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Econ Theme 3 > labour market > Flashcards

labour market Flashcards

1
Q

Key issues in labour markets

A
  • rise of automation and robotics
  • minimum wages
  • role of trade unions and their power (esp in cost of living crisis)
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2
Q

What is trade union

A

Group of workers using “collective bargaining” power to increase the real wages and standard of working conditions for their members, thus improving welfare

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3
Q

What is the assumption of a close shop trade union

A
  • Only one trade union in entire industry, thus it becomes the monopoly supplier of labour
    controls labour supply at given wage rates
  • in order to work in a given industry, must be part of a trade union thus 100% TU density
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3
Q

What is the trade union diagram

A

LOOK UP DAL LABOUR MARKET IMPACT OF TRADE UNION VIDEO

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4
Q

Effects of trade unions

A
  • imaging labour supply and demand curve, with equilibrium wage of W1
  • trade unions demand a higher wage of Wtu, thus labour supply curve is now a falt line from Wtu till it meets supply curve
  • where line meets supply curve = number of workers willing to work at W tu but this is not all workers
  • thus to employ more, firms must raise wage rates so new supply curve follows on from existing curve
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5
Q

Evaluate effects of trade union

A
  • the reduce employment and increase wages
  • unemployment is Qtu to Qe
  • Although trade unions distort outcomes in labour markets they make conditions better in a MONOPSONY labour market using wage setting power to increase wages and jobs
  • strength of TU depends on trade union trade density; propotion of a workforce of a given profession that are part of a trade union. Higher TU density = high trade union bargaining power and higher wages and greater control over labour supply. Also TUs can raise a relatively inelastic wage a lot more
  • Success of trade union (how much wages risen by) can be measured by union mark up which is difference between wages of those in a TU vs those outside a TU for a given profession
  • times of rapid GDP growth, falling unemploymet and skill shortages means unions have greater bargaining power due to scarcity of skilled workers
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6
Q

What is the reality of trade union power today

A

strict legislation limits TU power
- clsoed shop TUs are illegal so individual TU power limited, limitng TU density as workers are spread around TUs
- strikes are biggest weapons TUs have but ballots must be done in secret for strike to happen
- at least 75% of workers in a TU must agree for a strike to happen and you can only strike against your own employer so strike numbers limited
- also competitive pressures means firms can reject higher wages as globalisation means they go bankrupt due to higher labour costs

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7
Q

Evaluate the view that TU help improve outcomes in labour market

A
  • TU increase wages BUT: if wages rise faster than productivity, firms see a rise in unit costs and this can lessen profits leading to less jobs
  • TU counter monopsony employers who may offer low wages and less worker training BUT: MONOPSONY employer doesnt always pay less than they need to and they still see a positive link between pay and productivity
  • union can help prevent structural unemployment by campaiging against job losses caused by import dumping for example BUT they may impeded competitivness if they seek to block use of tech that replaces workers with robots!!!!!
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8
Q

Why were TUs making a comeback in 2022 after TU membership fell for many years

A
  • cost of living amplified role TUs play in protecting real wage of members
  • TU membership in UK fell for many years before stabilising recently
  • membershio rose and peaked in 1979 but fell sharply since
  • in 2021
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9
Q

TU density in 2022

A

Union membership density fell from 12.7% in 2021 to 12.0% in 2022 among private sector employees, and from 50.0% to 48.6% among public sector employees.

TU density higher in public over private sector

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10
Q

Current NMW

A

The 2024 NLW rate is £11.44, a 10 per cent increase in cash terms on the 2023 NLW (£10.42)

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11
Q

In 2023, what was the difference between lowest and highest paid workers

A

Highest: senior and chief executives was £1560 a week
lowest: £356 a week - leisure and theme park workers

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12
Q

trade union density in 2023

A

% of all employees was 23%

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13
Q

Two reason for long term decline in TU membership in UK

A
  • Globalisation and flexible hiring: MNC make it harder for TU to organise. Rise of gig economy has led to a rise in non-contracted self employed workers who arent part of TU
  • structural change in employment from manufac to services where unionisation rates are much lower. So many employers in services so lower TU density
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14
Q

Factors explaing gender wage gap (GWP) in the UK labour market

A
  • GWP worst among full time employees over 40. here many women take a career break due to mat leav. Due to BOUNDED RATIONALITY OF EMPLOYERS, women face systemic barriers like gender bias, stereotypes so discim overall
  • occupational clustering of women in jobs such as social care, accomodation and food services with low pay and low TU power
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15
Q

