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Human capital and trade unions
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The quality of workers matters as much as the number. Trade unions represent workers in bargaining with employers.
Quantity and quality of labour
Businesses need enough workers (quantity) with the right skills (quality).
Education and training raise human capital: the skills, knowledge and experience of workers.
More human capital raises productivity, so workers can earn higher wages and firms can produce more.
Education and training raise human capital: the skills, knowledge and experience of workers.
More human capital raises productivity, so workers can earn higher wages and firms can produce more.
Trade unions
A trade union is an organisation of workers that acts on behalf of its members.
Unions use collective bargaining: negotiating with employers for the whole group.
They aim to improve wages, working conditions, job security and health and safety.
Unions use collective bargaining: negotiating with employers for the whole group.
They aim to improve wages, working conditions, job security and health and safety.
Effects of unions
Unions can win higher wages and better conditions.
If necessary, they may take industrial action, such as strikes.
But if wages rise above the equilibrium, firms may employ fewer workers or replace them with machines.
If necessary, they may take industrial action, such as strikes.
But if wages rise above the equilibrium, firms may employ fewer workers or replace them with machines.
Why might a firm pay for its staff to train in new software?
- Training raises human capital.
- Skilled workers are more productive.
Answer: To raise productivity through better human capital.
Human capital is workers' skills and knowledge, built by education and training. Trade unions use collective bargaining to raise wages and improve conditions, but higher wages can reduce employment.
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