Trade unionists work for their members’ interests both at the workplace and in society as a whole.
They also provide services for the members: for instance, legal aid, political and legislative actions, cultural and sports projects, insurance, and economic support in conflict situations.
The supporting structures and activities must be established and financed. Finances are vital to every organization. Without money, the unions will not function.
The principles of paying for being a member of a trade union is old: - as old as the labour movement itself. The thinking behind it has been that if you earn money on a regular basis, you can also afford to pay something to the union, however small the amount.
By paying dues, the members feel that the organization belongs to them. The leaders of the organization must be more accountable to the membership through having a dues system, as they are not depending on any state funds or foreign donors. There is no doubt that a good dues system allows for more democratic organizations.
International solidarity projects should not replace subscriptions. Dues should be collected at the same level, in spite of economic assistance from organizations in other countries.
It is sometimes difficult to make members understand the need to pay. If their income is low, it might feel like a big burden to pay union dues. Many organizations also have difficulties in changing the system when they want to go from a fixed rate to a percentage based rate.
The Norwegian Confederation of Trade Unions (LO) states the following in its present solidarity strategy:
All members should pay union dues, preferably through an equitable, percentage-based system.
Becoming financially self-sufficient is an important objective. The organisation should take steps to develop a transparent, financial system in order to provide full accountability to its members. Efficient planning and alertness are crucial aspects for trade union centres to be effective.
Unions need to be independent. And in order to achieve real independence – they must be self-reliant. The members must feel that the dues system is built in an equitable way.
Usually there is a distribution of the money between the amount kept in the sectorial union, and the share which is forwarded to the national confederation. Some also collect a small amount to be used in the workplace for the union chapter there. It is important to understand that there is a balance between the sector unions and the national union centre. There is no contradiction between the two, and each organizational level needs to have sound finances in order to function properly.
Most of the 24 unions that constitute the membership of LO-Norway collect dues on a monthly percentage base. The principle behind the percentage based system is that when you earn and benefit more – you pay more. You earn and benefit less – you pay less in unions dues.
Those unions out of the 24 sectorial member unions of LO-Norway that do not collect membership dues based on a percentage of the income, pay a stipulated amount per organized worker to national centre LO based on the average payment of the other unions.
So what can LO offer the unions that join the confederation and their members? For many individual members, the most important is insurance in various forms, access to cheaper goods, support - also economic support, in the event of a strike.
The size of the percentage-based system varies. The large German Union IG Metal collects one percent of the worker’s monthly gross pay in union dues.
In some countries a worker has to be a union member to be a member of the unemployment benefit scheme. The amount that a metalworker in Denmark pays to be a member of the Danish Metal Workers’ Union, also guarantee him or her unemployment benefit if needed. The Metal worker’s union collects that share of the dues and forwards it to the government.
The size of dues must be relative to the services offered. In some areas where it is very difficult to offer much to the members, the dues will not be very high. It is important to show the members that the activity level of the organization is closely linked to the income; – the dues. And the constitution of the organization should reflect that only dues-paying members can be represented in the decision making process.
The rules must also include a system for following up those who have not fulfilled their obligations and are in arrears. There should be some principle about how to treat the rights within the union of those who have not paid as they should have.
Danish Metal Workers union has calculated the value in money per year of all the advantages that the union membership gives, by putting a prize to all the “goods” that the collective agreement offers each worker. At their website they have also listed what each personal member “earns” extra through the advantages that the trade union has negotiated in the collective agreements during the years.
In Denmark – as opposed to Norway - the principle is that all adult members above 18 years of age pay the same amount for union membership within each sector. There has been no substantive discussion about switching to percentage based dues in that country. The amount, however, differs from one sector union to the next. Young workers and part-time workers below the age of 18, apprentices under education, soldiers and pensioners pay reduced amount of dues.
Informal economy workers need a less strict system, because their income differs from period to period. Of course it is more difficult to develop a dues system among these workers. But in some places they have managed this.
In Nicaragua the informal workers have their own union within the national confederation of labour. Confederacion de Trabajadores por Cuenta Propia (CTPCP) has around 20.000 members (information from 2006). The size of the labour force in Nicaragua is 2, 3 million people. More than 40 percent of these informal workers regularly pay dues of 10 córdobas per month (= 0,58 USD). The CTPCP group in turn offers their members education in reading and writing. They also give courses in accounting and in further education.
So how should the unions go about to collect the money? Practice varies according to conditions in each country and sector. Most countries have had a “check off” or “payroll deduction” system introduced at some stage in their history. This means that employers deduct union fees from union members’ wages and then transfer these to the union. Generally this system has been agreed through the collective agreement. In some senses we can say that in this system the employers do the same for the government (eg through tax deductions, superannuation fund, repayment of student loans etc), and for the private sector (eg, health insurance, retirement schemes etc).
The position of the ILO’s Freedom of Association Committee is that if a state bans the check-off system, they violate ILO Convention No. 87 (Freedom of Association and Protection of the Right to Organize Convention). Each member has to give authorisation for the membership dues to be deducted. In Norway this started during the 1960s, and was gradually regulated in the collective agreement.
There are various reasons for unions converting from a flat, equal amount of money for being a member, to a system where the dues are deducted based on a percentage of the income. The Norwegian Civil Service Union went from flat rate to a percentage based system around 1980. The argument was that through a percentage based system any rise in the wages of the members would mean an increase in the income of the union itself, and therefore be beneficial to the running of the organization. This would in turn give the union a more stable financial situation.
When a union member is offered employment, she will know from the pay agreement how much the union dues will amount to. Above all, the percentage based system means that the union-dues will be distributed according to each person’s ability to pay, since those who earn more, pay more. And in most unions with a percentage based system, there is a “ceiling” established which means that there a limit to the maximum amount a member has to pay.
In the case of The Norwegian Civil Service Union, 30 percent of what the member pay goes to the local level (workplace) and 70 percent to the central union apparatus. The central union in turns pays a certain amount to the confederation for their membership there. If you look at one member paying 1,1 percent of the wages in due, the share that the Civil Service Union transfers to the national centre, LO, corresponds to 0,2 percent of that amount.
In South African Clothing and Textile Worker’s Union (SACTWU), which is a member of COSATU, the system is like this: Workers pay a weekly subscription fee equivalent to 1 per cent of their total weekly income, up to a maximum of ZAR 6, 00 each week, and a minimum of ZAR 3, 50.
SACTWU believe that it will be difficult to collect dues from informal workers. It will take time, it will cost and the income will be unstable. They are considering two ways of dealing with this: One is offering primary health care clinics or there collect monthly fees from workers and union membership dues at the same time. The alternative is to introduce a wide range of services that would be available to membership, like discount in supermarkets to legal advice. This offer would only be available through the payment of membership dues on a monthly basis.
It is very important to have a transparent financial system, so that each rank-and-file member can see what the union dues are used for. Through disseminating the accounts openly, each member can see where the money goes. This will show the actual costs of having an administration, both in the union and in the national centre. Being the owners of the union through their payment of dues, members have the RIGHT to demand accountability and when they do so the leadership must attend to the queries raised in a satisfactory manner.
Sources:
SEED working paper 37, pp 19
Information from LO Denmark
Information from NTL, Norwegian Civil Servants Union, including report from their congress in 1978
www.danskmetal.dk/sw2863.asp
A Handbook in Trade Union Finance, 1996, CIU/Learn/LO-Norway
Peter Hall-Jones, article at PSI website PSI article