the trade influence of trade unions on wages and employment

Question 1

factors that influence trade union power

Answer 1

employee participation
state of the economy
unemployment
productivity of labour
wage rates as a proportion of total costs
ability tom swap labour for capital
size of trade union
firms profits

The strong a trade union is , the more they can influence wages and unemployment levels

Question 2

the unemployment level

Answer 2

the higher the unemployment level , the weaker the bargaining power as firms can more easily replace existing workers

Question 3

wage levels as proportional of total costs

Answer 3

the lower the percentage of total costs that a firms’s wages represent, the higher the bargaining powe

Question 4

Swapping labour for capital:

Answer 4

the nearer the replacement cost of capital for labour to meet the increased costs demanded by the union, the weaker the bargaining power

Question 5

The level of profits

Answer 5

higher profits strengthen the unions demands for higher wages

Question 6

State of the economy

Answer 6

less bargaining power in a recession and more when the economy is booming

Question 7

Overall size of the trade union

Answer 7

the larger the union, the stronger their bargaining power

Question 8

The productivity of labour:

Answer 8

if the workers are extremely productive, generating high levels of output from low levels of input, they are more valuable to the firm, and the union has stronger bargaining power