An organisation tha negociates with employers on behalf of its members with the objective of:
- wage bargaining - WR>W* = causes UE
- better working conditions
- secure employment for members - less likely to lose jobs/ be more productive = better firms effeciency
the more inelastic demand for labour is the more dependant firms are on labour = less UE
POV OF ALLOCATIVE EFFICENCY: trade unions prevent WR from acting as a reliable signal to workers & firms - leads to subopitmal allocation of resources
flexibility contributes to good resource allocation allowing workers to move from declining to expanding sectors and allowes firms to produce output to match patterns of consumer demand
LABOUR FLEXIBILITY: Trade union activity can limit the entry of workers in market
they make is more difficult for firms to adapt to changes in market condition
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