John RapleyTHERE HAVE been more dramatic events around the globe in recent days, such as the failed rescue of the Russian submarine or the looming crises in Burundi's and Northern Ireland's peace processes, to name just a few. But for its long-term significance to the global economy, it would be easy to underestimate the importance of the Verizon strike that ended earlier this week.
On the face of it, this was a very ordinary strike. Some 85,000 workers belonging to the Communications Workers of America (CWA) took to the picket lines for better pay and benefits. At the outset, most analysts expected a brief strike. Yet they misjudged the CWA, which stood its ground and stayed out for over two weeks, finally forcing the telecommunications company to accede to their demands.
While both sides claimed victory, the strike argu-ably may have been a turning point in the decline of organised labour. The last two decades have not been kind to the union movement in many Western countries, and the USA has been in the forefront. Assisted by sympathetic governments and enabled by new technology to threaten to move jobs to low-wage zones at home and abroad, corporate executives have been able to launch a successful assault on organised labour.
Throughout the period, union membership, both in absolute terms and in proportion to total employment, dropped. As the economy shifted from the more-heavily unionised manufacturing sector to the largely non-unionised service sector, organised labour further lost its toehold. And in the services sector, firm managers were able to revive some of the practices unions had so long resisted: longer hours, labour flexibility (which amounted to brandishing the threat of unemployment to get people to work harder) and lower wages.
With real earnings repressed, inflation -- and thus the cost of credit -- came down and profits went up. This fed the stock market boom of the 1990s, sending the American economy, and with it, the global economy, to new heights.
However, the gains were unevenly distributed. Once the unemployment rate reached historic lows, American workers finally began pushing for better wages. And the CWA took advantage of labour's augmented bargaining power to organise workers and secure better deals. Indeed, as the union movement declined, the CWA bucked the overall trend and increased its membership by targeting non-union sectors in the new economy. While it secured healthy remuneration gains for its members at Verizon, its most significant gain is arguably the improved access it obtained to Verizon's wireless sector.
The directors of the "new economy" have long resisted encroachments by organised labour. Many analysts in the business press had gone so far as to declare the union movement a thing of the past, there being no place for it in a "post-industrial" society. However, the CWA obtained easier rights of access to the unorganised workers in the fast-growing wireless sector of Verizon, and its victory is likely a harbinger of things to come for the whole industry.
Organised labour, it now appears, is no longer confined to the seemingly declining manufacturing sector. It regrouped after its losses, and has begun to penetrate the emerging sectors of the service economy. Looking at the broader picture, union membership in the USA bottomed out in 1999, and since then has begun rising once again. We are at the early moments of a new period in the industrial struggle. But it may not be premature to say that the outcome of the Verizon strike signalled the start of a new chapter in economic history, just as the air traffic controllers' strike in Reagan's USA or the coal miners' strike in Thatcher's Britain signalled the start of the assault on the unions.
Looking down the road, optimists in the business press say the new Verizon deal will lead to better productivity and higher profits. But if this is so, one is left to wonder why Verizon executives resisted this innovation all along. It seems more likely that high profits were bought on the backs of cheap labour, and that the peak of this cycle has now passed. Lower profits, higher wages and reduced productivity by workers who no longer have to go without breaks may temper the boom of the 1990s. However, a rising share of a steady pie may seem an attractive alternative to a diminishing share of a growing pie.
John Rapley is a Senior Lecturer in the Department of Government, UWI, Mona.
