The Labour Market / Trade Unions

The amount of money paid to workers for their services over a period of time (i.e. the price of labour) is known as what? Remuneration Direct labour rate Wage rate Salary rate Which statement best describes the demand curve? It slopes down from left to right It slopes down from right to left It slopes up from left to right It is a horizontal line What is the relationship between the wage rate and the demand for labour? Proportional Inverse Obtuse Diagonal True or false: when wages rise firms demand fewer workers. True False Factors affecting the demand for labour Match each factor with the most appropriate statement: Demand for the product Is said to be derived as it arises because there is demand for another good i.e. consumers buy more goods and services from firms and so firms need to employ more workers to make them Availability of substitutes If firms can replace people for machines then they will do if they think that the machines will be more efficient and cheaper than people Productivity of labour If every worker is able to produce more output the demand for workers is likely to increase because production becomes more profitable Other employment costs Such as national insurance contributions (NICs), recruitment and selection costs, pensions, fringe benefits, training etc. Changes in these factors will have an effect on the demand curve for labour. Which description best describes the supply curve for labour? Slopes downward from left to right Slopes upwards from right to left Slopes upwards from left to right Is horizontal What is the relationship between wages and supply of labour? Proportional Inverse Didactic Inferior Factors affecting the supply of labour Population sizeAs the population grows there will be more people available for work so the supply of labour will increase.MigrationMore people moving to the country will increase the supply of labour in that country.Age distribution of the populationIn the developed world countries have ageing populations, this means that the dependency ratio (number of workers to non-workers) is rising and creating a financial burden.Retirement ageWhen people retire they get a state pension. Governments are having to raise the retirement ages, this leads to an increase in supply.School leaving ageChildren must stay at school until they reach a certain age and any changes to the leaving age will affect the labour supply.Female participationDue to changes in society more and more women are choosing to work, this has led to an increase in the size of the working population.Skills and qualificationsIf people have good skills and are well qualified they will become more employable and the quality of labour will improve.Labour flexibilityThis refers to the ease with which workers can move geographically and occupationally between different jobs. If workers are geographically mobile then they can move easily from one region to another to find work. If workers are occupationally mobile then they can switch from one type of job to another more easily.As workers become increasingly mobile the supply of labour in a particular market will increase. Improvements in transport networks has improved the geographical mobility of labour. Changes in these factors will effect the supply curve for labour, for example: an increase in immigration would lead to an increase in the supply of labour, which would then cause the supply curve to shift to the right. The importance of quantity and quality of labour to businesses As well as the cost of labour, when locating a business needs to consider whether workers have the necessary skills needed to meet their quality standards.In some locations labour is cheap because workers are unskilled and poorly educated. This can lead to poor quality workmanship and force the business to invest lots of money in training.They also need to ensure that they have enough workers near to the chosen site now and also into the future, in case they would like to expand operations. Businesses need access to sufficient numbers of skilled workers in order to minimise costs, operate efficiently and make more profit The impact of education and training on the quality of human capital The quality of labour is just as important to businesses as the price of labour. Employers want to recruit workers that can read, write and that have good communication skills, customer service skills and other specialist skills.A well educated and trained workforce will be more productive. The responsibility for education and training in most countries is divided between the state and firms, and over time a country will want to improve the quality of labour so that it can be more productive – this requires investment.Other reasons to train include:•New laws, policies, procedures•New technology or working practices•To multi-skill the workforce•To motivate the workers and help them to develop Find the missing word: Demand for labour in an industry is unlikely to remain _ over time Simplified Changeable Dynamic Constant As it is derived demand, if there is a fall in the demand for a product, what will happen to the demand for labour? Fall in demand Increase in demand No change in demand Fluctuating changes in demand Would firms like the supply of labour to shift to the left or to the right? Left Right Organisations representing people working in a particular industry or profession and that seek to protects their rights, are known as what? Customs unions Trade unions Guilds Cooperatives Trade unions The main aim of the unions is to:•Negotiate pay and working conditions with employers.•Provide legal protection for members, such as representation in court if an employee is fighting a case against an employer.•Put pressure on the government to pass legislation that improves the rights of workers.•Provide financial benefits, such as strike pay, whenever necessary.In the 1960s and 1970s many UK trade unions were in dispute with employers and took action to protest. Some people felt that they had too much power and government created laws to limit their power, by:•Requiring trade unions to have a secret ballot before a strike and then only striking if a majority of people wanted to.•Allowing businesses to sue for compensation if trade unions did not obey the law.•Banning secondary picketing, where workers in company B take strike action in support of workers in company A who are also striking.•Making closed shops illegal i.e. workplaces where all the workers must belong to a particular trade union.Partly as a result of anti-trade union legislation membership has declined. A strong trade union may be able to force wages higher in some labour markets. If the union has strong support from its members it can put pressure on employers during wage negotiations, when this happens unions are able to affect wages and employment levels. Labour Market Diagrams: Trade Unions and Wages