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Sept 1999

 Trade unions mutual policies pave the way for growth


As trade unionists gather in Brighton this month for the TUC Annual Conference, it is timely to look at the present state of the unions. Trade unions grew from the same roots as Friendly Societies.  However until quite recently, any suggestion that Unions were ‘friendly’ organisations would have produced a hollow laugh from many people.  The actions of a minority of union members during the “Winter of Discontent” in 1979 discredited the reputation of trade unionism amongst a large part of the public including many union members.  At that time  the Tory Press led by the Daily Mail had a field-day.  As the rubbish piled up in the streets, the headlines shrieked “We can’t even bury our dead”.  Most union leaders disassociated themselves from the actions of the extremist minority who had infiltrated the unions with the sole purpose of causing trouble.  But the damage was done.  Mrs Thatcher seized the opportunity of union unpopularity to introduce a whole series of laws which virtually wiped out peoples’ rights in the workplace.  That was twenty years ago.  Times change.  Subsequent changes in the labour market have made many people think again. Many traditional industries have collapsed and unemployment has risen.  Those in work often find themselves on short-term contracts or are forced to be self-employed. Job security is endemic.  Working conditions have deteriorated and for many sick pay, holiday pay, and company pensions are a thing of the past.  In these circumstances, it is not surprising that people are beginning to think that unions are not such a bad idea after  all.    
  In these circumstances, it is not surprising that people are beginning to think that unions are not such a bad idea after  all.  The new Labour Government has helped by showing that the era of ‘union bashing’ is over.  New laws have been passed which attempt to redress the balance in the work-place between employee and employer.  These first steps are very welcome.  The years that followed were very difficult ones for the unions. As well fighting against Thatcherite attacks, they had to set about modernising both their methods of operation and member services.  The number of Unions was reduced by mergers and the internal structures were streamlined.  Such changes often meant painful reforms.  Rising unemployment meant falling union dues.  However despite all their problems most Unions still focused on the need to become more member-friendly and professional.  They recognised the need to broaden their appeal beyond dealing with strikes and lock-outs. The number of working women increased, many of them part-time.  To attract them, the unions would have to shed their old fashioned ‘macho’ image.  
  The first step was to improve the benefits offered to members and their families.  Free legal advice, discounts on holidays, cut price insurance, motor breakdown services became commonplace.  Savings on utility bills for gas electricity and telephones followed.  Most unions now offer advice on tax problems and healthcare.  Well Woman services were introduced.  These dealt with feminine health problems like breast and cervical cancer.  Longer working hours and increased work-loads have meant that stress has become a major concern.  Several unions give guidance on how to deal with stress.  The Association of University Teachers has a 24hr Stress Helpline manned by trained nurses and counsellors.  This deals with bereavement, family breakdown and addiction.  UniFi, the banking  union, has a special service to cater for the needs of Gays and Lesbians.  
  In the field of financial services, there have been many innovations.  Deals have been struck with both private sector and mutual finance companies.  One of the most popular partners is Unity Financial Services which is associated with the Unity Trust Bank.  The Unity Trust Bank is jointly owned by the Co-operative Bank and a group of Trade Unions.  Unions often have special mortgage arrangements with mutual building societies. The Britannia and the Chelsea Building Societies are amongst the leaders.   Others use the large Friendly Societies like the London  Victoria. The latter also owns Frizzels  the insurance company.  Some Unions have their own in-house mutuals.  The Communication Workers Union has its Friendly Society whilst Unison has its own mutual insurance company UIA.    
