Labour Unions


As organized movements, labour unions began during the 19th century in Britain, then to continental Europe and later to the United States. Smaller workers associations began to be formed in Britain in the late 18th century, however they ended up remaining short-lived and sporadic through out most of the 19th century, mainly due to the hostility which they encountered from government groups and employers that resented this arising form of economic and political  activism (Campel, 1992). During that time unionists and unions were frequently prosecuted under several conspiracy and also restraint of trade statutes in both United States and the Britain (Kaushal and Kaestner, 2010).  

While organizers of these unions in the two countries encountered similar challenges, their approaches unfolded quite differently: for instance, in British these movements seemed to favor political activism, this eventually led to forming of  Labour Party in the year 1906, whereas in the United States the American unions undertook a collective bargaining approach as a mean through which they won  their workers’ economic gains (Doucouliagos and Laroche, 2006).

The labour unions strength at any given time has always been greatly linked to general conditions of the economy. During the rising wages and full employment times, the appeal of unionism is typically lost, especially among the workers who are young, whereas during the recessionary times the unions happens to be more attractive than other times (Kirsten and Siebert, 2003). Towards end of the 20th century the workforce globalization had set in new challenges to the existing labour unions, leading to weakening of the collective bargaining in most of workplaces where employees could be easily replaced by a labour force which was a bit cheaper in several parts over the world (Doucouliagos and Laroche, 2006).

The labour unions have always undoubtly had a commendable influence, whereby the practices and principles of labour unionism are fundamentally embedded in most industrial countrieseconomic systems (Dubofsky, 1994). As a result of favorable legislations and direct political action, in some countries, collective bargaining has resulted as the principal ways of wages disputes settling, the conditions of work, as well as other issues related to workforce. These successes have also been associated with consequences which are far-reaching, whereby a lot of organized labor’s tactics and goals have already been adopted by groups and professional associations that are traditionally outside the unionism scope (Kaushal and Kaestner, 2010).

However, despite many employers been against these labor unions it helps the members because, you can’t be fired without any genuine cause. This is because the employee has a powerful force which is always backing him in case his or her rights are violated by the employer (Campel, 1992). No one is supposed to negotiate for salary or wages raises, mainly due to the fact that they are clearly spelt out in the contract of the union. Moreover, most employers and managers are usually opposed to this aspect of unionization mainly because of the effects this labour unions have on their investment ventures (Compa, 2003). Some of the most evident reasons as to why employers are in the opposition to the labour unions are as follows: organization of labour strikes, demand for higher wages, government support, the majority rule embraced in unions and making the employers businesses uncompetitive;

Organizing labor strikes

Labor unions are mostly responsible for organizing strikes which are accused of sometimes holding the society ransom because the strike actions most of the times usually results to the disruption of activities in companies as well as public services. However, sometimes this can be can be interpreted where possible as the core purpose for employees participation in strike action since it results to the airing of their grievances when the negotiations have hit the wall (Kaushal and Kaestner, 2010).

Labor strikes are frequently used by employees as a powerful bargaining tool whereby a union’s weight is gauged depending on the number of members it represents. These often labor unions’ strikes lead to stoppage of productivity in companies hence they are possibly a nightmare for a large number of employers (Campel, 1992). This production interruptions during strikes make many employers to be opposed to the unions because the interruptions caused incurs a lot of losses to the companies.

The strikes are also feared by many employers because of their potential negative effects which are likely to accrue from them (Compa, 2003). They may result to damages in the company where employees decide to go on rampage which translates to losses to the employer. Also the striking employees may cause physical harm to the company’s management member in case they encounter them during the time of strike (Kirsten and Siebert, 2003). This is because most of the striking employees do not entertain address by the company management unless their grievances are met.

The employer also risks to loose skilled and reliable employees in case the management decides to fire all those participating in the strike in case it was illegally organized. This is because at such circumstances the labor unions can’t guarantee the employees jobs if they participate in such a strike. Despite the labor unions been known to provide job security, they are however not capable of extending this security in case of a strike (Jackson and Mathis, 2008).

Demands for higher wages

Labour unions are frequently associated with rising the wages and salaries of their members to higher levels at the expense of the employers. This is because most labor unions do not adequately consult before raising the employees’ remunerations   which becomes expensive for the employer to sustain (Köpsén, 2011).

