Trade unions Trade Unions are organizations of workers that aim at promoting and protecting the interest of their members (workers). They aim on improving wage rates, working conditions and other job-related aspects. Each employee who wishes to join a trade union must pay an annual fee, which contributes towards the costs and expenses that the trade union incurs when it provides services to its members, and supports industrial action by the workers. Types of trade union Craft union is an organized group of workers who are engaged in a particular craft or skill but who may work for various employers and at various locations, for example plumber or painter. Industrial union- Industrial unions are trade union that combines all workers, both skilled and unskilled, who are employed in a particular industry. A general union is a trade union which represents workers from all industries and companies, rather than just one organisation or a particular sector A white-collar union - This type of unions represents workers in professional and commercial jobs. (A white collar worker belongs to a class of employees known for earning higher average salaries doing highly skilled work, but not by performing manual labor at their jobs.) Functions of a trade union 1. To improve the pay of its members. 2. To improve the working conditions and the working practices of its members. 3. To support the training and the professional development of its members. 4. To ensure that their members’ interests are considered by the employers when any decision is made which will affect the workforce. 5. To provide financial and legal support to workers who may have been unfairly dismissed or disciplined. Trade union act as a means of communication and negotiation between employers and employees through a process known as collective bargaining. This occurs when a trade union representative, who is appointed or voted to negotiate on behalf of the workers for better work conditions and pay. 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. 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. Forms of Industrial Action Advantages and disadvantages of trade union membership Advantages to workers: Workers benefit from collective bargaining power by being able to negotiate an increase in wage factors as it increases their members’ disposable income and purchasing power. They can assist a worker in negotiating better working conditions which improve the workers’ living standards. Workers feel a sense of unity and feel represented, increasing optimism. Lesser chance of being discriminated and exploited. Disadvantages to workers: Workers might get lesser wages or none if they go on strike – as the output and profits of the firm falls and they refuse to pay. Some TU may be ineffective and workers waste their money by paying subscription instead of spending on necessary things. Advantages to firms: Time is saved in negotiating with a union when compared to negotiating with individual workers. A trade union’s cooperation can help organise workers efficiently. Good relationships between unions and firms help to increases productivity. Disadvantages to firms: Decision making may be long as there will be need of lengthy discussions with trade unions in major business decisions. Trade unions may make demands that the firm may not be able to meet – they will have to choose between profitability and workers’ interests. Higher wages bargained by trade unions will reduce the firm’s profitability. Businesses will have high costs and low output if unions take industrial actions leading to lower sales and profits. They may also lose market share to competing firms. Advantages to the economy: Ensures that the labour force in the economy is not exploited and that their interests are being represented Less work-based legislation needed Disadvantages to the economy: Can negatively impact total output of the economy. Firms may decide to substitute labour for capital if they can’t meet trade unions’ expensive demands, and so unemployment may rise. Higher wages make the country’s exports expensive and thus less competitive in the international market What determines the success/strength of trades unions? Membership of workers (% of the workforce in the trade union)- when the majority of workers form part of the trade union, this increase the power of the union to bargain. Bargaining power of workers- workers engage in vital industries have more bargaining power, for example power plant workers have more economic influence than a salesman in a supermarket. Economic conditions –during periods of economic growth, firms are more likely to wish to employ more workers and may accept union conditions. Government legislation- over the years many governments have reduced the power of trades unions, e.g. abolishing closed shops (A closed shop is a form of union agreement under which the employer agrees to hire union members only) Nature of good the industry supply – if the product workers produce have inelastic demand, then unions will be in a better position to negotiate higher wages and better working conditions. Skilled workers v/s unskilled workers – Trade union of skilled workers have more bargaining powers than unskilled workers.
