1. Labour Market – The Economics of Trade Unions

2. Unions – can you name them?
Retail & Leisure & Media
BFAWU
PFA
NUJ
Transport
BALPA
ASLEF
RMT
Public Services
FBU
PSU
RCN
NUT

3. Union Personalities – Can you name them?

4. UK Trade Union Stats
Trade union density for employees in the UK was 26.6 per cent in 2010
Trade union membership levels for UK employees was 6.5 million
Across all sectors of the economy, just under half of UK employees (46.1 per cent in 2010) were in a workplace where a trade union was present
The hourly earnings of union members, averaged £14.00 in 2010, 16.7% more than earnings of non-members (£12.00 per hour)

5. Union activity in the UK

6. Key functions of trade unions
Protecting and improving real living standards
E.g. Campaign for a living wage
Protecting workers against unfair dismissal (employment rights)
Promoting better conditions & health and safety
Workload issues
Workplace training and education, accumulation of human capital
Protection of pension rights
Counter-balance to possible monopsony power of employers in the labour market

7. Battling for their members

8. Unions in the News

9. Unions in the News

10. Influencing wages and earnings
Collective bargaining with employers
National wage bargaining
Plant level wage bargaining (micro level)
Can trade unions achieve a “mark-up” for their members (i.e. a premium wage)?
What are the possible employment consequences?

11. Factors influencing bargaining power
Macroeconomic climate
Unemployment rates / labour shortages
Profitability of businesses
Stage of the economic cycle
Public support / sympathy for unions
Union density – % of the workforce in an industry who are members of a union
Legislation – legal powers of union to take action
Financial consequences of industrial action
Impact of globalisation – and power of multinationals (TNCs) to outsource production around the world

12. A competitive labour market
Wage Rate Ls W1 Ld E1
Number of people employed

13. Unions may negotiate minimum pay level – at the cost of jobs?
Competitive labour market
Union negotiated wage rate
Wage Rate
Wage Rate Ls Ls
Wtu W1 W1 Ld Ld E1 E2 E1 E3
Number of people employed

14. Controlling labour supply to boost wage rates – restricting entry
Competitive labour market
Wage Rate
Wage Rate
Labour supply after trade union
Labour supply before trade union
Labour supply before trade union W2 W1 W1 Ld Ld E1 E2 E1
Number of people employed

15. Declining union membership

16. Long term decline in union power
Employment laws:
Employment legislation has
Outlawed illegal strikes
Given employers the right to seek compensation for the effects of certain forms of industrial action
Requires all unions to hold secret ballots of their members before any strike action is permitted

17. Long term decline in union power
Market competition / globalisation
The effects of increased competition in product markets – in nearly every domestic market for goods and services, there is greater competition now

18. Long term decline in union power
Changing pattern of employment
There has been a long term change in the structure of employment away from traditionally strong union sectors such as heavy engineering, coal-mining, steel and textiles, towards service sector jobs in the private sector where union density is lower

19. Trade Union Membership
There has been a large decline in union membership over the last thirty years
Union membership peaked in the late 1970s at over 13 million, and then fell dramatically in the 1980s as Margaret Thatcher took on the trade unions.
Membership then stabilised and the figure has remained between seven and eight million since the mid-1990s.

20. The number of industrial stoppages

21. Days lost from strikes in the UK

22. Total days lost to industrial action

23. The standard case against unions
Unions act as a distortion in the labour market
They drive wages higher and profits & employment lower than if the labour market was fully competitive
They may prevent the introduction of new, flexible work practices
They may delay the introduction of new technology
Their collective bargaining power can lead to higher wages and cost-push inflationary pressures
Unions can cause labour market failure

24. Evaluating: Questioning this view
Unions and their members stand to gain from
Higher productivity
The workforce having more flexible skills
Improved working conditions and employment rights
Higher pay does not automatically lead to fewer jobs
Monopsony argument
Higher pay can create incentives for higher productivity
Keynesian effects of increased incomes on demand
Many unions have modernised to reflect changes in the domestic and global economy
They can work with management and employers to improve efficiency and competitiveness – in partnership and cooperation

25. Evaluation on trade unions
Trade unions have (in the main) changed radically from the 1970s and 1980s
Reduced influence over pay and jobs
Greater willingness to enter into agreements with management over work practices
Still some “militant fringes” – mostly in the public sector
Britain now has one of the best industrial relations records of any rich advanced nation
Possible globalisation of trade unions

26. Tutor2u