Labour market

Question 1

What are trade unions

Answer 1

Trade unions are an organisations of workers who combine together to further their own interests;
-increased pay
-Better working conditions
-Improved job security
collective bargaining puts the workers in stronger position by effectively acting as monopoly suppliers of labour

Question 2

What are the power of trade unions

Answer 2

Union density and militancy(higher the membership of a union and the more militant it is, the more powerful its likely to be)
The elasticity of demand for labour (the more inelastic the demand for labour, a rise in wage rates will have less impact on employment and thus its members.
Profitability of the employer
-more likely to be in a stronger position with highly profitable firms (oligopolies and monopolies)

Question 3

trade unions and efficiency

Answer 3

Effect of trade union on economic efficiency depends on the market structures in the economy
A reade union facing a monopsonist redresses the balance of power and leads to a level of employment and wage closer to the free market outcome