outlook comprehensively documented profound differences in the degree of earnings inequality and the incidence of low pay in the advanced industrial countries, noting that these two labour market characteristics are closely related in that “the incidence of low pay tends to be highest in those countries where earnings inequality is the most pronounced.

While there is significant variation between countries, a generalized pattern is that continental European countries, particularly in Northern Europe, have a strikingly more equal distribution of earnings and a much lower incidence of low pay among both working women and men than do the U. S. , the UK, and Canada.

To indicate the extremes, the earnings gap between the top and bottom deciles of women earners in Canada is double that in Sweden (i. e. the ratio between the upper limit of D9 and the bottom limit of D2 is 3. ompared to 1. 8), and the incidence of low pay among full-time women workers (defined as earning below two-thirds of the economy wide median wage) is 34. 3% in Canada compared to just 8. 4% in Sweden. OECD countries such as Canada and Sweden are exposed to broadly comparable forces of “structural” change, such as exposure to international trade and investment flows and to rapid technological change, but differ significantly in terms of labour market institutions.

This suggests that institutions such as collective bargaining can have significant impacts on the quality of jobs as well as on the level of inequality between wage earners. As the OECD notes, a major explanation for large differences between countries is labour market institutions: “different institutional settings with regard to wage bargaining, legal minimum wages and the generosity of unemployment and other related benefits appear to account for some of the wide variation across countries in the over all incidence of low pay.

More specifically, it was established in the OECD analysis that there is a high and negative correlation between collective bargaining coverage and the incidence of low pay. Similarly, a major set of Canada-U. S. comparative studies has showed that labour market institutions, broadly defined, have significantly attenuated income inequality in Canada compared to the U. S. (Card and Freeman, 1993).

Among those studies, Lemieux (1993) showed that the higher level of unionization in Canada compared to the U. S. s one important factor explaining the lower level of wage inequality and somewhat lower incidence of low pay among Canadian compared to U. S. workers in the mid-1980s. He calculates that the pattern and extent of unionization in Canada compared to the U. S. explained 40% of the difference in the wage inequality among men in Canada compared to the U. S. The impact of unionization and collective bargaining on the quality of employment in terms of pay, benefits, security, and other outcomes is a complex and controversial subject.

However, there is a substantial consensus that collective bargaining raises pay and benefits for unionized workers compared to otherwise comparable non-union workers, particularly lower skilled workers (the wage premium effect) and promotes greater equality of wages and working conditions within the unionized sector by compressing wage and benefit differentials (the compression effect).

Chaykowski (1995) provides evidence on the impact of Canadian unions on pay and access to benefits, and on pay differentials within and between firms. Collective bargaining generally reduces the incidence of low pay and promotes equality between workers by simultaneously lifting the wage floor and by compressing wage differentials in the unionized sector, but collective bargaining can also increase inequality in the labour market as a whole by creating a pay gap between union and non-union workers.

The impact of collective bargaining on the incidence of low pay and on inequality in the labour market as a whole is thus crucially determined by three major variables: the wage premium effect (the impact of unionization on wages and differentials of union compared to non workers); the compression effect (the impact on earnings distributions in the unionized sector); and by the extent of collective bargaining coverage among the labour force as a whole.

A crucial institutional difference between many continental European countries and North America is that collective bargaining coverage is much higher in the former because of generally higher unionization rates, and because many non-union workers are covered by informal or legal extension of collective agreements. Union wage premiums, by contrast, have generally been found to be higher in the U. S.

It can be observed that, because of the impacts on the labour costs of union compared to non-union employers operating in competitive markets, relatively low collective bargaining coverage combined with a high union wage premium is likely to considerably increase employer hostility to unions and decrease the prospects for long-term union survival and growth compared to wide coverage and a lower wage premium (Chaykowski and Slotsve, 1996).

Recent empirical work in the U. S. has found that the inequality reducing wage compression effects of collective bargaining within the unionized sector outweigh the inequality increasing wage premium effect among male workers. Declining unionization has thus implied increasing wage inequality, and it has been estimated by Card (1992) and Freeman (1993) that about one-fifth of the increase in earnings inequality among U.

