Monday, 13 March 2017

Strike: a normal or abnormal phenomenon in the labour market?

In the UK, there are many strikes: one of the most common ones is the tube strike. Such strike usually causes much inconvenience to other members of the society in order to raise social attention and help them to achieve their goals. I think that such phenomenon only exists in an imperfect labour market where the supply side (labours) has a relatively dominated power over the demand side.

An imperfectly competitive labour market is also often caused by an imperfectly competitive good or service market. For example, in the UK, the national transport industry including the national rail and the London underground is a close-to-monopoly industry. Once a trade union has the ability to control the supply of labours, then it controls the supply and the outputs of the entire industry. All industries create values in our society and economy; when one industry is under the control of a trade union, then our economy partially depends on the action of this trade union, as if it decides to cut the supply of its industry, the entire economy and society will face losses.

In a perfectly competitive market, there are countless numbers of suppliers. It is impossible for a single trade union to control the entire labour supply in this market, so any trade union cannot act alone and gain enough power to influence the market and our society. When there are too many trade unions in industry, it is impossible for them to cooperate to conduct an effective strike. Therefore, in a perfectly competitive market, a strike is unlikely to take place as it can hardly make an impact.

Overall, in a perfect free market, a strike should not happen.

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