Belonging to a union may seem like an antiquated notion to many in today’s work environment. Since union membership is not growing as fast as overall employment, the share of unionized workers in the overall work force is declining. In addition, the union wage premium in Canada has been steadily declining since 1997, in both the public and private sectors.
But as the labour market grows, the ranks of organized labour also rise. Nearly five million Canadians in 2012 either belonged to a union or were covered by a collective agreement – up from 3.8 million in 1997.
Over the years, unions have fought to protect their members’ rights to safe employment, good working conditions, equal pay for work of equal value, and other rights that many now take for granted. But unions also bargain for benefits and higher wages for their members.
Unionized employees, who are covered by a collective agreement or a union contract, earn higher wages than employees who are not. In 2013, the average hourly wage for unionized employees in the private sector was $23.90, compared with $21.85 for non-unionized employees. In the public sector, unionized employees earned an average of $30.52 per hour; non-unionized employees earned $29.52.
The wage gap between unionized and non-unionized workers tends to be overestimated. The wage premium has not been adjusted to reflect differences in education, age, region, industry, occupation, or experience, which would undoubtedly affect workers’ hourly earnings. Adjusted data for these characteristics have not been available from Statistics Canada for several years.
In addition, unions need to finance their own operations through dues, which come off the wages of their members. Membership dues vary across union and bargaining units.
It is noteworthy that the union wage premium – albeit unadjusted – was higher in the private sector in 2013 (9 per cent) than in the public sector (3 per cent). This differential may, in part, be attributed to the much higher union density rate in the public sector. Three-quarters of all public servants are unionized, which may lead to greater consistency in wage setting – in both the public sector and for comparable non-unionized jobs in the private sector.
It is the public sector where most of the contentious bargaining is expected in 2014, according to the Conference Board of Canada’s Industrial Relations Outlook 2014: Back to Basics for the Labour Movement. The “back to basics” strategy is a response to globalization, deregulation and a shifting political landscape in Canada, all of which have contributed to a loss of bargaining power for the labour movement.
In public sector negotiations, governments appear more likely than not to continue downsizing and scaling back public servants’ long-standing benefits and terms and conditions of employment. Unions representing workers in the private sector, meanwhile, have already begun to temper expectations – particularly the feasibility of holding on to legacy defined-benefit pension plans.
Nevertheless, part of the challenge for the labour movement in going “back to basics” is finding a way to create value for union members. That often comes back to being able to demonstrate that there are still tangible rewards to belonging to a union. Maintaining a meaningful union wage premium serves that purpose.
Karla Thorpe is a director with the leadership and human resources research division of the Conference Board of Canada.
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