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Striking Charts Show Importance of Collective Bargaining to Reducing Poverty in Europe


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Unifor, the Canadian union formed following the merger of the Canadian Auto Workers (CAP) and the Communications, Energy and Paperworkers Union (CEP), is undertaking a “Rights at Work” campaign with hopes of reaffirming the value of unions to its membership in the leadup to the 2014 elections.  The campaign suggests “unions lift up wages, standards, and security for all workers, not just their own members, through their influence on the actions of non-union employers, their influence on policy and politics, and their ability to provide a collective voice for workers’ interests on all issues.”  

Using data from the Oganisation for Economic Co-operation and Development (OECD), Unfior provides statistical evidence of the impact of collective bargaining on wages:

The following figure illustrates the broad negative correlation between bargaining coverage and poverty: that is, the higher is bargaining coverage, the lower is relative poverty (and the more equal is income distribution).  (It differs slightly from the simple scatter plot in the Unifor powerpoint show because I have obtained one more update of each of the series.)  Low-unionization high-poverty countries are grouped tightly in the top left (including Mexico, the U.S., Turkey, Japan, and Korea).  High-unionization low-poverty countries are grouped tightly in the bottom right (including several countries in continental Europe and Scandinavia with near-universal bargaining coverage).  The rest of the OECD countries form a broad cloud between those two poles, with much variation but still a clear negative correlation.

The OECD data reveals that collective bargaining is essential to reducing poverty:

Collective bargaining (rooted in unions and labour law) has a very important impact in reducing inequality and relative poverty. Differences in collective bargaining coverage explain about one-third of the differences in relative poverty across most of the industrialized world.

A second chart, below, shows strikingly low poverty rates in several high coverage collective bargaining countries.



One Comment on “Striking Charts Show Importance of Collective Bargaining to Reducing Poverty in Europe”

  1. President Grover Cleveland 1888 State of the Union speech \” As we view the achievements of aggregated capital, we discover the existence of trusts, combinations and monopolies, while the citizen is struggling far in the rear or is trampled under an iron heel. Corporations, which should be the the carefully restrained creatures of the law and servants of the people, are fast becoming the people\’s masters\”

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