Question

6. How do union’s provide for high wages for their membership? What are the negative impacts of this on the workforce? How could unions increase wages and employment simultaneously?

Answer 1

Unions negotiate collective agreements for their concerned members about employment, security and wages. Unions are generally interested in more than just higher wages, they are concerned with employment stability and training opportunities. In some situations, they may be interested in trading-off wage growth in return for employment security and training programs and this could lead to higher wages in the long-run. Studies show that workers covered under trade unions' collective bargaining have more workplace training than their non union employees. As a result of this union workers can gather more skills and increase their productivity, providing them higher wages in the later stage. This will be a favorable point for the organization. If there arises the chance of earning higher profit then the organization will definitely provide high wages for their membership.

There are negative impacts on the workforce as a result of high wages of union members. The workforce may feel discouraged to work due to their low wages. The workforce is trying to increase their productivity with the hope of a better earning, a better position and achieve the objectives of the company, but when they are provided a low wage as compared to their union members it shatters their hope.

Unions demand higher wages and employment security during collective bargaining, if their demands are not fulfilled they can go for a strike which will be a great loss to the company. To avoid these type of disturbances, most companies negotiate with their unions to fulfill their demand to some extent. However, increase in employment in manufacturing sector is an advantage for the company as it leads to greater productivity. Although increase in wages may put extra burden for the company, it has to go with union otherwise may incur losses. If a union is able to increase wages then it will attract more candidates to join the concerned company, this in turn increases the employment.