Trade Unions in the UK Labour Market

Aims and Objectives Aim: To understand trade union trends Objectives: Define trade unions Explain the effects of trade unions on the labour market Analyse trade union trends Evaluate trade union trends

GES Briefing

Trade Unions Definition: A Trade Union is an organisation of workers who join together to further their own interests.

Collective Bargaining Definition: Pay for a group of workers being decided through a single negotiation. E.g. Teaching, Nurses

Firms Vs Trade Unions ? Conflict Partnership Interests of firms and trade unions are conflicting. Higher wages for workers mean higher costs and lower profits for the firm. Union activity may then be seen as damaging to both the firm and the economy, reducing aggregate supply. The success of the firm is in the interests of both parties. A profitable firm is more likely to generate jobs and pay it’s workers well. If workers receive better pay and working conditions their morale may increase, leading to increased productivity for the firm.

Effects of Entry of a Union into a Previously Competitive Labour Market Assume a ‘closed shop’ agreement whereby all employees must be members of the same union. Union become a monopoly supplier of labour to the market. Union refuses to supply labour below it’s target level.

Effects of Entry of a Union into a Previously Competitive Labour Market Real Wage Rate/MRP Se Wtu Wc D=MRP O Qtu Qc Employment

Trade Unions as Monopsonists The greater the control over labour supply, the greater the power of the union. The threat to withhold labour supply can be used as a weapon to punish employers that fail to meet union demands. E.g. NUM Miners Strikes.

Union Mark-Up A measure of the success of trade unions at increasing wage rate of members Fallen since 1995, but have risen between 2008 and 2010 and are in excess of 20% in public sector.

Union Membership Strongest in public sector Reduced by Conservatives between 1979-1997 Supply side policy Brought in laws to make striking more difficult and reduce their effects. Secondary picketing made illegal.

Industrial Disputes Due in part to decline in memberships Change in union approaches, not just striking Recent movements towards striking in an attempt to stand against government cuts

Plenary Has the power of trade union diminished over time? Is this a good thing or a bad thing for the UK Economy Employers Workforce Trade Unions