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CIE IGCSE Economics Your notes
3.4 Trade Unions

Contents
3.4.1 Types of Trade Unions
3.4.2 The Role of Trade Unions
3.4.3 Advantages & Disadvantages of Trade Unions
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3.4.1 Types of Trade Unions

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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 & non-wage benefits of employment
Health & safety in the working environment
The reduction of discrimination & worker exploitation
Trade unions are usually formed by the members of specific industries

Airline pilots have a pilots' union
Rail & sea workers have a rail & 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 & health
All trade unions can be classified into one of four categories
Types of Trade Unions
Type of Union Explanation
These represents skilled & unskilled workers in any industry e.g. truck
General Union
drivers, football referees, musicians & gardeners
These represents workers in the same industry. Anyone in the industry can
Industrial Union join, irrespective of skill level or seniority e.g. The Fire Brigades Union in the
United Kingdom
These represent skilled workers with a specific trade e.g. painters,

Craft Union
electricians
White Collar Union
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These represent professional office-based (‘white-collar’) workers e.g.

financial advisors, teachers, architects, designers
Your notes
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3.4.2 The Role of Trade Unions

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The 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 & 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 & include
Strikes
Overtime bans
Work to rule
Go-slows
The Focus of Trade Union Efforts
1. Collective bargaining on wages, working conditions & contractual terms
Negotiates for acceptable wage levels - often Negotiates for increased wages when
well above the minimum wage 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 & Negotiates for improvements to working
any overtime payments conditions & equipment
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2. Protecting the employment of their workers

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Negotiates for the retention & redeployment of Negotiates resettlement packages when firms
workers when machinery (capital) replaces relocate from one region to another &
labour redundancy terms for those unable to relocate
Negotiates to minimise job losses when Negotiates on a fair termination process when
machinery (capital) replaces labour firms are struggling in an economic downturn
3. Influencing government policy
Negotiates with government on the Aims to influence policy through member action
creation/maintenance of minimum wage levels such as strikes
Negotiates to minimise job losses when Negotiates on a fair termination process when
machinery (capital) replaces labour firms are struggling in an economic downturn
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Factors Influencing the Strength of Trade Unions

The higher the percentage of workers from a firm that belong to a trade union, the greater the Your notes
collective bargaining power of that union with the employer
The higher the percentage of workers from an economy that belong to trade unions, the greater the
collective bargaining power of the unions with the government
There are numerous other factors which influence the collective bargaining power of specific unions
at different periods of time
Factors which influence the collective bargaining power of trade unions
1. The unemployment level - the higher the unemployment level the weaker the bargaining power as
firms can more easily replace existing workers
2. Wage levels as proportion of total costs - the lower the percentage of total costs that a firms's wages
represent, the higher the bargaining power
3. Swapping labour for capital - the nearer the replacement cost of capital for labour to meeting the
increased costs demanded by the union, the weaker the bargaining power
4. The level of profits - higher profits strengthen the unions demands for higher wages
5. State of the economy - less bargaining power in a recession & more when the economy is booming
6. Overall size of the trade union - the larger the union the stronger their bargaining power
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7. The productivity of labour - if the workers are extremely productive, generating high levels of output
from low levels of input, they are more valuable to the firm & the union has stronger bargaining power
Your notes
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3.4.3 Advantages & Disadvantages of Trade Unions

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Pros & Cons for Workers, Firms & Governments
Different economies have different views about the usefulness of trade unions. Capitalists generally
do not like them as the collective bargaining increases costs for firms
The European Union values trade union activity whereas Saudi Arabia bans trade unions completely
When considering the benefits of trade union activity, it is useful to analyse the advantages &
disadvantages for workers, firms & the Government
Pros & Cons of Trade Unions For Workers
Pros Cons
Workers no longer need to negotiate with Industrial action is stressful as it is a conflict

management on their own as they benefit from between workers & management
collective bargaining Workers do not get paid while on strike
Workers receive better pay than non-unionised Strike action disrupts economic activity & can
workers upset other people in the economy
Workers enjoy better working conditions than Individual workers may not agree with specific
non-unionised workers demands made by the trade union on behalf of
Workers enjoy better non-wage benefits such all the workers, & yet they are pressured to
as guaranteed lunch breaks support the collective action
Workers receive specialised job training & free Some union members continue to work through
legal advice from the union a strike (they may need the money) & receive
abuse & intimidation from the other striking
union members
Pros & Cons of Trade Unions For Firms
Pros Cons
Training from the trade union increases worker Including unions in decision-making increases
productivity which decreases costs the time period taken to implement changes
Empowerment in the workplace improves which can be detrimental to effective
employee motivation, which usually results in competition
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fewer sick days, higher productivity & greater Management styles have to be more inclusive &
output for the firm less authoritarian which some managers find
difficult to accept Your notes
Meeting union demands increases costs of
production, which may reduce output & profits
Pros & Cons of Trade Unions For Governments/Economy
Pros Cons
Trade unions help create a more equal & Industrial action reduces output, lowers firms’
prosperous society profits, thereby lowering the potential
A prosperous society is the basis of strong corporation tax collected by the government
consumption in an economy & this helps to drive Strike action is often very disruptive to many
economic growth people’s lives, especially when it occurs in
If firms’ profits increase due to increased essential industries such as rail networks
productivity, governments receive more Governments may find it harder to attract
corporation tax multinational corporations (MNCs) to invest if
Higher wages mean that the workers pay more industrial action occurs regularly
income tax to the government, which can be MNCs may be more reluctant to invest in
used to further fund public & merit goods strongly unionised economies as the costs of
production will be higher
Page 9 of 9

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CIE IGCSE Economics Your notes

3.4 Trade Unions

3.4.1 Types of Trade Unions

The interests of the worker include

Trade unions are usually formed by the members of specific industries

All trade unions can be classified into one of four categories

Types of Trade Unions

Type of Union Explanation

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

White Collar Union

These represent professional office-based (‘white-collar’) workers e.g.

3.4.2 The Role of Trade Unions

Benefits of union membership include

The Focus of Trade Union Efforts

1. Collective bargaining on wages, working conditions & contractual terms

2. Protecting the employment of their workers

3. Influencing government policy

Factors Influencing the Strength of Trade Unions

Factors which influence the collective bargaining power of trade unions

3.4.3 Advantages & Disadvantages of Trade Unions

Pros & Cons of Trade Unions For Workers

Workers no longer need to negotiate with Industrial action is stressful as it is a conflict

Pros & Cons of Trade Unions For Firms

Pros & Cons of Trade Unions For Governments/Economy

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