Type of Union Explanation

These represents skilled & unskilled workers in any industry e.g. truck drivers,
General Union
football referees, musicians & gardeners

These represents workers in the same industry. Anyone in the industry can join,
Industrial Union irrespective of skill level or seniority e.g. The Fire Brigades Union in the United
Kingdom

Craft Union These represent skilled workers with a specific trade e.g. painters, electricians

White Collar Union These represent professional office-based (‘white-collar’) workers e.g. financial
advisors, teachers, architects, designers

The Work of Trade Unions

Workers pay a monthly fee to join a trade union
The fee is called a subscription
Their membership ends when they stop paying this fee
Benefits of union membership include
Collective bargaining
Job-specific training
Legal representation in disputes
Discounts on a wide range of goods/services
When collective bargaining fails & discussions break down, trade unions have several methods of
forcing employers/governments to continue engaging with them These methods are collectively
referred to as industrial action & include

Strikes

Overtime bans

Work to rule

Protecting the employment of their workers

•Negotiates for the retention & redeployment of workers when machinery (capital) replaces labour

*Negotiates resettlement packages when firms relocate from one region to another & redundancy
terms for those unable to relocate

•Negotiates to minimise job losses when machinery (capital) replaces labour

•Negotiates on a fair termination process when firms are struggling in an economic downturn

Go-slows

pg. 1
Factors Influencing the Strength of Trade Unions

The higher the percentage of workers from a firm that belong to a trade union, the greater the
collective bargaining power of that union with the employer

The higher the percentage of workers from an economy that belong to trade unions, the greater the
collective bargaining power of the unions with the government

There are numerous other factors which influence the collective bargaining power of specific unions
at different periods of time

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

Wage levels as proportion of total costs - the lower the percentage of total costs that a firms's
wages represent, the higher the bargaining power

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

The level of profits - higher profits strengthen the unions demands for higher wages

State of the economy - less bargaining power in a recession & more when the economy is booming

Overall size of the trade union - the larger the union the stronger their bargaining power

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

Advantages & Disadvantages of Trade Unions

Pros & Cons of Trade Unions For Workers

Pros
Cons
 Workers no longer need to negotiate with  Industrial action is stressful as it is a conflict
management on their own as they benefit between workers & management
from collective bargaining
 Workers do not get paid while on strike
 Workers receive better pay than non-
 Strike action disrupts economic activity & can
unionised workers
upset other people in the economy
 Workers enjoy better working conditions than
 Individual workers may not agree with specific
non-unionised workers
demands made by the trade union on behalf
 Workers enjoy better non-wage benefits such of all the workers, & yet they are pressured to
as guaranteed lunch breaks support the collective action

 Workers receive specialised job training &  Some union members continue to work
free legal advice from the union through a strike (they may need the money) &
receive abuse & intimidation from the other
striking union members

pg. 2
Pros & Cons of Trade Unions For Firms
Pros
 Training from the trade union increases worker
productivity which decreases costs
 Empowerment in the workplace improves
employee motivation, which usually results in
fewer sick days, higher productivity & greater
output for the firm
Pros
 Trade unions help create a more equal &
prosperous society
 A prosperous society is the basis of
strong consumption in an economy & this helps
to drive economic growth
 If firms’ profits increase due to increased
productivity, governments receive more
corporation tax
 Higher wages mean that the workers pay more
income tax to the government, which can be
used to further fund public & merit goods
Pros & Cons of Trade Unions For Governments/Economy
pg. 3
Cons
 Including unions in decision-making increases the
time period taken to implement changes which
can be detrimental to effective competition
 Management styles have to be more inclusive &
less authoritarian which some managers find
difficult to accept
 Meeting union demands increases costs of
production, which may reduce output & profits
Cons
 Industrial action reduces output, lowers firms’
profits, thereby lowering the potential
corporation tax collected by the government
 Strike action is often very disruptive to many
people’s lives, especially when it occurs in
essential industries such as rail networks
 Governments may find it harder to attract
multinational corporations (MNCs) to invest if
industrial action occurs regularly
 MNCs may be more reluctant to invest in
strongly unionised economies as the costs of
production will be higher