Trade Unions

Question 1

What is a trade union?

Answer 1

An organisation of many workers that bargain for higher wages and better working conditions

Question 2

Why is a trade union a labour market imperfection?

Answer 2

Distorts competitive labour market outcomes

Question 3

How do trade unions bargain?

Answer 3

Collectively

Question 4

Collective bargaining

Answer 4

Trade union bargains on behalf of all workers within the union

Question 5

‘Closed shop’ trade union

Answer 5

In a given profession, all workers are part of one trade union

Question 6

What does a closed shop trade union become?

Answer 6

And monopoly supplier of labour

therefore controls labour supply at a given wage rate

Question 7

Does the supply curve of labour tell us?

Answer 7

The quantity of workers who are willing and able to work at different wage rates

Question 8

All workers below pink dot on supply curve would be….

Answer 8

Very satisfied with the wage rates of WTU as they were willing and able to work for lower wage rates

Question 9

Beyond the pink dot on the supply curve…

Answer 9

If employer wanted to employ more workers, need to offer a higher wage rate in order to incentivise more people to work

The wage rate set by the trade union isn’t high enough

Question 10

What happens to the supply curve beyond the pink dot?

Answer 10

Reverts back to the original

Question 11

Trade union supply curve vs competitive outcomes: what happens to wages and employment?

Answer 11

Wages higher compare to competitive outcomes

Employment lower compared to competitors outcomes

Question 12

Up until what point are workers getting a good wage and are employed?

Answer 12

Qtu

Question 13

Up until QTU

Answer 13

Workers getting a good wage and they are employed

Question 14

QTU to QC

Answer 14

Unemployed

People have lost their jobs - no benefit

Question 15

What happens when trade unions bargain for higher wages?

Answer 15

Distorts sufficient labour market outcomes

Significant amount of people are losing out

Question 16

Is the risk of an increased cost to firms?

Answer 16

Could lead to bankruptcy in the LR

Question 17

EVAL: in a monopsony labour market

Answer 17

Trade unions increased wages and employment

make outcomes more efficient

Question 18

EVAL: Strength of trade union power

Answer 18

greater % of union density, the greater the trade union power is, the greater the bargaining power the trade union has, to fight for higher wages.

Question 19

EVAL: how is the strength of trade union power measured?

Answer 19

Union density

Question 20

Eval: union density

Answer 20

Proportion of the workforce in a given profession that are part of a given trade union

Question 21

EVAL: success determined by union mark up

Answer 21

The bigger the union mark up, the bigger the success of the trade union

Question 22

EVAL: union mark up

Answer 22

Difference in wage between workers are getting who are part of the trade union in a given profession, compared to workers in similar profession who are not part of a trade union

Question 23

EVAL: Real-world evidence proving limited power of trade unions

Answer 23

Legislation

Striking

Question 24

EVAL: legislation

Answer 24

Strict since 1970s against trade unions

Closed shop trade unions = illegal

Question 25

EVAL: why do closed shop trade unions being illegal reduce power of trade unions

Answer 25

Significantly reduces the power of each individual trade union. Limits union density because now workers have to be spread around different trade unions

Question 26

EVAL: What do closed shop TU’s being made illegal affect?

Answer 26

Union density bc workers have to be spread around different trade unions

Question 27

EVAL: striking

Answer 27

Legislations reduce how easy it is to strike

Question 28

EVAL: types of legislation on striking

Answer 28

Ballots have to be done in secret for strike activity to happen
Strikes only happen if at least 75% of members in TU agree to strike, otherwise illegal
Strikes can only be made against own employed, limits power of strike

Question 29

EVAL: reconstructing UK economy

Answer 29

Part time work in UK becoming more prevalent, so harder to organise TU activity

Question 30

What do trade unions bargain for?

Answer 30

Higher wages

Better working conditions