Workers and Trade Unions
Advantages and disadvantages of trade unions
Definition and functions of trade unions
Reasons for Differences in Earning
disadvantages
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for workers
Definition: Trade unions are groups that promote and protect the interests of their members with the purpose of improving their wages and working conditions. In return, members usually pay a union membership fee to help fund the union's operations and the union organisation itself.
Belonging to a trade union requires weekly or monthly fees
Division of labour and specialization
Skilled Vs. Unskilled
Individual workers will not have bargaining power for higher wages against colleagues
Some workers have no other option but to join unions
Demand and Supply of Labour: There is a lower supply of skilled workers than unskilled workers. The demand for skilled workers is also higher than unskilled workers since they are more productive.
Division of labour
for firms
Wages and working conditions may be better and less working hours if the was no union representation
Dividing employees into different tasks or operations is known as division of labour
Workers are divided into different tasks and by focusing their efforts on completing that single task and going it over and over again makes them more skilled.
Specialization
They will have less contol over who to hire and who to dismiss
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Relative bargaining strength: This disparity means that skilled workers have greater bargaining power and can bargain higher wages.
Advantages and Disadvantages of Division of labour:
Government policies: On the other hand, since a large proprotion of labour is unskilled, governments have made minimum wage laws to ensure they get paid fairly.
Primary/Secondary/Tertiary
Demand and Supply: Primary sector includes labour-intensive work, hence the demand for labour is high. On the other hand, supply of such labour is high, which is why wage rates tend to be low anyway. The secondary sector is more capital-intensive, so demand for labour is low, hence wage rates are low. The tertiary sector/service sector has a high demand for skilled labour. However, supply of skills is comparatively low, so wage rates are higher.
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Advantages
for workers
Disadvantages
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Help to fight and maintain their jobs and working conditions
Protect wages and benefits
Prevent discrimination and exploitation
Can provide training and educational cources
for firms
Protect and maintain skill levels of their members
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Functions
- Influencing government policy and employment legislation to protect jobs, the rights of workers, and their wages and working conditions.
- Providing social and recreational amenities for their members
- Supporting members who have been dismissed or who are taking industrial action
- Improving pay and other benefits, such as paid leave, holiday entitlement, and pensions
- Improving working conditions, such as securing better hours of work and better health and safety policies
- Negotiating improvements in and other non-wage benefits with employers
- Encouraging firms to increase workers' participation in business decision
making
- Defending union members' jobs and rights as employees
- Developing the skills of union members, by providing training and education courses
Wage determination:
Definition: Just as in a market for any good or service, the market price of labor or the equilibrium wage rate is determined by the demand and supply of labour.
Factors affecting demand of labour:
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Government Policies: Minimum wage laws help balance wages better but do not bridge the disparity.
Advantages
3) If a worker has to switch between many different tasks and operations, it would take a lot of time to learn and develop the skills required. Division of labour would mean lesser training required as well.
2) The workers' abilities are used to the full extent - firms can choose workers based on what work they are best at. By repeating their individual tasks, their speed and skill increases and along with this their earnings as they become more productive.
1) More goods and services can be produced - repetition of the same operation over and over again increases their skill and speed which would result in more production in the same amount of time.
4) It allows the use of machinery - Since labour is divided into specialist sections, it becomes more worthwhile to use machinery. This allows further savings of time and effort.
External reasons such as a pandemic and other natural causes that could increase demand for a product.
Instability in economy -->Firms have lesser revenue --> Less money to spend on wages
Prices of capital intensive methods -->If there are higher prices then more likely the firm would be labour intensive and vice versa.
Male/Female
2) workers may start to feel alienated and may feel undervalued and lose pride in their work. It may result in the workers not being able to see the final result and will start losing motivation --> may lead to industrial disputes
3) products may become too standardized - May not be enough variation, this point depends on consumers' opinions and differs from peoples' wants and choices.
1) The work may become boring - repetition of the same task may get too repetitive and workers may get bored and start losing motivation. As a result, quality may go down.
4) Firms are unable to use labour flexibly - If one or two workers responsible for one task take leave, the overall production would be on hold. Since that task was dependent on those workers, no other workers would be able to fill in and production rate would decrease.
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Demand and Supply:
Labour productivity
Factors affecting supply of labour:
Skillset/qualification --> Greater skillset -->Greater productivity-->Greater demand
Labor mobility
most people choose to specialize in not just one relatively simple task but in a range of skills
These ranges of skill are relevant to one or more occupations
Advantages and Disadvantages of specialization
Disadvantaages
Advantages
Specializaiton allows workers to make the best use of their skills and abilities
skilled employees will often earn more than unskilled employees as their skills are limited.
Being exposed to more skills and abilities would also increase the workers' productivity and increase their opportunities as there is a high demand for skill labour
however, over-specialization in only a few skills or a small skillset can result in immobility and the workers' will have a harder time finding a job
the quality of the products may come down as the worker wouldn't spend too much time on checking the product.