Digby, the biggest director-general in the world, is fed up. A Labour government has been talking to the trade unions, negotiating and, on occasion, actually signing agreements. It's not on. 'Businesses have never been as frustrated and annoyed with government as they are today,' he has been telling any reporter with time to spare and a notebook at the ready. 'We are at a seminal moment for the relationship between government and business.'
In the run-up to Christmas, Sir Digby Jones, DG of the UK's biggest employers' organisation, the CBI, declared himself extremely worried at alleged government backsliding in favour of 'their trade union paymasters'.
Confusion over pensions - civil servants allowed to retire at 60 with an index-linked final salary deal, while the rest of us are urged to aim for 68 with many fewer guarantees - rankled. So did the invitation from the Government to help with the implementation of the Warwick agreement - essentially a tidying-up exercise of European employment legislation and Labour party manifesto commitments made earlier to the unions. Chuck in the painful memories of BA's 'unofficial' (ie, illegal) Gate Gourmet dispute, which ended up costing the airline £45 million, and you have a toxic cocktail indeed.
Business has had enough, Sir Digby declared. Not enough of low and stable inflation, low interest rates, record levels of employment, more than 30 consecutive quarters of growth, and the higher rate of income tax frozen at 40%, as promised, since Labour came to power. No: it was these all-powerful, menacing trade unions that really got his goat.
That would be the unions who have seen virtually no significant changes to the Tory employment law reforms of the 1980s, a minimum wage brought in at least 20% below the figure they had wanted, and seen its government - a Labour government! - argue for a delay and watering down of the EU directive on information and consultation rights at work. After Gate Gourmet, the Government rushed to assure employers that such secondary or sympathy strike action would remain illegal.
If this is union power, some comrades must be asking, it's hardly the good old days of beer and sandwiches at No.10, when trade union general secretaries were household names.
There are several paradoxes at work here. We have a Labour party well into its third term in office and likely to hold on for a fourth, relying heavily on trade union contributions to fund its electioneering and campaigning activities - 62% of the £70 million donated to the party since 2001 came from this source, according to the Electoral Commission - but at the same time giving its union brothers and sisters the bare minimum in concessions.
We have a trade union movement still well entrenched in the public sector, yet with fewer than 20% membership in the private sector. And although the bigger industrial unions continue to lose members as manufacturing jobs take the speedboat to China, smaller professional service and specialist unions acquire new members and grow quite steadily.
What is really going on? Is this triumph or disaster for the trade unions?
Are they finally on the road to the new Jerusalem, or is it the road to perdition? The question was asked in a significant pamphlet written a few months ago by Professor David Metcalf of the LSE (British Unions: Resurgence or perdition?, published by The Work Foundation).
Metcalf outlined with unflinching candour the extent of the challenge facing the British trade union movement. In 1979 there were 13 million union members; today there are just 7 million. Although 60% of public-sector workers belong to a union, only about 17% of private-sector staff are members, and many of these have been effectively de-recognised by their employers as collective bargaining in their workplaces has been abandoned.
'It is possible to argue that trade unions were a 20th-century phenomenon,' says Metcalf. 'But unions are capable of doing a lot of good things for their members. They still wield the sword of justice in the workplace.
Unions narrow the distribution of pay, promote equal opportunity and family-friendly policies, lower the rate of industrial injuries and handle grievances.'
The difficulty, as Metcalf sees it, lies in the removal of two of the traditional weapons that the unions boasted in pre-Thatcher days: the closed shop (no union card meant no job) and the ability to call strikes on an almost arbitrary basis. These reforms lost the unions much of their bargaining power. And as employers tore up recognition agreements or hired non-union staff on greenfield sites, there was less reason for people to join.
Trade union leaders and their members no longer led the news bulletins with their latest pronouncements on government policy and economic prospects.
And as UK manufacturing shrank to a fraction of its former size - four million jobs have gone since 1979 - unions have struggled to replace those members with new recruits from the new businesses of the service sector.
The test that unions face is that of relevance. Do unions bring anything to the party other than aggravation? Why should a business deal with unions unless it has to?
