why do countries need trade unions?

Answer 1

From the perspective of an economist, countries do not need trade unions. However, countries are not run by economists, so trade unions persist. The main arguments for having trade unions is that the trade union protects the workers from the greedy corporations, who simply want to see these workers live in absolute poverty by sending their jobs overseas.

Unions are protectionistic. This means that they are designed to get workers more protection in the form of higher pay, better benefits, and job security, often at a price born by the other citizens and their fellow workers. Unions keep wages artificially high, which in turn causes prices to be higher for the product. This can be sustained if the product is something that is in demand, but if something changes to make demand weaken, workers will get layed off. For example, look at Ford. Trade unions also are meant to protect the worker from competition, since it limits who can be a member.

In reality, trade unions hamper economic growth by forcing markets out of equilibrium. Generally, they have done nothing good for the economy as a whole, although a few select groups have benefitted from them.

Answer 2

Unions, properly used, tend to share wage information among labor. This tends to standardize the market price of wage, which actually makes macroeconomics easier.

On an aggregate level, it doesn't matter, but on an individual level, if you're twice as good as the person next to you and the two are paid the same, you'll resent it. There's certainly some behavioral theory involved.