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The effect of Trade Unions on causing Labour Market Failure Today

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Introduction

Comment on The effect of trade unions on causing labour market failure today Labour Market Failure (LMF) occurs when the market forces of demand and supply do not results in an efficient allocation of labour resources. A major cause of LMF is the abuse of trade union. However as the market changes, this cause of LMF is losing significance. Trane Unions are organisations which act on behalf of workers to gain better rights and benefits through collective bargaining, they are attractive to workers as the bargaining power of a union is always more powerful than that of an individual. ...read more.

Middle

Whilst this is a great benefit for union memebers, it can cause signifigant market failure. The below diagram shows, that the new wage rate my cause market failure through unemployment. As the market forces of supply and demand settle on a wage rate of W1, the presense of a union increasing the rate to W2 will cause LMF by causing employment to drop from L1 to L3 This is despite their being L2 amount of labour supplied, the gap between potential labour force and the actual employment rate means there are unused resources. ...read more.

Conclusion

In recent years, it may be easier for unions to force this wage increase, as many unions are merging into larger unions, making their action more powerful. On the other hand, LMF caused by unions as more employers are now monopsony's, meaning the sole employer of labour, in this case, monopsony's use MRP theory to determine their employment figures, trade unions end up causing a rise in cost of labour, this would result in a higher MRP and an increase in employment, meaning no LMF. ...read more.

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Response to the question

Although this response is short, there is a good level of analysis here. There is a sustained focus on trade unions causing labour market failure, with the key terms being defined and explained well. However, I would note that the ...

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Response to the question

Although this response is short, there is a good level of analysis here. There is a sustained focus on trade unions causing labour market failure, with the key terms being defined and explained well. However, I would note that the command word for this question is "comment" and so you should be looking to evaluate the consequences as well as analysing them. If I were answering this question, I would be engaging with the fact that trade unions have less power today, and the extent to which they cause labour market failure depends upon their presence within and industry. Such evaluation at A-Level will gain credit, but without it you will only gain a low mark despite the amount of analysis.

Level of analysis

The analysis here is good. I liked the definition of labour market failure, looking at an inefficient allocation of resources, but I think this could've been applied to the labour market. It would suffice to give a simple explanation saying that a labour market failure is where supply exceeds demand which causes unemployment. Engaging with the context of the question will allow to examiner to see you have an in-depth understanding of the topic. The definition of a trade union is good, and it was great to see the buzzword of collective bargaining used. Whenever I discuss trade unions, I like to say they are a monopoly of labour and so can dictate the market somewhat. The analysis is strong as there is a clear diagram which is well explained. The diagram has a number of equilibria annotated, and these aren't just for show but are explained within the essay. Sentences such as "the presense of a union increasing the rate to W2 will cause LMF by causing employment to drop from L1 to L3" are brilliant in showing the examiner you have a full understanding of the concept. As mentioned above, this essay just needed to take it further to discuss whether trade unions are causing labour market failures today, and to what extent this occurs.

Quality of writing

The essay has a logical structure, moving from definitions of the key terms to analysis. However, to be a complete essay there needed to be an argument which looked closely at evaluation. The essay hasn't got the best of styles, and there are numbers of mistakes in spelling, punctuation and grammar. For example "the market forces of demand and supply do not results in an efficient allocation" and "caused by unions as more employers are now monopsony’s" show the examiner you lack the ability to write clinically. Although it shouldn't detract from solid analysis, it sometimes will, and so I would always advise a simple proof read.


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