‘Trade Unions Fail to Serve Their Members and Damage Firms.’ to What Extent Do You Agree with This Statement?

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‘Trade Unions fail to serve their members and damage firms.’ To what extent do you agree with this statement? Trade union is an organisation of workers who combine together to further their own interests. Trades unions were first organised around the start of the twentieth century. An individual worker is likely to be in a relatively weak bargaining position compared to employer, so they organise themselves together to bargain collectively. They elect or appoint a representative to bargain on their behalf so can have a much larger effect than each individual do it themselves. Neo- classical economic theory predicts that trade unions can improve working conditions but create unemployment in competitive labour markets. If labour markets are competitive, Better working conditions (including higher wages) means higher cost of production to firms, which can shift the demand curve to the right and with the new higher wage, there would be unemployment (Q3-Q2). In this case trade union successfully created benefit for some of its members. The hourly wages of union member saver aged £12.43 in 2006, 16.6% more than the earnings of non-members (£10.66 per hour). However, for those who lost job by this action, the union failed to serve them but put them to the worst situation. How much unemployment it would create depend on the elasticity of demand. A rise in wage rates will have far less impact on employment in the industry if the labour is inelastic than if it is elastic. There will be far less cost to the union of a better condition in terms of lost membership and to its members in terms of lost employment. By it means the effect of trade union on its members depend on the industry it is in. In industry with inelastic demand, the trade union can serve more members than create problems for them. By theory, trade union always creates unemployment. The trade union

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