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economics > Employment > Flashcards

Employment Flashcards

chapter 22

1
Q

why is it the goal of every government in the modern economy to achieve high levels of employment?

A

+ higher tax take in form from income taxes

+ less government expenditure on social welfare payments

+ increases standard of living for citizens

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2
Q

what is full employment?

A

when everybody seeking work is employed at existing wage rates

…happens when a sustained period of economic growth occurs

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3
Q

what are the positive consequences of full employment?

A
  1. INCREASED STANDARD OF LIVING
    people have more disposable income to spend on goods/ services
  2. INCREAED GOVERNMENT TAX REVENUE
    income tax on what they earn and VAT on what they spend
  3. REDUCED SOCIAL WELFARE BILL
    lower gov. spending e.g. jobseekers benefit and allowance
  4. INCREASED AGGREGATE DEMAND
    including consumption, investment, government expenditure and net exports
  5. INCREASED INVESTMENT
    businesspeople expectations for the future are good, companies want to enlarge
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4
Q

what are the negative consequences of full employment ?

A
  1. POSSIBLE LABOUR SHORTAGE
    there is no more staff available, this may stunt the growth- leads to a move abroad
  2. INFLATIONARY PRESSURES
    demand pull inflation as demand exceeds supply
  3. PRESSURE ON STATE INFRASTRUCTURE
    traffic on roads, transportation networks, child minding services
  4. DETERIORATION / LOSS OF SERVICES
    people would not be attracted to low payed jobs, must increase wages for low quality jobs,…
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5
Q

name 3 different types of unemployment

A
  1. STRUCTURAL
    when people are no longer needed due to technical progress and competition
    (e.g. online checkin on airports)
  2. GEOGRAPHICAL
    jobs in one area but unemployment in another area (e.g. jobs in cork, unemployment in Dublin)
  3. SEASONAL
    when staff is only employed in a certain part of the year… (e.g. agricultural sector, holiday and tourism sector)
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6
Q

what is meant by unemployment?

A

all those seeking work at existing wage rates but unable to find work

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7
Q

name the 2 methods of measuring unemployment!

A

life register

quarterly national household survey

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8
Q

what are the limitations of life register for an accurate measurement of unemployment?

A

it includes people who are:

  • legally working part time and signing part time (seasonal industries)
  • engaged in the black/shadow economy
  • not seeking employment
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9
Q

why is the quarterly national household survey useful as an accurate measure of unemployment ?

A

it excludes people who:

  • legally sign on and work simultaneously
  • legally draw unemployment benefit/ unemployment assistance because they work 3 days per week or are in seasonal or casual labour
  • sign on, but aren’t seeking employment or aren’t available for work
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10
Q

what causes unemployment in Ireland ?

A
  • economic recession (cyclical)
  • relocation of industry
  • irish companies exporting to the US (trump) or the UK (Brexit)
  • banking crisis
  • uncertainty about futur
  • reliance on construction sector/ structural unemployment
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11
Q

what is the impact of unemployment on the economy?

A
  • decrease in consumer demand
  • falling inflation or deflation
  • entrepreneurs hesitant to invest
  • more government expenditure on social welfare
  • lower tax receipts
  • greater tax burden on the employed/ reducing the incentive to work
  • increased social problems
  • wage increases not sought
  • reduced demand for imports
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12
Q

how does a rise in unemployment levels affect government current finances?

A
  • reduction in taxation revenues

- increase in social welfare payments

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13
Q

how does a rise in unemployment levels affect the balance of payments current amount?

A
  • lower incomes leading to a reduction in imports

- rising unemployment may mean closure of business - some of which may be export oriented, hence lower exports

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14
Q

how does a rise in unemployment levels affect price inflation?

A
  • moderation in demand pull inflation, as demand decreases
  • long term : increase in unemployment may lead to the need to increase taxation or increase charges for certain services, resulting in a rise in the consumer price index
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15
Q

strategies for reducing unemployment in Ireland?

A

DECREASE TAXATION
bolster personal expenditure, higher demand, higher employment

SUSTAIN A LOW RATE OF CORPORATION TAX
ireland has one of the lowest in the EU and is under constant pressure

SUBSIDISE ADDITIONAL LABOUR
grants for employing people, introduced tax break down for additional employees

REDUCE COSTS FOR BUSINESSES
oversee fall in commercial rates and utility prices, lower cost of production

CAPITAL INVESTMENT BY GOVERNMENT
improve infrastructure (e.g. new motorways,...) - creates jobs automatically - multiplier effect

ENCOURAGE NEW INVESTMENT
grants for investing in projects, leads to research and development

ENCOURAGE LABOUR-INTENSIVE INDUSTRIES
abolish the travel tax, tourism-friendly environment, lower VAT rate in restaurants, hotels,…

INVESTMENT IN EDUCATION AND TRAINING

CONSUMPTION OF IRISH GOODS

ENCOURAGE ENTREPRENEURSHIP

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16
Q

What is meant by ‘ job-sharing’ ?

A

if two people share one job.

e.g. one works in the mornings and one in the afternoon

one works 3 days a week and one 2

  • this does not cost the employer any more
  • but the employee gets less income
17
Q

what are the effects of job-sharing?

