S7

IGCSE®/O Level Economics

3.3 The role of trade unions

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 Trade Unions
At the end of this lesson, you should be able
to be:
-Define a trade union.
-discuss the functions and types of trade
union.
-Identify the factors that determine the
strength of trade unions

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2
 What is a trade union or labour union?

Trade unions are organizations that promote and protect the

interests of their members (employees) by helping 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 doing non-manual jobs
•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/Functions 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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 Trade Union

At the end of this lesson, you should be able

to:
-Examine the factors which determine trade
union bargaining strength
-Define collective bargaining and industrial
dispute
-Discuss the possible remedies available to
trade union in the event of an industrial dispute.

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 Starter
Brain Teaser

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STARTER: How many additional blocks are required to make the cube whole? (Assume the hidden inside
cubes are there.)

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SOLUTION- STARTER: How many additional blocks are required to make
the cube whole? (Assume the hidden inside cubes are there.)

Answer
= 45

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 Collective bargaining
Collective bargaining is defined as negotiations 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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 Industrial dispute
This is a disagreement between a trade union and the employer
over improvements in wages and other non-wage benefits. It
happens when collective bargaining fails.

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 Trade Union
At the end of this lesson, you should be able to:
-Discuss the possible remedies available to trade unions in the
event of an industrial dispute.
-Discuss the problems of a trade union.
-Answer questions on trade union.
.

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 Remedies for industrial dispute: What
if negotiations fail?
Trade union members may take industrial action in an attempt to
increase their bargaining strength. Industrial action disrupts
production, increases costs and reduces revenues for
employers.

Industrial action is defined as a temporary show of dissatisfaction

by employees to protest against bad working conditions or low pay
and to increase bargaining power with the employer.
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 settle their
industrial dispute.

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 Forms of industrial action

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 Problems or disadvantages of a trade union
Unemployment: In a competitive labour market, trade
unions who push wages above equilibrium can cause
unemployment.
Inflation: Powerful unions can push wages up, thereby
causing inflation. Employers add on the increased wages to
the prices of goods and services.
Lost productivity: Industrial action by workers can lead to
lost production hours and eventually lost productivity.
Confrontation: Unions can also create a confrontational
attitude, leading to disputes and poor morale.
Ignore non-members: Trade unions only consider the needs
of its members, often ignoring the plight of those excluded
from the labour markets, e.g. the unemployed.
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 Question 1

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 Question 2

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 Question 3

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 Question 4

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 Question 5

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 Homework
Theory (Oct/Nov 2012, Paper 2, Question 2c)

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 Trade Union
At the end of this lesson, you should be able to:
-Answer theory past questions on the labour market, trade union
and some other topics.

Class Work
May/June 2018, Question 2a, b and c (Paper 2).
.

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