Liberty, Politics and Economics

Trade Unions Are An Anachronism

One has to ask what is the point of Unions in the context of all-powerful UK / EU employment laws?

The UK and EU offer such high protection to workers that it actively discourages employers taking on new staff, particularly full time staff. Higher unemployment (particularly youth unemployment) and a disproportionate number of part-time workers is a consequence.

The only added value of Union membership is to enable a certain minority of strategic workers to extort additional income from taxpayers and other workers with the threat of industrial action. This detrimentally skews the labour market causing major economic inefficiencies, which make us all worse off.  For example, because tube train drivers can economically ruin London with a damaging strike, they can extort extra income from other workers (fare-paying commuters and tax payers) and earn significantly more than hotel workers doing similarly skilled work.  London Underground staff are lavishly paid by public transport standards, with Tube drivers on basic pay of up to £52,000 ($85,000) by 2015.

They can also prevent the modernisation of an essential economic asset by insisting we have cash based ticketing offices in an era of cheaper automated vending machines and Oyster Cards that can be automatically topped up with cash online.  The Unions are also the reason we have drivers on tube trains in an era of cheaper, more reliable and safer driverless trains.   Transport for London faces a budget shortfall of nearly £80 million for 2013 and 2014. It cannot afford to ignore opportunities to cut costs and modernise for the sake of old-fashioned ticket offices or a confrontational union boss with a social agenda.

The final insult is that it locks away workers in out-dated and unproductive roles that could be doing something more economically useful.  Does anybody remember the Transport Unions forcing diesel trains to have a driver, guard and fireman? Anybody assuming moving to driverless train would cause unemployment should remember this era and swot up on the Lump of Labour Fallacy. Another example of a minority holding the majority to ransom is the National Union of Teachers ability to prevent the modernisation of our education system because a small minority of teachers can vote for strike action. We all vote for policies in general elections. Why should certain workers get an extra vote?

We have a new economic reality since Labour was last in power. Over a trillion pounds of debt, which is still rising due to an annual deficit of over 100 billion pounds. All this must be paid down. Combining this with an older population (with their large pension and healthcare needs) means we will have no more spare money for at least a generation. The UK must now earn what it wants to spend; it cannot continue to borrow what it wants to spend. Increased taxation can get nowhere near lowering the deficit, let alone the debt. Massive public spending cuts are inevitable.

To win the next election Labour must address one key question: Which party will best manage this new economic reality?

Labour must now convince the country that they can move from a party which financially supports in-work welfare benefit and uncontrolled public spending to one which puts financial prudence ahead of its social engineering experiments i.e. prudently manage the country’s massively reduced public spending capacity for the foreseeable future.

The Labour front bench may believe they can do this, but I doubt that their political paymasters (Unite and the GMB unions) will let them. They have a social agenda not an economic one. Unless Labour loosens the power of the Unions over its selection of leaders, MPs and policies the country will not trust them with its new, constrained economic reality.

I understand the important role played by Unions in securing workers rights in the latter part of the Industrial Revolution. But they have won the battle and served their purpose, which has been superseded by modern employment laws. They have become nothing more than a sinister anachronism, practiced in the art of blackmail and extortion on behalf of a tiny minority.

The Labour Party will have more credibility and electability without them.


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