Trade union

A union (labor union in American English; trade union in British English and Australian English; either labour union or trade union in Canadian English) is an organisation formed by workers. Most typically, a single union will represent workers in a particular industry (industrial unionism) or craft (craft unionism), within all or part of a country. Unions are often divided into "locals" and united in national federations. Typical examples, depending on the country, could be all the assembly workers for one employer, all the teachers in a local school district, or all the workers in a particular industry.

Criticism

Trade unions are often accused of benefiting the insider workers, those having a secure job and high productivity, at the cost of the outsider workers, those who are unemployed or at the risk of unemployment or who are not able to get the job that they want in a particular field. The so-called insider-outsider theory analyses this problem.

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Usually, the marginal benefit of an additional worker decreases as the number of workers increase. This implies that the lower the minimum wage, the more workers a company can profitably employ. Thus, while an increase in the minimum wage benefits the insiders, as a result fewer new workers are recruited and fewer retiring workers replaced. This effect is more pronounced in a work-intensive service company.

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The economic analysis of a cartel applies completely to most unions, to those that try to fix the (minimum) price of work, to limit supply (e.g., by some criteria on membership or education) or to limit competition. On the other hand, unions often have also other functions than those of a cartel: they may advise the workers, warn about disadvantageous contracts or terms of employment etc. These latter functions are usually considered as beneficial for both the workers and for the society as a whole (though not necessarily for corporations or shareholders), whereas the opposite applies to cartel-type minimum terms.

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Often the union on a particular industry puts pressure on politicians to subsidize the industry concerned. This benefits both the workers, companies, shareholders and consumers of the product of that industry at a cost to other people. Thus, it depends on the question whether the interests of a trade union are for or against the interests of the companies, workers, unemployed, tax-payers or the society as a whole.

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