Question

Labour unions are said to play an important role in maintaining and improving employees’ terms and conditions. From a theoretical and empirical perspective, discuss the effect(s) of labour unions on wages. Remember to identify any caveats in attempts to quantify the effect of unions on wages.

Answer 1

Labour union plays a crucial role in the maintenance and improvement of labour/worker's terms and conditions. Wage rate is determined by the market forces of demand and supply. It leads to exploitation of workers by employers. Such S situation we need a powerful trade union.

There are different types of unions like general unions, industrial unions etc. They will have to reduce wage inequalities by conducting wage negotiations among employers. They will set a wage standard that will follow the non union employers.

The working of the trade union is good for the society. Because it mainly demands for higher wages which creates competitives that ultimately leads to higher productivity. Similarly, labour unions protect their members from unfair practices like exploitation and demanding or bargaining for equal pay for equal work.

Trade union strikes shows their strength. They participated as a representatives of workers in the wage negotiation.Trade unions protect their labour rights. Ultimately they will win in each strikes. Now minimum wage goes up from 10,000 as a result of the existence of trade unions in the economy like India.