Question

how wages are determined? how the trade unions affect the rate of wages? (10 mrks question) ​

Answer 1

Answer:

At that wage rate, the number of workers unemployed would be l1 – l2. ... So, in reality, wages are not determined by market forces of demand and supply put by collective bargaining between the trade union and the employer. And collective bargaining in the labour market is an example of bilateral monopoly.

Explanation:

What effects do unions have on wages? A primary goal of trade unions is to maintain and improve workers' terms and conditions, particularly workers who are members of the union, through collective bargaining with employers. ... This is because above-market wage costs are faced by all competitors.

Answer 2

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Some economists compare them to cartels. 4 Through collective bargaining, unions negotiate the wages that employers will pay. Unions ask for a higher wage than the equilibrium wage (found at the intersect of the labor supply and labor demand curves), but this can lower the hours demanded by employers.

Traditionally, unions have supported minimum wage initiatives because their contracts have been directly or indirectly tied to the minimum wage. ... By making non-unionized labor more expensive with minimum wage hikes, unionized labor becomes comparatively more attractive.