The power that the union has can have a big impact upon whether or not it can affect the wage rates within that particular market. It largely depends upon the financial status of the employer. If the union is powerful enough to get wages to rise then it may not lead to a loss in jobs, because it shows that the employer has money in which to raise the wages of its employers and still make supernormal profits. A very powerful trade union may be able to negotiate this rise with the employer, but it would depend on the type of job, if the workers were skilled and difficult to replace then it is likely that …show more content…
Some workers would benefit from higher wages whilst others would lose their job because there would be an excess in supply at wage rate W2.
The status that some jobs come with may lead to unions asking for more pay. A doctor is held very highly within society because of the duty that they perform, and therefore they might feel that they are entitled to more money. The union that they belong to may then apply pressure to employers to raise wages so that the union gets the best for their members. This would probably lead to a fall in labour because of how employers will want the best employees that it can have for the money it can have available, meaning it may have 2 doctors for more money than 3 doctors for the same amount, because of how it feels it has a higher calibre of employee.
To say that a fall in employment is inevitable if there is an increase in wages is not entirely true. It depends on other factors such as how well the general economy is doing, or how the business in particular is doing. However it is likely to have an effect on it. Many businesses may feel that they cannot stretch to giving every single employee a pay rise, and therefore they may have to let someone go. Also Government interventions may also have an effect on the number of people employed within a certain business so to promote competition or to ensure employees rights are being met. Overall I would probably agree with saying that when an