CHAPTER 8: Trade Union & Wages

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1. Trade Union- An association of workers with the main objective of demanding higher wages to improve its members living standard.

2. Aims of Trade Union
a) To demand higher wages for its members.
b) To improve the worker’s working condition.
c) To provides training courses.
d) To demand for better parks. E.g.: Paid transport allowance.
e) To provide recreational facilities.
f) To ensure that members’ interest.

3. 3 types of Trade Union
a) General Unions- Represent different types of workers, both skilled & unskilled indifferent industries.
b) Industrial Unions- Represent workers in a particular industry.
c) Craft Unions- A small union represent people of the some occupation.

4. Methods to raise wages
a) The trade union has to work on the market forces of demand for and supply of labour to influences wage rate. To raise wages, it can either restrict supply of labour or increase demand for labour.

5. How can the Trade Union restrict the supply of labour?
a) Increase the minimum working age.
b) Reduce the retirement age.
c) Shorten the working hours.
d) Increase the required educational qualification.
e) Worker has to be member of the trade union before he/she join the company.

6. How can the Trade Union increase the demand for labour?
a) Increase labour productivity by offering training to the worker.
b) Support the advertising campaign to increases sales.

7. Factors that limits to power of Trade Union
a) The size of the trade union can affect the demand for higher wages.
b) Changes in the elasticity of demand for a firm’s good.
c) Profits will be reduced when cost of production increases.
d) Economic condition
e) Trade Union will be less successful if labour substituted easily with capital or machinery.

Trade Unions and the State: The Construction of Industrial Relations Institutions in Britain, 1890-2000 - Amazon.com


8. Wages- Payment for services rendered by the worker.

9. 2 types of money
a) Money wage- Money income in term of dollars and cents.
b) Real wage- Purchasing power of money income.

10. Derived demand- When the demand for a factor of production depends on the demand for the good produced by the worker.

11. Marginal Revenue Product- Addition to total revenue as a result of employing one more unit of labour.

12. Factors of Supply Of Labour
a) The size of the population
b) Retirement age is extended.
c) Minimum educational qualification for a job.
d) Changes the rate of wage

13. Wage differential among different occupation
a) Nature of the work. Is it dangerous or not?
b) Difference in educational qualification.
c) Members of trade union.
d) Number of working hours.
e) Gender discrimination. Male or Female.
f) Level of talent of the employee.
g) Satisfaction of a person.
h) Fringe benefit. E.g.: Not only get the wages but also can travel to other places for free.

14. Reasons for wage differential for same occupation
a) Maternity leave for female.
b) Level of responsibility.
c) Nature of occupation. E.g.: Same jobs are only allow women.
d) Lack of training.

15. Reasons for wage differential between urban and rural areas
a) High level of training in urban areas.
b) Higher cost of living in urban areas.