Do unions protect older employees' pay?

• Date: 01 November 2018
• DOI: http://doi.org/10.1111/irj.12234
• Author: Michael White
• Published date: 01 November 2018

Do unions protect older employees’pay?

Michael White

ABSTRACT

There was a substantial fall in older British employees’wages and earnings, relative to

younger employees, over the 1990s and 2000s. This shift in the lifetime fortunes of

employees was possibly stimulated by pressures of increased competition, and inten-

sified technological and organisational change, along with the high cost to employers

of elder employment. A panel analysis for the period 1990–2006 shows that older

(age 45-plus) employees in non-union jobs fared much worse, in terms of relative

pay, than did those in unionised jobs. Unions were partially successful in maintaining

the relative pay of older employees, compared with younger employees, and this

applied to both older female and older male employees.

1 INTRODUCTION

There were considerable falls in the wages and earnings of older British employees

during the 1990s and 2000s, relative to younger employees (Smeaton and White,

2018). The average decline over a 15-year period was in the vicinity of 20 per cent,

somewhat greater in the case of older male employees and somewhat less in the case

of older female employees. A question not considered in this earlier research was

whether the declining position of older employees was uniform across union and

non-union jobs, or whether a union presence was capable of giving older employees

(some) economic protection. Normal union bargaining can protect groups that are

otherwise at a potential disadvantage. Union voice may also contest new practices

that undermine implicit contracts that in the past have somewhat favoured older

employees.

Investigation of unions’role with respect to the shift in the relative position of older

employees is important for three main reasons. First, it provides interpretive insight

into the nature of the age-related shift in pay. If this shift is a fully determined out-

come of external economic and technological change, then there is little that unions

could reasonably be expected to do. If on the other hand one finds that unions have

made a difference, what has happened to older employees is in the realm of negotia-

tion and hence of organisational choice: In short, one contests determinism. Second,

by making the union/non-union distinction, one can have a clearer view of the

magnitude of the adverse shift for older employees when not subject to any union

restraint. If as currently seems possible union coverage were to become sparser and

unions weaker in Britain, then the non-union pay decline gives the most realistic

estimate of the economic future toward, which most employees will be heading as

❒Michael White, Emeritus Fellow, Policy Studies Institute, University of Westminster, London, UK.

Correspondence: Michael White, Policy Studies Institute, University of Westminster, 35 Marylebone

Road, London NW1 5LS, UK. Email: whitemi@virginmedia.com

Industrial Relations Journal 49:5-6, 492–511

ISSN 0019-8692

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd

they age. Third, analysis of the union role in moderating an adverse long-term change

constitutes a novel and useful method of evaluating and quantifying the effectiveness

of unions.

While the focus on the relative pay of older employees needs no justification, it is

worth emphasising that older employees express a range of discontents that extend

over several other aspects of the quality of working life and become increasingly

negative over time. For evidence concerning this wider picture, see, for example,

McNair and Flynn (2005), Smeaton et al. (2010), and Smeaton and White (2015).

Our analysis makes use of panel data for the period 1990–2006. This type of

analysis permits us to take account of unobserved, persistent productive abilities that

are certain to affect pay and may also be correlated with sorting into a unionised job.

We will argue that this is a crucial requirement in an age-relative analysis of pay

because of the different educational opportunities available at different historical

periods, rendering uncertified ability more important for older groups.

The next section of the article provides a brief review of concepts and theories

about the position of older employees, and about what has affected that position in

recent decades. The third section brings unions into this picture and leads up to the

framing of hypotheses about their effects with respect to older employees’pay. The

fourth section describes the research methods in more detail, while the fifth

section presents the results. The final section summarises findings and offers a

brief discussion.

The chief contribution of the research is to provide a conceptualisation and analysis

of the union role with respect to older employees’pay; to the best of our knowledge,

this has not been attempted previously in any country. The primary main new finding

that emerges is that working in a union-covered job reduces the relative financial loss

for older employees, compared with younger employees, while conversely working in

a non-union job exposes the older employee to an increased relative loss. The second

main finding from the research is that the protective effect of unions is present for

both older female and older male employees. A third new finding is that while

decline in pay is reduced in unionised jobs, compared with non-union jobs, it is not

eliminated.

2 OLDER EMPLOYEES—FROM PRIVILEGE TO DECLINE

For long, older employees in Britain held a relatively privileged position. Employer-

provided benefits and welfare provisions (notably, sick pay and pensions) have often

been conditional on length of service, thus favouring older employees (for historical

cases, see Fitzgerald, 1988; Russell, 1991). Pay has also reflected length of service,

hence age, through the use of annual increments, grade progression, enhanced

chances of promotion with seniority and increased protection against layoff or dis-

missal. Seniority benefits and rules have also been prominent features of employment

relations and internal labour markets in the United States (Edwards, 1979; Freeman

and Medoff, 1984: 122–35).

Sociology enshrined these observations within life-course theory, where it was

supposed that social norms guaranteed a smooth passage for (most) individuals from

the later stages of their employment career into retirement status at a prescribed age.

By the early 1990s, however, it was observed that this predictable transition had

begun to break down, with the age of retirement becoming more variable and

the pre-retirement years marked by increasing precarity for sections of the elder

493Do unions protect older employees pay?

© 2018 Brian Towers (BRITOW) and John Wiley & Sons Ltd