As the question regarding the continued legitimacy or need for labor unions did not specify a country, it will be assumedfor the purposes of responding that the focus is intended to be on the United States. Support for the right of workers to organize in many less-developed countries remains an appropriate priority of U.S. foreign policy, as the conditions that fueled the growth of organized labor in the United States remain very much alive in much of the developing world.
The history of organized labor in the United States is one of systemic abuse of workers in terms of dangerous working conditions, excessive hours without appropriate compensation, and the use of children as inexpensive labor. As labor unions gained in strength during the 20th Century, they became major factors in the economy at both the micro- and macroeconomic levels, and an argument can be made that they contributed to the decline of the American manufacturing base. Labor union demands for pay and benefits, initially fully warranted, grew excessive and provided the catalyst for the movement of much of the country's manufacturing base to other countries.
The excesses of many American labor unions during the second half of the 20th Century, however, does not mean they have outlived their usefullness. On the contrary, while government regulations -- for example, minimum pay rates and laws pertaining to workplace safety -- help ensure that the abuses of the past are not repeated, it can be argued that labor unions are still needed to ensure that workers are treated fairly in many areas, including wages relative to those enjoyed by executives and protection against arbitrary personnel decisions that are patently unfair, for example, terminating employment for arbitrary or unreasonable grounds. This educator witnessed for himself the legitimate role a labor union played in ensuring that workers at a factory outside of Washington, D.C. that was being closed with operations moved to cheaper locations (West Virginia) were given adequate advance notice of the impending corporate action -- notice that would not have been provided absent the union presence there, and that workers were offered the opportunity to relocate and keep their jobs.
Much of life is a balancing act. The role of labor unions in the United States is a perfect example. Legitimate and proper roles continue to exist for organized labor in this country; at the same time, the excesses that contributed to the decline of the manufacturing base illustrated the consequences when one side of the management-labor equation grows too powerful.