Union unemployment insurance schemes were super tough on malingerers
27 Feb 2018 2 Comments
in labour economics, unemployment
An early role of trade unions was to provide unemployment insurance for members. Majority of British unions in 1908 provided unemployment insurance for members for 6 months or more. These union provided unemployment benefits were about 30% of the take-home pay of the time.
British unions had extremely tough safeguards against moral hazard. The Amalgamated Engineers forced each applicant to make his claim at the next meeting of his branch.
- If the members present, some of whom were his fellow workmen, determined that he was not eligible for benefits, he forfeited the benefits and was “liable to such other punishment as the branch may consider the case deserves.”
- A worker deemed eligible for benefits had to “sign … the ‘vacant-book’ of his branch once every day between certain hours” to collect relief.
- The branch secretary would direct an unemployed member to any local firm in need of labour. A member who refused a job offer, or who did not apply for a job when informed of a vacancy by the branch secretary, would forfeit his unemployment benefit unless he could show sufficient cause for his action at the next branch meeting. This is a common theme among mutual aid societies. They use local knowledge to root out shirking.
Mutual aid societies were formed by people with a common denominator such as the same occupation or ethnic, geographic, or religious background and later, on union membership. This appears to be an attempt to both profit from advantageous selection and to deal with moral hazard by personal knowledge of new members or signs of other forms of good character such as religious fervour. Building societies and credit unions arose out of these mutual aid societies. There were burial societies, factory societies, which make provision for its employees for accident, sickness or burial, and fraternal societies that provided for widows and old-age pensions.
In 1908 Britain, 1 ½ million trade unionists were eligible for unemployment insurance through their union; four million British also belonged to the sickness societies which predated the union movement. Trade unions were superior to mutual aid societies as providers of unemployment insurance because of their greater ability to monitor the eligibility and job search of members through local branches. Few mutual aid and friendly societies provided unemployment insurance.
Friendly societies did not fail; in the UK for example, they were displaced by the National Insurance Acts of 1911 and 1948. When national insurance was first introduced in Britain, people could file claims either with the government bureaucracy or with their friendly society.
The unemployment benefits paid by national insurance were small. Most unions continued to provide insurance benefits throughout the interwar period. It was not until the post-war development of the welfare state that most unions ended their unemployment insurance policies. The 1948 Act created a government monopoly. At the time of the 1911 National Insurance Act, 9 million people were covered by voluntary insurance societies. These provided for widows and burial expenses and medical care. Some provided help in times of distress and grants to travel to new jobs.
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in economics of education, politics - New Zealand, unions
Unions fight for better playing conditions for their members. Is not that what the class war is all about? Unions are not there to act as management consultants to the employer, working out ways to make their wage slaves profitable – extract more labour surplus.
Please do not mention that the employer of teachers is the state sector. That is an argument against unions in the state sector, a very slippery slope.
When the interests of the union and it is teacher members and the interests of children conflict, the union will do what its mission is which is to protect its members.
The first jobs to be unionised were craft jobs. The craft unions certainly foster the marketability of their members but were keen to suppress competition nonetheless. To quote Charles Baird
Most unions in the private sector are in crafts and industries that have few companies or that are concentrated in one region of the country. This makes sense. Both factors—few employers and regionally concentrated employers—make organizing easier. Conversely, the large number of employers and the regional dispersion of employers sharply limit unionization in trade, services, and agriculture. A 2002 unionization rate of 37.5 percent in the government sector, more than four times the 8.5 percent rate in the private sector, further demonstrates that unions do best in heavily regulated, monopolistic environments. Even within the private sector, the highest unionization rates (23.8 percent) are in transportation (airlines, railroads, trucking, urban transit, etc.) and public utilities (21.8 percent), two heavily regulated industries.
Craft unions opposed unionisation of less skilled workers because it threatens their own ability to extract higher wages as explained in the Wikipedia entry:
The concept of organizing a strong federation on the basis of craft evolved out of conflict between the Knights of Labor (KOL), which organized mass organizations of unskilled, semiskilled and skilled workers by territory, and the American Federation of Labor (AFL), which organized only skilled workers.[1] The craft workers were capable of demanding more from their employers due to their skills, and therefore organized into stronger organizations pursuing narrower interests.[2] The AFL was formed as a direct result of the perceived need by skilled workers to defend their individual craft organizations from poaching by the Knights of Labor.[3] The Knights of Labor believed that skilled workers should dedicate their greater leverage to benefit all workers.[4] Selig Perlman wrote in 1923 that this resulted in “a clash between the principle of solidarity of labor and that of trade separatism.”[2] The trade unions “declared that their purpose was ‘to protect the skilled trades of America from being reduced to beggary’.”[5]… As long as the craft unions were the dominant power in the AFL, they took every step possible to block the organizing of mass production industries. This led to challenges from both inside and outside the Federation.
The craft unions such as teachers unions have more bargaining power because they are difficult to replace on short notice unlike less skilled workers. In addition, teachers are much more difficult to automate away. I am not too sure what the teachers union might think of giving more responsibility to teachers aides?


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