3.5.2 wage rates Flashcards
What is demand for labour affected by? [6]
- Wage rate
- Demand for products
- Productivity of labour
- Substitutes for labour
- How profitable the firm is
- Number of firms in the market
How is demand for labour affected by the wage rate?
If wages get higher, firms might consider switching production to capital, which might be cheaper and more productive.
How can productivity of labour be increased?
With education and training, and by using technology.
What is the supply of labour affected by? [8]
- Wage rate
- Demographics of the population
- Migration
- Advantages of work
- Leisure time
- Trade unions
- Taxes and benefits
- Training
Why does migration particularly affect supply of labour at the lower wage rates?
As migrants are usually from economies with average wages lower than UK minimum wage.
Why has wage gap between skilled and unskilled workers increased in the UK recently?
Due to technological change and globalisation, which has shifted production abroad.
Why does demand for labour fall during a recession?
Due to a lack of demand for goods and services. Firms are either forced to close or make workers redundant, as profits are falling due to reduced consumer spending and need to reduce costs.
What do trade unions aim to do? [4]
- Protect workers
- Secure jobs
- Improve working conditions
- Try achieve higher wages
What is individual bargaining?
Negotiation between a single employee and the employer.
What is collective bargaining?
Negotiation between employers and a collective group of employees. This is with the aim of regulating working conditions and representing the interest of employees.
It gives more strength to employees in the negotiation.
What is productivity bargaining?
An agreement where employees agree to make changes which improve productivity in order to receive higher wages.
