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Trade Unions (The role of trade unions in an economy (Functions of trade…
Trade Unions
The role of trade unions in an economy
Functions of trade unions
negotiating improvements in and other non-wage benefits with employers
defending employees' rights and jobs
improving working conditions, such as securing better working hours of work and better health and safety policies
improving pay and other benefits, such as holiday entitlement, sick pay and pensions
encourage 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
influencing government policy and employment legislation to protect jobs, the rights of workers and their wages and working conditions
Types of Trade Union
General Union
represent workers from many different occupations and industries
Industrial unions
represent workers in the same industry
Craft unions
represent workers with the same skills across several industries
Non-manual unions
represent workers in non-industrial and professional occupations
What is collective bargaining?
The process of negotiating over pay and working conditions between trade unions and employers when:
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
labour productivity of their members has increased
profits of the employing organization have increased
What determines the bargaining strength of different trade unions?
whether it represents most or all of the workers in that firm or industry
union members provide products and public services consumers need and for which there are few close substitutes, such as electricity, public transport, education and healthcare
when it is able to support its members financially during strike action to compensate them for their loss of hearing
Why do industrial disputes occur?
When unions demands for fringe benefits
when unions insists members can only carry out certain jobs and will not take on new tasks
when a firm employs non-union members to carry out the same or similar tasks
Industrial actions
overtime ban
work to rule
go-slow
strike
businesses suffer high costs and lose revenue and profits
Union members not paid their wages or salaries
consumers may be unable to obtain the goods and services
reputation of an economy as a good place for business tarnished
arbitration may be necessary to settle industrial disputes
advantages and disadvantages of trade union activity
benefits of trade union representation
for workers
trade union represents their views and fight to maintain their jobs and working conditions
they protect their wages and other benefits
they prevent discrimination and exploitation at work
they can provide training and educational courses
for firms
trade unions protect and maintain the skill levels of their members
they provide a single point of contact. Having a single body for negotiating terms and conditions for workers is simpler than dealing with workers individually
they can help to improve labour productivity. Improvements in working conditions and wages can create an incentive for workers to be more productive. Unions may also agree to pay or profit sharing deals linked to higher levels of productivity
for government
the trade union movement in an economy provides a single point of contact and source of infomation to inform and discuss economic issues and government policy measures including employment laws
they can help to reduce inequality in society by raising the wages of low paid workers
they can raise productivity within firms, they will help to boost output and economic growth in the economy
improving and maintaining workforce skills increases the mobility of labour in the economy
disadvantages of trade union representation
for workers
belonging to a trade union requires the payment of weekly or monthly membership fees
individual workers who are more productive and have more experience and skills than their workplace colleagues will be unable to negotiate higher wages separately with their employers
in some workplaces with closed shops or single union agreements, employees have no choice but to join a union and to follow union rules
for firms
wages and other working conditions may be better, more productive and working hours lower than they might otherwise be if there was no union representation in workplaces
they will have less control over who they can hire and dismiss, and may face more challenges and legal actions from trade unions if they do not agree with the reasons for certain dismissals and the procedures used
they are normally required to collect trade union membership fees from the pay of their workers and then pay over these fees to their unions. This increases administrative and accounting costs
trade unions may organize workers to participate in disruptive industrial actions including strikes, to increase their bargaining strength in negotiations over jobs, workers' rights, pay and working conditions
for government
the demand for labour in the economy may be lower and unemployment higher if trade unions push up wages. In turn, a government may have to spend more of unemployment benefits or welfare payments and raise taxes to pay for them
trade unions may contribute to rising wage inflation if they are successful at raising the wages of their members without improving their productivity at the same time
industrial disputes and actions can result in lost production and may reduce economic growth