However, as a result of raised price of labour, where the wage rates are high above, results to unemployment (Compa, 2003). This is due to the fact that many businesses can only be able to sustain certain ranges of wages hence they only willing to employ workers who wages are less than the one set by the labor unions. The aspect of high wages and salaries leading to unemployment has a lot of implications to the employers because they are not capable of hiring the required employees which then leads to reduced production since the employer is not in a position to sustain the salaries of the required extra employees to increase the company productivity (Doucouliagos and Laroche, 2006).

Many unions have managed to secure higher salaries and wages as well as better working conditions which are conducive to their members. However, this reduces the available number of jobs in companies which are unionized (Campel, 1992). This occurs because of the law of demand whereby when unions raise the labor price, most employers will only be capable of buying less of it. Hence the labor unions are one of the major labor markets anticompetitive forces (Dubofsky, 1994). Thus, the unions’ gains are usually achieved at the expense of others such as the nonunion workers, consumers, the jobless and employers.


In case of competitive labour markets, higher wages causes unemployment equivalent to (Q3-Q2). Labor unions can lead to wages rising above equilibrium by threatening to strike. However, under the situation when salaries and wages are above the equilibrium then the unemployment results.

The labor unions enjoys many legal privileges

The labor unions’ power to raise salaries for their member is based on the legal immunities and privileges that they enjoy from governments, both by nonenforcement of other laws and by statute (Campel, 1992). These legal privileges are aimed at restricting other people from working wages and salaries that are lower than the expected.

For instance, labor unions in the United States enjoy a lot of legal privileges. This is because they are immune from antitrust as well as taxation laws (Compa, 2003). This makes companies to be compelled legally to bargain with the labor unions for their demands in “good faith.” Unions are also at some situations capable of forcing companies to give them company property that is available to be used by the union.

Moreover, at situations where the government ratifies that the position taken by the union as one which represents a group of employees, it however leads to the representation of them all, if or not some employees want to be represented collectively (Wolman, 1987). The labor unions are also immune from paying for the damages or injuries that could have been inflicted during labor disputes, which then results to workers strikes. This is mainly because of the injunctions of the federal court, as well as many other state laws that are evident in the federal preemption doctrine.

They embrace the philosophy of majority rule

In a situation whereby labor union is present in a workplace, the majority who are members of union usually make decisions for the rest of the workers.  This situation is not conducive for some employees and employers because in case you do not agree with the decisions taken by the majority then you end up not having any voice. Thus, the labor unions representation is sometimes very powerful forces for changing the favor of employees a company (Doucouliagos and Laroche, 2006). However, this powerful force influence changes in the favor of the majority hence the minority have no chance to be heard (Kirsten and Siebert, 2003).

This leads to the loss of the aspect of individuality. In situations when a union is approved to exclusively represent the employees in a place of work, irrespective of employees will they are automatically registered as members of that union which then acts as an overall unit of bargaining for the employees rights whereby the majority will always rule (Dubofsky, 1994). The situation where ruling is done by the majority does not have any sympathy with every person’s specific employment aspirations or needs.

Individual employee agreements between management and the employee are whatsoever not allowed due to the fact that the employer is obliged to deal only with the labor union on issue regarding employment (Campel, 1992). This then creates a condition whereby the union leaders usually make decisions on behalf of all the employees, this privilege has a tendency to be misused  because the labor union leaders may only present situation that favor their individual interest (Köpsén, 2011). This loss of individuality causes a lot of concern for many employers, because there is no opportunity for negotiating with individual employees in case special arrangements can be done with them to increase the productivity of the company (Wolman, 1987).

The labor unions have also contributed to the inhibition of the economic advancing of the minorities. This is mainly because the labor unions at times they are the ones which determines who to be hired and the chances of this leading to the exclusion of the minority are very high (Jackson and Mathis, 2008). This is justified due to the fact that the other main function of these labor unions is that after increasing the wages and salaries of their members above the levels which are competitive, it then turns out to ration the scarce jobs that remains since the employers are not in a position to offer more jobs because of the implicated costs (Doucouliagos and Laroche, 2006).

