Reasons why trade unions demand wage increase
1. Rise in the cost of living:- Trade unions demand higher wages wherever there is an increase in the cost of living as the real wage falls leading to a fall in the standard of living.
2. Comparative wage rate argument: The wotkers may demand-for a wage increase if other workers doing similar jobs, elsewhere are being paid higher wages. The differential wages argument is based on the idea that people doing similar jobs get more or less similar rewards.
3. Increased profits of the firm or industry: Workers may justify their demand for a higher wage if the profits of the entire firm have increased. Trade unions usually insist on wages being increased whenever there is a rise in profitability of the firm.
4.Increased productivity of the workers: Trade unions demand higher wages if the productivity of their member increases. However the rise in productivity may be due to improved performance of capital assets.
5. Increased demand for the products:- workers demand for a share of these profits because they argue that it is a result of their effort.
6. The nature of work:- Trade unions usually tend to demand for higher wages for jobs which are risky or unpleasant e.g., in case of pilots, mine workers etc.
7. The nature of labour supply:- When there is a full employment situation in the labour market and the supply of labour is inelastic, the trade unions usually demand for higher wages.
8. Breach of an agreement by the employer:- If a certain wage had initially been settled by both parties and the employer fails to pay, then trade unions will demand for wage increase or for the implementation of the agreement.
9. Increased general prosperity of the economy:- If the economy attains general prosperity, ,then the workers will demand for a wage increase.
10. Failure to pay minimum wages:- The employer is paying less than the registered minimum wage, then the workers will demand for a wage increase.
11. Increased skills of the labour:- If the labour has high skills to offer, like in the case of professionals who have specified skills to offer or has attained higher 'qualifications, the trade unions will ask for wage increase for such workers.
12. Increased workload for the workers:- If the workload is increased without any corresponding adjustment in pay, the workers may demand: for their salary to be increased.
13. If the demand for products becomes inelastic:-When the demand for the product becomes inelastic implying higher returns to the firm and the workers get to know of it, they will in such a situation, demand for a wage increase.
14. If the workers feel being exploited:- When the workers feel that the wage given to them is too low, then they may demand for wage increase.