External legitimacy of unions: trends in New Zealand

Article Abstract:

Just 5 years ago, at the pinnacle of their success, New Zealand unions negotiated collective agreements covering over 720,000 employees and were successful in persuading some 603,000 of these employees to join. In May 1991, the Employment Contracts Act, which withdrew totally any state-endorsement or sponsorship of union activity, radically altered their position. Union membership fell by around 40 percent in the four years since the enactment of the Act - from 603,000 to 376,000 members in December 1994; the overall number of unions remaining has declined to around 80; a number of unions have become insolvent and have filed for liquidation; staff retrenchments within unions has been widely reported and, in some cases, this has led to a reduction in services and capacity. Data for 1993 suggest that union decline may have "bottomed out" with unions losing fewer than 20,000 members in that year. However, decline is again apparent in the 1994 data. The removal of external legitimacy has had a significant impact on unionization rates. We review the conditions under which the restoration of legitimacy would bring about a reversal of union decline. (Reprinted by permission of the publisher.)

Political aspects

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Eternal legitimacy of New Zealand trade unions: an update

Article Abstract:

This paper examines the current state of play in New Zealand's industrial relations policy following the first general election under a system of proportional representation. The implications of the new Coalition Government's policy statements are examined in light of the current outcomes under the Employment Contracts Act. It is concluded that radical reforms, and therefore radical changes, are unlikely. With the exception of the role of the Employment Court, institutional arrangements and bargaining outcomes under the Employment Contracts Act have become reasonably stable and are unlikely to be radically altered. The role of the Employment Court and to a lesser extent the Employment Tribunal is under threat and a more gradual move towards further liberalization of the labor market through changes to personal grievance procedures and bargaining process requirements cannot be ruled out. (Reprinted by permission of the publisher.)

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A model of monopoly and "efficient" unions with endogenous union coverage: positive and normative implications

Article Abstract:

We present a model of a rent-maximizing union that organizes to increase its coverage of an industry and analyze monopoly and "efficient" unions in this setting. Our model is unique in that we allow for a competitive industry with free entry and find union and nonunion firms coexisting with product market equilibrium. This is achieved by incorporating the insight that firms are heterogeneous in productive characteristics. An important implication of our model is that an "efficient" union that covers a nontrivial share of the market is not efficient and may in fact be less efficient than a monopoly union. (Reprinted by permission of the publisher.)

Models, Monopolies

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