6.5

• Trade union definition

  A group of workers who join together to maintain and improve their conditions of employment, including their pay
• collective bargaining definition

  a process by which wage rates and other conditions of work are negotiated and agreed upon by a union or unions with an employer or employers
• How can trade unions influence wage levels?

  Can bargain collectively on behalf of workers to secure higher wages than the market equilibrium wage (collective bargaining)
• what is the impact of strong trade unions on wages in a competing labour market ?

  push wages above the equilibrium level, leading to higher wage rates but potentially causing unemployment (excess supply of labour)
• can trade unions even increase employment ?

  yes, in monopsonistic markets, unions can help increase both wages and employment by counteracting the employer‘s wage-setting power
• what factors affect the ability of a trade union to influence wages and employment ?

  • elasticity of demand for labour
  • strength and size of the union
  • Market structure (monopsony vs. Perfect competition)
  • Government legislation (e.g trade unions laws)
  • Public support and economic conditions
• what is meant by ‘real wage unemployment’?

  real wage unemployment occurs when wages are forced above the equilibrium level, causing more people to want to work that there are jobs available
• what role can government play in trade union influence?

  the government can regulate trade union activity through laws that either empower unions (e.g legalising strikes) or restrict them (e.g minimum ballot thresholds, banning closed shops)
• what is a closed shop?

  a workplace where only union members can be employed. these are now mostly illegal in the UK
• how might employers respond to strong trade unions pressure?

  • reduce staff numbers
  • outsource jobs
  • automate processes
  • move operation overseas