Question

Will a union behave differently if it wants to get all of its members employed instead of maximizing the total wage bill? Explain your answer. 250 word minimum requirement

Answer 1

Unions are formed with a view of maximizing the interests of all users so that each one gains benefits from the exercise of dialogue with those that demand for labour force. Usually, they represent buyer power in the market place, wherein they raise their expectations from those that are demanding for labour force by either wanting better conditions or salaries or both.

They have largely revolutionized the way in which corporations view their staff in the sense that they have been vocal and dynamic in being able to control the industry.

If a union wants that everyone in the same must be employed, their behaviour indeed changes as opposed to increasing the total wage bill which is aimed at maintaining shortage of labour force unless the price per unit increases. If the aim is to ensure that all people get demanded for in the market for labour force, then they need to become price takers and should be ready to work for wages which the suppliers agree upon.

The concept of them arguing for better working conditions or salaries and wages then does not come into play and cannot be successfully applied to business.

This typically takes place, when the supply of labour force increases and goes way beyond the demand for it these are typically representative of a recession cycle wherein employment opportunities are less and therefore the union then needs to focus towards creating employment rather than fighting for higher wages. As the need for a job rises, the need to argue for its price reduces. Those demanding for labour i.e. industries can then get the same at a relatively much cheaper rate than they used to.

The union thus can be said to become a price taker, wherein they do not negotiate on prices but rather on quantity of employment possible in the market place. Their aim shifts towards maximum employment and getting whatever salary they can in such an environment.

Please feel free to ask your doubts in the comments section if any.