Close observers of the trade union scene criticise the labour movement for its style and presentation. 'Watching the TUC in September, I was struck by the negative tone of so many of the debates,' says one. 'Really, the way some of these general secretaries speak, you'd think we were still in the 1970s. Who wants to associate themselves with people who always seem to be on the losing side, who are always complaining? The world of work is not as awful as you might think, judging from these speeches. Work is getting better for a lot of people.'
Two trends are emerging within the movement as we enter 2006. On the grand scale, the largest industrial unions - the T&G, Amicus and the GMB - are discussing merger plans to form a super-union, combining their 2.6 million members into one powerful bloc. At the other end of the scale, smaller professional unions such as Connect (telecoms engineers and managers) and Prospect (private-sector managers and civil servants), and the newly formed Community union (steel and textile workers), are focusing on their core regional and professional strengths, and trying to provide an altogether different, more modern version of trade union membership.
The super-union attracts most attention, partly because of the size of the planned venture. It is far from being a done deal: for one thing, the turmoil surrounding the GMB makes it the least likely member of any merged entity. This union has recently lost one general secretary in unpleasant circumstances - funny how often the champions of employees at work make rather poor employers themselves - and is massively in debt. The GMB's structure also gives huge power to regional officials, making it a difficult organisation to manage and an unhappy bedfellow for any proposed merger.
In the run-up to Christmas, the signs were that that there will be just two rather than three in this marriage. The T&G and Amicus (the latter the product of several mergers itself) are still on track, though not without tensions. The T&G is led by Tony Woodley, a formidable negotiator who made his name in the auto industry representing members at Ford, Vauxhall and, memorably, Rover (he was identified as a rising star by MT in 1999). Amicus general secretary Derek Simpson has more members than Woodley (1.2 million to the T&G's 840,000), but it's likely that Woodley would emerge as the eventual leader of the new union.
Talk of a new super-union has provoked a sceptical response from many.
Professor Paul Willman of the Said business school in Oxford has likened the move to a 'circling the wagons' operation - a defensive manoeuvre designed to protect struggling organisations. The chances are, he has argued in a collection of essays published by the LSE, that any super-union will form a kind of 'impoverished conglomerate'. As many business leaders could tell their union counterparts, merging two organisations that already face difficulties does not necessarily produce a healthier, larger one.
Unions do not have a great track record in finding the synergies much loved by investment bankers and management consultants proposing M&A activity to their clients. The management time involved in creating new structures could be horrendous, not to mention the potential bickering over jobs.
At Amicus, Simpson inherited a post-merger environment in which he was confronted by a legacy of an entire shelf-load of alphabetti spaghetti - AEU and EETPU, which became the AEEU; ASTMS and Tass, which became MSF, and now Unifi (formerly Bifu) ... Indeed, Simpson is rumoured to have said: 'I've now got two deputy general secretaries, seven assistant general secretaries and I don't know what to fucking do with any of them!'
But it is not just the practicalities of a merger that are creating doubts.
Its implications, both for the TUC and the Labour party, are arousing concern. The new super-union together with Unison, with its 1.3 million members from the public sector, would between them command over half the overall TUC membership. They would also hold well over a quarter of the votes at the Labour party conference, according to its current rules.
Late last year, trade and industry secretary Alan Johnson created a stir with his musings on curbing the trade union vote at the Labour party conference, bringing their share down to 15% from its current 50%. Sources close to the merger discussion hinted at a possible compromise - keep the 50% share, but limit the super-union's portion to only half that figure - ie, 25% of the vote at conference. This would preserve the influence of the other trade unions in the Labour party. 'It's a good thing no-one takes Labour party conference votes seriously,' sighs one cynical observer.
But smaller and medium-sized unions worry that the TUC would either be hijacked by the big two or find itself being bypassed altogether. Simpson, for one, has been sceptical of what the TUC can do for him, turning up only very rarely to TUC General Council meetings. Woodley has also been a reluctant attendee, but in the wake of the Gate Gourmet dispute at BA he is seen as having warmed up considerably to his colleagues in Congress House.
