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The Impact of Trade Unions on Productivity
Although there is no consensus on the union impact on productivity, there are two different opinions on the subject in the literature. The first one is the “Neo-Classical Approach”. According to this approach, the monopolistic wage increases and/or the restrictive working conditions like strike that trade union bring in have a negative influence on business productivity. The second one is the “Voice/Institutional Response Approach” developed by Freeman and Medoff. According to this approach unlike the Neo-Classical Approach, that trade unions are collective organizations far from being monopolistic, seeking ways to improve productivity by responding to the demands of varying employees with varying interests. So that, according to this view trade unions in reducing the job turnover rates, encourage the management to follow better production methods and adopt more effective policies, ensure enhanced decision making processes by improving communication between the employees and the management and thus eventually improve productivity by keeping the morale of the employees high. Eventually, although relatively the two different views of its own merit, on the one hand, “productivity” depends on the workforce quality, the capital and technological structure, the competitive power, and management philosophy of the company as well as the sector it operates in, and on the other, it co-varies with the social, economic, and political power of trade unions.

Productivity, business, trade unions, wage, motivation, approach.

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