IGCSEEconomicsEdexcelRevision NotesBusiness EconomicsThe Labour MarketThe Impact of Trade Unions

The Impact of Trade Unions (Edexcel IGCSE Economics)

Revision Note

Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Types of Trade Unions

  • A trade union is an organisation that represents the interests of its workers in negotiations with a firm’s management or owners

  • The interests of the worker include

    • Wage and non-wage benefits of employment

    • Health and safety in the working environment

    • The reduction of discrimination and worker exploitation

  • Trade unions are usually formed by the members of specific industries

    • Airline pilots have a pilots' union

    • Rail and sea workers have a rail and maritime union

  • If there is no specialist union for an industry, most economies have a number of general unions which any worker can join, e.g. In the UK, UNISON is the largest trade union

    • It represents workers from across the public sector, including those working in local government, education and health

  • All trade unions can be classified into one of four categories

Types of Trade Unions

Type of Union

Explanation

General union

  • These represents skilled and unskilled workers in any industry e.g. truck drivers, football referees, musicians & gardeners

Industrial union

  • These represents workers in the same industry. Anyone in the industry can join, irrespective of skill level or seniority e.g. The Fire Brigades Union in the United Kingdom

Craft union

  • These represent skilled workers with a specific trade e.g. painters, electricians

White collar union

  • These represent professional office-based (‘white-collar’) workers e.g. financial advisors, teachers, architects, designers

Work of Trade Unions

  • Workers pay a monthly fee to join a trade union

    • The fee is called a subscription

    • Their membership ends when they stop paying this fee

  • Benefits of union membership include:

    • Collective bargaining

    • Job-specific training

    • Legal representation in disputes

    • Discounts on a wide range of goods/services

  • When collective bargaining fails and discussions break down, trade unions have several methods of forcing employers/governments to continue engaging with them

  • These methods are collectively referred to as industrial action and include

    • Strikes

    • Overtime bans

    • Work to rule

    • Go-slows

Impact of Trade Unions

  • Trade union intervention changes the equilibrium wages and employment in the labour market

    • Through collective bargaining, workers have the power to increase wages

    • Through negotiation, trade unions can change the rate of employment

The Focus of Trade Union Efforts

Collective bargaining on wages, working conditions and contractual terms

  • Negotiates for acceptable wage levels - often well above the minimum wage 

  • Negotiates for increased wages when comparative industries receive pay increases

  • Negotiates for inflation-linked pay rises

  • Negotiates for higher wages when firms are making higher profits

  • Negotiates standard weekly working hours and any overtime payments

  • Negotiates for improvements to working conditions and equipment

Protecting the employment of their workers

  • Negotiates for the retention and redeployment of workers when machinery (capital) replaces labour

  • Negotiates resettlement packages when firms relocate from one region to another and redundancy terms for those unable to relocate

  • Negotiates to minimise job losses when machinery (capital) replaces labour

  • Negotiates on a fair termination process when firms are struggling in an economic downturn

Influencing government policy

  • Negotiates with government on the creation/maintenance of minimum wage levels

  • Aims to influence policy through member action such as strikes

  • Negotiates to minimise job losses when machinery (capital) replaces labour

  • Negotiates on a fair termination process when firms are struggling in an economic downturn

Examiner Tips and Tricks

You may be asked to assess the impact of trade unions.

Trade unions have many benefits to workers, but they can also be beneficial to employers too. The firm can negotiate with just one body, instead of the time consuming task of negotiating with individual workers. Some countries have trade union officials sitting at the management table and working in collaboration with the management team.

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    Author
    Reviewer
    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.