Annals of the University of Oradea: Economic Science (Jul 2016)
SELECTIVE INCENTIVES AND TRADE UNION DENSITY
Abstract
Trade unions often emphasise their objective of protecting and representing workers’ common interest. They provide not only a means of achieving common goals but many other services as well. It is a hallmark how are these large organizations able to fulfil this important mission. At present, however, there is a declining trend in trade union densities. We can ask why do workers think that the unions’ performance has deteriorated? What is the difference between the past and the present? The key question of the theory is related to employees’ willingness to join a large organization. If the most important trade union services are collective goods which are obtainable without costly membership, then why would a rational individual become a union member? The most widespread response among economists comes from the logic of collective action which is used, in general, as a starting point in studies for explaining trade union membership or density growth. According to this theory, there must be some form of pressure or positive incentives, i.e. union excludable incentive goods such as legal aid or strike pay, which can reward contributors and punish free-riders. This article would like to highlight the relevance of positive and negative selective incentives in connection with trade unions. Therefore, it conducts a survey of theoretical and empirical studies. The paper focuses on economic approaches, thus it devotes a relatively little attention to theories of social sciences, for example the social custom theory. Instead of this it emphasizes union security methods (e.g. obligatory union membership) and presents union-run, government subsidised unemployment insurance, the so-called Ghent-system in detail, because these seemed to be the most important factors which influence trade union density. More accurate identification of union security practices and data collection of pure private goods provided by the union would be needed to allow for analysing the effects of unions’ selective incentives.
