Topic 4 - Labour Market

Question 1

Where does the demand for labour come from?

Answer 1

Aggregate demand

Question 2

What is aggregate demand?

Answer 2

Refers to the total demand for goods and services within the economy

Question 3

Output of the firm

- What are general economic conditions?

Answer 3

When economic conditions are buoyant, a firm is more likely to enjoy higher sales and will therefore need more employees. i.e Higher economic growth = falling unemployment

Question 4

The productivity of labour / SHORT TERM?

Answer 4

If aggregate demand is rising faster than the increase in productivity, than businesses will increase their demand for labour to meet the higher level of aggregate demand in the economy.* If agg demand is unchanged, but productivity is rising than businesses will not need any new labour. Demand would decline because the business can cut back on workers and still produce the same output as they did before

Question 5

The productivity of labour / LONG TERM?

Answer 5

Higher labour productivity will make labour a more attractive input in to production

Question 6

Supply of labour;

Pay levels ?

Answer 6

Higher labour productivity will make labour a more attractive input in to production

Question 7

Supply of labour;

Working conditions ?

Answer 7

Attractive working conditions like flexible working hours, working from home, generous holidays will increase supply of labour.

Question 8

Supply of labour;

Education, skills and experience requirements ?

Answer 8

Human capital is the total sum of the knowledge, skills, training and experience of workers that contributes to the process of production. It reflects the “quality” of a labour force and it is the main influence on productivity growth

Question 9

Supply of labour;

The mobility of labour – Occupational mobility ?

Answer 9

The ability of labour to move between different occupations, geographical mobility: Ability of labour to move between different locations.

Question 10

Labour Force Participation Rate?

Answer 10

Labour force = unemployed + employed persons in a country. Also known as the ‘workforce’
Working-age population = Number of people in an economy who are at least 15 (the working age)

LFPR = Labour force/Working-age population

Question 11

Economic benefits of inequality?

Answer 11

Inequality encourages the labour force to increase education and skill levels
Encourages the labour force to work longer and harder
Makes the labour force more mobile
Encourages entrepreneurs to accept risks more readily
Creates the potential for higher savings and capital formation

Question 12

Economic costs of inequality?

Answer 12

Reduces overall utility
Can reduce economic growth
Creates conspicuous consumption
Creates poverty and social problems
Increases the cost of welfare support

Question 13

What are the 5 types of unemployment

Answer 13

Cyclical unemployment, Structural unemployment, Long-term unemployment, Seasonal unemployment, Frictional unemployment

Question 14

Outsourcing ?

Answer 14

occurs when an organisation pays another business to perform a function that it does not regard as a core part of its business focus. E.g governments now outsource most of their information technology operations, leaving most computer operations performed by government in the hands of private companies.

Question 15

Casualisation of the workforce?

Answer 15

CASUALS
Casualisation refers a situation when the percentage of casually hired workers in the total workforce tends to rise over time.

Question 16

Benefit of Casualisation of the workforce?

Answer 16

• Flexibility for employers to increase or reduce staff as business demands change

Question 17

Disadvantage of Casualisation of the workforce?

Answer 17

-less job security

Question 18

Industrial relations?

Answer 18

Involves the laws, institutions and processes to resolve the conflict that arises between a employer and employee

Question 19

Trade unions ?

Answer 19

A trade union is an association of workers that aims to advance the interests of its members by improving their wages and working conditions

Question 20

Name 4 trade unions ?

Answer 20

Occupational unions, Industry-based unions, Enterprise - based unions, General unions

Question 21

Occupational unions?

Answer 21

A union whose job territory is restricted to members of a particular occupational group. Craft unions of skilled manual workers take this form as do unions of professionals, such as doctors, midwives, teachers, lecturers, and nurses.

Question 22

Industry-based unions?

Answer 22

A union that combines all workers, both skilled and unskilled, who are employed in a particular industry.

Question 23

Enterprise-based union ?

Answer 23

A form of trade union where all members work for the same company rather than having the same trade.

Question 24

General unions?

Answer 24

Cover a whole range of workers with many different skills across various industries

Question 25

There are a number of factors that have contributed to decline in union memberships such as ?

Answer 25

• Change in wage determination
• Changes within industries
• Change in the nature of employment

Question 26

Role of unions in the labour market?

Answer 26

• Representing the employee interests
• Exercising their bargaining power in negotiations with employers
• Restricting the supply of labour

Question 27

Role of employer associations ?

Answer 27

Represent and promote the interests of their members by lobbying the government on industrial relations policies

Question 28

National employment standards ?

Answer 28

• Maximum weekly hours
• Right to request flexible working arrangements
• Leave
• Notice of termination and redundancy pay

Question 29

Enterprise agreements

Answer 29

Negotiated collectively through enterprise bargaining between an employer(s) and employees, usually represented by unions.
As a minimum all agreements cannot offer pay rates below that mandated by the equivalent award.