What is a Trade Union?

Definition: A trade union is an organization of people working for certain industry with aiming to achieve a set of goals when negotiating compensation, employee benefits, and improved working conditions with employers. Trade unions are also known as labor unions and are assumed to preserve workers rights through collective action.

What Does Trade Union Mean?

Since employers are presumed to have more power and bargaining capabilities than workers, trade unions organize workers to represent them. Most unions are industry-specific but it can be a trade union related to a particular region or even a company, particularly if it is a large one. When industries are big enough, companies also organize in trade associations, which therefore negotiate with unions.

Trade union’s members pay union dues to support the union administration and representatives who act on the workers’s behalf. Union achievements are expressed in written documents that last a given period of time, usually from one to three years, and are signed by both parties. After that, a new bargaining between the parties takes place and a new agreement is written and signed.


A medium-size company initiated operations in the plastic manufacturing business. The founder and general manager of Plastic World offered what he thought would be very satisfactory salaries to workers at all levels. He also guaranteed mandatory benefits according to the legal framework of the country. Operations started successfully and profits were better than expected. After the first year, several workers asked for a meeting with the general manager.

They expressed him that all workers entered the Plastic Industry Union which meant that a collective agreement must be signed. Benefits provided to other workers in that industry should be also granted by Plastic World. Additional welfare benefits like production bonuses, Christmas bonuses, days off at certain holiday seasons of and free transportation to workplace where mentioned among those. Plastic World had to negotiate and sign a collective agreement that included some of this demands in order to continue having healthy relationships with its workers.