03/08/2005 11:56:16 am
Trade Unions and Wages. In the latest edition of The Economist, it is reported that trade union participation in the US has fallen from some 30 % in 1960 to 12 % today. In the private sector, the figure is 8 %. In Sweden, already the figure for 1960 would seem low. It is now, however, falling from the extremely high levels of about 80 % that were once the case.

Trade unions can do many things for their members. One main argument, however, has always been that by having most employees as members, they would be able to negotiate higher wage increases than otherwise. If that were true, wages for most people would of course be vastly higher in Sweden than in the US. Is that the case?

No. In fact, the wage level is generally much higher in the US. Average income per person in the US is about 35 % higher than in Sweden. It is also higher for ordinary workers in the US than in Sweden. Private consumption per person is about twice as high. Thus, trade unions simply can′t produce wage increases. Higher wages come from having a free economy which enables entrepreneurs and companies to pursue their ideas and grow. That′s when wages grow too - without trade unions.