Factors that Affect Trade Unions Power in Influencing Wages & Employment
- The higher the percentage of workers from a firm that belong to a trade union, the greater the collective bargaining power of that union with the employer to influence wages and employment
- The higher the percentage of workers from an economy that belong to trade unions, the greater the collective bargaining power of the unions with the government
- There are numerous other factors which influence the collective bargaining power of specific unions at different periods of time
The stronger a trade union, the more they can influence wages and employment levels
- The unemployment level: the higher the unemployment level, the weaker the bargaining power as firms can more easily replace existing workers
- Wage levels as proportion of total costs: the lower the percentage of total costs that a firms's wages represent, the higher the bargaining power
- Swapping labour for capital: the nearer the replacement cost of capital for labour to meet the increased costs demanded by the union, the weaker the bargaining power
- The level of profits: higher profits strengthen the unions demands for higher wages
- State of the economy: less bargaining power in a recession and more when the economy is booming
- Overall size of the trade union: the larger the union, the stronger their bargaining power
- The productivity of labour: if the workers are extremely productive, generating high levels of output from low levels of input, they are more valuable to the firm, and the union has stronger bargaining power