Revelation! IMF links union decline to rising inequality
A recent International Monetary Fund staff discussion note has found that the weakening of unions has resulted in rising inequality.
Inequality and Labour Market Institutions found, unsurprisingly, that attacks on unions mean less bargaining power for workers. That negatively affects their capacity to fight for better wages and conditions.
Between 1980 and 2010, union density declined from 47 percent to 31 percent in the sample of advanced economies that the researchers studied. Over the same period, the richest 10 percent’s share of national wealth grew by approximately 40 percent.
“We find evidence that the erosion of labour market institutions is associated with the rise of income inequality, notably at the top of the income distribution”, wrote the authors. “Our key findings are that the decline in unionization is related to the rise of top income shares.”
Declining union density also has enabled governments to cut welfare by limiting “workers’ influence on redistributive policies, thus contributing to the rise of net income inequality”.
The discussion note is careful not to encourage more progressive policies, however. Co-author Florence Jaumotte, in an interview with IMF Survey Magazine, said: “Our findings don’t constitute a blanket recommendation for more unionisation or higher minimum wages. Assessment of whether reforms to labour market institutions are appropriate needs to be done on a country-by-country basis, taking into account possible trade-offs with other macroeconomic priorities”.
But prevailing “macroeconomic priorities”, neoliberal in character, have pushed down average real wages by 2.3 percent in Italy, 4.1 percent in the United Kingdom and 23.6 percent in Greece.
The IMF used a number of complex economic models and equations to come up with the report’s tentative findings. But there is a simple equation for our side: attacks on workers + rising inequality = the need to unionise and fight.
