Trade Unions Flashcards
What is a trade union?
An organisation of workers who join together to further their own interests
What are the aims of a trade union?
- higher wages
- better working conditions
- protecting workers, their jobs and their rights
- improving training
What is collective bargaining?
The union represents workers as a group (collective) and negotiates (bargains) with the employer on their behalf. The trade union becomes a monopoly supplier of labour and thus has some power over the employer.
What are the factors affecting the power of trade unions and their ability to change wage rates?
- membership and militancy
- the elasticity of the demand curve for labour
- profitability of the employer
- economic climate - level of unemployment
- public support for unions
- legislation
What is membership and militancy?
High membership means a union has more power due to the larger amount of people on their side. High militancy means more power as the unions are more willing to take dramatic actions, e.g. strike
What is the elasticity of the demand curve for labour and how affect trade unions power?
Unions are more powerful if Inelastic demand for labour - as it means the firm is quite unresponsive to changes. Gives the unions more bargaining power to ask for higher wages if its a big firm that doesn’t really care about the money, or if the staff are highly skilled and cannot be switched out for machinery.
What is profitability of the employer and how does it affect the power of trade unions?
If a firm is more profitable, it gives the union more bargaining power to ask for higher wages, as the firm has plenty of profits to do so
What is economic climate (level of unemployment) affect the power of trade unions?
High levels of unemployment reduces the power of a union. If theres low unemployment, it means unions can demand more for staff and the firms should provide as they can’t really get more workers, vice versa with high levels of unemployment
What is public support for unions and how does it affect the power of unions?
If the union is more popular and has lots of support from the public, then the union is more powerful, however, e.g. teacher unions, are not as popular as teacher strikes affect children’s educations and also allows for childcare for working parents, so this is very unpopular by parents
What is legislation and how does it affect the power of unions?
Laws may make it harder for unions, therefore reducing their power, e.g. Margaret Thatcher enforced several laws against unions (e.g. making it more difficult to go on strike, etc). If theres more laws against your unions, then its hard for the union to be powerful/profitable
What’s a trade union markup?
The difference between wage rates in a unionised place of work and the wage rate which would otherwise prevail in the absence of trade unions (the equilibrium wage rate in a perfectly competitive market)
What does the increase of wages do on the diagram?
The increase of wages leads to contractions in the demand for labour, as fewer firms are willing and able to employ workers at the new higher wages, and also leads to an extension in supply of labour, as the more workers are willing and able to supply their labour at the new higher wage rates.
- however this also leads to excess supply of labour or unemployment
Why might the increase in wages from unions might not always have the same effects?
The increases of wages is based on the assumption the trade unions operate in perfectly competitive markets, which is not usually the case in reality
—> unions only really get involved if theres already distortions and if the employers have too much power