The is likely tom result to the labor union discriminating  the potential new employees on the basis how related they are or how better they know the applicant or instead of  openly advertising these jobs which are highly valuable to the applicants who are highly qualified. This denied the employers the chance to openly employ the most qualified and productive employees who would in other words lead to increased production (Campel, 1992). For instance, it has been historical that craft unions which involve the railway and carpenters’ unions had greater monopoly to control the hiring practices and wage rates compared to the industrial unions that include the steel and auto workers had, craft unions had greater opportunities to kick out minority workers. The industrial unions were mainly involved in organizing for who was to be hired, hence this situation denied the employers the privilege to hire for themselves.

Reducing business competitive advantage

Most of the times labor unions inhibits the capability of any company to retain market competitiveness. Hence the reduction of competitiveness leads to decrease in the sales volume as well as reduced profits (Jackson and Mathis, 2008).  This is mainly because the union workers wages are frequently much higher than those of workers who are not in a union. The high wages results to an increase in the prices of goods that are produced by workers who are in a union to be above the competition (Wolman, 1987). The increased cost of production then reduces the company’s market competitiveness.  Also, productivity is at no one time encouraged or rewarded by the union structure to which the employees are members. Reduced productivity decreases the capacity of an industry to effectively compete for business with its competitors (Compa, 2003).

The combined aspect of no incentives to individual employees as well as potential union fines in case an employee or employer violates the union contract means the employer is likely to suffer from decreased productivity. The reduction in productivity may mean that the employer will remain less competitive in the market which could lead to business stagnation. Reduction in the productivity of a company, loss of the capacity to be market competitive as well as increased pay rates can result to layoffs or even at times it may result to the company going out of business (Dubofsky, 1994).

In union representation company, pay and promotions are mostly determined by the order of seniority (Campel, 1992).  This makes employers to remain with fewer options which are always there for the purpose of motivating their employees to work hard, leading to more production as well as suggesting creative and innovative solutions to the challenges which the business is facing. Sometimes unions might put pressure on specific employees whose their productivity is higher than that of other employees. The labor union can look at this as detrimental to the rest of members of the union (Doucouliagos and Laroche, 2006).


            The labor unions are usually very helpful to individual employees mainly because they act as the tools which advocates for their rights. They mainly act as the collective bargaining tool which has been frequently used by workers to address their grievances. However, despite the unions having helpful effects on the employees the employers are always opposed to them mainly because of the effects they results to (Jackson and Mathis, 2008). For instance, they ends up advocating for wages that are too high to be sustained, also they are mainly responsible for organizing strikes which always have detrimental impacts to the employer. They also embrace the majority rule philosophy whereby an individual employee is not supposed to negotiate individually with the employer. Also the labor unions lead to reduction in the productivity of most of the companies which ends up making the companies less competitive in the market.

For the last forty or so years there has been a steady decline of labor unions all over the United States (Köpsén, 2011). This has been greatly contributed by many factors which included the employers undertaking strategies to silence the employees or some employees not willing to join the labour unions (Campel, 1992). There has been also been an increase in the privately owned companies that didn’t tolerate the issue of their employees joining the unions (Compa, 2003). Some of the strategies involves been active in their opposition as well as going to an extend of hiring consultants to be involved in the process of devising legal strategies that can be used to combat the labour unions hence reducing their powers. Other employers ended up picking the activist workers to become part of the company’s management team through their appointment into the board of directors while others were involved in a process of profit-sharing whose aim was to reward the employees (Doucouliagos and Laroche, 2006).

Another reason which can be attributed to the decline of labor unions is because labor force new additions have always had minimal loyalty to an organized labor. This is mainly because a great number of teenagers and women are nowadays working and in most cases their salaries tend to be second incomes for the family, thus they  are likely to accept lower wages, which leads defeat of  the organized labor purpose. The third other reason for the unions decline is that they have ended up been victims of their own achievements (Campel, 1992). This is because the unions raised their wages more above the wages that are paid to workers who are not in unions. Therefore, this made most of their products to be very expensive leading to reduction in sales due to competition from other competitors as well as nonunion producers. As a result of this, companies resulted to cutting back on the production; this led to some workers losing their jobs some of whom were union members (Dubofsky, 1994).










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