Microeconomic Decision Makers · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 8% of your exam marks.
Wage determinants, minimum wage effects, and trade union impact appear regularly in Section B; typically 6 to 10 marks.
A trade union is an organisation of workers that represents its members in negotiations with employers over pay, hours, and working conditions. The negotiation process is called collective bargaining.
The IGCSE syllabus names four common types.
| Type | Who it represents | Example |
|---|---|---|
| General union | Workers in any industry, skilled or unskilled | A union open to truck drivers, gardeners, referees |
| Industrial union | All workers in one industry, regardless of skill | A fire-brigades union covering everyone in the fire service |
| Craft union | Skilled workers in one trade | A painters' or electricians' union |
| White-collar union | Office-based professionals | A teachers', architects', or accountants' union |
Workers usually pay a monthly subscription to belong, and lose membership if they stop paying.
Unions do far more than negotiate wages. The syllabus lists five main functions.
| Function | What the union does |
|---|---|
| Collective bargaining | Negotiates pay, hours, overtime, and inflation-linked rises with employers |
| Protecting employment | Negotiates redundancy terms, redeployment, and resettlement when firms restructure |
| Lobbying for legislation | Pushes the government to introduce or maintain worker-friendly laws (minimum wage, holiday rights, anti-discrimination) |
| Legal advice and training | Provides legal support in disputes and offers job-specific training |
| Health, safety and conditions | Campaigns for safer workplaces, decent equipment, and reasonable working environments |
If collective bargaining breaks down, unions can apply pressure through industrial action.
Successful collective bargaining can raise wages above the free-market equilibrium. On a labour-market diagram, the union wage
Wusits aboveWe.
The trade-off: at the higher union wage, the quantity of labour demanded falls (firms hire fewer workers) and the quantity of labour supplied rises (more people want the higher-paid jobs). The gap is unemployment: workers who would like to work at the union wage but cannot find jobs.
Strong unions therefore face a trade-off. They can raise pay for members in work, but at the cost of fewer jobs in the unionised sector. In practice the effect depends on the elasticity of labour demand: unions are more effective at raising wages without creating unemployment in industries where labour demand is inelastic (workers cannot easily be replaced by machines or by imports).
A union's bargaining power depends on: