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Impact of Trade Union Wage Increase on Workers


Discuss whether workers always benefit when their trade union achieves an increase in wages.


Labor Market and Income Distribution

[CIE A level November 2019]

Preview Answer

Step ➊ : Define ‘trade union’ in the definition.

A trade union is an organisation formed to protect the rights and interests of workers. When a firm is the only employer of a certain type of labour, this situation is called a monopsony and this may lead to the exploitation of workers. Individuals have little power to influence conditions of employment, thus, trade unions use collective bargaining to negotiate with employers. One of the many aims of trade unions is to increase the wages of their members. However, it is often argued that these wage increases do not always benefit all workers.

Step ➋ : Discuss how whether always workers benefit from an increase in wages.

➤ 2.1 Trade unions can introduce a minimum wage in order to increase wages, however, this is only beneficial to an extent.

The introduction of a minimum wage can be shown in the figure below.

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