BUSINESS
07/06/2011 10:49 am ET | Updated Sep 05, 2011

While Labor Unions Show Their Might In U.K., Workers' Influence Remains Slight In U.S.

To those prone to suggest that the power of organized labor is declining in advanced economies, Great Britain offered up a potent counter-argument last week.

Faced with threats to their pensions, some 750,000 government workers walked off their jobs en masse, demanding the promise of negotiations with relevant ministers to resolve their dispute. They went back to work a day later, but left a powerful ultimatum in place: Resolve their concerns or face a long summer of similar work stoppages.

For labor advocates in the United States, the spectacle of this successful action underscored the degree to which American unions now lag behind their counterparts on the other side of the Atlantic in terms of political influence.

"The overall environment is still much less hostile in the U.K. than it is in the U.S. both in terms of the legal environment and in terms of employer behavior," said John Logan, Associate Professor and Director of Labor Studies at San Francisco State University. "People in the U.K. have been lamenting for years that we're becoming more and more like the U.S. and less and less like the rest of Europe in terms of labor relations."

"But I think last week's protests show, in some ways, there are still significant differences," Logan added. "I think that the level of the demonstration last week would be difficult to imagine in the U.S."

In the wake of the Great Recession, the United States and Great Britain confront a similar set of problem: Both experienced severe financial crises after many years of overly exuberant investment into real estate; both are struggling with a painful shortage of jobs and a loss of confidence in the future; both now face budgetary problems that are fueling demands for cuts to government spending.

But who should bear the brunt of those cuts? The Americans and the British diverge significantly over their approach to that question, and the relative strength of union ranks in the two societies appears to shape the degree to which workers are finding themselves suffering the burden.

In the United Kingdom, nearly two out of three public sector employees are members of a union, while only a little more than one-third of American public sector workers are similarly represented, according to the Bureau of Labor Statistics.

Those numbers largely explain how British union leaders managed to swiftly unleash the largest labor protests that country has seen in a generation, in response to proposals that government workers surrender significant portions of their retirements benefits.

Under the government's proposed austerity measures, the official retirement age would eventually be raised by one year to 66, employees would be forced to contribute larger portions toward their retirement funds and the total payout would be reduced.

If no resolution is reached, labor leaders say, last week's strike could be the beginning of a series of protests in coming months.

In some ways, the strikes in England echo the protests staged across the American Midwest this past winter, similarly provoked by efforts to cut pensions for government employees.
But in the case of the American protests, labor unions found themselves even more on the defensive, facing a series of proposals aimed at stripping them of their rights to bargain collectively.

In Wisconsin, Governor Scott Walker, a Republican, championed what he called a Budget Repair Bill, which purported to address the state's significant budget shortfall by removing public unions' collective bargaining rights and slashing benefits for state employees. Union leaders portrayed the bill as a brazen attempt to cripple their influence.

The bill was ultimately approved by the state legislature, despite weeks of protests that featured thousands of workers camping out in front of the capital building.

In the U.K., the issues at hand appear less sweeping and more focused on the nuts and bolts of national spending priorities.

Prime Minister David Cameron maintains that his proposed austerity measures are essential for narrowing the country's deficit.

"We can't go on as we are," Cameron said in a speech last week, according to the Financial Times. "As the baby-boomers retire -- and thankfully live longer -- the pension system is in danger of going broke."

But unlike Gov. Walker, Cameron has avoided making the issue into a referendum on the role of organized labor -- a role that is far more firmly established in Britain than in the United States, at least among government workers.

"The key difference is this: what we're seeing in the U.S. were real efforts to move back to a scenario where collective bargaining wasn't the norm," said Alex Bryson, Director of Employment Relations Research at the National Institute for Economic and Social Research, an independent study group. "In the U.K. there's no real dispute about the rights of workers to bargain collectively."

In the wake of last week's protests, government ministers and union leaders in the U.K. are braced for tense negotiations over hours and benefits for public workers, according to the Financial Times.

"If there is a summer, autumn, winter of discontent the real worry is the effect on the economy," one conservative close to leadership told the Times. "We're waiting to see where public opinion goes on this, and the strategy is to be non-confrontational, make the argument to the public but not provoke the unions."

The public appears divided over the degree to which government employees should surrender retirement benefits in pursuit of government savings.

"The government has a perfectly legitimate point that the pensions schemes are quite generous," said Jonathan Portes, director of the National Institute for Economic and Social Research in London. "On the other hand, the government has exaggerated the size and the immediacy of the crisis in the sense that it's not a crisis. It's not going to bankrupt the country. And the unions are right in saying that their members' contracts should not be rewritten overnight."

Public pensions currently cost Britain nearly $50 billion a year, according to The New York Times.

The issue, as Portes sees it, is more economic than political.

"It is a narrow economic question of what the country can afford measured against the interests of a particular group of workers who have been made, as they see it, a set of promises about their future pensions," he said.