As far as I have observed, most service organizations have contractual employees whose employment are good only for a maximum of six months, after that they are terminated; and new employees of the same nature are hired. The nature of work in service organizations are such that these organizations will not need regular or permanent workers. This I believe is the reason for lower incidence of trade unions in service organizations.

Employers and employees are a in natural conflict. Trade unions look after interests of employees and this brings them into conflict with employers who see trade unions as foes. Public institutions are under more scrutiny and are directly supported by tax payers. Their employes do not get much income as private ones and they do not lose much as privates ones either. So trade unions are a lesser concern as compared with private sectors. This is what I think.

Trade unions are almos nonexistent in small private companies as the rights of employess seem to affect them more than to big companies.

Public institutions are more secure, at least in some countries, and so there is no need for strong unions. In Greece however, at this severe crisis, all are unsecured and all unions are alert.

Debi,

Costas is greatly right. In our own country, service is still in public sector. And, in most of services there is still provision of fund/pension including family pension. Even in some services, in service demise of a servant entails a job for a qualified member of the family or widow or widower or someone from family is employed on humanitarian grounds. As such job security and social security make the employees satisfied. Even if they go on strike for salary hike, in some services under the category of essential services, it is not possible under law.

There used to be industrial strikes in our country. However, since globalisation and liberalisation there is no prominent labour union. It is an arrangement for foreign investors so that they get a free hand to run their units at lowest wages. Since you are guru of management, you might be knowing in the absence of viable employment opportunities and a flooded labour market, what would have been negotiating power of labour. Afraid of loosing livelihood industrial labour does not go on strike. If such a situation arises, police is purchased. I have myself watched on TV footage workers being mercilessly thrashed by force in Faridabad. It is said NGOs are mediators between capitalists and workers, but NGOs are also amenable to be purchased. I don't think there has been any major industrial workers' strike in India after globalisation.

As I know, the turnover rate of employees working with service organization is higher than those working with manfacturing organizations. That could be the reason for lower incidence of trade unions in service organizations.

I would suggest that the reason for this is financial (i.e. the bottom line). Unionized work forces tend to have better entitlements (which leads to ongoing costs and overheads that need to be met), whereas private, contractual arrangements do not necessarily incorporate the added extras (such as sick leave, extra annual leave, long service leave, pension funds etc). With globalization and the introduction of powerful technology some services are now outsourced under contractual arrangements (which prove to be much cheaper eg call centers and banking services).

Trade unions were established at the start of industrial revolution when manufacturing industries contributed to the wealth creation. In order to promote the productivity and profits the manufacturing industries let them grow. That is how UAW in US is strong in auto sector with old auto manufacturers such as Ford and GM. An example can be seen in the hay day of Bajaj Auto in Pune when they have increased the salaries of their employees compared to other employees of the region same as what Henry Ford did with his employees in the beginning of 20th century.

Service organizations in many places have managed with a majority of contractual employment. That is not conducive for forming labor unions. In USA most of the auto manufacturers that came late such as Toyota and Honda are resisting the formation of UAW labor unions.

Service organisations are more amenable to automation . Thanks to the advances in technology. there is lot of re- engineering effort that has gone into this. Look at the way service portals operate these days. This is true for many service encounters , be in banking, be it insurance etc.

Though the manufacturing organisations have also gone for automation, the scope may be limited based on the typical characteristics of the concerned sector, such as automobile, electronics etc.

Due to automation, the bargaining power of unions get reduced , hence , we may be seeing less of unionization efforts in services as compared to manufacturing. A case in point is Indian banking industry. the unions were very strong in early 80's. However, due to automation (such as ATMs, web based/internet banking ) and due to streamlining of paper transactions, their bargaining power has substantially reduced.

The other reason as the discussion says, may be due to secure positions in service sector , there may not be any motivation for union efforts !

I'm not sure I agree with either the premise of the question or the answers supplied thus far, at least in reference to the American case. In the U.S. the labor movement is most active in the service sector (e.g., health care, education), because deindustrialization has been under way since the 1950s. New manufacturing firms in the U.S. often locate in right to work states where unions are weak to non-existent. Having said that, you would be hard pressed to find public sector employees who feel secure: private contracting, mass layoffs and firings, and other anti-labor tactics are eroding what security they once had. I would say, however, that unionization is lower in the most precarious forms of service sector work (e.g., internships, online crowdsourcing, personal training).

I think in case of service organizations most of the workers are skilled, informed and there individual bargaining power is very strong so they don't need to unionize. They are seen as talent not workers. There is a research on this topic plz check

Good point Harshita.

In addition to some of the points made before (such as high fluctuation, more skilled workers with individual bargaining power) firm size may also play a role. In many countries unionization is more likely in larger firms (for various reasons such as recruitment cost, worker-management problems), and as firms in the service sector are often smaller, this may explain part of the sectoral difference in union density.

I think one of the main factors would be the difference in the type of talent typically found in these two industrial sectors.  The services cluster would generally include financial services; health services; information and communications; business services (eg real estate, transport etc); tourism and hospitality among others.  The manufacturing cluster, includes manufacturing as a sector but may also embrace   agro-processing activities,

If we examine the term "labour" we will find connotations going back to the agricultural and industrial era.  In the domains where knowledge, intellectual capital and higher-value human capital prevail, the term "talent" is preferred to "labour".  The talent within the services group would typically be of a higher knowledge and skill level than found in manufacturing; as a general rule.  This however does not deny that low-level low-wage personnel exist in the services sector eg gardeners and housekeepers in the hotel sector for instance.  

In that regard, "labour unions" would tend to predominate where "labour" is prevalent eg manufacturing and agriculture.  The talent that occupies the services areas, for the most part,  may not regard themselves as "labour".   The representation of their interests and the collective organization  advocating on their behalf would still exist but may not be labeled as a "labour union" but maybe a staff, or subject-matter or professional association eg "Association of Accounting Technicians" 

One possible explanation is that worker irritability due to regidity in work procedures is higher in manufacturing firms than it is in most service firms.

Perhaps service organisations have a large number of educated workers with less physical exertion and are adequately paid.