What are the potential disadvantages of Trades Unions?
1. Creates UnemploymentIf labour markets are competitive, and trade unions are successful in pushing for higher wages, it can cause disequilibrium unemployment. Union members can benefit from higher wages, but outside the union, there will be higher unemployment.2. Lost ProductivityIf unions go on strike and work unproductively (work to rule) it can lead to lost sales and output. Therefore their company may go out of business and be unable to employ workers at all. In many industries, trade unions have created a situation of a confrontational approach.
AP
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