List of recent strikes and outcomes

A
  • RMT called off a strike after + talks with TFL . They initially rejected a 5% pay offer
  • junior docs in England striked for 6 days, the longest in NHS history to achieve full pay restoration after a steep decline since 2008/9
16
Q

Reasons for longest walkout in NHS history Jan 2024 junior doctor strike

A
  • BMA says junior doctors in England have had a 26% real-terms pay cut since 2008 because pay rises have been below inflation.
  • BMA pushing for a 35% pay rise. Gov gave junior docs a rise of 8.8% but that wasnt enough
  • BMA is a trade union
17
Q

Impact of recent NHS strikes

A
  • Strike in late 2023 in NHS lasted three days and nearly 90 000 appt and operations were postponed alone
  • year of industrial action by NHS staff in 2023 costed NHS £2bn
18
Q

Assess policies that might be effective in reducing shortages in an industry of your choice

A
  • higher minimum wage
  • change state pension retirement wage
  • labour migration policy - points based system is stricter
  • income tax changes - tax bands frozen now
  • affordability of child and social care
  • investment in education
  • improve employment rights
19
Q

evaluate policies effective in reducing labour shortages in industry of your choice

A
  • policies to increase supply of labour will decrease supply elsewhere
  • persistent labour shortages act as catalyst for acceleration in the use of new tech such as construction, education and farming
  • no policy needed; free market mechanism means firm raise relative pay and conditons ,signalling/incentivising new workers to come
  • lower barriers to entry but this has a time lag (reduce costs of housing, subsidising childcare, support for exams in careers)
20
Q

Evidence of gender wage gap in healthcare

A
  • Average pay for women is about 24% lower than men in the health and care sector and 20% less overall according to World economic forum
  • women are 67% of healthcare workers globally
21
Q

What is a monopsony employer

A
  • sole or dominant employers in a labour market; NHS or Armed forces, supermarkets, amazon and sports direct
  • supply curve of labour is just average cost of labour and monoposony employers have to bi d up wages to attract new workers but the wage they pay MAY NOT REFLECT THE TRUE MRP of people employed
  • hire at MRP= Marginal cost of labour to max rev compared to competitive wage wherre MRP = S (average labour cost)
22
Q

Analysis for a monopsony employer

A
  • monopsony employer can use their buying power to pay a wage loweer than the value of MRP of workers
  • monospony power leads to exploitation of employed workers and lost wages due to underpaymet by monopsony employers
23
Q

median full time vs mean full time earnings

A

Uk median 2023: £35 000
Uk mean 2023: £42 200
mean is skewed by earning of the richest indicating a £7000 gap between median and mean due to unequal distribution of incomes

  • median
24
Q

size of gender pay gap and main reason

A

14.3%
- rising childcare costs means many women forced to leave labour market but rishi sunak announced eligible parents and carers of 2 yr olds entitled to 15 hrs of free childcare per week from 1 april but spaces are limited and not guaranteed

25
Q

What is pay like for richest in the UK

A
  • Median FTSE 100 CEO pay exclsuing pension is £3.81 m, 109 time the median full time pay
  • magic circle law firm partner: £1.92m
  • Big four accountancy: £871K
  • Nov 2023, Uk gov scrapped banker bonus bc people demanded higher salaries
26
Q

Strongest trade union in uk and recent succes

A
  • unison
  • We represent full-time and part-time staff who provide public services
  • 1.3 mil members

ALSO UNITE alongside RMT
- won successful pay deal with pay rises ranging from 5.8%-11%

  • trade union in eatching: NASUWT, NAHT, NEU, ASCL
27
Q

Why is rishi sunak reluctant to increase public sector wage

A
  • warns or wage price spiral as gov expen increases inflation
  • BUT increase in public expenditure could lead to inflation and public wages are one way public expenditure is increased,THIS BIT: but the government could increase wages and cut other parts of the budget.”
28
Q

EVIDENCE OF INEQUALITY IN UK

A
  • 42% of income earners pay no income tax due to tax allowance of 12 570
  • uk gini coefficient is 0.343, down from 0.386 (evidence of progressive tax systme reducing income inequality)
  • average salray of a teacher is £38000
  • bottom third of tax payers pay only 0.01% of total tax revenue
29
Q

regional wage diferentials

A
  • Wage gap between london and south east (£765 a week) vs NW, NE, west midlands (£580-600)
  • due to restructuring of uk economy, loss of manufacturing industries up north cuasing negative multiplier effect (labour is derived demand). London docklands development cooperation regeneration project to become enterprise zone
  • productive workers migrate from north to thriving south, worsening - multiplier effect

Econ Theme 3 (36 decks)

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