Trade Unions

A trade union represents and acts for workers, to try to secure the best possible working conditions, pay and protect jobs. They also provide local, social and welfare facilities. Finally they attempt to influence government policy on a national basis.

Trade unions are financed by the workers who will normally pay a monthly subscription for the right to be a member. When a union represents a group of workers to their employers it is known as collective bargaining. 

A typical example of Trade Union activity is that they can control the Supply of labour as union members refuse to work for a wage rate below a certain level. This is shown in the diagram below:

A majority of disagreements can be resolved quickly and without incident, however, occasionally the two sides are unable to agree. In these cases the union may decide to take industrial action.

Unofficial action: This is where there is no official backing from the union. Unofficial action taken by the employees can come in a number of forms eg:

• Low levels of effort – by working inefficiently or deliberately wasting time;

• Unofficial strikes – will normally occur when workers stop working as an immediate reaction to an employer’s decision.

Official action: This is where the union represents the workers. This is action that is supported by the union. This action can take a number of different forms:

• Work to rule – this means that workers do not carry out duties that are not in their employment contract. This can mean workers observing safety laws to the letter, when they are normally disregarded, which can lead to slower working;

• Overtime ban – employees only work the hours agreed in their contract;

• Sit-ins – workers refuse to leave a premises after production has finished;

• Work-ins – employees refuse to stop working in the hope of showing the owners that a factory is still a viable concern;

• Picketing – this involves members of a union on strike standing outside a firm’s entrance trying to persuade other workers not to cross it;

• Strike – this is the ultimate sanction a union can take. Employees refuse to work either for a set period of time or indefinitely. A majority of workers must vote in agreement of the strike in a secret ballot.

(These forms of industrial action could also be carried out without the backing of the union, in others words it be unofficial, but they are usually forms of official action.)

If after consultation and negotiation both sides fail to reach an agreement one of the following organisations might be used to resolve the conflict:

• Advisory, Conciliation and Arbitration Service (ACAS)

• European Court of Justice.

ACAS is used to solve industrial disputes between the employees and employers. The European Court of Justice. 

How successful are trade Unions?

Trade unions can really benefit their members. However especially in times of recession they cannot protect job losses nor gain wage increases. Often they can lead to firms having higher costs and in extreme cases the firms may become uncompetitive and in this case the firms may go out of business and workers may lose their jobs. 

In recent years Governments have introduced laws to reduce the powers of trade Unions

Recent Legislation

Recent legislation has severely weakened trade union power as follows:

• An employer can now sue a union for lost profits if industrial action is taken without an initial secret ballot of workers. 

• Industrial action can be taken only against the original employer and not against his suppliers or buyers. 

• Mass picketing is unlawful. Only a handful of strikers are allowed to man a picket line, peacefully. 

Core Notes from video  above:

Trade unions can use their  power to increase the real wages of their members and therefore improve welfare.

Eval: If wages rise faster than productivity, then firms will see a rise in unit costs and this can negatively affect profits and eventually lead to less jobs.

Unions can act as a counter to the  power of employers who may pay lower wages and spend less on worker training.

Eval: An employer does not always pay lower wages than they need to. Many employers treat workers well and do not exploit them

Unions can help to prevent structural unemployment by campaigning against job losses caused for example by imports. 

Eval: Unions may impede competitiveness if they seek to block the use of technologies that replace some workers with robots.