Simpson remains defiant. He told the Guardian in the autumn: 'If 90% of the members in the TUC are in one union, why should that union not have 90% of the say ... We are going to be a big powerful bloc. What do you want us to be, weak and ineffective? Are we supposed to be scared of being powerful?'
The proposed merger will take at least a year, possibly longer. So we might not get a sense of how much the industrial relations scene has changed until the spring of 2007. Perhaps that partly explains why Brendan Barber, general secretary of the TUC and leader of the British trade union movement, is not getting too wound up. 'I wouldn't say we've been offering marriage guidance, but I'm certainly an interested observer,' he says. 'If the merger goes ahead, it would be a big change in the landscape of trade unionism. A lot of other unions - medium-sized and smaller unions - are interested as well. There's no doubt that there have been concerns about the idea of a big union potentially trying to assert a dominant role.'
Barber is keen to point out that among TUC affiliates, there is a range of different unions that all have something to bring to the table. In particular, some of the smaller professional unions have a good story to tell as far as recruiting new members is concerned.
'If you look at the profile of the labour force overall, and what it's likely to look like going forward - a big growth in professional work - unions have been doing reasonably well in those areas,' Barber says.
'Obviously, the general unions have been very important in manufacturing, and they are a crucial part of the trade union movement. But there are other parts of the movement that come out of a slightly different tradition, who want to be comfortable that their contribution is still going to be made.'
Barber faces the extremely difficult challenge of trying to keep the trade union show on the road, balancing the natural instinct to fight when a Gate Gourmet-type employer arbitrarily sacks hundreds of staff by megaphone, with the need to appear modern, aspirational and committed to helping businesses and organisations succeed - which is what the evidence suggests would make unions a more attractive proposition to potential members.
How do you square this circle, between the calls from the T&G's Woodley to 'fight back' and 'give the employer a bloody nose' and, say, Connect's campaign to show how outsourcing and off-shoring can be made to work to the benefit of employees in this country?
Barber has a nuanced take on all this. 'Different unions in a sense present a slightly different public face,' he says. 'They use different language and different images. There's a lot of research that shows that most people at work want to be respected by their employer, and they are not attracted by the idea of a confrontational relationship. But, clearly, there are circumstances where you are dealing with a bad employer who does not treat the workforce with any dignity, and people will react accordingly. But that's not what's happening in every workplace. There are a lot of fair-minded employers. So the style needs to adjust to that.
'The future of trade unionism, I'm convinced, is of course tackling the injustice where there are bad employers and real exploitation is taking place - workers facing that kind of exploitation need trade union support, they need trade union organisation; but also being seen as part of the formula to build organisations that are commercially and competitively successful, in difficult market areas, and not just as something that has to be tolerated. That has to be a part of our ambition as well. We've got the evidence to show that unions make a positive difference in building successful organisations. We're not just a drag.
'I put a strong emphasis on working within successful organisations. Not everybody thinks they have terrible problems at work - we have to show that we can help provide an independent channel for people to have a voice at work, helping people get on, as well as get even.'
Barber cites the 12,000 union learning reps around the country - starting from zero four years ago - as a sign of trade unions' commitment to the upskilling of the UK's workforce. The number of reps grew by 50% last year alone. 'This is an area where unions can really add value - pushing and prodding employers to do more, to open up opportunities, to take training seriously, often acting as a broker to open up the deal with local colleges to work with tutors, setting up workplace learning centres,' he says.
Unions have helped establish 150 learning centres in workplaces in the past couple of years, providing support for individuals, many of whom may have been written off by the formal education system in the past.
'This demonstrates a different side to trade unionism - which is about responding to people's aspirations and ambitions for personal growth and development in a way that sometimes really surprises people. They thought unions were just about having a row with the employer. Unions could be a vehicle for opening opportunities for the individual,' Barber argues.
The CBI's Jones concedes that Barber may have a point here - but he scores a point of his own: 'How do you think union learning reps, who are trying to get people to skill and upskill for the 21st century, feel when they look in a newspaper and see the leaders of the trade unions calling for secondary picketing? They think they are bonkers.'
