Industrial Relations - unions

In order to protect workers' rights and make sure that their employers pay attention to them, unions are created. The amount of pay a worker should receive and the benefits that should be added on top of it all are heavily influenced by the worker's unions. Additionally, there are both direct and indirect ways that unions might affect wages. The more workers a union represents and the better they are able to negotiate for good terms and conditions for their members, the more powerful the union and the higher their wage premium. Unions have a direct impact on wages of employees they have covered by bargaining for either increase or maintenance of wages. Every worker who has been covered by the union has their rights defended by the organization, and therefore they have a form of security and safety net in case the employer tries to change the terms. Indirectly unions have an impact on wages when there is a threat from workers to form a union the employers raise wages to avoid unionization of workers which will likely mean more demands (Wachtel, 2013). There are also times where there is a loss of jobs among the union members which in turn raises the labor supply in the non-union sector resulting in minimal wages.
Finally, unions are also able to affect wages indirectly by creating a voice for the employees (Wachtel, 2013). Choosing one person who will air their needs and concerns to the employer as opposed to withholding their work frustrations; the chosen person is the mediator. As a result of properly handling concerns and complaints, fewer people will quit, and there is a raise in tenure. Workers can have higher wages by using surplus money to invest in firm-specific human capital.


Reference
Wachtel, M. H. (2013), Labour and the economy. Amsterdam, Netherlands: Elsevier
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