ECON-200 Lecture Notes - Lecture 13: Workchoices, Efficiency Wage, Unemployment Benefits
9 Sep 2020
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A union is a worker association that bargains with employers over wages and working conditions. In the 1970s and 1980s, when unions were at their peak, more than half of the australian workforce was unionized. A union is a type of cartel attempting to exert its market power. Union raises the wage above the equilibrium level, it raises the quantity of labour supplied and reduces the quantity of labour demanded, resulting in unemployment. The process by which unions and firms agree on the terms of employment is called collective bargaining. A strike will be organised if the union and the firm cannot reach an agreement. A strike refers to when the union organises a withdrawal of labour from the firm. A strike makes some workers better off and other workers worse off. Workers in unions (insiders) reap the benefits of collective bargaining, while workers not in the union (outsiders) bear some of the costs.
