Methods Employed by Trade Union to Raise Wages
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Methods Employed by Trade Union to Raise Wages

Methods Employed by Trade Union to raise wages Raising Standard Wage Rates- Instead of putting restrictions on the supply of labor, modern trade unions fight for the raising of standard wage-rates. This is a very common method of raising wages adopted by the unions today. Once certain standard wage rates are accepted by a representative body of the industry, individual firms quickly fall in line.

Methods Employed by Trade Union to raise wages

Raising Standard Wage Rates- Instead of putting restrictions on the supply of labor, modern trade unions fight for the raising of standard wage-rates. This is a very common method of raising wages adopted by the unions today. Once certain standard wage rates are accepted by a representative body of the industry, individual firms quickly fall in line.

Increasing Labor Demand- The trade unions also adopt ways and means to increase the demand for labor on the part of the employees. We know that demand for labor is a derived demand, i.e., derived from the demand for products that labor produces. The unions try to shift this derived demand curve upward. For instance, by improving labor productivity, they may enable the management to reduce cost of production and hence the price. This in turn will increase the demand. The unions may agitate for the protection of the industry so that domestic industry expands and employs more labor. They may influence the government to pay higher rates on public contracts for the goods made by the industry. They may help the employers to charge a high monopoly price and wrest a share for labor out of monopoly profits. Some unions have agitated for higher tariff duties in order to increase the domestic demand for goods they produce and consequently for labor used in their production.

By collective bargaining they can raise wages and increased wages mean higher marginal productivity. Higher marginal productivity means shifting of the demand curve upwards.

The trade unions can raise wages, because a large part of this rise can come about by squeezing the rent-element in the other factors of production and monopoly gains in other incomes.

It may also be argued that the raising of wages by the unions will not necessarily discourage investment. Today the bulk of investment comes not from individuals but from big corporations which usually maintain the level of investment but reduce dividend to shareholders when their income falls.

However, trade unions can raise wages if they are all-inclusive and it is difficult to import 'black-legs'.

If a trade union can wrest monopoly profits from a monopolist, it is all right. The proper function of a trae union is to stop or prevent exploitation and when it goes beyond, it is bad.

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