Question

Under what conditions may unions create a wage advantage for workers? In your answer, consider demographics, industry structure and the political climate.

Answer 1

Labor (labour) unions are workplace associations set up to negotiate salaries, housing and conditions of employment with employers. Unions are a democratic institution whose main purpose is to enhance their members ' economic conditions. In most democratic societies, unions exist as a mechanism for providing representation and voice to workers for deciding their wages and conditions. Generally speaking, unions are supposed to aim to increase their members ' salaries. Some analysts, however, question the union's ability to raise workers ' incomes above the level of general market equilibrium.

Trade unions exist to protect their members ' interests by offering a collective to the various employees and thus an active forum to negotiate with the few employers on such other working conditions as health, holidays and non-wage benefits. A trade union is concerned primarily with the rate of wages paid to its members and other forms of remuneration. A trade union (i.e., a group of workers working to protect their interests) needs to negotiate with employers to put pressure on them to raise wages. Workers may begin to balance the control employers have over them by joining in unions. Collective bargaining, where workers ' party appoints representatives to negotiate with employers ' representatives, is an attempt to change the balance of power in the relationship between employee and employer.

However, such an argument will last only if the company can restrict access to alternative labor supplies. It means that under a standard collective bargaining agreement, employers agree not to employ non-union plumbers, not to contract plumbing services, and not to negotiate with non-union firms. Each of these clauses helps prevent the loss of the monopoly lock of the union on the company's supply of plumbers.