Labor Unions and their Role in the Political Economy of Nations

What are Labor Unions ?

We are all aware of the existence of labor unions as part of the socioeconomic structure and the political economy of nations. However, many of us are sometimes confused between whether there exists a need for labor unions especially in the context of the routine bad press they receive as obstacles to progress and economic growth of nations.

Indeed, in recent years, thanks to the dominance of the neoliberal policies pursued in the West and beginning to spread across the globe, it is common for capitalists and the media alike to paint the functioning of labor unions in a negative light. However, this was not always the case and there was a time when labor unions were looked upon as necessary and even vital bodies for the healthy functioning of democracy and capitalism.

This article aims to introduce the readers to the functioning and the role of labor unions which is especially important for the millennial generation to know and explore.

The Early Labor Unions

To start with, in the early days of the industrial revolution, working conditions, pay, wages, and other aspects were abysmal for workers and labor and it was often the case that they were at the mercy of the owner or the capitalist who hired them.

In the immediate aftermath of the Industrial revolution, there was a need for the workers to organize themselves and form a body that would negotiate on their behalf and barraging for the collective good which is what the term collective bargaining signifies. This gave birth to the early labor unions whose mandate was limited and whose function was to liaise between the owners and the workers so that both benefit from the interaction.

The Emergence of Labor Unions

Gradually with the introduction of mass production and the rise of the Industrial corporation as an entity that was taking over the economies of the Western world, there was a pressing need for the voices of the workers to be heard as when compared to the beginnings of the industrial revolution, the situation now was somewhat better and yet left a lot to be desired especially when one takes into account the need for job security, family benefits, healthcare, social security, and working hours as well as paid and unpaid leaves.

This gave birth to the modern incarnation of the labor unions in the United States and Europe and indeed, in most parts of the developing world as they industrialized and where the need for workers rights was being felt. This is the genesis of the labor union movement between the Two World Wars which witnessed an explosive growth in both the industrial corporations and the membership in the labor unions.

Workers Paradise

Indeed, it was during this time and in the immediate aftermath of the Second World War that important victories for workers in terms of assured employment, hiring and firing without leaving the workers in the lurch, contributions to their pension funds from the employers, provision of healthcare benefits to them and their families, and reasonable working hours as well as safe and secure working conditions.

This period was marked by a relative peace between the unions and the management as the prevailing all round prosperity in the West ensured that both sides were able to agree on most contentious issues and wherever they could not reach a meeting ground, they agreed to disagree. This phase which lasted between 1950 to the early and mid 1960s provided the workers with a sense of security and stability and they basked in the assurance that the unions would represent them in disputes with management.

The Dwindling Power of Unions

However, as the tumultuous 1960s which for the first time, resulted in the introduction of neoliberal policies gave way to the 1970s, the managements under the influence of the neoliberal capitalists as well as the architects of globalization proposed that labor unions were like relics and that businesses ought to concentrate and focus fully on making profits whereby even the workers benefited because of the expansion of the pie.

The beauty of this argument was that even the unions felt it hard to resist as the workers were being offered the chance to participate in growth beyond the normal which would also benefit them though the other point that they had to give up their rights certainly did not resonate with them.

The Advent of Neoliberal Thought, Globalization, and the Demise of the Unions

Thus was born a long period of strife between the unions and the management which continues to this day as the Western neoliberals first dismantled the socioeconomic structures where the unions were key players, then outsourced manufacturing and later services to China, India, and other developing nations thereby ensuring that the western blue collar worker was redundant, and most importantly, ensured that financial services and other forms of services based firms replaced manufacturing as the backbone of the Western economies.

To summarize the points made so far, one can understand how the characterizations of labor unions as important stakeholders of society soon gave way to them being shown in a negative light.

Indeed, the fact that neoliberal policies enthralled the entire world is the primary factor behind the dwindling union memberships, their importance, and more importantly, the demise of the blue collar worker in the West.

The final nail in the coffin of the labor unions was in the first decade of this century wherein the culmination of the long drawn out strategy to decimate unions was the global economic crisis of 2008.

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Economics of Human Resources