Increasing union density in firms boosts both productivity and wages – it's official.
A study on the effects of union density (union employees as a percentage of the total number of employees) in Norway found that higher trade union membership led to "substantial increases" in productivity and wages. The more bargaining power a union has, the greater the increases.
In Norway, union membership fees are tax-deductible. From 2001 to 2012, the subsidy increased over 400% while the average membership fee rose 150%. Researchers found that the higher the subsidy rate, the higher the union density. “As with most normal goods, the demand for union membership (or the service this membership provides) is negatively related to its price, and thus the demand for union membership fluctuates with the size of tax subsidies.”
They suggested that union density increases productivity because unions provide a 'voice' for workers and better feedback mechanisms, while encouraging firms to invest more in workers and their workplaces.
Image: Gerd Altmann