3.3 Workers Flashcards
Methods of compensation
Wages
Salary
Commissions
Bonus
Profit-related pay
Share/stock options
Fringe benefits
What are Wages
Usually for unskilled/basic jobs that can be time based (time rate) or output based (piece rate) and is a variable cost for the firm.
What is Salary
Paid to skilled workers. Paid monthly and is a fixed cost to the firm
What is time rate
Method to calculate wages based on the number of hours worked
Quantity or quality of output doesn’t matter
What is piece rate
in what way does it compare to time-rate
Method to calculate wages based on number of units produced or the output of the worker. Quality doesn’t matter
More productive than time rate.
What is a bonus
Additional lump sum of money paid at the end of the year which depends on performance.
What is profit related pay
Additional payment to all employees or select employees who have worked for the firm for a specific amount of time. Part of the profit is shared with them
What are stock/share options
Workers may receive shares in the firm to give them an incentive to work hard.
What are fringe beenfits
Are considered as a non-wage factor and are additional benefits which have a monetary value
What is a job’s net advantages
All the wage and non-wage factors that affect the attractiveness of a job or occupation.
What affects choice of occupation
Wage factors
Non wage factors
Career prospects
Level of training
Level of danger
Personal satisfaction
Recognition on the job
Level of experience required
Level of challenge
Choice of occupation - Wage factors
Monetary related factors
Choice of occupation - Non-wage factors
Non-monetary benefits
Choice of occupation - Career prospects
Opportunities for growth and progression in an industry/company
People who arent included in the supply of labour
Full time education
Voluntarily retired
What is the backwards bending supply curve.
Wages will rise along with hours worked until a certain point, after which the number of hours worked reduces and wages continue increasing so that people can get more leisure time.
what is the labour force participation rate
% of the working age population that is working rather than unemployed.
How does the govt intervene in the labour market
NAME AND DEFINITION
Minimum wages - Lowest legal amount any firm can pay its workers which is set by the govt.
Factors that affect the supply of labour
Demographic changes
Changes in net advantage
Changes in quality of edu/training
Changes in welfare benefits
NT DW
What are demographic changes - supply of labour
Changes in size and age distribution of the population in an economy.
Disadvantages of minimum wage
Unemployment
Surplus in labour
Cost of productions for firms will increase - will have to delay business decisions such as growth and expansion
What are welfare benefits - s o l
If welfare benefits offered are reduced then people will be forced to work
If they are increased then people will get used to the benefits and won’t work.
what are the changes in quality of edu/training- s o l
Changes in level and type of education and training courses offered can increase supply of workers with diff skills.
Factors that dictate wage differences
Difference in abilities and qualifications and training
Type of job
Job satisfaction
Labour mobility
Non-monetary benefits
Wage differences - diff in abilities and quals
Higher the amount of abilities, quals, training required lower the number of people who can have undergone it - higher the pay
Wage differences - type of job and what are they paid
Dirty, dangerous, unsociable hours. Are paid more which is known as compensation differentials
Wage differences - job satisfaction
Sometimes, satisfaction of the job can compensate for the lower wage rates. If the wage rate is low, but satisfaction is high it will still attract a lot of people,
Wage differences - labour mobility with affects of high and low mobility
Ease at which workers can move between occupations and different areas in a country (or diff countries).
Workers may earn more since they can easily move to the job that pays them the most
High mobility - supply of labour is high - wage rates are low
Low mobility - supply of labour is low - higher wage rates
Wage differences - non-monetary benefits
Firms may choose to give more fringe benefits than wages sometimes and vice versa.
Adv of specialization
Will be considered as skilled labour and can earn more
Disadv of specilization
Higher and longer levels of unemployment if the demand for their labour falls - lot of retraining will be required
This would lead to the govt giving more unemployment benefits - OC
