Micro 47 trade unions Flashcards
define trade unions?
Trade unions are labour organisations that seek to promote the interests of their members.
What is the primary function of trade unions?
- Negotiate higher wages.
- Improve working conditions.
- Better job security.
What are the 2 forms of bargaining?
- Individual bargaining.
- Collective bargaining - Union negotiates with the govt on your behalf.
What is a monopoly seller of labour?
When all workers in an industry belong to a union.
Define closed shop?
When everyone is a part of a union.
(illegal in the UK).
Draw a diagram showing the impact on unemployment from unions?
ADD DIAGRAM PAGE 29
No supply at any point below W2 because workers won’t work - closed shop.
Does the impact of unions create allocative efficiency?
NO - excess supply of labour, unemployment would not happen in a free market.
What is a union mark up?
The percentage by which the wages of union members exceed the wages of non-union workers doing the same work.
Why is union mark up a problem?
People are getting paid above their MRP.
And everyone would join unions.
What impact does a closed shop have on elasticity of supply?
Makes it more inelastic: There is less supply of labour.
What does the effectiveness of trade unions depend on?
The type of market structure they are operating in.
What happens when a union attempts to raise wages in a competitive market?
Unemployment will increase because firms need to protect their profits, so costs cant increase.
What happens when a union attempts to raise wages in a monopolistic market?
Employment will not be affected and increase in wages will just eat up the monopolies profits.
finish page 32.
What are the 4 factors influencing a unions bargainig power?
- Elasticity of supply of labour - teachers cant be replaced so they can ask for higher wages.
- How destructive industrial action can be - strikes.
- Labour costs as a proportion of total costs - low labour costs means higher power.
- If demand for the product is price inelastic.
What proportion of the labour force is part of a union right now?
30%.
Fallen from 60% in the 80s.
What are the 3 reasons why unions memebership has fallen?
- Deindustrialisation - manufacturing sector was more dangerous and so workers needed to be protected.
- Regulation - closed shops were banned and laws around what you cant do when protesting.
- Globalisation - large supply of labour,
