ABSTRACT
The effect of trade unionism on relative wages may be defined as the degree to which unions raise the wages of their members through collective bargaining above the level which those same workers would have been paid in the absence of unionization. Economists tend to argue that the interaction of supply and demand in the labour market continues to affect relative wages independently of collective bargaining but as yet we have no acceptable yardstick by which this can be measured. The effect of trade unions on occupational and industrial differentials is more problematic. Trade union structure may therefore affect the rate at which compression takes place. The presence of trade unions who are seeking to achieve equity-based bargaining objectives must obviously have some effect over the behaviour of pay relativities, but the objectives themselves and the vigour with which they are pursued are in turn strongly influenced by the general rate of inflation.