  Most Unions offer affinity credit cards either linked to Visa or Mastercard.  A new area of Trade Union activity has been that of Employee Credit Unions.  Before 1997, membership of a Trade Union was not regarded as constituting a ‘common bond’ which potential members of a Credit Union must have before they can be registered.  In 1997 came the landmark decision by the Registrar of Friendly Societies to accept that membership of the Bakers Union could be regarded as a ‘common bond.   The Bakers Union with 30,000 members duly formed their employee based credit union.  The Lancashire branch of GMB followed suit.  Large unions are still not allowed to have Credit Unions but their regions can.  The Employee Credit Unions are growing rapidly.  They are mostly found in the public sector: in the Police, Local Authorities, the National Health Service, Fire and Rescue Services and amongst Bus and Passenger Transport Services.  In the private sector, they are less common. The Credit Unions at British Airways, News International and the London Taxi-drivers group are amongst the most prominent.  
  Why set up an employee based credit union?  Patricia Hewitt, MP Economic Secretary to the Treasury recently described credit unions as ‘the unsung heroes of the mutual sector’.  She added,” Credit unions have been doing invaluable work encouraging people to save.  They offer low cost credit and thus protect people from being at the mercy of loan sharks”.  Many people on modest means have difficulty in getting a loan.  Most unions offer cheap loan facilities.  Headline interest rates are usually as low as 9%. But these rates only apply to sums over £10,000. For smaller loans the rate often rises to nearly 14%.  The legal maximum for a credit union is 1% a month (APR 12.75%).  Some charge less.  Trade union based credit unions have a further advantage for casual workers and those on short term contracts.  They may change their jobs but their union remains the same.  Several unions are considering setting up a credit union.  
  Looking to the future, we may see two further innovations by the trade unions. One could be the introduction of Employee Mutuals which are co-operative employment agencies and another the extension of Employee Share Ownership Schemes.  A recent report from Demos entitled ‘Employee Mutuals; the 21st century trade unions’ envisaged the setting up of a new type of co-operative that would organise, manage and hire out labour. It would negotiate with employers to provide workers from its pool of members.  This could restore the bargaining power to employees who at present move from one short term contract to another. The employee mutual would negotiate on behalf of the group.  The members would have continuity of employment and the mutual could provide career development.  It would be responsible for pensions, healthcare, holidays and time off together with training.   
  For the employer there would be the advantage of being able to cater for changing needs without having to take on permanent staff. In a sense, it would be a development of the employment bureaux that unions like GPMU and Bectu have run for years.  The difference would be that the members would be paid by the mutual.  The employee mutual would need to be self-standing but could enjoy the same arms-length relationship with its trade union parent as employee credit unions do at the moment.  One of the authors of the report is Geoff Mulgan who is now a member of the No.10 Policy Unit. .  
  Another opportunity for union innovation could be in the area of Employee Share Ownership Plans or ESOP.  .ESOPS enables members of staff to purchase a large part of the equity of a company.  This enables them to have a substantial say in the running of the firm. ESOPs should not be confused with so-called profit sharing schemes whereby staff are given a small number of shares as a bonus.  GMB has been in the forefront of setting up ESOPs; the most recent example being at the Roadchef company.  Local government ‘externalisations’ of services present another opportunity for ESOPs to be established.  Greenwich Leisure is a good example of this.  ESOPs could become a stepping stone to full mutualisation.  
  Union membership has stopped falling for the first time in 18 years according to the latest official Labour Force Survey(Autumn 1998).  That showed there were 6.8 million employee union members representing 30% of all employees. This was the same as in 1997.  Union membership amongst women was up by 60,000 compared with 1997 with 22% of working women now belonging to a trade union.  Amongst black women the figures rises to 30%.  Union membership in the North(40%) is still double that in the South East (22%).  Despite this, it is clear that the climate is changing. Trades unions have turned the corner and are starting to make a comeback.    
  Part of their success must be due to their new, more inclusive and modern style of operation.  By returning to their mutual roots, they have laid the foundations of future growth.  TUC General Secretary John Monks commented, ”The report shows that union recruitment efforts are starting to pay off.  But unions must not become complacent - in almost half of the UK’s workplaces there are still no union members”.  He added, ”Unions must become experts in recruitment and retention.  We must make ourselves attractive to new recruits”.  This year’s figures show that these policies are beginning to bear fruit.  

   This article was published in the Co-op News

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