The decline of labour share is a global loss


The fact that labour share of the economy is declining does not relate only to workers’ incomes. It affects social cohesion and, above all, democracy.

American writer David Bacon tells us about the large decrease in labour’s share of national income in the US private sector over the last 40 years. A research done by the University of Haifa, in Israel, reveals that the decrease of labour corresponds to a significant increase in capitalists’ share in industries where unionization declined.

Economist Tim Taylor confirms that the falling share of labour income is a global phenomenon, it has happened across all industries and across all countries with a very wide range of different policies and economic institutions. Amongst the main causes for this decline, Taylor points out technological change, globalization, stronger financial markets and weaker labour institutions.

Whatever the cause, in a world with higher profits and lower labour incomes, there is no doubt that trade unions are a target.

In Egypt, during the Mubarak regime most of foreign investors were attracted by fake unions that helped the government to repress workers’ demands, instead of supporting them. Two years on the revolution, free and independent labour organisations still struggle to improve workers’ conditions and to obtain official recognition by the autocratic executive of Mohamed Morsi.

Amongst the worst places on earth for trade unionists, the ITUC has identified seven “countries at risk”: Bahrain, Myanmar, Fiji, Georgia, Guatemala, Swaziland and Zimbabwe. Not surprisingly all of these countries have a serious deficit of democracy.

In Guatemala alone at least 53 union leaders and representatives have been killed since 2007. And yet, GDP there has grown constantly since 2009, up to 3.3 per cent in 2011. According to the World Bank, “despite its challenges, Guatemala has huge potential for accelerating economic growth”.

The Bank admits, however, that crime and violence represent staggering economic costs for the country, equivalent to 7.7 per cent of its GDP. A net loss indeed.