Union membership has fallen from 29 per cent to 28.4 per cent – the largest percentage drop since 1998, according to figures from the Office for National Statistics.

The rate among employed people has also fallen – from 26.3 per cent in 2005 to 25.8 per cent in 2006.

For the third year in a row a higher proportion of women than men were trade union members and male membership fell by 0.9 per cent, compared to 0.2 per cent for women.

TUC general secretary Brendan Barber said: “Today’s relatively small fall in the number of union members is actually a union success story, given the continuing decline in traditionally unionised jobs in sectors such as manufacturing. Indeed after falling strongly through the 1980s and early 1990s, union membership has roughly stabilised since 1997.

“These economic changes mean that unions have to run hard just to keep still. Detailed analysis of the figures shows that unions are reaching out to new sections of the workforce – for example the growth in union density in recent years among women and professional workers.

“And unions are putting increasing efforts into organising new sectors and in new companies, with important recognition deals in cleaning and security in recent years.

“But unions need to run just that bit faster in order to start gaining members overall, and I am confident they can rise to that challenge. The merger of the TGWU and Amicus into a new union will free up £5 million for new organising.

“The continuing success of unionised companies such as Tesco, shows that employers have nothing to fear from constructive relations with unions and much to gain from the boost to productivity from the training, participation and workplace safety that unions provide.”

Union density is at its highest in Northern Ireland, with 39.7 per cent of employees belonging to a union, and at its lowest in England where the figure is 27 per cent.

Only 16.6 per cent of private sector employees in the UK were union members in 2006, with collective agreements covering fewer than one in five private sector employees.

Meanwhile, in the public sector 58.8 per cent of employees were union members in 2006 and collective agreement coverage was 69 per cent.

The hourly earnings of union members averaged £12.43 in 2006, 16.6 per cent more than the earnings of non-members, which stood at £10.66 per hour.