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Is Declining Union Membership Contributing to Low Wages Growth?

James Bishop and Iris Chan
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James Bishop: Reserve Bank of Australia
Iris Chan: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: The union membership rate has declined steadily in Australia since the 1950s. Some have suggested that this decline has caused a fall in the bargaining power of workers, which in turn has contributed to low wages growth in recent years. We test this hypothesis using a newly available source of micro data, covering all enterprise agreements federally registered between 1991 and 2017. We find that changing unionisation patterns are unlikely to account for much of the recent low wages growth. This conclusion reflects three key results. First, there has been no decline in the share of employees covered by enterprise agreements negotiated with union involvement even as union membership has declined. Second, the 'union wage growth premium' in the private sector has been stable over time. Third, spillover effects from union involvement in enterprise agreement negotiations onto wage outcomes in other enterprise agreements exist, but have not changed materially over time.

Keywords: wages; trade unions; collective bargaining; wage differentials (search for similar items in EconPapers)
JEL-codes: E24 J31 J51 J52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Date: 2019-04
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