The Role of Trade Unions | Economics for GCSE/IGCSE - Year 11 PDF Download

The Work of Trade Unions

• Employees contribute a monthly fee to become members of a trade union, known as a subscription. Membership ceases upon discontinuation of this fee payment.
• Membership in a union offers numerous advantages, such as:
  • Collective negotiation.
  • Specialized job training.
  • Legal representation during disputes.
  • Discounts on a variety of goods and services.
• When negotiations collapse and collective bargaining proves ineffective, trade unions resort to various tactics to compel employers or governments to continue dialogue. 
• These strategies, collectively termed industrial action, encompass:
  • Strikes.
  • Overtime bans.
  • Work-to-rule practices.
  • Go-slows.

The Focus of Trade Union Efforts

Factors Influencing the Strength of Trade Unions

• The strength of trade unions is significantly impacted by the percentage of workers within a firm who are union members. This directly correlates with the collective bargaining power that the union holds in negotiations with the employer.
• Similarly, the collective bargaining power of unions at a broader economic level is influenced by the percentage of workers in the economy who are part of trade unions. This statistic affects the unions' ability to negotiate with the government.
• Various additional factors play a role in determining the collective bargaining power of specific unions during different time periods, showcasing the dynamic nature of labor relations.

Factors Influencing Collective Bargaining Power of Trade Unions

• Unemployment Level: Higher unemployment weakens the bargaining power of unions as companies can readily replace existing workers with available job seekers.
• Wage Levels as Proportion of Total Costs: When wages represent a lower percentage of a company's total costs, the union's bargaining power increases.
• Swapping Labor for Capital: The closeness of capital's cost to that of increased labor costs affects the union's bargaining power.
• Level of Profits: Increased profits embolden unions in demanding higher wages and better benefits.
• State of the Economy: During recessions, unions have less bargaining power compared to periods of economic prosperity.
• Overall Size of the Trade Union: Larger unions possess stronger bargaining power due to their increased collective influence.
• Productivity of Labor: Highly productive workers are more valuable to both the company and the union, leading to enhanced bargaining power.