Trade unions
What are trade unions?
A trade union is an association of workers formed to represent their interests and improve their pay and working conditions.
4 types of trade unions:
- Craft unions: These represent workers with particular skills, for example, plumbers and weavers. These workers may be employed in several industries.
- General unions: These unions include workers with a range of skills and from a range of industries.
- Industrial unions: These seek to represent all the workers in a particular industry, for example, those in the rail industry.
- White collar unions: These unions represent particular professions, including pilots and teachers.
A national trade organization is a union of all the trade unions in a country, for example, the All India Trade Union Congress (AITUC).
Role of trade unions
- Negotiate on behalf of their members for wages, job security, working hours, and working holidays(collective bargaining).
- Provide information on a range of issues for their members.
- Provide help with education and training schemes.
- Provide benefits such as strike pay, legal advice, and sick pay.
- Involve the government in the adoption of legislation that will benefit its members.
The basis of wage claims
- A worker deserves a higher wage because of increased productivity.
- The industries where the profits have increased can afford to pay higher wages to its workers.
- Comparability argument: a union may argue that a worker it represents should receive a pay rise to keep their pay in line with similar workers.
- A worker needs higher wages to deal with increased costs of living.
Factors affecting the strength of trade unions
The level of economic activity- if output and income are rising, most industries may be earning high profits and hence can pay workers higher wages and offer better working conditions, as demand for workers increases an employer will be more likely to agree with a trade union to retain its current workers.
The number of members- the more members a union has, the more funds it will have to finance its activities. It may also prove difficult for employers to replace all union workers with non-union workers.
The level of skill- the union representing highly skilled workers will be in a relatively strong position as it will be difficult to replace union members.
A consistent demand for the product produced by the workers– unions representing in-demand products are in a strong position to demand.
State of government legislation- a union will be in a stronger position if laws permit industrial action.
Industrial action
Industrial action occurs when workers disrupt production to put pressure on employers to agree to their demands.
3 types of industrial actions:
- Overtime ban
- Work-to-rule
- Strike (when a group of workers stop work to put pressure on employers to agree to their demands)
Trade unions can increase the wages of their members by restricting the entry of new workers into the industry, or by demanding high qualifications for closed shop industries.
Closed shop: employers employ only those workers who are a part of the labor union
Open: employer is free to employ members and non-members
Trade union’s impact on firms
| Benefits | Drawbacks |
| Less time-consuming to negotiate as firms will find it relatively easy to negotiate with the trade union than all its workers individually. Reduces conflicts as the presence of a trade union provides a channel of communication between workers and employers. Increased productivity from workers as the union provides training to its members. | Loss of revenue Loss of reputation Affected costs by overtime bans Flexibility is affected by work-to-rule. |
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