global labour markets

Question 1

What are wages determined by? What can they be impacted by?

Answer 1

Demand and supply.

Can be impacted by market failure.

Question 2

What things affect supply of labour?

Answer 2

• Skills
• Knowledge
• Qualifications
• Availability of other job opportunities
• Motivation/desire to do the job

Question 3

What is demand for labour called and why?

Answer 3

Derived demand because employers desire the labour for what it can produce rather than labour itself.

Question 4

How can workers add value to themselves and what does this affect?

Answer 4

By being good at their job, which affects demand and therefore price paid.

Question 5

What can higher wages cause for businesses? What may this lead them to do?

Answer 5

Less profit, which can encourage them to reduce the number of employees in total.

Question 6

What global factors affect demand and supply of labour?

Answer 6

• Overseas competition
• Austerity measures of public sector cuts
• Industries with skills shortages who may choose to import labour from abroad

Question 7

How did trade unions impact wage levels?

Answer 7

They negotiated with employers to protect and increase wages for their members.

Question 8

What was the main negative of trade unions being successful in raising wages?

Answer 8

It could sometimes equal fewer jobs due to demand falling for higher wages.

Question 9

How can monopsony powers affect wage levels?

Answer 9

Due to the imposed lower wages as they are the sole/dominant employer of the industry.

Question 10

How can governments intervene in national labour markets?

Answer 10

• Minimum wage
• Legislation
• Retraining

Question 11

How has globalisation contributed to the increase in the size of the labour force?

Answer 11

With ease of travel and less restrictions between borders, people have been able to find jobs more easily.

Question 12

Why has production shifted from developed to developing countries?

Answer 12

Companies can take advantage of the low labour costs in developing countries.

Question 13

Why might unemployment in developed countries increase as a result of globalisation?

Answer 13

Firms shift their operations to countries with low labour costs.

Question 14

List 4 factors affecting the demand for labour.

Answer 14

• Wage rate
• Demand for products
• Productivity of labour
• Substitutes for labour

Question 15

Why do firms employ less workers as wages rise?

Answer 15

It may be easier for firms to invest in capital, which is cheaper and more productive that manual labour, so less workers are required.

Question 16

If workers are more productive, will their wages be high or low?

Answer 16

Their wages will be high.

Question 17

If the market is unsaturated, how will this affect wages and why?

Answer 17

The firm is the only one in that market, and so has more bargaining power than workers and will therefore offer lower wages.

Question 18

How is the supply of labour calculated?

Answer 18

By multiplying the number of people who can work at the current wage rate by the number of hours they can work.

Question 19

Describe the relationship between the wage rate and the number of workers willing to work.

Answer 19

As the wage rate increases, the number of people willing to work increases (proportional).

Question 20

Why do firms fear trade unions?

Answer 20

Trade unions have the power to increase wages and working conditions, thus raising costs for firms.

Question 21

If taxes are too high, how will this affect the supply of labour?

Answer 21

This will reduce the supply of labour because less people are willing to work knowing that more of their income is deducted with taxes.

Question 22

What happens if trade unions push wages too high?

Answer 22

It will cost too much for firms to maintain their employment level so they will cut down on the number of workers required.

Question 23

Describe the difference between individual and collective bargaining.

Answer 23

Individual bargaining is between an employer and an employee, whereas collective bargaining is between employers and a group of employees.

Question 24

What is productivity bargaining?

Answer 24

Occurs when employers and employees meet to discuss wage rises given an increase in productivity.

Question 25

Do minimum wage have to be set above or below the free market price?

Answer 25

Above the market, else they will prove ineffective.

Question 26

How would a minimum wage benefit tax revenues?

Answer 26

It will increase tax revenues, because consumers will be earning higher wages and will therefore have to pay higher income tax.

Question 27

How would a minimum wage affect competitiveness?

Answer 27

Countries would become less attractive to foreign firms as higher wages would mean higher costs for those firms.