gov intervention in labour markets

Question 1

how has the government intervened in the labour market

Answer 1

the national minimum wage

Question 2

information about the minimum wage (5)

Answer 2

• Labour introduced the national minimum wages in April 1999
• Raises people out of poverty
• Decent minimum standards in the workplace
• Failure to pay leads to firms being fined
• National living wages introduced for over 25 (£9, 2020)

Question 3

arguments for the national minimum wage (5)

Answer 3

Reduces poverty as it impacts the lowest wages and ensure people have enough to live on

Can reduce male/female wage differentials – as women may take up lower paid jobs (as they are vocational, offering more flexible hours)

More content workforce who are more motivated – making the business more productive and increasing profits (ev – assumes people are motivated by money)

incentivises people to work and prevents the “unemployment trap” when benefits are higher than the wage people would otherwise receive

Fair wage – people are not exploited by being drastically underpaid

Question 4

arguments against minimum wage (4)

Answer 4

Loss of jobs in the industry

Will raise costs for companies – increasing prices – decreasing profits

Wage spiral as individuals will try and protect wage differentials between them and the lowest price workers – as when minimum wage rises others expect theirs to rise as well – reduce profit – reduce competitiveness in long run

No consideration of regional differences – may be ineffective at reducing poverty – London compared to rural