A
  1. FEWER PEOPLE ON SOCIAL WELFARE
    good for government
  2. LESS ABSENTEEISM
    good for employer
  3. LOWER TAX REVENUE INTAKE DUE TO LOWER MARGINAL TAX RATES
    bad for government, good for employee
  4. FEWER IMPORTS AS A RESULT OF REDUCED INCOMES
    bad for economic growth, lower s.o.l.
  5. INCREASED ADMINISTRATION /TRAINING COST
    bad for employer
  6. SOCIAL PROBLEMS DECREASE
    more people are employed
18
Q

define underemployment !

A

…a situation whereby a factor of production (e.g. labour), though not actually unemployed, is working below capacity.

19
Q

give an example of underemployment!

A

a PhD graduate in analytical chemistry who is unable to find work and instead is working as a waiter. their training skills and qualifications are not being utilized to the maximum.

a son/daughter in their family’s business while they are waiting for a job elsewhere may be underemployed. ( i.e. the sales of the business do not increase as a result of their employment)

20
Q

why is Ireland attracting many multinationals and foreign direct investment ? (FDI)

A
  1. AVAILABILITY OF SKILLED, ENGLISH-SPEAKING WORKFORCE
    reduces tainingcosts for firms
  2. LOW RATES OF TAXATION
    one of the lowest rates of corporation tax in EU
  3. ACCESS TO EU MARKET/ MEMBER OF THE EU CURRENCY
    free movement within the EU, international transaction becomes much easier
  4. AVAILABILITY OF STATE INCENTIVES
    attractive grants and other incentives by the industrial development authority
  5. GOOD INDUSTRIAL RELATIONS
    partnership agreement, social relations - less strikes, no lost tax,…
21
Q

why do many multinationals exit Ireland?

loss of FDI

A
  1. LOWER WAGE RATES OUTSIDE
    statutory min. wage and social partnership in Ireland result higher wages, firms may move to Eastern Europe and Asia
  2. SKILLS MISMATCH
    labour is not equipment with specific skills a firm is losing for
  3. RISING COSTS OF PRODUCTION
    make exports less competitive
  4. ACCESSION OF NEW EU MEMBER STATES
    transport costs out of Ireland are higher, as it is an island
  5. REGULATORY FRAMEWORK
    less laws in Eastern Europe and Asia
  6. ADVANCES IN INTERNATIONAL COMMUNICATION.
    global communication, lower unit cost, increases their profits
  7. COST OF LIVE, UNCERTAINTY IN TAX, LAW, BREXIT, …
22
Q

What is the statutory minimum wage?

A

the lowest wage that an employer must pay a member of staff.

there are some exceptions to the payment of the statutory minimum wage:

  • employees under the age of 18
  • family members employed in a business
23
Q

what are the advantages of lowering the minimum wage in Ireland ?

A
  1. LOWER LABOUR COST
    continued production, less business closure
  2. LOWER SELLING PRICES
    falling production costs - lower consumer prices - increased competition
  3. INCREASED DEMAND/ PROTECTION OF JOBS
  4. INVESTMENT STIMULUS
    reduced costs - increased investment by entrepreneurs, increased FDI
  5. REDUCED RISK OF RELOCATION
    Irish wage levels may be similar to other countries - firms would stay in Ireland
24
Q

what are the disadvantages of lowering the minimum wage in Ireland ?

A
  1. REDUCED STANDARD OF LIVING
    lower income - less disposable income
  2. REDUCED AGGREGATE DEMAND/ SPENDING
    reduced spending, falling demand, unemployment, less VAT receipts
  3. WORKERS ON LOWER INCOMES SUFFER MOST
    only those on the min wage rate suffer, not equitable
  4. DISCOURAGE EMPLOYMENT
    greater participation in the black/ shadow economy, no motivation
25
Q

what is the black-/ shadow- economy ?

A

describes all economic activity that goes unrecorded in the national income accounts.

26
Q

what are the economic effects of the black-/ shadow- economy ?

A
  1. LOSS OF TAX REVENUE TO THE GOV.
    essential for the provision of state services,…
  2. DECLINE IN LEGITIMATE BUSINESS ACTIVITY/ THREAD TO JOBS
    suffer a decline in sales, job losses, decline in economic activity
  3. INCREASED GOV. EXPENDITURE ON ENFORCEMENT
    to curb black economy… , further pressure on the states finances/ necessity to raise taxes
  4. PRESSURE ON GOV. SERVICES/ FINANCES
    reduce the volume of services provided, increase borrowing
  5. STANDARDS OF PRODUCT/SERVICES
    lack of regulation, products may be unsafe/ harmful to consumers
27
Q

what strategies could the government undertake to discourage black/shadow market activity?

A

+ reduce direct taxation rates

+ reduce indirect taxation rates

+ better enforcement by revenue commissioners

+ educate the public about the importance of tax revenue to the state

+ simplification of the tax system / close all tax loopholes

28
Q

discuss the factors that influence the size of the Irish labour force !

A

+ WAGE LEVELS WITHIN THE ECONOMY
higher wage levels - more people supply labour. wage retain - fall in this figure

+ STRUCTURE OF POPULATION/ SIZE
irelands population has increased, more citizens in the working-age bracket, larger labour force

+ PARTICIPATION RATE
number of people willing to work has increased, more women working, more people working after they are 65 years old

+ LABOUR MOBILITY
fewer barriers in place, free movement, more immigrants into Ireland, more Irish people emigrate

+ GOVERNMENT POLICIES
restrictions on the entry of immigrants , to liberalize entry requirements into certain occupations

29
Q

Who is Karl Marx ?

A

book, page 321

economics (28 decks)

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