Cambridge IGCSE Economics 0455
Syllabus points
- Define a trade union and explain its role.
- Explain the advantages and disadvantages of trade unions to workers, firms and the economy.
What is a trade union?
A trade union is an organisation of workers that acts together to protect and improve its members' pay and conditions. By bargaining as a group (collective bargaining), workers have more power than they would as individuals.
Key definitions
| Term | Definition |
|---|---|
| Trade union | An organisation of workers that negotiates pay and conditions with employers. |
| Collective bargaining | Negotiation between a union and employers on behalf of all members. |
| Industrial action | Measures such as strikes used to pressure employers. |
What trade unions do
- Negotiate higher wages and better conditions through collective bargaining.
- Improve health and safety and job security.
- Provide legal support and advice to members.
- Use industrial action (strikes, overtime bans) if negotiations fail.
Advantages and disadvantages
| For workers | For firms and economy |
|---|---|
| + Higher pay, better conditions, protection | + One body to negotiate with; motivated workers |
| − Union fees; strikes can cost pay | − Higher wage costs; strikes cut output; may raise unemployment |
Unions can raise members' pay and protect workers, but higher wage costs and strikes can reduce output, profits and jobs.
Worker power depends on
Unions are stronger when members are skilled and hard to replace, when the firm is profitable, when a high proportion of workers are union members, and when the economy is doing well.
Worked example
Nurses' unions negotiate a pay rise with the government. Because nurses are skilled and essential, the union has bargaining power. Higher pay helps recruit and keep staff, but it raises government spending, which must be funded by taxes or cuts elsewhere — showing the trade-off unions create.
Common exam mistakes
- Saying unions only benefit workers — always give costs to firms and the economy.
- Confusing collective bargaining with industrial action (the latter is a last resort).
Exam technique
Balance the benefits (pay, conditions, protection) against the costs (higher wage bills, strikes, possible job losses), and note that union power depends on skills and membership.
Quick revision
- Trade union = workers acting together (collective bargaining).
- Pros: higher pay, better conditions, protection.
- Cons: higher costs, strikes, possible unemployment.