Trade unions

Question 1

What is a trade union

Answer 1

An organization that uses collective bargaining to negotiate better working conditions and pay for its members.

Question 2

Draw diagram for TU

Answer 2

With no intervention, the equlibirium is left at QFM= W/R FM. Once the trade union intervenes it negotiates a pay rise for the workers. The wage rate now rises to W/R TU. The difference between W/R FM and W/R TU is known as the trade union mark up. However as W/R increases there is a contraction of demand for labour from QFM to QTU, so less people are hired.

Question 3

Context for Trade Union

Answer 3

• Margeret Thatcher reduced TU power in the early 1980s by introducing new legislation for example : introduced secret balloting, and banned secondary picketing ( stopped other professions from striking with different professions
• Rishi introduced further legislation : 50% membership must vote, of that 50%, more then 50% must vote for action

Question 4

Are TUs good for workers TEOTPU

Answer 4

• Trade union density (% of employees in the industry that are members of the TU) – if TU density is high it is much more effective and vice versa
• How many lose their jobs as a result of a contraction in demand (QFM-QTU)
• If the TU is negotiating against a monopsonist employer (single dominant source of demand)