<3.4 TRADE UNIONS>

--3.4.1 DEFINITION OF TRADE UNION--

--DEFINITION--

A TRADE UNION is a group of workers who join together to protect their rights and improve their working conditions. Usually this is highly organised and a membership fee is payable.

--3.4.1 ROLE OF TRADE UNION--

--ROLE--

They MAINLY do things like:

NEGOTIATE WITH EMPLOYERS: Trade unions act as 'MIDDLEMEN' in negotiations between employee and employer concerning issues related to better pay, hours, or working conditions. This is called collective bargaining as they work as a 'COLLECTION OF WORKERS' to 'BARGAIN', based on the premise that 'STRENGTH IN NUMBERS' is more powerful than the INDIVIDUAL.
TAKE INDUSTRIAL ACTION: A source of their strength is the THREAT to take some form of (Industrial) action, if their demands are not met, such as STRIKING.
LEGALLY SUPPORT/ADVISE MEMBERS: Often they will need to help members who believe they have been treated unfairly at work and who wishes to get legal advise and support. In some cases a strike may be called until the issue is resolved.

--HOW STRONG ARE THEY?--

'STRENGTH' in the case of trade unions, refers to their 'LEVEL OF BARGAINING POWER' which depends on a number of factors:
- - 1) LEVEL OF ECONOMIC ACTIVITY: When the economy is booming and incomes and profit are rising there is a high demand for extra labour and for current workers to work even more, therefore unions have MORE bargaining power as they can say to the owners... "Your making more revenue and profits now th eeconomy is booming, so we feel justified in asking for you to share some of that with us in the form of higher wages!"
  - 2) SIZE OF THE MEMBERSHIP: Clearly as their power lies in their ability to use 'STRENGTH IN NUMBERS' to their advantage, the higher the proportion of workers who are members, the greater the union's ability to cause serious impacts on production by for example 'STRIKING', in addition they will have significant membership funds to make the strike last longer. As such they can say to the owners... "We are not happy with this, so we will organise a strike, which will mean 99% of your workers will stop working all at once, this should mean production will cease and cost you millions so let's chat now!!!"
  - 3) LEVEL OF SKILL REQUIRED: In the last unit we discussed how the level of 'IRREPLACABLENESS' impacts wages (Mo Salah😭!!), clearly if a union of highly skilled workers go on strike that are really hard to replace then unions will have MORE bargaining power. As such they can say to the owners..."Look, we are highly skilled individuals, who studied to obtain these skills for many years, if we leave you can not find replacements easily, so you need to listen to our demands and compromise now or else!!"
  - 4) ELASTICITY OF DEMAND FOR LABOUR: Again this is linked to points previously made regarding the ability to be replaced as jobs with ELASTIC demand imply that if wages rise the fall in quantity demanded is significant which you can relate to low skilled jobs/jobs that can be replaced by automation etc...in these cases union power is WEAK. As such employers can say to unions..."Look if you ask for more money then, we can replace you with simple tech, or any other low-skilled worker."
  - 5) PROPORTION OF WAGES TO TOTAL COSTS: It is fairly common for labour costs to be the highest cost of most businesses, especially labour intensive ones. Therefore, it is much harder to negotiate wage changes compared to when it is is only a small % of total costs. This means the bargaining power of unions is WEAKER when it is a large cost of the business as the employer can argue..."Our business already spends most of our income on wages, we simply can't stay profitable if we raise everyone's wages, if we do we might have to employ less workers, is that what you want?"
  - 6) LEVEL OF IMPORTANCE OF INDUSTRY: If the union represents what is considered an essential industry such as pilots, doctor's and teachers' unions, then they are more likely to be successful as when these industries strike it has a major 'Knock-on -effect' on the whole economy (It's GDP), for example teacher's strikes means parents can't go to work. As such the union can say..."We are vital for the entire country, if we don't work then everyone is inconvenienced and this could impact GDP, so let's talk now!"
  - 7) LEVEL OF GOV'T/BIZ RESTRICTIONS: Due to the devastating impact strikes can have some governments and businesses have limited trade union power making it illegal to strike etc... while some firms will simply not employ union members, which clearly impacts their ability to use industrial action.

--3.4.1 PROS/CONS--

--TO WORKERS--

--PROS--

GREATER BARGAINING POWER: Employees can negotiate better wages, benefits, and working conditions as a group.
LEGAL SUPPORT: Trade unions often provide legal assistance in disputes with employers, such as unfair dismissal or discrimination cases.
JOB SECURITY: Unionized workers may have stronger protection from sudden layoffs or unfair treatment.
BETTER WORK CONDITIONS: Unions advocate for health and safety, hours of work, and general employee well-being.
Representation and Voice
→ Employees have a platform to raise concerns and influence company policies.

--CONS--

Membership Fees

→ Employees often have to pay monthly or annual fees to be a member of the union.

Strikes and Industrial Action

→ Employees may be expected to participate in strikes, which can lead to lost pay or conflict with management.

Loss of Individual Negotiation

→ Some employees might prefer to negotiate their own terms instead of accepting collective agreements.

Union Politics

→ Decisions are made by majority vote, so individual preferences may be overruled.

Tensions with Management

→ Being in a union can sometimes lead to strained relationships with employers.

--TO EMPLOYERS--

--PROS--

LOWER COSTS?: Trade unions may cut the firms’ costs of production by reducing the time and effort involved in negotiating with workers individually, and these lower costs can increase profits and encourage expansion.
MORE SALES?: Trade unions may push up wages boosting total (aggregate) spending in the economy which may increase demand for the firm's products.
GREATER PRODUCTIVITY?: Trade unions may help with training and education systems and such schemes may raise productivity which can cut costs of production and increase productive potential.
INCREASED MOTIVATION?: By promoting workers’ rights trade unions may increase the motivation of workers as they gain more job satisfaction and security which will raise productivity.

--CONS--

HIGHER COSTS?: Trade unions may push up wages higher wages will increase firms’ costs of production this may encourage them to cut production AND WORKERS.

• Trade unions may engage in industrial action (1) e.g. strikes (1) this will disrupt production (1) sales may be lost (1).

• The presence of trade unions may discourage MNCs setting up in the country (1) MNCs contribute to economic growth (1).

--TO GOV'TS--

--PROS--

Trade unions may cut firms’ costs of production (1) by reducing the time and effort involved in negotiating with workers (1) lower costs can increase profits (1) higher profits can encourage expansion (1).

• Trade unions may push up wages (1) boosting total (aggregate) demand in the economy (1)

• Trade unions may help with training and education systems (1) such schemes may raise productivity (1) higher productivity can cut costs of production (1) and increase

productive potential (1). • By promoting workers’ rights (1) trade unions may increase the motivation of workers / workers may gain more job satisfaction (1) which will raise productivity

--CONS--

Trade unions may push up wages (1) higher wages will increase firms’ costs of production (1) this may encourage them to cut production (1).

• Trade unions may engage in industrial action (1) e.g. strikes (1) this will disrupt production (1) sales may be lost (1).

• The presence of trade unions may discourage MNCs setting up in the country (1) MNCs contribute to economic growth (1).

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