Advantages & Disadvantages of Trade Unions (CIE IGCSE Economics)

• Different economies have different views about the usefulness of trade unions. Capitalists generally do not like them as the collective bargaining increases costs for firms
  
  
• The European Union values trade union activity whereas Saudi Arabia bans trade unions completely
  
  
• When considering the benefits of trade union activity, it is useful to analyse the advantages & disadvantages for workers, firms & the Government
   

Pros & Cons of Trade Unions For Workers

Pros

Cons

Workers no longer need to negotiate with management on their own as they benefit from collective bargaining Workers receive better pay than  non-unionised workers Workers enjoy better working conditions than non-unionised workers Workers enjoy better non-wage benefits such as guaranteed lunch breaks Workers receive specialised job training & free legal advice from the union

Industrial action is stressful as it is a conflict between workers & management Workers do not get paid while on strike Strike action disrupts economic activity & can upset other people in the economy Individual workers may not agree with specific demands made by the trade union on behalf of all the workers, & yet they are pressured to support the collective action Some union members continue to work through a strike (they may need the money) & receive abuse & intimidation from the other striking union members

Pros & Cons of Trade Unions For Firms

Pros	Cons
Training from the trade union increases worker productivity which decreases costs Empowerment in the workplace improves employee motivation, which usually results in fewer sick days, higher productivity & greater output for the firm	Including unions in decision-making increases the time period taken to implement changes which can be detrimental to effective competition Management styles have to be more inclusive & less authoritarian which some managers find difficult to accept Meeting union demands increases costs of production, which may reduce output & profits

Pros & Cons of Trade Unions For Governments/Economy

Pros

Cons

Trade unions help create a more equal & prosperous society A prosperous society is the basis of strong consumption in an economy & this helps to drive economic growth If firms’ profits increase due to increased productivity, governments receive more corporation tax Higher wages mean that the workers pay more income tax to the government, which can be used to further fund public & merit goods

Industrial action reduces output, lowers firms’ profits, thereby lowering the potential corporation tax collected by the government Strike action is often very disruptive to many people’s lives, especially when it occurs in essential industries such as rail networks Governments may find it harder to attract multinational corporations (MNCs) to invest if industrial action occurs regularly MNCs may be more reluctant to invest in strongly unionised economies as the costs of production will be higher