Trade Unions

Trade Unions

A trade union is a group of workers who join together in order to protect their own interests and to be more powerful when negotiating with their employers.

Each employee who wishes to join a trade union must pay an annual fee, which contributes towards the costs and expenses that the trade union incurs when it provides services to its members, and supports industrial action by the workers.

Trade unions have a number of aims:

  1. To improve the pay of its members.
  2. To improve the working conditions and the working practices of its members.
  3. To support the training and the professional development of its members.
  4. To ensure that their members' interests are considered by the employers when any decision is made which will affect the workforce.

There are four main types of trade union in the UK:

  1. General Unions. These are for skilled and unskilled workers performing different jobs in different industries (e.g. cleaners, clerical staff, transport workers).
  2. Industrial unions. These are for different workers in the same industry (e.g. the National Union of Miners (N.U.M), covering workers at all levels in the hierarchy).
  3. Craft Unions. These are fairly small unions for skilled workers, performing the same or similar work in different industries (e.g. musicians).
  4. White-collar Unions. These are for 'white-collar' (or professional) workers who perform the same or similar tasks in different industries (e.g. teachers, scientists).

Trade unions are most closely associated with negotiating with the employers of a business on behalf of their members over the issue of pay. This is known as the 'pay-bargaining process', and it is an example of collective bargaining.

The first stage in this process is for each side (the employer and the trade union) to decide on its objectives. As well as deciding the amount of a pay rise, both the trade union and the employer will also need to decide how the money will be distributed amongst the members of the trade union (i.e. will the pay rise be a 'blanket' coverage giving every employee a fixed percentage rise, or will different groups of workers receive different percentage pay rises?). Further to this point, will the pay rise be awarded in a lump sum per employee, or will it be staggered over time?

The second stage involves both sides (the trade union and the employer) presenting their arguments at a 'pay-talk' discussion. A trade union will put in a 'pay claim', which will be based on one or more of the following points:

  1. An increase in the cost of living (i.e. inflation) requires that workers have a pay rise in order to maintain their purchasing power.
  2. An increase in labour productivity rates will mean more sales revenue and profits for the business, this extra profit should be shared with the workers by giving them higher rates of pay.
  3. A pay rise is required in order to recruit and retain the 'best' workers that the business can find.
  4. If workers are using new machinery and working practices, then they need to be compensated for this extra work by being given a pay rise.

The employer will put forward a 'pay offer', which they believe will reflect the current trends in the labour market (i.e. the rates of pay which are being offered by rival businesses), as well as maintaining the competitiveness of the business (i.e. not increasing their costs by a large percentage).

The third and final stage involves a negotiation process between the trade union and the employer. In order for this to be a success, both sides will be required to compromise and be prepared to accept less than their original objectives.

It must be remembered that there are many other issues that a trade union will negotiate for its members other than pay rises (e.g. length of the working week, working conditions, and proposed redundancies).

If the negotiation process collapses (whether it was negotiating for pay or for working conditions), then there are a number of different methods of industrial action which the trade union can propose to its members that they use in order to achieve their demands :

  1. Non co-operation. Refusing to attend meetings and use new machinery or processes.
  2. Work to Rule or 'Go Slow'. Refusing to perform any tasks not in the contract of employment and keeping the output of products to a minimum.
  3. Overtime Ban. Refusing to work any hours over and above the required weekly number of hours.
  4. Picketing. Standing at the entrance to the workplace and not allowing any person or vehicle to cross the 'picket line' and enter the workplace.
  5. 'Blacking'. Refusing to deal with certain employees or suppliers because they have refused to participate in the industrial action.
  6. Strikes. This is often the last resort for a trade union. It involves the employees stopping their work, leaving the workplace and refusing to return.

    Whichever method of industrial action is implemented, the trade union and the employees are using it in an attempt to reduce output (therefore also reducing sales and profits) and hoping that the employer will give-in to their demands.

This refers to employees being given more responsibilities at the workplace and being involved in the decision-making process. The aim of participation is to increase the levels of motivation and job satisfaction amongst the staff by making them feel more involved in the business.

Trade unions often try to increase the amount of worker participation in the workplace, since it provides a sound justification for pay rises for the employees. The main types of worker participation include

Employee shareholders. These are a common form of payment in many PLCs and are often termed 'share options'. This basically involves each employee receiving a part of each month's salary in the form of shares (usually at a discounted price).

This forms a profitable savings-plan for the employee, and he can sell them after a given period of time. This should motivate the employees to work harder and increase their efforts, since the share price will rise as the company becomes more profitable, therefore increasing the capital gain on their shares.

Empowerment. This involves a manager giving his subordinates a degree of power over their work (i.e. it enables the subordinates to be fairly autonomous and to decide for themselves the best way to approach a problem).

Kaizen. This is a Japanese word meaning 'continuous improvement'. It is widely held that any aspect of the business can be improved, not just the production processes.

Quality circles. This is a group of workers that meets at regular intervals in order to identify any problems with quality within production, consider alternative solutions to these problems, and then recommend to management the solution that they believe will be the most successful.

Teamworking. This is the opposite production technique to an assembly-line which uses an extreme division of labour. Teamworking involves a number of employees combining to produce a product, with each employee specialising in a few tasks and the whole team taking the responsibility for production.

Works council. This is a type of worker participation and it consists of regular discussions between managers and representatives of the workforce over such issues as how the business can improve its processes and procedures.

Worker-directors. These are workforce representatives who participate in the meetings held by the board of directors. Worker-directors are not very common in the UK, since employers often believe that they can slow down the decision-making process, as well as 'leaking' confidential information to employees.

The Advisory Conciliation and Arbitration Service was set up by the government in 1975 as an independent body that helps to settle industrial disputes and claims of unfair dismissal by employees. As the name suggests, there are three main services that are offered by ACAS, advice, conciliation and arbitration.

A.C.A.S. representatives can be invited into a business by the two feuding parties (employers and trade unions) in order to offer their advice to both parties on the industrial unrest and the 'best' way to proceed in order to settle the unrest.

Conciliation is an attempt to get the two sides in an industrial dispute to resolve their differences. A conciliator listens to the arguments of both sides, and then tries to encourage the trade union and the employer to negotiate and compromise so that they can reach a solution that is acceptable to both parties.

Arbitration is the process of resolving an industrial dispute by using an independent person to decide the appropriate outcome. The arbitrator will look at the arguments put forward by both parties, and then he will arrive at a decision. The decision can be legally binding on both parties if this was agreed prior to the arbitrator's decision.

Pendulum arbitration is a type of arbitration in which the arbitrator will decide completely in favour of one party or the other, with no compromise or negotiation being allowed. It is likely, therefore, that both parties (the employers and the trade union) will make their demands more conservative and realistic than if the arbitrator was allowed to choose an outcome which was somewhere between the two.

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