The labour market Flashcards
Define a labour market
Where workers sell their labour and employers buy the labour
Define supply of labour
Those who are willing and able to work
Define demand of labour
The amount of labour that employers seek to higher during a given time period at a particular wage rate
Define gross pay
The amount of money that an employee earns before any deductions are made
Define net pay
The amount of money that an employee is left with after deductions are made from gross pay
Define income tax
A tax demanded on personal income (e.g. a tax on a person’s wages)
Define national insurance
A contribution payed by workers and their employers towards the cost of state benefits.
Define pension
A fixed amount paid at regular intervals to a person (usually retired) or their surviving dependants.
Define collective bargaining
The process in which working people, through their unions, negotiate contracts with their employers to determine their terms of employment
What payments are deductions from gross pay (making net pay)?
- Income tax
- National insurance
- Pension
What payments require both the worker and employer to pay?
- National insurance
- Pension
How do you calculate gross pay?
Base pay (amount contract states you are paid) + Extra payments (bonuses, overtime etc)
How do you calculate net pay?
Gross pay - deductions (income tax, national insurance, pension)
What does the labour market consist of?
Supply of labour by households and demand for labour by firms
What is the role of the labour market?
- Enable workers who are willing and able to sell their labour to meet employers who are willing and able to offer them a job
- Determine the wage rate/salary for this work
What basis does the labour market operate on?
Local, national and international
What does the labour market depend on?
The exchange of information between employers and employees on wage rates, employment conditions, level of competition, location etc
What are reasons for lack of labour mobility?
- Lack on necessary skills
- Unable/unwilling to relocate
- Personal factors
- Information failure
Explain how lack of necessary skills leads to lack of labour mobility?
Skills needed in different jobs are not interchangeable
Explain how being unable/ unwilling to relocate leads to lack of labour mobility?
Speaking only English leads to restriction to jobs only in English speaking countries
Explain how personal factors leads to lack of labour mobility?
Family ties to an area or would prefer to live in certain areas.
Explain how information failure leads to lack of labour mobility?
Not aware of what jobs are available
Interaction between workers and employers: How is the contract determined with an individual worker and employer?
The work deals directly with the employer about pay etc
Interaction between workers and employers: How is the contract determined with collective bargaining
Trade unions bargain for all their members with employer
