On account of the inflation in the 1970s which resulted in recession, the function and position of the trade union movement has been challenged. While governments and employees have also moved away from the "neo-corporatist" model, a new variety of forms of economic and labour relations have emerged, the major trend being to shift collective bargaining and the resulting collective agreement to the enterprise level. However, different forms have emerged in various countries because of the differing balances of power and specific national customs. This also challenges the global solidarity of the union movement.
Trade unions are advocates of fossilized patterns of working and living, impervious to social changes and opposed to them out of self interest.
There are three challenges to the trade union movement: (a) Fewer and fewer employees join a trade union for ideological or religious reasons. Now they need to recognize another "interest" in membership as is the case, for instance, in Belgium or Denmark where the trade unions handle unemployment benefits; (b) Trade unions need to regain their position as the main spokesperson for employees (group discussions and direct participation seem to be supplanting bargaining with the trade unions. Decentralization of collective bargaining and the emphasis on flexibilization are signs that in most Western industrial countries management is now the main influence on developments in industrial relations; and (c) Relating and responding to the increasing involvement of government in labour relations, not only in the field of legislation but flowing on from government policy initiatives. One aspect of this may be greater involvement in the management and administration of public service and local government.
Organized labour's hopes rest, in part, on the emergence of the third sector as a new social force. Unions are finding it harder to recruit workers in the new information age economy. Organizing at the point of production becomes difficult, and often impossible, when dealing with temporary, leased, contingent and part-time workers and a growing number of telecommunters. At the same time, the strike is becoming increasingly irrelevant in an age of automated production processes. Joining with thirds sector organizations – service, fraternal, civic and advocacy – to exert a collective pressure on management to share some of the gains of cyberspace with workers and local communities is labour's best hope for success in the new era.