A trade union is an organisation which aims to protect the interests of its members.

Each employee who wishes to join a trade union must pay an annual fee, which contributes towards the costs and expenses that the trade union incurs when it provides services to its members, and supports industrial action by the workers.

Types of trade unions

1. Craft Unions
Craft unions represent workers across several industries with a particular skill.

2. Industrial Unions
Industrial unions represent all workers in one industry with different skills.

3. General Unions
General unions represent workers from many different occupations and industries.

4. White-collar Unions / Staff Associations
This type of unions represent workers in professional and commercial jobs.

A trade union will act in the best interest of the workers and try to secure the best possible working conditions, pay and protect jobs. Trade unions are financed by the workers who will normally pay a monthly subscription for the right to be a member. When a union represents a group of workers to their employers it is known as collective bargaining.

Aims of a trade union

1. To improve the pay of its members.

2. To improve the working conditions and the working practices of its members.

3. To support the training and the professional development of its members.

4. To ensure that their members’ interests are considered by the employers when any decision is made which will affect the workforce.

5. To provide financial and legal support to workers who may have been unfairly dismissed or disciplined.

Trade union act as a means of communication and negotiation between employers and employees through a process known as collective bargaining. This occurs when a trade union representative, who is appointed or voted to negotiate on behalf of the workers for better work conditions and pay.

Trade unions may seek to improve the wages and other working conditions of their members if:

  • price inflation is high and rising;
  • other groups of workers have received pay rises;
  • new machinery or working practices have been introduced in the workplace;
  • the productivity of their members has increased;
  • the profits of the employing organization have increased.

Trade union members make take industrial action in an attempt to increase their bargaining strength. Industrial action disrupts production, increases costs and reduces revenues for employers.

Arbitration may be necessary to settle industrial disputes. This involves employers and unions agreeing to let an independent referee, often a senior government official or lawyer, help them to settle their industrial dispute.

Forms of Industrial Action

StrikeWorkers refuse to work and may also protest outside their workplace.
Work-to-ruleWorkers work to fulfill the minimum requirements of their job, complying rigidly with every rule and regulation
Go-SlowWorkers complete their assigned task slowly to reduce production.
Sit-inWorkers turn up to work and occupy the premises but do not undertake their normal work.
Overtime banWorkers refuse to work more than their normal hours.

Advantages of Trade Union

  • By introducing education and training, workers gain necessary skills which increases productivity
  • They reduce unemployment, since they fight for fairness of their members
  • They encourage employee’s participation in decision making which improves job satisfaction among members
  • They can assist a worker in negotiating better working conditions which improve the workers’ living standards.
  • They negotiate an increase in wage factors as it increases their members’ disposable income and purchasing power.

Disadvantages of Trade Union

  • An increase in wage factors increases cost of production thereby causing cost-pull inflation.
  • It reduces work opportunities as some employees don’t take members of trade union
  • Forms of industrial action may disrupt the productive potential of an economy thereby leading to under-utilisation of resources.
  • Some trade union can be ineffective as they update their members’ with the necessary skills needed for production which makes them not efficient.
  • Money that should have been used to buy necessities would be used to pay for subscription to an ineffective trade union.