Unit 3 Flashcards
What influences the occupational choice of workers?
The occupational choice of workers are influenced by a range of non wage and wage factors;
What are wage factors?
Wage factors are financial payments that workers receive for their labour.
What are non-wage factor?
Non-wage factors incorporate a range of influences that are meaningful to a worker.
What are wages?
Wages are an agreed amount of money per hour and it is calculated directly from the number of hours worked.
What is salary?
Salary is an annual payment paid to workers. The amount tends to be stated in employment contracts. This is then divided by 12 and paid monthly . The hours worked monthly may vary but the pay received is always the same.
What is commission?
Commission is a payment to sales people for the value of the items they sell. It is typically a percentage of the value of the transaction and can motivate employees to maximise sales.
What is a bonus?
A bonus is money paid in addition to a salary and is often paid when the company earns high levels of profit, or as a reward for exceptional worker performance.
What is piece rate pay?
Piece rate pay is a fixed amount paid to the employee for each completed item produced.
What is performance related pay? PRP
Performance related pay are payments based on how well the worker performs.
What are fringe benefits?
Fringe benefits are benefits provided in addition to the normal salary. They can be very significant in influencing occupational choices. They include benefits such as childcare, free lunches, gym membership or a company car.
What is job security?
Job security is stated in employment contracts and is how long the employee works for the employer. The can be anywhere from a year to four years which provide high security.
What is job satisfaction?
Job satisfaction is infixing fulfilment in a job role and enjoying work. This can be very significant when workers choose their job.
What is status?
Status is the fact that some jobs carry a higher recognition in society which many workers find applying. - lawyers, surgeons.
What is level of challenge?
Level of challenge is the fact that many workers step into an occupation due to the challenge of the role and enjoy that.
What is career prospects?
Career prospects refers to jobs with a defined pathway for promotion (and salary increase) which tend to be more desirable and increase motivation.
What is length of training or level of education required?
The longer the time period required to study or train for a job, the fewer the number of people who seek employment in that occupation.
What is holiday?
Holiday refers the fact that the more holiday a job has, the more desirable it may seem to many.
What is the labour market composed of?
The labour market is composed of sellers (suppliers) of labour (households) and buyers of labour (firms).
-workers supply their labour and firms demand labour.
What is derived demand?
Derived demand is when any factor of production is demanded for the product it is used to produce.
How is demand for labour a derived demand?
Demand for labour is a derived demand meaning that labour depends on the demand for goods and services.
How does the demand for the final product influence the demand for labour?
As demand for labour is a derived demand, when an economy is booming and demand for goods and services tend to be high, the demand for labour will also be very high - economic growth.
Conversely, when an economy is in a recession, demand for goods and services will be very low and so the demand for labour will be low - leading to firms laying off workers and higher unemployment.
How does the ability to substitute capital for labour affect demand of labour?
Firms are constantly evaluating if it will be possible and more cost effective to switch production from using labour to capital. If it is more cost effective, the demand of labour will fall and so unemployment will increase.
How does the productivity of labour affect the demand for labour?
If the productivity of labour increases (e.g. through training) this will lower the average costs and firms will likely demand more labour.
How does the training period affect the supply of labour?
Longer training periods and the costs of them act as a barrier to the entry of many workers to the labour market. This excludes many households from offering labour in certain markets. However, the longer the training periods, the more skilled the employees tend to be and thus improving the quality.
How do wages in other occupations impact the supply of labour?
Comparative wage rates in substitute labour markets strongly influence the supply of labour.
How do changes in migration policies affect the supply of labour?
Policies that tend to increase the net migration rate can increase the supply of labour in certain industries.
Net immigration = Immigration - emigration. (number of immigrants in a country).
How do income tax levels affect the supply of labour?
At a certain level, income taxes become a disincentive to households offering they labour. If income tax increases, workers will feel disincentivised to work and thus the supply of labour decreases.
How does the price of the product being produced affect the demand for labour?
If the selling price of the product increases, then the firm will be incentivised to supply more (to prevent shortage) and thus the firm’s demand for layout will increase.
How does trade union power influence the supply of labour?
Trade unions can increase the supply of labour to certain industries as workers consider the benefits of benefits of belonging to the union. - higher wages and a safer working environment.
How does the level of welfare benefits affect the supply of labour?
The higher the level of welfare benefits, the lower the incentive for low-skilled labour to offer their labour. This is because they can live off the welfare benefits.
How do social trends affect the supply of labour?
Social trends include any major changes within society and can influence the supply of labour to certain industries.
-Work from home during covid resulted in significant changes in the labour market and not all workers returned to work when economies opened up again.
What is bargaining power?
The ability of a person or group to get what they want. The more bargaining power an employee has, the more likely the employer will have to comply to their requests.
What factors influence the bargaining power of workers?
-Membership of a trade union.
-Age and experience.
-Level of education.
-Current supply and demand conditions.
How does membership of a trade union impact the bargaining power?
Trade unions tend to have more bargaining power and they use it to represent the interests of the workers in negotiations with the employer.
How does age and experience impact the bargaining power?
Young and inexperienced workers tend to have less bargaining power than older, more experienced workers. As workers grow older, their age often begins to count against them because they are less productive and often nearing retirement, thus their bargaining power is reduced.
How does the level of education impact the bargaining power?
Education provides higher levels of skills and specialisation to a worker. This means that they are more important to business and thus have a higher bargaining power relative to unskilled workers.
How do the current supply conditions impact the supply of labour?
The supply of labour in many industries can change due to socio-political conditions. E.g. if there is suddenly a shortage in the labour willing to work in hotels, the bargaining power of the current hotel workers increases since they are in higher demand.
How do working conditions affect the supply of labour?
The working conditions and non-wage benefits can influence many people in many industries. If conditions are very good, more workers will want the job.
What are minimum wages?
Governments often intervene in the labour market by setting a minimum wage. They do this to improve equity and to reduce the exploitation of workers.
A minimum wage is a legally imposed wage level that employers must pay their workers.
What are reasons for differences in earnings (wage differentials)?
-Gender pay differences
-Industrial sector pay differences
-Public and private sector pay differences
-Differences in pay between skilled and unskilled
What are the reasons for wage differentials between men and women?
-Men may work full-time whereas women often work part-time in order to meet the demand of motherhood or childcare.
-Men tend to have an uninterrupted career journey whereas women may take time away from work for motherhood and their family and as a result, may miss opportunities for advancement.
-Women are more likely to accept a job below their skill or qualification level if it fits with the needs to looking after their children.
-The gender pay gap is a form of discrimination and is when a woman is paid less than a man who is doing exactly the same job.
What are the reasons for wage differentials in the primary, secondary and tertiary sectors?
In the primary sector, workers tend to be paid lower wages due to the unskilled nature of the job and the fact that raw materials often generate the lowest profits in the production chain. Moreover, this extraction of raw materials tends to occur in LEDC’s where workers are exploited for their labour - by firms.
-In the secondary sector, workers add value to the raw materials and then sell these products for higher profits. Therefore, wages tend to be higher than primary sector wages.
-In the tertiary sector, workers are paid the highest. This is because their jobs require the most skills that are also very valued and often take years to acquire.
What are reasons for wage differentials between private and public sector workers? (private sector).
In the private sector:
-Salaries can be extremely high, especially if the value of the goods or services is high and the workers are productive.
-Some salaries can be very low as firms seek to cut costs and maximise profits. =exploitation of workers often in poorer countries.
-There tend to be many wage benefits provided that are better than those provided by the public sector. E.g. bonuses and fringe benefits.
