Page 1 of 16 AP ECON 3240 – Labor Economics: Theory Weeks 11 and 12 Lecture Note: Topic: Union and Collective Bargaining Readings: • Our textbook Ch 14 and 15 Topics Covered: 1. The nature of unions and the role they play in the labour market. 2. Key measures of union influence in Canada 3. The legal framework governing unions and collective bargaining 4. Discuss the difficulties in measuring the impact of unions on the wages of their members and the methodologies that are often used to overcome those difficulties. 5. Describe the mechanisms whereby unions may affect the wages of non-union workers. 6. Explain how unions affect pay wage inequality and the distribution of income. 7. Discuss how the impact of unions may differ across various characteristics such as skill level, gender, the public and private sectors, and the degree of competition in the product market. 8. Describe how unions may affect productivity, investment, and the profitability of the firm, as well as overall efficiency in the economy as a whole. Union Growth and Incidence Unions Are collective organizations whose primary objective is to improve the well-being of their members The objective is met though collective bargaining and the outcome is an agreement specifying: Wages Benefits Aspects of employment relations There are two basic types of unions: Craft Unions which represent workers in a particular trade or occupation such as printing and construction Industrial Unions which represent all workers in a particular industry regardless of occupation such as automobile, steel, and forest industries
Page 2 of 16 Unions’ additional roles: Social and political affairs Influence the Government in power Provide financial support to the dominant parties Table 14.1 Union Membership and Union Density in Canada, 1920 – 2015
Page 3 of 16 The Legal Framework The evolution of the Unions legal framework in Canada Prior to Confederation the law has discouraged collective bargaining In the 1870s the law was “neutral” to collective bargaining In 1944 the law encouraged the spread of collective bargaining Features of Canadian labor relations policy: Workers have the right to join and form unions Collective bargaining rights are protected under unfair labour practices legislation System that defines bargaining representation is successfully established Union is an exclusive bargaining representative of the workers The rights are enforced by a labour relations board Factors Influencing Union Growth and Incidence The main measures of the extent of unionization: Union Density which defines the union membership as a percentage of paid workers (about 34% in Canada) Collective Agreement Coverage which is the percentage of paid workers whose wages and working conditions are covered by a collective agreement (also about 34% in Canada) Table 14.2 Union Density and Collective Agreement Coverage in Selected OECD Countries
Page 4 of 16 Figure14.1 Union Density in Canada and the United States, 1920 – 2015 Table 14.3 Union Membership and Collective Agreement Coverage as a Percentage of Paid Workers in Canada, 2015
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- Summer '20
- Trade union