3.3 Workers

Question 1

What wage related factors affect the occupational choices a worker makes?

Answer 1

• Wages (money per hour)
• Salary (annual salary divided by 12 and paid monthly)
• Commission (percentage of each transaction)
• Bonus (addition to salary in special circumstances, e.g high profits or good performance)
• Performance related pay (based on how well the worker performs)
• Share options (issuing of company shares, often in addition to salary)
• Fringe benefits (in addition to salary, e.g free childcare, car)

Question 2

What non-wage related factors affect the occupational choices a worker makes?

Answer 2

• Level of education/training required
• Job security
• Job satisfaction
• Career prospects
• Level of challenge
• Social status

Question 3

What factors influence the demand for labour?

Answer 3

• Demand for product being produced (increases –> supply must increase –> labour increases)
• Demand for final product (demand for labour is derived, booming economy means high demand)
• The ability to substitute labour for capital (high –> demand falls)
• Productivity of labour

Question 4

What factors influence the supply of labour?

Answer 4

• Long training periods (costly - excludes many households)
• Comparative wage rates in other sectors
• Changes in migration policy
• Income tax levels (increases –> labour decreases)
• Working conditions
• Trade union power
• Level of welfare benefits
• Social trends

Question 5

What effects the PED and PES of labour?

Answer 5

The skill of labour:
- Highly skilled markets are inelastic in both supply and demand
- Unskilled markets are elastic in both supply and demand

Question 6

What factors influence the bargaining power of individual workers?

Answer 6

• Membership of a trade union
• Age/experience
• Level of education
• Current supply conditions

Question 7

What reasons are there for differences in wages between workers?

Answer 7

• Gender
• Primary/secondary/tertiary sector
• Private/public sector
• Skilled/unskilled

Question 8

Why are there wage differentials between men and women?

Answer 8

• Gender pay gap (discrimination)
• Men usually work full time while women usually work part time
• Women more likely to accept a job below their skill level
• Women often have an interrupted career journey

Question 9

Why are there wage differentials between the primary, secondary and tertiary sectors?

Answer 9

• Primary: unskilled, raw materials fetch low profits –> low wages
• Secondary: value added to materials –> wages higher than primary
• Tertiary: highly skilled, add lots of value, products fetch high profits –> high wages

Question 10

Why are there wage differentials between the private and public sectors?

Answer 10

• Private sectors has highest and lowest wages (primary/tertiary)
• Public: has wage ceiling that may not be present in private sector
• Public sector has job security
• Public sectors wages don’t fall as low (unions, high bargaining power)

Question 11

Why are there wage differentials between skilled and unskilled workers?

Answer 11

• High supply of unskilled labour, wages pushed down as someone is always willing to work for less
• Skill takes time/money so limited supply

Question 12

What are the pros and cons of labour division/specialisation for workers?

Answer 12

Pros:
- Acquire single skill easily/quickly
- Gain recognition/statu
Cons:
- Repetitive/boring
- Limited opportunity to gain more skills
- Difficult to find other employment (limited skill base)

Question 13

What are the pros and cons of labour division/specialisation for firms?

Answer 13

Pros:
- Short time training new workers
- Increased output (sales/profit)
- Higher labour productivity lowers cost/unit, more competitive
Cons:
- Productivity falls from boredom
- Boredom –> high staff turnover
- Firms unable to compete globally go out of business
- Industries close –> structural unemployment

Question 14

What are the pros and cons of labour division/specialisation for an economy?

Answer 14

Pros:
- Increased exports, economic growth, higher standard of living
- Income from exports, increased imports, greater variety
Cons:
- Over-dependancy on other countries’ resources (conflict)
- Specialisation in own resources, resource depletion