3.5.1 Employment Patterns

Question 1

structural change

Answer 1

Occurs when resources are reallocated → demand for a specific product is faling, demand for labour will diminish

Question 2

how has the global labour force increased

Answer 2

• 1 billion entering global labour force
• Global supply of labour doubled between 1980s and early 2000s
• Rate at which new workers entered the workforce in the developed countries began to decline due to lower birth rates
• the global labour force in 2015 was about 3 billion with unemployment of 208 million
• Estimate of 3.5 bil in 2030, increase supply in labour markets makes markets more competitive and can reduce some incomes

Question 3

structural change with developed and developing countries

Answer 3

• Developed and richer countries, competition from millions of low skilled woekrs abroad has decreased wages for domestic low skilled workers
• People will moev from areas where pay is low to where it is high, to improve standard of living → internal migration
• Developed economies → rapidly aging and shrinking workforce, needs to be compensated by productivity
• Low skilled labour cannot replace all of these people, and there will be a surplus of these workers

Question 4

education and an increase in skilled workers

Answer 4

• Tech improved in advanced economies → demand for skilled workers has increased than the ability of the education and training system to supply them and this has pushed up pay for those scarce skills
• India and china have 70% and 35% people who have only primary education
• Tony blair and ‘education, education, education’ → aimed to get 50% of population at level 4 education
• However there is an academic class bias in UK, even if higher paid may be looked down upon due to stereotyping

Question 5

birth and death rate effect on the working population

Answer 5

• Developing economies have larger young populations but due to high levels of infanticide etc, less older workers and less experienced workers live
• Developed economies have smaller young populations but more older populations → there is a gap between new workers when current working force become elderly
• UK birth rate 1.49%, growing families organically take long time and incentives do not really work → china 1 child policy worked best when there were limited resources
• Need migration to gain more workers
• Internal migration → from towns to cities, causes labour market to adapt to this

Question 6

how are labour markets becoming more interdependent

Answer 6

• Individual labour markets are becoming more and more interconnected and therefore interdependent
• Globalisation, integration of economies and markets
• Trade liberalisation and the creation of trade blocs also make it easier for workers to move between labour markets
• Taking skilled workers from abroad markets may have implications on skill shortages on overseas labour markets
• Eg birmingham recruiting Filipino nurses as they need skilled workers
• Good for britain as they fill gaps of workers in understaffed NHS but take skilled workers from emerging/developing economies

Question 7

how has an increase in cheap labour in emerging markets affected domestic wage rates

Answer 7

• Increased cheap and skilled labour in emerging markets will affect supply of labour in developed countries
• Workers willing to accept lower wage rates abroad have a dampening effect on domestic wage rates
• Eg eastern european migrant workers more attracted to low wage jobs as they are used to low living standards they offer in lower wage economy
• No incentive for firms to raise wages for domestic workers,
  Increased supply of labour - Keeps costs low for consumers if workers are lower paid
• However domestric workers who are not used to lower working conditions demand a higher pay but will not receive any
• Keeps their wage rates low and decreased living standards for the country

Question 8

how has outsourcing affected developed economies (america and the rust belt)

Answer 8

• India and specialisation in IT and software development → can outsource skilled workers for lower wages so firms can reduce costs as workers in domestic markets will only work for higher rates6
• Eg in the rust belt in America causing economic decline and urban decay
• Glob caused america to outsource manufacturing to other countries with low labour costs
• Affected living standards in those areas, increasing poverty and econ growth