Trade Unions - IGCSE Economics (Grade 9) Notes
What is a Trade Union?
Trade unions are organisations formed to protect the rights and interests of employees.
During the Industrial Revolution, many workers laboured in harsh conditions, so groups of
workers banded together to negotiate better terms and working environments. Workers
join a union by paying a subscription fee that supports the union’s administration and legal
costs. Article 23 of the Universal Declaration of Human Rights states that everyone has the
right to just and favourable conditions of work and to form and join trade unions for the
protection of their interests. Today, unions exist in many industries and play an important
role in representing employees collectively when negotiating with employers.
Aims of Employers vs Employees
Employers and employees often have different objectives. Employers typically focus on
maximising profits, minimising costs and maximising sales. Employees, on the other hand,
want to maximise their wages, work in a safe environment, enjoy good terms and
conditions, maximise non‑wage benefits and secure their jobs. Because these aims
sometimes conflict, trade unions provide a collective voice so workers can negotiate better
conditions without fear of retaliation.
Types of Trade Union
Trade unions can be classified into different types:
• Craft unions – organise workers with a particular skill, such as carpenters, electricians or
printers.
• Industrial unions – represent all workers in an industry regardless of their skill; for
example, an oil workers’ union covers workers in exploration, extraction, refining and
storage.
• General unions – accept anyone into membership regardless of the place or nature of their
work; they often have large numbers of unskilled workers.
• White‑collar unions – recruit professional and clerical staff such as teachers, bankers and
civil servants.
Some professions (e.g. law or medicine) are governed by professional bodies rather than
unions because entry is controlled through examinations and training.
Roles and Functions of Trade Unions
The primary role of a trade union is to protect its members. Common roles include:
• Bargaining with employers for pay rises and better terms and conditions.
• Ensuring equipment is safe and that workers receive appropriate training.
• Providing legal advice and support when members are made redundant or unfairly
dismissed.
• Persuading governments to pass legislation in favour of workers, such as minimum wage
laws and fair working hours.
• Acting as a communication channel through collective bargaining. A union representative
negotiates with employers on behalf of all members, giving workers greater bargaining
power.
A union’s strength often depends on its membership size; larger unions have more
bargaining power.
Basis for Wage Claims
Unions typically base wage claims on one or more factors:
• Inflation: a rise in the cost of living reduces real income, so higher pay is sought.
• Comparability: workers in similar occupations may have received a wage increase.
• Profit sharing: increased profits in the industry justify a higher return to labour.
• Productivity: higher labour productivity suggests workers should share in the gains.
Types of Industrial Action
When negotiations fail, unions can call for industrial action:
• Strike – workers refuse to work; production ceases and workers lose pay during the
strike.
• Work‑to‑rule – workers strictly follow their contractual duties but do nothing extra; for
example, bus drivers stop at every bus stop even if no one is waiting.
• Go‑slow – workers deliberately slow down their work, reducing efficiency.
• Sit‑in – workers occupy the workplace but refuse to perform their normal duties.
Industrial action is a last resort but can be effective in pressuring employers to agree to
demands.
Impacts of Trade Unions on the Economy
Trade unions have both positive and negative effects on the economy:
Positive impacts:
• Provide a communication channel between employers and employees.
• Negotiate pay and conditions, helping to raise living standards.
• Offer legal support and advice to workers.
• Lobby governments for policies such as minimum wage legislation.
Negative impacts:
• Industrial action can reduce productivity and disrupt the wider economy.
• Employers may face higher costs due to union demands, reducing profits.
However, higher wages and improved working conditions can improve motivation and
productivity in the long run.
Trends in Trade Union Membership
Union membership trends vary by country. Membership has grown in some places, such as
China, but declined in others like the UK.
Reasons for increasing membership include growth in manufacturing jobs, low pay and
poor working conditions, and widening wealth gaps which prompt workers to seek higher
wages.
Reasons for declining membership include restrictive government legislation, a decline in
traditionally unionised manufacturing sectors, a rise in part‑time work, and the growth of
self‑employment and small firms where organising is difficult.
To remain relevant, many unions now offer additional services such as loans, insurance,
holiday vouchers and retraining programmes.
Real‑World Examples and Fun Facts
Real‑world examples help illustrate how unions operate:
• Hong Kong dock strike (2013) – Members of the Union of Hong Kong Dockers walked out
after their demand for a 20 % pay increase was rejected. The strike drew international
solidarity as dock workers from Australia flew to Hong Kong to support the movement.
• Australian teachers’ strike (2012) – The Australian Education Union called two one‑day
strikes in Victoria demanding a 30 % pay increase. The government eventually limited the
pay rise to 2.5 % per year and proposed performance‑related pay.
• Record US membership (2025) – According to the US Bureau of Labor Statistics,
16.5 million workers were covered by union contracts in 2025, up from 16 million in 2024.
