​In this revision presentation we look at recent trends in UK trade union membership, consider how trade unions can affect both pay and employment and challenge the textbook view that union-negotiated pay increases inevitably have negative consequences for employment.

1. Trade Unions -
Key Evaluation
Points
A Level Microeconomics
(2019)
Tutor2u Economics

2. Level of trade union membership in the UK in 2017 by union
1,397,803
1,282,671
617,213
452,669
434,790
372,937
318,700
192,646
190,628
185,785
161,708
112,576
103,985
0 400000 800000 1200000 1600000
Unite the Union
UNISON: The Public Service Union
GMB
Royal College of Nursing of the United Kingdom
Union of Shop Distributive and Allied Workers
National Union of Teachers
National Association of Schoolmasters Union of…
Association of Teachers and Lecturers
Communication Workers Union
Public and Commercial Services Union
British Medical Association
Prospect
University and College Union

3. Trade union density: Percentage of employees that were members of a
trade union in the UK from 1995 to 2017
22.3%
24.3%
26.3%
28.3%
30.3%
32.3%
34.3%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Percentageofemployees

4. Trade union density in the hospitality industry in the UK 1995-2017
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Percentageofemployees

5. Trade unions
and the
labour market
– some key
evaluation
points
Long term decline in union membership – which reflects the
growing flexibility of the UK labour market including zero hour
contracts + decline of heavy industry and shrinking public sector
Trade union influence on pay depends in part on trade union
density in an industry and also the credible threat power they
have with possible industrial action (e.g. London Tube drivers)
New Unionism focuses less on wage bargaining and more on
protecting employment, pension rights, health and safety,
workplace training, addressing gender & other discrimination
Don’t assume that trade unions successfully negotiating higher
wages will inevitably lead to a contraction in employment / jobs
(this is lazy economics!) – challenge theoretical assumptions!
Trade Unions may negotiate a combined pay and productivity deal
with employers – a positive-sum game! Use game theory!

6. Analysis diagrams – union negotiated pay
Wage
rate
Employment of labour
Labour demand (MRPL)
Labour supply
W1
E1
W2
E2
Trade unions are better placed to
negotiate better pay for their
members when the wage elasticity of
demand for labour is low.
E.g. when it is costly or difficult for an
employer to replace labour with
capital if wages are pushed too high
and threaten operating profits.

7. Analysis diagrams – productivity-pay deals
Wage
rate
Employment of labour
Labour demand (MRPL)
Labour supply
W1
E1
W2
E2
Wage
rate
Employment of labour
Labour demand (MRPL)
Labour supply
W1
E1
W2
E2
LD2 (higher
productivity)

8. Analysis diagrams – unions and monopsony
Wage
rate
Employment of labour
Labour
demand
(MRPL)
ACLMRPL
E1
W1
MCL
Wage
rate
Employment of labour
Labour
demand
(MRPL)
ACLMRPL
E1
W1
MCL
Union wage
E2

9. Trade Unions -
Key Evaluation
Points
A Level Microeconomics
(2019)
Tutor2u Economics