David Coats, associate director for policy at the Work Foundation, agrees that pessimism over the future for the unions has been overdone, but goes further than Barber in calling for a more modern and aspirational approach.
'I think unions need their own Clause IV moment, a clear break with the past. Decline is not inevitable, but unions do have to start thinking radically about their culture, their structures, and how they present themselves to large numbers of people who have never had any contact with them before. Give people confidence based on an aspirational agenda that has to do with the realities of their workplace.'
It may well be that, for once, the cliche is true: the unions really are drinking in the last chance saloon. A Labour government - even this very pale pink Labour government - may be the least bad option as far as the unions are concerned. The recent deal on public-sector pensions suggests that where they have the numbers, unions can still negotiate their way to an acceptable outcome. And if the CBI is whingeing about the Government leaning too far in the unions' direction, the brothers cannot be losing all the battles. A leadership (and deputy leadership) campaign in New Labour will also mean that union votes, and union wishes, will have to be taken into account.
In the longer term, although the union membership levels of the 1970s may never be seen again, the long, hard slog to recruit will have to go on, using any modern technique that seems to be effective. And prime minister Gordon Brown, while no soft touch, will certainly be less instinctively hostile to the unions than his predecessor. Brown, don't forget, wants to be leader of the Labour movement, as well as prime minister.
Put those obituaries for the trade union movement back in the pending tray - for a while yet, at least.
TWO FOR ONE: THE TESCO/USDAW DEAL
Which UK employer has more trade unionists on its pay-roll than any other? It's Tesco, which has a partnership agreement with Usdaw, the shop-workers' union. A third of Usdaw's 330,000 members are Tesco employees - getting on for half of the retailer chain's UK workforce.
So, is partnership a panacea or a false dawn? Win-win scenario or sweetheart deal? The issue is contentious in trade union circles. For some, it's the pragmatic way, the best and only deal on the table; for others, it's a sell-out, 'getting too close to the gaffer'. Even Brendan Barber, general secretary of the TUC, sounds a little weary when the term is brought up.
'It's a mixed story,' he says. 'For some unions it was never a concept they were attracted to; others put more emphasis on it. It's one of those words that has assumed a totemic value - you have to declare where you stand, for or against.
'Even unions that prefer to identify themselves in a more aggressive way would still say that with the good employers they work with, it's all about maintaining a good relationship that delivers success for the organisation while delivering high standards for the workers,' he adds.
'They might not use the word partnership, but the relationship they are intent on nurturing is very much about strong mutual respect.'
Some observers criticise Usdaw for being a pushover for Tesco's robust management. GMB and T&G members worry that their sometimes superior terms and conditions with rival supermarkets Sainsbury's and Morrison's will come under pressure as bosses level down. Others praise Usdaw for achieving a broad partnership agenda - lifelong learning, health and safety, challenging glass ceilings, and so on.
Says Catherine Glickman, personnel director of Tesco (pictured): 'There is an understanding with Usdaw that we work jointly on business issues, which is underpinned by openness in sharing information. We work from one common set of data, so we both have the facts. During the pay review discussions, we share company business information.'
Tesco and Usdaw agree an annual agenda, based on their respective aims and values. They also work together on learning and development. As an employer, Tesco uses its 'customer segmentation' approach with its staff - 'employee segmentation'. So there is an individual as well as a collective relationship with Tesco personnel.
Does it work? Well, Sir Terry Leahy is hardly a softie. Would he persevere with an approach that didn't work for him?
For Usdaw, the questions are a bit tougher: do the terms really measure up? Is it a pushover for management?
One thing is clear: Tesco's continuing success is good news for Usdaw's growing membership, and few other unions can claim similar success with service-sector employers.
SAPPING THE STRENGTH? Unions and their membership since 1975 Membership No of (m) unions 1975 11.7 446 1979 13.2 475 1983 11.3 432 1987 10.5 344 1991 9.5 291 1995 8.0 260 1999 7.9 237 2002 7.7 213 Source: Annual reports of the Certification Officer for Trades Unions and Employers Associations, DTI