3.4 Trade Unions

Question 1

What are the four types of trade unions?

Answer 1

• General union (workers in any industry)
• Industrial union (workers in the same industry)
• Craft union (skilled workers of a specific trade)
• White collar union (Professional office based workers)

Question 2

What do trade unions focus their efforts on?

Answer 2

• Collective bargaining on wages, working conditions and contractual terms
• Protecting the employment of their workers (fair termination process, minimise job losses)
• Influencing government policy in pursuit of first two goals (strikes)

Question 3

What factors increase the bargaining power of trade unions?

Answer 3

• Low unemployment (workers not easily replaced)
• Wage levels a low proportion of firm’s total costs
• Swapping labour for capital more costly than union’s wage demands
• High profits
• Booming/stable economy
• Large trade union
• Productive workers (more valuable to firm)

Question 4

What are the pros of trade unions for workers?

Answer 4

• Collective bargaining (no individual action needed)
• Receive better pay
• Better non-wage benefits
• Better working conditions
• Specialised training & free legal advice from union

Question 5

What are the cons of trade unions for workers?

Answer 5

• Industrial action may be stressful
• No pay while on strike
• Striking disrupts economic activity
• Pressured into collective actions even if you disagree with some of the union’s demands
• Abuse/intimidation if you work during a strike

Question 6

What are the pros of trade unions for firms?

Answer 6

• Training from union increases worker productivity
• Empowerment –> motivation –> increased output

Question 7

What are the cons of trade unions for firms?

Answer 7

• Including unions increases time taken to make changes, less competitive
• Managers must be less authoritarian (which some won’t like)
• Meeting union demands increases costs of production

Question 8

What are the pros of trade unions for governments/economy?

Answer 8

• More equal/prosperous society –> economic growth
• Increased productivity –> increased profits –> more corporation tax
• Higher wages mean higher income tax

Question 9

What are the cons of trade unions for governments/economy?

Answer 9

• Demands lower profits –> lowers corporation tax
• Strikes very disruptive
• Harder to attract MNCs