Economics Ch#19 Trade Unions

Definition- An association that represents the interests of a group of workers.

Types of Trade Unions
·         Craft Unions – Workers with particular skills. These workers may be employed into a
number of industries. Eg: Plumbers and weavers
·         General Unions- Workers with a range of skills and from a range of industries.
·         Industrial Unions- Represent all workers in a particular industry. Eg: Those in a rail
industry
·         White collar Unions- Represent particular professions for example: pilots and teachers.
Unions in a country often belong to a national union organization. For example: In India a
number of unions belong to the AITUC.
Some also belong to the international trade union organization such as International
Confederation Of Free Trade Unions
Role of Trade Unions
·         Negotiate on behalf of the members on pay scales, working hours and working conditions.
Eg: basic pay, overtime pay, health safety, promotion prospects.
·         Protect or improve workers’ rights
·         Provide information on a range of issues for their members. Eg: Pensions
·         Help with education and training schemes
·         Participate in measures designed to increase demand for the product, thus increasing the
demand for labour.
·         Provide range of benefits to their members including strike pay, sickness pay and
unemployment pay
·         May pressurize govt. to adopt a legislation- which will benefit workers by fixing a national
minimum wage.
Collective Bargaining
An individual worker may not have the time or skill or willingness to negotiate with his or her
employer. A worker will also have a limited bargaining power. The  employer may dismiss an
individual worker and replace him if he asks for a higher wage.
  Unions however enable workers to press their claims through collective bargaining. This
incolves negotiations between the union officials, representative of a group of workers
and representative of a group of employees.
Collective Bargaining: Representatives of workers negotiating with employers’ associations.
Basis Of Wage Claims
 ·         Workers need a wage raise because:
 ·          because they have been working hard and have increased productivity.
 ·         The industry is making more profits and workers have been linked to those profits
 ·         Comparability argument- The workers it hires should receive a pay rise in order to
keep their pay IN LINE (not the same) as similar workers. Eg: If doctors get a pay raise,
then the union of nurses will demand a higher pay as well.
 ·         Meet their cost of living
Factors affecting the strength of the union
·         Factors affecting the strength of the economic activity- If output and input in the country
are the increasing,  industries will be doing well. When output reaches high levels and those
want to work are already employed firms will be competing for workers. To retain existing
workers and to hire more workers, firms will agree to union requests and pay higher wages and
allow better working conditions.
 ·         A high number of members- The more number of members a union has:  the more
funds it is likely to have to finance its activities and the harder it is to replace the union
labour with the non-union labour.
 ·         A high level of skill- Unions representing skilled workers are in a stronger position
as it can be difficult to replace those workers
 ·         A consistent demand for the product produced by the workers. Unions that
represent workers make goods and services that are essential to consumers are in a
strong position to bargain.

Industrial Action
 ·         Workers may refuse to work overtime
 ·         Workers may undertake the tasks required by the contracts only.
 ·         They can strike-  Official strike- Strike approved by union. Unofficial strike- One
that the union does not agree with, or is over before the union has time to approve it.
  ·         Strike action can be measured by: No. of strikes, numbers of workers involved and
number of working days lost.

Question: Why do govt.s try to prevent strikes.?

They do this by asking unions and employers to go into arbitration, in case negotiations don’t
work. 
             Influence on the supply of labour
·         Unions can raise the workers’ wages by restricting the entry of workers into the industry
by either insisting that the workers have high qualifications or by maintaining a closed shop-
Firms are not allowed to emply non-union workers.

Trade unions, Firms and Workers

Firms can be harmed if industrial action is taken against them. A firm’s costs and flexibility will
also be affected by overtime bans and a ‘work to rule action.’(Doing only what is required and
nothing more.)
Unions also do benefits to firms. The firms will have to negotiate with the union and not every
individual worker. Unions also encourage workers to gain education and pursue training, which
promotes health and safety and raises productivity.
Unions also benefit non-union members too as they also receive the high wages.
Disadvantages of unions- They can make people lose jobs. They can restrict the entry of
workers into the company. They can get all the workers kicked out.

Unions around the world-

High union power in European Countries- The public supports things like strikes
Some countries ban trade unions
Managers threaten the workers that they will close down the factory if they form unions