The Influence of Trade Unions in determining wages and levels of employment
The Influence of Trade Unions in determining wages and levels of employment
Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes
Aims of Trade Unions
- Secure Jobs
- Protect Workers
- Encourage Higher Wages
- Improve Working Conditions
Factors affecting the ability of Trade Unions to influence wages and the levels of employment
- If Trade Unions try and push wages up too high, it can reduce the number of workers employed becomes it becomes more expensive for firms to employ them
- For the purpose of Job Security, some workers may prefer to be paid a lower wage as it reduces the risk of firms getting rid of them due to high costs
How wages and employment are likely to be affected by Trade Unions
In a Perfectly Competitive Market
[diagram]
In a perfectly competitive market, the level of employment and wage rate is W1, Q1
To prevent the exploitation of workers, Trade Unions aim to increase wages and the marginal revenue product in the market.
In a Monopsony Labour Market
The employer possesses Monopsony Power – so workers are paid and employed at the profit maximising level.
Workers are paid at W2 and only Q2 number of workers are employed.
Quick Fire Quiz – Knowledge Check
1. Identify four aims of Trade Unions (4 marks)
2. Identify and explain two factors affecting the ability of Trade Unions to influence wages and the level of employment (4 marks)
3. Explain how wages and employment are likely to be affected by Trade Unions in a Perfectly Competitive Market (3 marks)
4. Explain how wages and employment are likely to be affected by Trade Unions in a Monopsony Labour Market (3 marks)
Next Revision Topics
A Level Economics Past Papers