S. men in the 1980s can be attributed to the sharp fall in unionization over the decade. The impacts of collective bargaining on wage inequality among women have been found to differ because of the historically lower rate of unionization among women (though this is no longer true of Canada), and because unionization among women, unlike men, tends to be more heavily concentrated among highly educated workers.

This is, in turn, a function of the relatively high unionization rates in public or quasi public services such as health and education which employ a large proportion of women with high levels of education, and very low unionization rates in private services which employ a high proportion of women, such as retail trade, personal services and accommodation and food services.

Fortin and Lemieux (1996) have found that changes in labour market institutions, broadly defined, account for about one third of the increase in wage inequality among U. S. n and women in the 1980s, but that the fall in collective bargaining coverage specifically had little impact on inequality among women. Lemieux (1993) found, on the basis of Canadian data for 1986, that unionization significantly raised the wages of unionized compared to non-unionized women, that the unionization rate of women increased with skill level, and that unionization compressed wages among unionized women. The “wage raising” effect of unionization among women was not entirely offset by the wage compression effect in the unionized sector, so unionization very slightly increased wage inequality among women.

Unionization did, however, very modestly improve the position of women relative to men in the overall wage distribution. In both the U. S. and Canada, research has shown that unionization has little impact on the overall gap between the wages of women and men, in significant part because the unionization rate has been much higher for men, thus concentrating the income gains of collective bargaining among male workers (particularly blue collar workers).

However, the impact of unionization on inequality of earnings between men and women was found to be small in Canada in 1984 (30 cents per hour), and was concentrated in the private sector where the unionization rate of women is low. Unionization has considerably reduced earnings differences between men and women in public services where the unionization rate of women is high. (Maki and Ng, 1990). The impact of collective bargaining on earnings, inequality between women and men will increase if the unionization rate of women in private services increases, and/or if more women work in relatively highly unionized blue collar occupations.

There is, then, evidence that the pattern and extent of unionization are major influences on the distribution of earnings and the incidence of low pay, and that these patterns are different for women and men. Higher rates of unionization and collective bargaining coverage among women could potentially have a significant impact on the very high incidence of low pay among Canadian women workers, on high levels of inequality of earnings among Canadian women, and on the still significant earnings gap between women and men.

These issues are clearly of public concern, but the impact of unionization on women workers in the 1990s has not been extensively studied. A central purpose of this paper is to document the independent impact of collective bargaining coverage on the level of wages, the incidence of low pay, and the distribution of wages, with a specific focus on the impacts upon women. The data are presented so as to facilitate comparisons with the impacts on men.

It would be argued by some that the gains of unionization come at the expense of employment, particularly for the lower skilled. However, the OECD analysis of low paid work and earnings inequality found that “there is little evidence to suggest that countries where low-paid work is less prevalent have achieved this at the cost of higher unemployment rates and lower employment rates for the more vulnerable groups in the labour market such as youth and women.

Freeman has similarly concluded on the basis of numerous recent studies that union wage effects (higher wages, particularly for the low paid, and greater compression in the distribution of wages) do not come at the expense of productivity and are not responsible for the aggregate level of unemployment, largely because collectively bargained wages flexibly respond to shifting market realities (Freeman, 1992, 1994).

According to the 1995 World Employment Report of the International Labour Organization (ILO), it is wrong to view labour market regulation as the fundamental cause of unemployment, and it is important to recognize that such regulation has important positive impacts for society in terms of greater equality and less poverty. The ILO report takes particularly strong issue with the widespread view that labour market “rigidities” have been an important source of the unemployment problem in Europe, and emphasizes the many negative features of “flexible” U. S. style labour markets from the point of view of workers.

Collective bargaining procedures which secure steady employment at decent wages in a relatively non-polarized labour market are seen as an important source of social well-being, rather than as a barrier to job creation. In recent years, the ILO has also drawn attention to the positive role of labour market regulation and collective bargaining in addressing the specific labour market problems faced by women.

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