1. To demand for increase in wages.
  2. Improvement in working conditions.
  3. Helps to fight job loss.
  4. Helps to fight unfair dismissal.
  5. Helps to protect against any kind of discrimination.
  6. Trade unions help to advice the government in number of issues such as employment policies, wage determination etc
  7. Trade unions help in improving the skills of its members through organizing seminar workshops etc.

Strength of the Trade Unions

Strength of the trade union depends on the extent at which a trade union is able to achieve its objective. Strength of the trade union will depend on the following factors.

  1. Unity among members.

When there is unity among members, there is strength of the trade union because they tend to have a common stand.

  1. The rise of membership

The bigger the membership the more strongly the trade union because they contribute more ideas and the voices is high.

  1. Financial position of the trade union.

When the financial position of the trade union is high the more the stronger the trade union because it can open up more branches and can run up all the financial activities of the business.

  1. The(impacts) level of inconvenience of trade union

The more the impact of the trade union activities,the stronger the trade union and the opposite in true

  1. The labour laws of the Country.

If the labour laws are supporting and protecting the interest of the labourers then the trade union will be strong and the opposite is true

  1. Trade union leadership.

If a trade union is led by committed and competitive leaders, he tends to be stronger as compared to one led by leaders who aim at fulfilling their own objectives.


Problems faced by Trade Unions in poor countries.

  1. Lack of enough funds which tend to limit the operation of the union.
  2. Government interferences in the activities of the trade union e.g. Setting restrictions on their operations.
  3. Lack of enough co-operations among members.eg. Some do not pay membership subscription or fee.
  4. Poor management and administrators who use trade union as a stepping stone as a base to achieve their own objectives
  5. Tribal differences which tend to affect mobilization of members.
  6. In many low developed countries, the government is the major employer and on many times resists to request from trade unions.


Factors that Determine Wages

  1. The level of experience.
  2. Level of education.
  3. Government policy (minimum wage).
  4. Level of responsibility.
  5. The demand of the labour and supply as well.
  6. Level of strength.
  7. Level of productivity.
  8. Costs of living.
  9. Riskiness of the job given


  1.         Rent

Rent is a reward to the land lords for use of the land there it is the price of land.

In economics, rent is defined as a payment made to the land lord by the tenants for the use of their land.

In ordinary sense rent is defined as a periodical payment made for use of items such as house, a bicycle, and a car and so on.

Theories of Rent

There are two main theories of Rent

  1. Ricardo theory or Ricardian theory.
  2. Modern theory or demand and supply theory.
  3. Ricardian Theory of Rent

This theory was put forward by David Ricardo and in his ideas he defined Rent as, “That portion of the produce of land which is paid to the land lord for the use of the original and indestructible process of the soil.” In other words Ricardo considered rent as a return to the landlords from the use of their land.


In his opinion Ricardo stated that rent is only applicable to land and not any other factor of production because land possesses unique features being a free gift of nature and having fixed supply. He also emphasized that land possesses some power which are free and indestructible and this is what referred to as the fertility power of soil, but however such fertility is not uniform to all portion of land, therefore some portions have high fertility and other low and hence basis of rent.

Ricardian theory has two elements

The first element is that rent arises due to the reasons that certain lands are more fertile as compared to other lands and in this way, surplus production occurs due to the difference in the fertility of land and it is called differential surplus or differential rent

The second element is that land is scarce and rent arises due to the security of land. According to Ricardo, the superior lands will pay scarcity rent at the same rate as the inferior lands but they will also pay a differential rent.

The Theory is based on the following assumptions:-

  1. Land has a fixed supply.
  2. Fertility differs among different portions of land.
  3. He also assumed the law of diminishing returns to operate.
  4. It is also assumed that land possesses original and indestructible power of the soil
  5. Basing on all the above Ricardo concludes; that difference in rent among different portions of land depends on the superiority of the fertility and therefore more fertile land will fetch more rent than the less fertile.

Criticism of the Theory

  1. In reality rent does not arise because of fertility but because land is scarce.
  2. Rent is not only applicable to land but even to other items such as car, bicycle.etc
  3. The law of diminishing return which was assumed to operate can be checked by modern methods of agriculture eg. use of fertilizers
  4. It is also not true that there is such original and indestructible power of soil since fertilized soil tend to lose fertility after being used for a long period of time.
  5. Land can as well be used for various uses besides cultivation. It can as well require to pay rent eg construction of commercial buildings.
  6. Modern Theory of Rent
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To demand for increase in wages. Improvement in working conditions. Helps to fight job loss. Helps to fight unfair dismissal. Helps to protect against any kind of discrimination. Trade unions help to advice the government in number of issues such as employment policies, wage determination etc Trade unions...