How unions are changing in a bid for relevance – and survival

It is often said that necessity is the mother of invention. As Australian unions face increasingly urgent challenges to their legitimacy and influence, it comes as no surprise they are busy rethinking how best to represent their members and reverse the decline in membership they have experienced over the last 30 years.

Last year, unions and their activities faced intense scrutiny from the trade union royal commission (TURC). Damning in its assessment of widespread and deep-seated union misconduct, the TURC made extensive recommendations for legislative reform of union governance arrangements.

Similarly, a Productivity Commission report last year recommended a raft of changes to workplace relations arrangements.

Now the Turnbull government has announced it will call a double-dissolution election over industrial relations if two bills to reintroduce the Australian Building and Construction Commission and to tighten regulation and oversight of unions and employer associations are again rejected by the Senate.

The most recent figures, from August 2014, show that union members make up just 15.1% of the workforce – down from 17% a year earlier. The problem for unions is not just that members are leaving, but that a majority of the workforce has never joined.

Workers taking up union membership has slowed to a trickle. Those who have been a member for less than five years account for a very small proportion of all union members – between 2.5% and 6.3% for different age groups. Most people decide to join a union relatively early in their working life – if at all – and unions are struggling to replenish membership stocks of younger workers.

Negotiating collective agreements is a key union activity. They make unions more attractive to workers by delivering a "wage premium" and other benefits. However, unions are now struggling to maintain their influence on this front. At the end of the December 2010 quarter, there were 25,193 current agreements. By the end of the September 2015 quarter, this had fallen to 15,229 – or 39.6% fewer than five years earlier.

A range of factors – such as the consolidation of many agreements into larger ones – help to explain, but don't fully account for, this downturn. The concern for unions is that they are struggling to prosecute collective agreements in workplaces where they have previously managed to organise and reach agreements.

Confronted with these difficulties, unions are now pursuing different strategies to revitalise their prospects. Amid ongoing efforts at strategic repositioning, three recent developments warrant particular attention.

Union mergers are back on the agenda. Mergers involve two or more unions joining together as a single organisational entity. Australia saw a merger "wave" in the late 1980s and early 1990s. Internationally, mergers have long been used as a response to union decline. Now, the Maritime Union of Australia and the Textile Clothing and Footwear Union are in negotiations to join the Construction, Forestry, Mining and Energy Union, while the Australian Manufacturing Workers Union and United Voice are also in merger talks.

Although a pooling of resources through merger promises greater clout, the empirical evidence of their impact on union performance is mixed, and suggests they are no panacea. A recent discussion paper by Per Capita urges unions to proceed cautiously, and systematically assess the potential of further mergers to yield transformative results.

And the Australian Council of Trade Unions is now pursuing a campaign strategy around a broader social agenda ahead of the forthcoming federal election. Reminiscent of the Your Rights at Work campaign that helped unseat the Howard government in 2007, the current Build a Better Future: Fight for Our Living Standards campaign focuses on local activism in marginal electorates supported by dedicated organisers, as well as online campaigning.

In the most recent Victorian and Queensland elections, sophisticated grassroots campaigns involving union volunteers helped deliver Labor governments.

Subsequently, unions in these states have tended to enjoy a more favourable local operating environment, through restorative legal changes or other supportive policy initiatives. While this type of approach has secured some political influence, there is no sign it has replenished membership stocks.

Unions are also diversifying their membership options. Professionals Australia, and more recently the National Union of Workers and the Media Entertainment & Arts Alliance, have been early adopters of the "associate" membership option. This allows workers to join for a low fee but gives them limited voting rights.

The aim is to recruit a broader base of workers who are sympathetic to unions, but unconvinced of the value of full membership or are not in a workplace covered by a union agreement. The hope is these associates will, with time, upgrade to full membership.

It is clear that there is a growing appetite among unions to innovate with new ways of working, but the incremental changes may not be sufficient to generate the necessary turnaround.

Clues for more radical forms of innovation may lie in unlikely places. Like many businesses faced with "digital disruption", unions need to rethink their business model.

Major companies have done so in a variety of ways – through experiments with new products or services which are quickly shut down if not successful, or scaled up if they turn out to work. Some companies are spinning off parts of their business to become more nimble and focused, and in some cases cannibalising their own core business in order to innovate.

Others have looked to customer-led innovation. Lego is one of the more celebrated cases in which customer demands inform what products the company creates next.

While there is no silver bullet, unions will need to accelerate the pace of innovation if they are to regain their influence in a rapidly changing world of work.

Andreas Pekarek, Lecturer in Management, University of Melbourne and Peter Gahan, Professor of Management + Director, Centre for Workplace Leadership, Faculty of Business and Economics, University of Melbourne

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