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A labor union (American English) or trade union (British English) is a commercial entity consisted of employees or workers having a common interest, such as all the assembly workers for one employer, or all the trades workers in a particular industry. The union is formed for the purpose of collectively negotiating with an employer (or employers) over wages, hours and other terms and conditions of employment.

The concept of labor unions began early in the industrial revolution. More and more people left farming as an occupation and began to work for employers, often in appalling conditions and for very low wages. The labor movement arose as an outgrowth of the disparity between the power of employers and the powerlessness of individual employees.

Labor unions were illegal for many years in most countries. There were severe penalties for attempting to organize labor unions, up to and including execution. Despite this, labor unions were formed and began to acquire political power, eventually resulting in a body of labor law which not only legalized organizing efforts, but codified the relationship between employers and those employees organized into labor unions. Many consider it an issue of fairness that workers be allowed to pool their resources in a special legal entity in a similar way to the pooling of capital resources in the form of corporations.

Unions are sometimes mistakenly thought to be successors to medieval guilds. Although guilds also existed to protect and enhance their members' livelihoods, guilds were groups of self-employed skilled craftsmen who had ownership and control over the materials and tools they needed to produce their goods. Guilds, in other words, were small business associations.

A union, in sharp contrast, is an organisation of hired workers who, generally speaking, own and control only their own ability to labor, not the tools or materials they work on. While industrial era unions could and often did consist of highly skilled factory workers, one of the radical breaks with the past was that unions could be constituted for essentially unskilled workers, even poor agricultural labourers.

Companies that employ workers with a union generally operate on one of several models:

• In the closed shop, a business may only hire workers who already belong to the union.
• In the union shop, a business may hire anyone, but workers must join the union within a designated amount of time after they start work.
• In the agency shop, workers may choose to not join the union, but must pay a fee to the union for its services in negotiating their contract.
• In the open shop, a business may employ anyone it likes, regardless of their union status, and workers are not required to associate with a union at all.

The Problem of International Comparison

As labour law is very diverse in different countries, so is the function of Labour Unions. For instance in Germany, only open shops are legal. This affects the function and services of the union. On the otehr hand, German unions have played a greater role in management decisions through participation in corporate boards and co-determination than have unions in the United States.

In addition, unions have very different relationships with political parties in different countries. In many countries unions are integrally associated with a particular political party. In the United States, by contrast, while the labor movement is historically aligned with the Democratic Party, the labor movement is by no means monolithic on that point; the International Brotherhood of Teamsters has supported Republican Party candidates on a number of occasions and the Professional Air Traffic Controllers Organization endorsed Ronald Reagan in 1980, shortly before he destroyed it and banned all of its striking members from employment as air traffic controllers in 1981. In the United Kingdom the labor movement's relationship with the Labour Party is fraying as Party leadership embarks on privatization plans at odds with labor's interests.

Finally, the structure of employment laws affects unions' roles. In many western European countries wages and benefits are largely set by governmental action. The United States takes a more laissez faire approach, setting some minimum standards but leaving most workers' wages and benefits to collective bargaining and market forces.

Trade Unions in Britain

The legal status of trade unions in the United Kingdom was established by a Royal Commission, which agreed that the establishment of the organisations was to the advantage of both employers and employees. Most British unions are members of the TUC, the Trades Union Congress.

Labor Unions in the US

Most labor unions in the United States are members of the AFL-CIO, or the American Federation of Labor-Congress of Industrial Organizations. The Taft-Hartley Act, passed in 1947 over the veto of President Harry Truman, severely limits the powers of unions in the United States, and remains in effect. Closed shops are forbidden; union shops are allowed within the limits allowed by the sttute and subject to additional conditions imposed by the National Labor Relations Board and the courts. Jurisdictional strikes (where two unions each claim work that they believe should be assigned to the workers they represent) and secondary boycotts (boycotts against an allegedly neutral company that does business with another company with which a union has labor dispute) were made illegal. Unions are no longer allowed to donate money to federal political campaigns.

Most importantly, the bill provided the executive branch of the Federal government with the ability to obtain legal strikebreaking injunctions if an actual or impending strike "imperiled the national health or safety", a test that has been in practice interpreted loosely by the courts.

Many US unions lost much of their prestige when links to organized crime were discovered. Union membership has been steadily declining for the past decade or so in all but the public sector (that is, unions of government employees).

Other

Some countries such as Sweden have strong, centralized unions, where every type of work has a specific union, which are then gathered in large national unions. The largest Swedish union is LO, Landsorganisationen. LO has over 2.1 million members, which is more than a fifth of Sweden's population.

See also Salting, Labor law, List of labor unions, strike