Free Riding: Trends in Collective Bargaining Coverage and Union Membership Levels in New Zealand

Abstract

Free riding occurs when non-union members receive the benefits of a union-negotiated collective bargain without contributing to the costs of achieving that bargain, whether by paying union mem bership dues or an agency fee. In New Zealand, free riding has been a significant difficulty for unions operating under the Employment Contracts Act 1991. Free riding had been approximately 16 per cent of collective bargaining coverage under previous employment laws. Free riding under the Employment Contracts Act represented some 27 percent of collective bargaining coverage. This paper re views the nature and extent of the differences between industry free riding rates and examines the paradigm shifts occurring in the New Zealand industrial relations system.

Labour Market Re-Regulation and Its Effects on Free-Riding in New Zealand

“…THE Elsewhere we have explored the impact of the lack of external legitimisation specifically on free-riding rates. Free-riding grew from around 16 per cent in 1989/90 under the system of industrial conciliation and arbitration, to 27 per cent in 1998/99 under the system of employment contracting (Harbridge & Wilkinson 2001). We concluded that, in the absence of a legislative system that allowed for coercion or 'cheap-riding', unions in industries with high labour turnover rates had limited effective responses to free-riding.…”

Freedom of Association, Freedom of Contract, and the Right-to-Work Debate

“…If anything, conventional (see, for example, Harbridge & Wilkinson, 2001) estimates of free riding are almost certainly too low. They only pertain to workers who are covered by collective agreements in organized workplaces.…”

“…In Canada and the US, the legal duty of fair representation has also made union advocacy in contract administration and personal grievance cases a public good by obliging unions to defend the rights of both union and nonunion employees covered by the same collective agreement. Some union-negotiated provisions, such as a higher wage increase, may not be public goods in the usual sense, but nonunion employees may still benefit if employers extend such advantages more or less automatically to nonunion employees on individual contracts (Harbridge & Wilkinson, 2001). If union-negotiated terms and conditions are available to everyone (or extended to everyone by the employer), paying and non-paying employees alike, it generally makes no sense for a self-interested, utility-maximizing person to join a union and pay dues.…”

“…Employees shifted rapidly from collective to individual agreements (Harbridge & Wilkinson, 2001). Many employers and employees negotiated more individualized contracts, reflecting the varying needs of individual businesses and workers as well (McAndrew & Ballard, 1995;McLaughlin & Rasmussen, 1998;Ryan, 1996).…”

A New Approach to Resolving the Right-to-work Ethical Dilemma

“…Similarly, in the US, Chaison and Dhavale (1992, p. 355) conservatively estimate from the 1988 Current Population Survey that half of non-members covered by a collective agreement were free riders. With free riding more common in the service sector and among female and lower paid workers (Harbridge and Wilkinson, 2001), a feminization of the workforce together with structural shifts towards services could mean a further increase in free ridership. Moreover, unions face a dilemma: if they work hard and achieve much success in their collective bargaining, they create greater incentives for free-riding (Harbridge et al, 2002).…”