S7

IGCSE®/O Level Economics

3.3 The role of trade unions

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 What is a trade union or labour union?

Trade unions are organizations that promote and protect the

interests of their members (employees) to improve their wages
and working conditions
The trade union movement worldwide has helped to
•fight and bring to an end child labour in many countries
•improve workers’ safety
•increase wages for both union and non-unionized workers
•improve education and other benefits for many poor and working
class families

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 Types of trade union

Trade unions may represent:

Craft unions
e.g. Union of Operators and
Technicians in Cinema and
Video Projection (Spain)
•employees with the same
skills or in the same occupation Non-manual unions
e.g. German Police Union

•employees in the same Industrial unions

industry e.g. National Union of
Mineworkers in South Africa
(NUM)

•employees with different skills in different

occupations and industries General unions
e.g. Australian Workers Union

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 The aims of unions

Unions’ aims are:

• negotiating improvements in wages and other non-wage benefits
• defending employees’ rights and jobs
• improving working conditions, such as securing better hours of work and better health
and safety policies
• improving pay and other benefits, including holiday entitlement, sick pay and pensions
• encouraging firms to increase workers’ participation in business decision making
• supporting members who have been dismissed or who are taking industrial action
• developing the skills of union members, by providing training and education courses
• providing social and recreational amenities for their members
• improving employment legislation

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 Collective bargaining
Negotiations take place between trade unions and employers over
improvements in wages and other non-wage benefits for employees

Trade unions may seek to improve the wages

and other working conditions of their members if:

•price inflation is high and rising

•other groups of workers have received pay
rises
•new machinery or working practices have been
introduced in the workplace
•the productivity of their members has increased
•the profits of the employing organization have
increased

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 Union bargaining strength

Strong bargaining position if: Weak bargaining position if:

•the union represents most or all of •many workers in the firm or industry
the workers in the firm or industry do not belong to a union
•union members provide non-essential
•union members provide essential
goods or services for which there are
services such as health care and
many close substitutes
electricity
•the union lacks financial resources
•the union is able to support its
members financially during strike •laws outlaw or severely
action restrict union activity

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 What if negotiations fail?

Trade union members make take industrial action in an attempt to increase

their bargaining strength. Industrial action disrupts production, increases
costs and reduces revenues for employers.

Arbitration may be necessary to settle industrial disputes. This involves

employers and unions agreeing to let an independent referee, often a senior
government official or lawyer, help them to settle their industrial dispute.

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 Forms of industrial action

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