A trade union is an organized group of workers who join together to protect and improve their rights and interests in the workplace. Unions use collective bargaining to discuss wages, working conditions, and job terms directly with employers.

How unions influence wages:

• Collective bargaining: By negotiating as a large group, workers have more power than they would have on their own.
• Strike action: The threat or act of stopping work can pressure employers to increase pay.
• Restricting supply: Unions may limit the number of people entering a specific job, which can help increase wages.

Types of union actions:

• Positional bargaining: Using the threat of industrial action to demand better pay.
• Restrictive practices: Limiting output or specific work tasks to protect existing jobs.

Economic impact: While unions can help members earn wages above the competitive equilibrium (the market average), these higher costs for employers may sometimes lead to job losses or fewer opportunities for non-union workers.