Employers may make contracts with organized labour to only hire members of specified trade unions; in other words, to form a closed shop. Once a closed shop has been agreed on, all trade employees are obliged to join the union. Non-union workers may not be hired or may be hired conditional on their obtaining a union card within a stipulated period of time. Dismissal may result upon refusal. Another disadvantage of the closed shop is that it lends itself to abuse by the union by giving it too much power over individuals in that they may be denied union membership initially or dropped from the union rolls subsequently, and therefore become ineligible for employment.
In the UK the agency shop, and in the USA the union shop, are the kind of closed shop that allows non-union workers employment conditional on their becoming union members later. In the UK, those electing not to become members have to contribute union dues. Nonetheless the incidence of closed shops is higher in some developing countries of the South than in the Northern market economies. However in some Communist industrialized nations, a Party card is equivalent to a union card and non-Party members may be discriminated against.