Tuesday, 9 February 2010


As the new and improved SGP and rumours of bailout talks among our EU partners begin to shine some light on the fiscal hole Greece is in, our unions are girding their loins for war in a poorly-timed attempt to show “the markets” who’s boss.

As some of my compatriots are sympathetic to this cause, why not review the evidence a little?

Currently, union membership in Greece stands at around 30% of employees and has been falling steadily. It is now 12 percentage points lower than it was 15 years ago. Yet on last count (2004) their collective bargaining held power over the earnings of 65% of our workforce.

Worse still, they were effectively funded by 100% of the workforce – and their employers, as noted here:

"The state subsidy paid through the Workers’ Welfare Foundation, a scheme supervised by the Ministry of Employment and Social Protection, which collects funds from all paid employees (both union and non-union members) as well as from employers for the primary purpose of providing social services to employees, is the basic source of funding for the unions since in effect union dues play a part only in the public-sector unions."

In fact, our Unions can by law get up to 25% of the Workers' Welfare Foundation's budget, and no less than 15% per year.  This would suggest a 2008 budget of EUR 35m. (Weird source for me to cite, I know, but they know their stuff.)

What do we get for this? For one, we get the 147th most flexible labour market in the world. And deteriorating. We were 135th just a year ago. We also got a flatlining labour share of GNP, which should be the major benchmark for Union success. We got may one or two extra percentage points immediately after 1981 and that was that. 

But perhaps for all this we buy more security for our workers. Well the evidence is mixed but, according to at least one comprehensive review of industrial relations in individual EU countries (not by neoliberals but by the union-loving Germans),

"Stricter employment protection legislation [and a] higher […] minimum wage are likely to reduce both employment and activity rate[...] On the other hand, collective bargaining over wages and political orientation of the government do not have [a] significant effect on labour markets[’] performance."

So to recap, despite effectively representing less than a third of the workforce, the Greek unions get to earn against its totality and bargain on behalf of its majority. Or do they?

Well, although density of union membership is falling, the absolute number of union members is rising and in fact public sector union membership in Greece is rising much faster than private sector union membership. Note that overall membership is rising faster here than in almost any other OECD country. [Though it must be noted that many of our unions effectively inflate their membership figures by failing to strike off retired members.]

Why is the public/private divide important? Because the shift in Union power from the private to the public sector means that the union movement will increasingly act in favour of greater allocation of funds to the public sector.

Of course, most countries have a pro-union party and an anti-union party and that’s some kind of guarantee against this kind of influence as the two will inevitably alternate in and out of power.

Well, we don’t. Check this list of Presidents and General Secretaries of the private sector tertiary Union, GSEE, of whom there have only been four (!) since 1996. One is an on-and off Conservative MP, one a current Conservative MEP, one a member of the Central Committee and Political Council of our Socialist Party, and one a member of the National Council of our Socialist Party. Our Unions have, to borrow a dirty capitalist term, cornered the market.

All of this of course translates to, you guessed it, more government spending, and debt.

Ironically, the only country in which union membership (private and public) is rising faster than in Greece is the third most indebted EU country after ours and Italy, Belgium. (Comparisons here). In Italy, be it noted, membership has also been rising at a respectable 4.3% per annum. Unsurprisingly, Belgium is also the only other country with rising public sector compensation where the number of civil servants has also been rising in the past decade.

That’s the big picture. But if Union leaders are assured a long life in politics, what do the rank and file get?

The evidence is out there. Tellingly, we’re the only EU country in which people with lower education levels are, ceteris paribus, less likely to be union members. So Union membership in Greece is not about protecting oneself from ruthless competition in a rapidly upskilling world where one’s place in the labour market is increasingly precarious. In fact, according to the same study, we are also the only country, along with Finland, in which people whose parents were educated to a lower level are more likely to be union members. Simply put, union membership in Greece is a means for those who invested in education in a bid to secure an advantage in the labour market to hold on to their status in the face of competition. Sound familiar?

It’s not the best of news. Unfortunately, Greek Union power is not going anywhere soon. The reason is simple demographics. Union membership tends to peak in the mid-to-late 40s, which is predicted to be the dominant age group in Greece in 2020. After that, well, it might be too late.

Time to change the law.

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