4.5 Trade unions

Question 1

What is a trade union?

Answer 1

A group of workers who join together to maintain and improve their conditions of employment, including their pay.

Question 2

What is collective bargaining?

Answer 2

A process whereby wage rates and other conditions of work are negotiated and agreed upon by unions and employers

Question 3

Why is a trade union regarded as a monopoly supply of labour?

Answer 3

We regard a trade union as a monopoly supplier of labour, which is able to keep non members out of the labour market

Question 4

What methods do trade unions have to influence employers?

Answer 4

Work to rule
Go slow
Overtime ban
Strike

Question 5

What is work to rule?

Answer 5

When you work your hours and nothing else

Question 6

What is go slow?

Answer 6

Take longer on all jobs

Question 7

What is overtime ban?

Answer 7

Taking no extra shifts

Question 8

What are strikes?

Answer 8

Refusing to work

Question 9

What happens in a perfectly competitive labour market with a trade union?

Answer 9

Wage goes above equilibrium price. This then leads to excess supply. However employees will not work or not work effectively under the new price. This means employers have to employ at the new price.

Question 10

In a monopsony labour market, what impact will a trade union have?

Answer 10

Wages rise. Due to the trade union, people will not work under the new wage level. This creates a kinked AC/supply curve.