About 14.7 million Americans were union members, and union membership increased from
9.9 % in 2024 to 10 % in 2025.
• Union membership in the UK – The Trades Union Congress notes that the UK has about
6.4 million union members, representing roughly 25 % of all employees. Private‑sector
union members earn about 8 % more than non‑members, and women who are union
members earn on average 30 % more than non‑unionised women. Women also make up
55 % of union membership.
• Fun fact – The first US union on record was the Federal Society of Journeymen
Cordwainers (shoe‑makers), formed in 1794. They met in secret to avoid employer
retaliation.
• Fun fact – In some countries, such as the United Arab Emirates, trade unions are illegal.
Conversely, in Singapore, unions must register with the government, and the National
Trades Union Congress plays a major role in representing workers.
• Fun fact – Unions are more than bargaining agents; many offer members financial
products such as mortgages, insurance, holiday vouchers and retraining programmes.
Multiple‑Choice Questions
The following multiple‑choice questions help test your understanding of trade unions. Each
question has four options; choose the best answer.
1. 1. What is the main purpose of a trade union?
• A. To maximise profits for firms
• B. To protect the rights and interests of workers
• C. To set government policy
• D. To provide banking services
2. 2. Which of the following is a primary aim of employers?
• A. Maximise wages
• B. Minimise costs
• C. Enjoy job security
• D. Maximise non‑wage benefits
3. 3. Which of the following is NOT a typical aim of employees?
• A. Maximising wages
• B. Working in a safe and healthy environment
• C. Maximising profits for shareholders
• D. Enjoying job security
4. 4. Which type of union organises workers according to their particular skills?
• A. Craft union
• B. Industrial union
• C. General union
• D. White‑collar union
5. 5. An industrial union represents:
• A. Only professional staff
• B. Workers in a specific industry regardless of their skills
• C. Only self‑employed workers
• D. Only skilled craftsmen
6. 6. General unions are characterised by:
• A. Accepting only skilled workers
• B. Accepting workers regardless of where or what they do
• C. Representing only clerical staff
• D. Having membership limited to a single profession
7. 7. White‑collar unions recruit:
• A. Manual labourers
• B. Professional and clerical workers
• C. Self‑employed entrepreneurs
• D. Unemployed workers
8. 8. Which of the following is a role of trade unions?
• A. Running the government
• B. Providing legal and financial support to members
• C. Maximising profits for shareholders
• D. Preventing workers from complaining
9. 9. What does collective bargaining mean?
• A. Workers individually negotiating pay with managers
• B. Negotiations between a union representative and employer for better pay and
conditions
• C. A meeting of shareholders to discuss profits
• D. A government committee setting national wages
10. 10. A rise in the cost of living due to inflation may lead trade unions to claim:
• A. Reduced wages
• B. Higher wages to maintain real income
• C. Longer working hours
• D. Fewer non‑wage benefits
11. 11. Which form of industrial action involves workers refusing to work altogether?
• A. Strike
• B. Work‑to‑rule
• C. Go‑slow
• D. Sit‑in
12. 12. In a work‑to‑rule, workers:
• A. Go on indefinite strike
• B. Fulfil only the minimum requirements of their contract and nothing extra
• C. Stop working permanently
• D. Speed up productivity to meet targets
13. 13. A go‑slow results in:
• A. Increased productivity
• B. Workers completing tasks very slowly to reduce efficiency
• C. Workers working longer hours
• D. Workers abiding by all rules without affecting speed
14. 14. Which of the following is a positive impact of trade unions on the economy?
• A. Disruption and lost productivity
• B. Raising living standards through negotiation for better pay and conditions
• C. Increasing costs and reducing profits
• D. None of the above
15. 15. A negative impact of trade unions can be:
• A. Improved communication between employers and employees
• B. Industrial action causing lost productivity and disruption
• C. Motivation and productivity gains from better working conditions
• D. Higher living standards
16. 16. In some countries like the United Arab Emirates:
• A. Trade unions are encouraged
• B. Trade unions are allowed to operate freely
• C. The law prohibits trade unions
• D. The government finances trade unions
17. 17. Reasons for increasing trade union membership in some countries include:
• A. Growth in manufacturing jobs and widening wealth gaps
• B. Decline in manufacturing and rise in part‑time employment
• C. Fewer workers experiencing low pay
• D. Falling wealth gaps
18. 18. Reasons for declining trade union membership include:
• A. Restrictive government legislation and a rise in part‑time work
• B. Growth in manufacturing and more low‑paid jobs
• C. Increased wealth gaps
• D. Attractive non‑wage benefits
19. 19. According to 2025 data, the number of US workers covered by union contracts was
about:
• A. 5 million
• B. 16.5 million
• C. 30 million
• D. 40 million
20. 20. In the UK, trade union membership is around 6.4 million workers, which is roughly:
• A. 10 % of employees
• B. 25 % of employees
• C. 50 % of employees
• D. 75 % of employees