Readers Question: The three factors which can explain the wage differentials in the South East and the North ? (1,living cost 2, MRP theory , 3 ??), can I say that trade union power in the South East is more strong ? I just guess and dont know whether that is an acceptable answer ?
If you said trades unions could explain wage differentials between south east and north, it probably would be accepted. I would say:
Higher wages in the south east could be explained by a higher trade unions presence in the south east – There is greater membership, higher density and more power. Therefore, the unions could help to bargain for higher wages.
However for evaluation I would say:
- The unions might be more successful in the south east because unemployment is lower. In the north unemployment rates are higher therefore, the bargaining power of unions is diminished because firms could more easily replace striking workers with unemployed workers.
- Trades unions in the UK have declined as a political and economic force. These days in an era of service sector based economy they struggle to have much impact on increasing wages. In the south east, many of the industries have very low union density. Therefore it is unlikely that higher wages in the south east are due to trade union power.
So it is fine to say trades unions could explain differences in pay. I don’t think it is a particularly good point, but, that doesn’t matter. It actually makes the evaluation easier.
1 comment so far ↓
haha,,I argue that if there is a strong monopsony power in the South East , it may offset the power of the Trade Union . Is that OK ? and actually the second point of your evaluation is one of the eva. I’ve made . And I think the first evaluation you made is very convincing . (p.s. : my classmates said that the power of trade union should not be stronger than the North because there are more privatised firms than the North , which I think is a good argument . )
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