Presentation delivered at a Fringe Event at the 2019 TUC Congress, organised by Unions21.

1. New Model Unions:
Options for the 21st Century
Paul Willman, LSE
Alex Bryson, UCL
John Forth, Cass
TUC Fringe, 10th September 2019
John.forth@city.ac.uk

2. The argument in brief
■The organisational model adopted by most major UK unions is in trouble
■ Weak balance sheets
■ Reliance on ‘off balance sheet’ resources that are not guaranteed
■Pressures are intensified by an operating model in which collective action
dominates over benefit provision or welfare administration
■Various options for the future
■ Do nothing and hope for the best ….
■ Reduce expenditure, e.g. by moving activities off the balance sheet
■ Increase income via subscriptions
■ Diversify revenue streams via a platform business model

3. The current operating model
■UK unions have an operating model based around collective action
■Unions amass members and seek to negotiate with employers
■This benefits everyone in the bargaining unit -> danger of free-riding
■ Can be limited by: coercion (closed shop – now outlawed); provision of membership-
specific benefits (e.g. sick pay – now covered by the welfare state) or provision of
membership-specific services (individual representation, which is costly)
■First-order problem = how to stimulate and maintain collective action
■Second-order problem = how to control the costs of doing so

4. The current operating model
■Historically, membership income insufficient to cover costs
■Shortfall covered via:
■“off balance sheet resources”:
■ membership activism
■ provision of facilities for union activity by employers
■income from investment yields or disposal of assets

5. Weakness of the model increasingly apparent
Base: employees covered by collective bargaining
Source: Labour Force Survey
Fewer covered employees are paying union subscriptions …

6. Weakness of the model increasingly apparent
Income barely covers expenditure …

7. Weakness of the model increasingly apparent
Reserves are being depleted relative to outgoings …

8. Weakness of the operating model accentuated by
the ‘cost-disease’
■Productivity improvements in other sectors (e.g. due to technology) raise
wages for workers in those sectors
■Unions must then also raise wages by a similar amount to recruit and
retain quality staff
■But scope for own productivity growth among unions has historically
been low, so wages and costs rise above inflation
Which is, in turn, accentuated by the moral
imperative
■Unions need to be seen to provide good jobs (e.g. final salary pensions)

9. Possible solutions
■Test price sensitivity by raising subscriptions
■Secure state or private subsidy
■Union default (unlikely)
■Enhanced employer contributions (also unlikely)
■Reduce expenditure
■Move items off the balance sheet: requires a reversal of decline in member
activism
■Use of technology (e.g. social media) to reduce costs of collective action

10. A new operating model?
■Extensive adoption of the platform business model:
■Free / low-cost access to the platform for ‘customers’
■Alliances to build the network (scale effects)
■Generate ‘big data’
■ Enhances services to members (e.g. info on wage rates)
■ Provides commercial opportunities (e.g. income from advertising)
■Shift from subscription model to transactional model
■ Members buy high-cost services through the app
■Issue: Administrative rationality vs Democratic rationality
■Can existing unions adapt, or does the future belong to new entrants?

11. Further reading
■Unions21 discussion paper to follow – contact Unions21
■You can read the underlying academic paper here:
Willman P, Bryson A and Forth J (2019) “UK Unions, Collective Action
and the Cost Disease”, British Journal of Industrial Relations, May.
■Or if you do not have access to the BJIR, you can find an open-access
working paper version here:
Willman P, Bryson A and Forth J (2019) “UK Unions, Collective Action
and the Cost Disease”, IZA Discussion Paper No. 10043

12. New Model Unions:
Options for the 21st Century
Paul Willman, LSE
Alex Bryson, UCL
John Forth, Cass
TUC Fringe, 10th September 2019
John.forth@city.ac.uk